Matthews International Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 17, 2023

There are 6 speakers on the call.

Operator

Greetings. Welcome to Matthews International Fourth Quarter and Year End Fiscal 2023 Financial Results Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded.

Operator

I will now turn the conference over to Steven Nicola, CFO. Thank you. You may begin.

Speaker 1

Thank you, Sherry. Good morning. I'm Steve Nicola, Chief Financial Officer of Matthews

Speaker 2

and with

Speaker 1

me on the call this morning is Joe Bartolacci, our company's President and CEO. For your reference in today's call, our earnings release has been posted to the Investors section of our website, www.matw.com, along with the presentation. Before we start, please note that any forward looking statements in connection with this discussion are being made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Factors that could cause the company's results to differ from those Discussed today are set forth in the company's Annual Report on Form 10 ks and other periodic filings with the SEC. In addition, We will be discussing non GAAP financial metrics and encourage you to read our disclosures and reconciliation tables carefully as you consider these metrics.

Speaker 1

In connection with any forward looking statements or non GAAP financial information, please read the disclaimer included in today's presentation materials located on our website. Now I will turn the call over to Joe.

Speaker 3

Okay. Thank you, Steve. Good morning. Again, this quarter, we are very pleased with our results The company has reported higher consolidated sales, while all of our business segments reported higher adjusted EBITDA. Our Industrial Technologies business again reported solid revenue growth in the 4th quarter, driven by the strong and ongoing interest in our Energy Solutions business.

Speaker 3

This growth enabled the segment to exceed the $500,000,000 revenue target we set for the year. Industrial Technologies revenue The full year increased by over 50% in fiscal 2023 from last year's sales of 335,000,000 Our Memorialization business also performed well for the full year with stable revenues despite a continued decline in debt. Our sharp focus on improving productivity in the business coupled with improved price realization led to an 8% increase in adjusted EBITDA for the full year. At SGK, as expected, cost reduction actions resulted in higher adjusted EBITDA for the quarter and improved margins despite market conditions in Europe That still continued to be challenging. Based on the strength of our operating results, we exceeded our target, reduced our net leverage ratio And also lowered our total debt outstanding as of year end.

Speaker 3

We expect further debt reduction in the coming year as we convert our increased working capital results From our growing Industrial Technologies segment to cash, consolidated sales for the company increased by 6.7% and adjusted EBITDA by 7% In fiscal 2023, impressive results despite the sense of uncertainty hovering around The global market is fueled by geopolitical events and the interest rate concerns. We are poised to drive continued growth in sales and adjusted EBITDA in fiscal 2024, Buoyed by the long term opportunities being created by several of our businesses with special mention to our Industrial Technologies segment. On a constant currency basis compared to prior year, our sales increased 8% and our EBITDA increased 9%, A strong performance in a challenging environment. Turning now to the performance of our individual businesses, let's begin with Industrial Technologies, which had strong growth in fiscal 2023, primarily through higher sales in our Energy Storage Solutions business. Included in the year over year improvement are also benefits gained from the acquisitions of Ulbrich and R&S Automotive that provided expanded capacity to execute and meet our growing demand for energy solutions.

Speaker 3

On our last call, we discussed actions to be taken in Ulbrich and R and S that would ultimately improve their overall performance. As you can see from our strong 4th quarter results, those initiatives have begun. We expect significant improvement in the operating results of these businesses in the coming year. We continue to actively engage in multiple discussions with several OEMs battery manufacturers across the world on our Energy Solutions services and we expect to finalize orders for production scale equipment During 2024, we still have about 50% of the $200,000,000 in energy orders announced this past January that we expect to fulfill during 2024 as customer delays have pushed out deliveries. We will continue to share our progress in any significant new orders as they are received.

