Good morning. Welcome to Matthews International's First Quarter Fiscal 2024 Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Bill Wilson, Senior Director of Corporate Development. Thank you. You may begin.

Great. Thank you, Sherry. Good morning, everyone and welcome to the Matthews International first quarter and fiscal year 2024 conference call. This is Bill Wilson, Senior Director of Corporate Development. With me today are Joe Bartolacci, President and Chief Executive Officer; and Steve Nicola, our Chief Financial Officer. Before we start, I would like to remind you that our earnings release was posted on our website www.matw.com in Investor section last night. The presentation for our call can also be accessed in Investor section of the website. 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-K 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. In connection with any forward-looking statements and 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.

Thank you, Bill. Good morning. Despite the EBITDA shortfall versus prior year, we are pleased with our fiscal '24 first quarter results. All of our businesses exceeded our internal expectations, except energy which saw delays in our projected deliveries for our largest customer, which are outside of our control. Overall, we reported a modest increase in consolidated sales to $450 million this quarter from $449 million in the first quarter of fiscal '23. We cautioned last quarter, however, customer readiness to accept our equipment throughout the year will be and in this quarter clearly was the primary factor behind the performance of the energy business, as delays have impacted the timing of anticipated revenues for our fiscal '24 first quarter. Even with the timing of the energy sales, sales for the industrials -- industrial segment increased compared to the first quarter last year, and together with OLBRICH and the rest of our industrial technology segment, we have almost $260 million of backlog expected to be substantially delivered this fiscal year. Memorialization sales also increased compared to last year and SGK sales were modestly down largely due to lower retail based sales and continued weakness in the European brand market. For our industrial segment, we continue to receive significant inbound interest for our unique energy solutions from almost all of the major global OEMs and battery manufacturers. The benefits of our solutions remain clear. By leaning on our industry leading expertise, we have developed processes that produce -- excuse me, that reduce customer cost of production by lowering capital investment, labor costs and energy consumption while greatly reducing any environmental concerns. As a result, we continue to see an influx of inquiries from potential customers who are still several years behind our largest customer. We believe that the breadth of these…

Thank you, Joe and good morning. Consolidated sales for the fiscal 2024 first quarter were $450 million compared to $449.2 million a year ago. The increase primarily reflected higher sales for the industrial technologies and memorialization segments. The Industrial Technology segment reported a sales increase of $2.2 million compared to a year ago, primarily reflecting higher engineering product identification and surfaces sales. Memorialization sales were $208.1 million for the current quarter, compared with $206.5 million a year ago, primarily reflecting higher granite sales and the acquisition of Eagle Granite last fiscal year. Sales for the SGK brand solution segment were $3.1 million lower than a year ago, primarily reflecting lower retail base sales and continued softness in the European brand markets. On a consolidated basis, changes in currency rates had a favorable impact of $5.1 million on current quarter sales compared to a year ago. On a GAAP basis, net loss attributable to the company for the quarter ended December 31, 2023 was $2.3 million or $0.07 per share, compared to income of $3.7 million or $0.12 per share in the prior period. On a non-GAAP adjusted basis, earnings for the fiscal 2024 first quarter were $0.37 per share, compared to $0.53 per share a year ago. The decrease was primarily attributable to lower consolidated adjusted EBITDA and higher interest expense for the current quarter compared to a year ago. Consolidated adjusted EBITDA which represents net income before interest expense, income, taxes, depreciation and amortization and other adjustments for the fiscal 2024 first quarter was $45.5 million compared to $49.3 million a year ago. The decrease reflected lower adjusted EBITDA for the industrial technologies and memorialization segments, offset partially by an increase in adjusted EBITDA for the SGK Brand Solutions segment and lower corporate and other non-operating costs. Changes in…

[Operator Instructions] Our first question is from Dan Moore with CJS Securities. Please proceed.

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

Good morning, Dan.

Good morning.

Let's start with energy storage. Clearly timing or visibility around the timing of order intake is still difficult in the current environment. Completely understandably, having said that, maybe just talk a little bit more about discussions you're having not only with your large client but with other potential customers and when would you need to see a pickup in orders in order to generate the positive growth that you expect year-over-year not only in energy storage, but also in overall kind of revenue and EBITDA?