Speaker 3

However, we exited 2023 with backlogs in our engineering and Overt businesses that were $190,000,000 higher than at the beginning of the year, including an increase of $80,000,000 in our energy business. As for our product identification and warehouse automation businesses, let me lead off with an update on developments at our product identification business. As you know, this business provides a comprehensive suite of advanced marking and printing technologies, consumables and software for industrial applications. These solutions include differentiated printing equipment, recurring ink consumables And critical controller software. As you may recall, we have identified an opportunity to displace incumbent continuous inject Technology which has proven to be too complex, environmentally challenged and costly.

Speaker 3

Our new solution addresses a market opportunity $2,000,000,000 using a disposable printhead that is maintenance free and reduces total cost of ownership significantly. The solution pairs flexibility, speed and performance with low maintenance, convenience and environmental fairness. We continue to develop the economic and performance model supporting the product and believe it could be the only available product in the market, Able to address the growing need for 2 d codes that are delivered at high rates of speed. 2 d codes are expected to replace barcodes in certain applications due to their ability, Deliver greater track and trace information and we believe our product is perfectly positioned to meet this demand. We anticipate Launching the solution sometime in the latter half of twenty twenty four to early 2025.

Speaker 3

With respect to warehouse automation, We won our 1st European warehouse automation installation project and our 1st factory automation order, which will be delivered in fiscal 2024. We are excited about the opportunity to expand our available market both by industry and geography. Fueled by the continued growth of our Industrial Technologies segment, we are ways to expand our product portfolio in this segment through acquisitions, which will augment our ability to grow each of the businesses with capacity, geography and technology. As I've said before, our Memorialization segment has been reset to a higher level than before the pandemic. While fiscal year revenues for the business remained stable, we delivered an adjusted EBITDA number that exceeded the amount reported for the full fiscal year before the pandemic by $30,000,000 Continued growth of our cremation products business in addition to market share gains, Productivity improvements, acquisitions and pricing initiatives all contributed to the success.

Speaker 3

Moving on to SGK, this segment continues to be impacted by challenging market environment in Europe and unfavorable currency rate changes. With that said, we did see performance setting over the second half of fiscal twenty twenty three and are also beginning to see the impact of cost reduction actions implemented recently as margins and adjusted EBITDA improved in all of the regions in which we operate. We are also initiating a more significant cost reduction In Europe, which has been the most severely challenged region for SGK. These actions include selective price increases and the closing of several sites, thus reducing our cost structure in Europe due to the impact of the current war between Russia and Ukraine. Looking ahead to next year, We are excited about the long term opportunity for all of our businesses, but especially for our Industrial Technologies segment.

Speaker 3

We believe it can drive us to another year of growth in Sales and adjusted EBITDA. We met our targets for the year and we are well positioned for a solid start in fiscal 2024 with good backlogs that In that business in particular. However, as I have advised on prior calls, there is a significant amount of project related work in our Technologies segment, specifically in Energy Solutions, Ulbrich and Warehouse Automation. As these businesses continue to scale up And account for a greater portion of our consolidated sales, it becomes more difficult to project timing of our growth, particularly on a quarterly basis. With this in mind, we will not provide specific fiscal 2024 earnings guidance at this time, but I can say that we expect our 2024 results To exceed fiscal 2023.

Speaker 3

Note that we anticipate providing updated guidance as we have more clarity on the timing of orders as they come through. As for our capital allocation plans, we anticipate fiscal 2024 operating cash flow generation to be Strong. Continued debt reduction remains a long term focus. And as I mentioned earlier, we plan to explore acquisitions to particularly in our Industrial Technologies segment. In conclusion, we look forward to delivering another good year in 2024 as we continue to transformation Our Industrial Technologies segment into a more significant contributor to our overall results.

Speaker 3

Now let me turn it over to Steve, who will discuss

Speaker 1

Thank you, Joe. I'll begin with Slide 7. Consolidated sales for the fiscal 2023 Q4 were $480,000,000 compared to $457,000,000 a year ago, representing an increase of $23,000,000 or 5%. The increase primarily reflected higher sales for the Industrial Technology segment. The Industrial Technology segment reported a sales increase of $36,000,000 or 34% compared to a year ago, primarily reflecting higher engineering energy storage sales and the impact of the acquisitions of Olbrich GmbH And R and S Automotive GmbH in August last year.

Speaker 1

Memorialization segment sales were 204 point $9,000,000 for the current quarter, which was relatively consistent compared with $206,300,000 a year ago. And sales for the SGK Brand Solutions segment were $11,500,000 lower than a year ago. On a consolidated basis, changes in currency rates had a favorable impact of $5,000,000 on current quarter sales compared to a year ago. On a GAAP basis, the company's net income was $17,700,000 or $0.56 per share for the current quarter, compared to a loss of $81,000,000 or $2.63 per share for the same quarter last year. The prior year loss on a GAAP basis reflected a goodwill impairment charge related to the SGK Brand Solutions segment.

Speaker 1

On a non GAAP basis, consolidated adjusted EBITDA, which represents net income before interest expense, income taxes, depreciation and amortization call. Representing an increase of $6,000,000 or 10.7%. The increase reflected higher adjusted EBITDA All three of the company's reporting segments. Changes in currency rates had a favorable impact of approximately $422,000 on current quarter consolidated Adjusted EBITDA compared to a year ago. Adjusted earnings per share for the current quarter was $0.96 compared to $0.82 for the same quarter a year ago, representing an increase of $0.14 or 17.1%.

Speaker 1

The increase primarily reflected higher adjusted EBITDA for each of our business segments and a lower income tax expense impact for the current quarter, offset partially by higher interest expense. Please see the reconciliations of adjusted EBITDA, non GAAP adjusted earnings per share And constant currency sales and adjusted EBITDA provided in our earnings release. Please turn to Slide 8 to begin a review of our segment results. Sales for the Industrial Technology segment for the fiscal 2023 Q4 were $140,600,000 compared to $104,600,000 a year ago, representing an increase of $36,000,000 or 34%. Recent acquisitions primarily Olbrich and R&S Automotive contributed $14,800,000 to the current quarter growth.

Speaker 1

The engineering business reported higher sales for the current quarter compared to a year ago, primarily reflecting continued growth in our energy storage solutions business. Our product identification business also reported higher sales for the current quarter compared to last year, which was offset by lower sales for the warehouse automation For the year, sales for the Industrial Technology segment were $505,800,000 Exceeding the $500,000,000 target we set at the beginning of the fiscal year and $170,200,000 or over 50% Higher than last year. Adjusted EBITDA for the Industrial Technology segment for the current quarter was $23,500,000 compared to $23,400,000 a year ago. The increase primarily reflected the benefit of the segment sales growth for the current quarter, offset partially by the unfavorable impact of recent acquisitions. As we previously indicated, these acquisitions were not expected to contribute to adjusted EBITDA immediately, but their results are expected to improve with our integration actions.

Speaker 1

We are already starting to realize the benefits of these actions. Please turn to Slide 9. Sales for the Memorialization segment for the fiscal 2023 Q4 were 204,900,000 compared to $206,300,000 for the same quarter a year ago. The recent quarter primarily reflected the benefits of improved pricing And the acquisition of Eagle Granite Company in February 2023, which were offset by lower unit sales of caskets and memorials, reflecting lower COVID related deaths. Memorialization segment adjusted EBITDA for the current quarter was $36,900,000 compared to $33,400,000 for the 4th fiscal quarter last year.

Speaker 1

The increase primarily resulted from improved pricing and benefits from call. Cost savings initiatives. These increases were partially offset by the impact of lower casket and memorial sales volumes and increased labor costs. Please turn to Slide 10. The SGK Brand Solutions segment reported sales of 134,700,000 For the fiscal 2023 Q4 compared to $146,300,000 a year ago.

Speaker 1

The decrease primarily reflected lower sales in the segment's European and U. S. Markets, including a decline in retail based sales and the impact of several site closures. Changes in currency rates had a favorable impact of $1,800,000 on current quarter sales compared to a year ago. Adjusted EBITDA for the SGK Brand Solutions segment was $17,500,000 for the recent quarter compared to $16,700,000 a year ago.

Speaker 1

Despite lower sales, adjusted EBITDA for the segment increased for the current quarter, primarily reflecting improvements in the ability to pass along cost increases and the benefits from the segment's recent cost reduction actions. Changes in currency rates had an unfavorable impact of $235,000 on adjusted EBITDA compared to a year ago. Please turn to Slide 11. For the year ended September 30, 2023, Operating cash flow was $79,500,000 compared to $126,900,000 a year ago. The reduction from last year primarily resulted from an increase in working capital during fiscal 2023.

Speaker 1

Working capital in our Energy Storage Solutions business was higher than a year ago, reflecting the significant growth in this business. Granted inventories also increased for the year reflecting higher sales and increased costs. Operating cash flow for 2023 2022 fiscal years reflected final payouts for the settlement of the company's U. S. Retirement plan obligations.

Speaker 1

The final payouts for settlement of the supplemental plans totaled $24,200,000 in the fiscal 2023 Q1. Final payouts for settlement of the company's principal U. S. Pension plan totaled $35,700,000 in the 1st fiscal quarter last year. Outstanding debt was $790,000,000 at September 30, 2023 compared to 799,000,000 At the end of fiscal 2022.

Speaker 1

At September 30, 2023, the company's leverage ratio based on net debt, which represents outstanding debt less cash and trailing 12 months adjusted EBITDA was 3.31 representing a reduction from 3.35 at June 30, 2023 and 3.5 at September 30, 2022. Approximately 30,500,000 shares were outstanding as of September 30, 2023. During the fiscal 2023 Q4, the company purchased approximately 1100 shares, which were in connection with withholding tax obligations On equity compensation. At September 30, 2023, the company had remaining authorization of approximately 1,200,000 shares under its repurchase program. Finally, the Board this week increased the quarterly dividend to $0.24 per share on the company's common stock representing the 30th consecutive annual dividend increase since becoming a publicly traded company.

Speaker 1

The dividend is payable December 11, 2023 to stockholders of record November 27, 2023. This concludes the financial review and we will now open the call to questions. Sherry?

Operator

Thank Before pressing the star keys, one moment while we poll for questions. Our first question is from Daniel Moore with CJS Securities.

Speaker 2

Thank you. Good morning, Joe. Good morning, Steve.

Speaker 3

Good morning, Dan.

Speaker 4

Good morning, Dan.

Speaker 2

Start with Energy storage, obviously, the big influx of orders last fiscal Q1, and appreciate the color, So just talk about pipeline, what it looks like, and what your expectations for order intake would look like over the next maybe 4 quarters. I know that getting the exact timing is difficult, but what are you hearing from both your bigger customers and newer opportunity?

Speaker 3

So our largest customer has pushed up and that's more issues as it relates to them than it as it relates You can see by the working capital build that we have on our balance sheet, it's more the question of timing of deliveries and hitting the Those that will allow us to reduce that while they're being ready for the equipment is the critical issue. They obviously we are aware of other projects that they are working on. I know they are substantially behind in those developments, but We expect to hear something over the course of this year. Others, however, are moving forward. As I've said before, where we stand today with respect to our largest customer, our other customers are Probably 2 to 3 years behind.

Speaker 3

So what we will expect to see this year are the first orders for production equipment. And I would say we have Least 2, maybe 3 significant customers that will be we're in the midst of working on what we call specifications for those production pieces of equipment, But they will not be multi $100,000,000 orders at this time. They will lead to multi $100,000,000 orders over But today, the types of orders we're talking about are more in the line of $25,000,000 to $50,000,000 And We will announce those as they go forward. We are also working on some very interesting things with some U. S.

Speaker 3

Manufacturers On joint developments in the United States. So, we'll see we'll have some announcements, I'm sure, over the coming months. But at this point in time, Timing of that is our biggest issue.

Speaker 2

Really helpful, Joe. I'm bouncing around a little bit here, but in Memorialization, And you had the initial bump in casket sales from the pandemic followed by delayed bump in memorial. Are we now essentially fully past those more difficult comps? And what should sort of the organic rate look like in your mind over the next 3 to 5 years?

Speaker 3

Yes, I would tell you that when it comes to memorialization, the team has done an exceptional job. What I would call cashing the debts for the debt rates are down materially from the serially from the peaks. Still had a few of those kind of off normal kind of months Throughout that period, but I would tell you we're substantially back. I would say as I look forward, I think the key to this story As it relates to memorialization, as we've picked up some share, we've picked up some pricing and we've improved our productivity. And the last part of this, we've made several smaller acquisitions that have become extremely accretive to that overall business.

Speaker 3

And we have some strategies That we're looking at, which we hope will continue to build on that. So I again, I don't think this is a business that's going to grow Double digit top lines or double digit bottom lines into the future, but we expect it to be a modest grower going into the future for the next 5 years.

Speaker 2

Helpful. Well, I have one more and I'll jump back around cash flow and capital allocation. Maybe Steve, what are we looking at for CapEx for next year, if I missed it, forgive me. How much do you think we can pull out of working capital? And Joe, I heard acquisitions a couple of times.

Speaker 2

Just talk about the your priorities delevering versus maybe Some of that M and A and what kind of size we might be looking at? Thanks again.

Speaker 1

Yes. So Dan, Yes, I'll start with the first part of your question. So with CapEx, I think this year we landed just a little bit over $50,000,000 for the year. I do expect that to be a little bit higher next year. So just with some of the investments that we're making in our That we're making in our Industrial Technology segment, I expect that to be higher.

Speaker 1

And then with respect to working capital, although I think you heard Joe reference Strong cash flow, we're expecting a strong cash flow year next year. And I do think an important piece of that is going to come from Working capital reduction, we had to build this year that we just talked about. I expect that to be realized to some degree In fiscal 2024. But again, the caution there is timing on that, Dan, just simply because of the project nature of the business.

Speaker 3

Yes, Dan, and I'll take the second half of your question. As it relates to acquisitions, you're right. I have been very Consistent with a couple of comments with respect to acquisitions. Let me put it by segment as a better way to do it. We will expect to do a few things in our on our oralization business, but those are relatively small with big impacts potentials to the bottom line.

Speaker 3

That's leveraging our what we're doing really is leveraging our platform, salesmen across the United States, distribution centers across the United States. And as we're in the cemeteries and funeral homes in literally every part of the country. So we'll continue to expand that, but those are relatively small. What I think is that what is important to hear in this commentary is that we're now focused on Growing our Industrial Technologies segment as a whole, there are a couple of pieces of that puzzle that we're working on. I'm not prepared today to kind of speak to them, but they're not Insignificant acquisitions.

Speaker 3

One of the keys to this is the fact that we know based on what the working capital build and what we Expect to collect this year. We're going to have a pretty significant difference in working capital over the course of the year. Timing of that really is Not so much in our control because they've got to be willing to accept delivery. Just for purposes of those on the phone, Revenue recognition is not necessarily the same as the timing of collections and billings. There is revenue recognition is done as work is Perform versus billings and collections are based on the milestones in the contract that are usually set around delivery timetables.

Speaker 3

So we know that's coming and we expect that to be a fairly significant contributor to the overall. We will pay down debt As well as do some acquisitions in the process. So we're pretty we're working on some things. Hopefully, some of them come to fruition, Not prepared to talk about what they are.

Speaker 2

All right. I'll jump back in the call. Thank you.

Operator

Our next question is from Liam Burke with B. Riley Securities. Please proceed.

Speaker 5

Thank you. Good morning, Joe. Good morning, Steve.

Speaker 2

Good morning, Liam.

Speaker 3

Good morning, Liam.

Speaker 5

Joe, on Industrial Technologies, specifically energy, you talked about $190,000,000 in backlog. Increase? That's for energy.

Speaker 3

No, hold on Liam, just to be clear, $190,000,000 increase over prior year between Obert and Energy, of which $80,000,000 of that was entered.

Speaker 5

Okay. What is the cadence on shorter cycle orders? Are you having a lot of activity on Research level types of systems.

Speaker 3

We're receiving orders every day. I mean, some smaller, some larger, not This materiality that we would call them out, but as evidenced by the fact that our overall backlog between Obrich and Energy, which is blended because of how they're managed, It's about $300,000,000 over $330,000,000 today. We're getting orders all the time. So it's just we called out the magnitude of the $200,000,000 so order in early calendar 'twenty three because of its magnitude, but we continue to receive orders as we speak.

Speaker 5

Great. Thanks, Joe. And on the memorialization, you had the readjustment of mortality rates. How did cremation do during the quarter?

Speaker 3

Our business or cremation rates?

Speaker 5

No, the business.

Speaker 3

The business did fit in fine. We had some early challenges that we set over in the UK principally on some incineration work, But we are in the midst of landing 1 to 2 more decent sized incineration project here in the UK, which It should be add nicely to the performance for the overall group, starting here in, I would say, second half of our fiscal 'twenty four.

Speaker 5

Great. Thank you, Joe.

Speaker 3

Yes.

Operator

Our next question is from Justin Bergner with Gabelli Funds. Please proceed.

Speaker 4

Good morning, Joe. Good morning, Steve.

Speaker 3

Good morning, Justin. Good morning.

Speaker 1

Good morning. Okay.

Speaker 4

I guess, could you talk a bit about warehouse automation, how that Formed in the Q4 and how you see that performing over the course of fiscal year 2024? So warehouse automation in

Speaker 3

the 4th quarter had a decent quarter. I would not say it was a strong quarter, but what was very positive for us in the 4th quarter was Mix of what I would call mix of revenue that was reported. The Q1 contained a lot of Pure software. And as you know, software has better margins in some of the hardware that we sell associated with that. So I would say it finished up the quarter and the year well.

Speaker 3

As we said throughout the last 3 to 6 months. We've seen a slowing and it's not just us, it's also others. We will know more about Where that business will finish out the year probably after the holidays. What we're seeing is a lot of customers taking a Wait and see how Christmas goes attitude. So we have quoting and we have other things of that activity going on, but finalization of orders are going to be Are cautious right now and I think that's economically sensitive today.

Speaker 4

Okay. Thank you. That's helpful. Switching to the M and A, with respect to the M and A, I didn't catch How you saw the size of potential acquisitions on the industrial technology side? And what would you say distinguishes between nice to have and need to have assets given the healthy leverage financial leverage ratio at the company and the high interest rate environment we're in?

Speaker 3

So I'll give you some examples of what we're looking at and how we're looking at. We know that our software business is the linchpin To the automated warehouse and there's a lot of activity in the marketplace today to be able to expand that portfolio. One of the things we're looking at, for example, is system integrators that allow us to integrate directly into the WMS or the ERP systems. These are businesses that allow us more access to markets that weren't currently not performing, so bringing us along. Secondly, I mean, as a practical matter, Justin, everything is nice to have.

Speaker 3

I mean, we have a complete portfolio, but We would love to have more presence in Europe, frankly. And there are some small opportunities over there that allow us to expand What we do on the warehouse side in Europe. When it comes to energy, I would say there's nothing that's necessarily a must have. There's a lot of nice to haves, but they are extremely complementary as we move forward. So we will be very, very sensitive to our leverage ratio, But given the kind of cash flow that we have to expect over the course of the year, we should be able to do both.

Speaker 4

Great. Thank you so much.

Operator

Our next question is a follow-up from Daniel Moore with CJS Securities. Please proceed.

Speaker 2

Yes. Just wanted to drill down a little bit more. Joe, you mentioned the new print head solution, maybe more Today than over the last few quarters. So what's changed? Remind us where we are.

Speaker 2

Is it still beta? No, no. Customers pulling, you're seeing more demand customers pulling or is it your capabilities? What's getting you more excited right

Speaker 3

The most exciting part of that is we continue to refine the what I both the economic model And customer desires through discussions. When we open the kimono a little bit through our customers and let them see what's coming, Their excitement is what's driving our enthusiasm. Where we stand from a timing standpoint, it's Right on what we've kind of said, end of this fiscal year, end of the calendar year, early next year with months. Months are not things that we can control completely, but We're extremely bullish on this. 2nd, Dan, we've hired a few folks, we've spoken to a few folks about what we call alternative Uses.

Speaker 3

And we think we have something that is unique. And I mean, when I say alternative uses, I'm not suggesting that we're going to go off into Other areas that have nothing to do with what we do. We've got enough different kinds of businesses in our portfolio today, But we clearly can license or produce and sell the chip to alternative uses and give us a great opportunity long term to monetize What we think is a very, very unique solution.

Speaker 2

Okay. And lastly, again, when you talk about M and A on the software side, Are these kind of $20,000,000 to $50,000,000 deals or could it be something more like up into the $100,000,000 because those Obviously, it can be very powerful, but also tend to be dilutive relative to your current margin structure.

Speaker 3

Yes. I mean from a margin standpoint, if I'm pushing up into the 100 stands because they're bringing pretty good margins. So I wouldn't be as much Concerned about the margins. We are sensitive to our debt ratio. So, our ability to do the size will be dependent on where our cash flows are coming in.

Speaker 3

We are focused on getting ourselves to under 3 and we will continue to be focused. There's a few things out there that we are aware of And we'll make the right call at the same time. There are a couple that are in the 20s or a couple that are in the pushing 70, 80. What they will do though Our focus is in trying to make our Industrial Technologies segment a more significant part of our overall portfolio.

Speaker 2

Thank you.

Operator

There are no more questions at this time. I would like to turn the conference back over for closing comments.

Speaker 1

All right. Thank you, Sherry, and thank you all for joining us And your interest in Matthews, just a reminder for additional information about the company and our financial results, You can feel free to contact me or visit our website. Enjoy the rest of your day.

Operator

Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.

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Key Takeaways

  • Consolidated sales rose 6.7% in FY 2023 with adjusted EBITDA up 7%, driven by a 34% Q4 and >50% full-year surge in Industrial Technologies, which surpassed its $500 million revenue goal.
  • The Energy Storage Solutions pipeline remains robust with a $200 million order book announced in January, a segment backlog up $190 million year-over-year (including $80 million in energy), and expectations to fulfil roughly half of those orders in FY 2024.
  • A new disposable printhead marking solution is set to displace continuous-inkjet systems in a $2 billion market by offering maintenance-free operation, lower total cost of ownership and high-speed 2D code capability, with launch planned in late 2024 to early 2025.
  • The Memorialization segment delivered stable full-year revenues and an 8% increase in adjusted EBITDA—exceeding pre-pandemic EBITDA by $30 million—thanks to productivity gains, pricing actions and add-on acquisitions.
  • Management reduced net leverage from 3.50x to 3.31x, lowered total debt and plans further paydowns amid strong operating cash flow, while pursuing targeted acquisitions—especially in Industrial Technologies—and expects FY 2024 results to exceed FY 2023.
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Earnings Conference Call
Matthews International Q4 2023
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