A lot of questions in that one. Let me try to parse it. So first off, we continue to discuss with just about everybody. I mean, it's a very hot topic throughout the industry. Our discussions are complex as you might expect, you need to understand and this we've tried to kind of, say this to folks, what we provide is a very complex piece of solution to the puzzle. There is a lot of work in the front end and on the back end that we don't participate in. A lot of that work revolves around the chemistries, it revolves about the technical specifications, the processes they intend to use, we are a critical -- I mean, utterly critical part of that process. But we don't control the balance of that puzzle, it's up to their -- our customers. So our discussions continue. As they kind of develop their specification, we oftentimes will be modifying our solution or customizing is a better way to put our solution to their needs and that takes time. And our largest customer has the benefit of years of work in this, others are trying to catch up. As it relates to the balance of the year, whether it be orders from our existing customers, or whether it is new customers, it's hard to tell. We have a balance of at least $100 million of the balance of the year, we recognize some $30 million or so in this quarter. I think we recognize, if I recall correctly, about $150 million last year. It's not a long putt [ph] to be able to exceed that number throughout the course of the year as we go through this. Now, we have been pretty clear that the timing of some of these revenue recognitions are things that are outside of our control, giving -- given the readiness of customers to be able to accept product. So I would tell you that right now we're confident and we think we can get there.

Very helpful. Maybe switching gears, memorialization. Just housekeeping, remind me what the Eagle Granite contribution was, and just your expectations for growth, ballpark terms as we looked at, first caskets, then memorials and cremation equipment throughout the balance of the year.

Okay. So I would tell you, as we look at the various businesses, as we said earlier that we're back to a more normalized death rate throughout the industry. However, we are seeing really elevated levels of mortality right now. Our casketed sales for the month of January are strong. That is probably indicative of some of the pulmonary illnesses that are floating around in the country. So we expect that over the next 60 days, 90 days to be where our memorialization business will trend on the funeral home side. That as you know translates ultimately to more cemetery product sales. So as we kind of go through the year, we're expecting some modest growth, maybe relatively flat the modest growth in the overall memorialization segment. But as I said earlier, Dan, recognize that this business is materially higher at that reset level then it was pre-COVID.

Very helpful. One more memorialization, I'll jump back with any follow ups. But the margin ticked lower, you said that the business exceeded your internal expectations. Although overall margins tick little bit lower. If cremation continues to grow and memorials are steady or grow modestly, is -- are those incrementals in those businesses enough to offset potential detrimentals in caskets? I know this is a -- we're seeing an uptick here in mortality this quarter, but overall the trend has been lower in caskets. So can you hold the line? In other words, can you get back to 18%, 20% margin in that business even if caskets tick lower by 1% or 2%? Just talk about that [indiscernible] a little bit and that's it. Thanks.

Sure, Dan. I will -- this is Steve. I'll speak to the first part of that question, and I'll let Joe jump in. But specifically with respect to the quarter we saw the decline in casket unit volumes as we mentioned. So that was our expectation going into the quarter. We did have a stronger quarter from a granite memorial sales perspective. So on a like-for-like margin that's what created some of the margin degradation is just the lower casket offset by the higher granite memorial sale. But With respect to the margins as we go throughout the year, as we get into this, the stronger seasonal months whether it's the winter months for caskets in the spring, summer months for memorials, we do expect those margins to get better.

Okay, great. I will jump back with any follow ups. Thank you.

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

Yes, thank you. Good morning, Joe. Good morning, Steve.

Hi, Liam.

Good morning.

Joe, could you give us some sense on how the profit initiatives at OLBRICH progressing? I mean, it was essentially breakeven business. You've got a little more flexibility in terms of cost now. How's that progressing in terms of profit contribution?

We expect [indiscernible] nicely contributory this year as we continued on the cost. I mean, as we said in the past, we are locked into union contracts that prevented us from being able to take action until early late -- latter part of the summer -- latter -- early part of this quarter. So those actions are in place, and we expect to be a nice contribution to the full year which will help us achieve our results.

Great. And either -- I guess, Steve mentioned that you're on memorialization you're attracting new accounts, is that all products or caskets or bronze and granite memorials?

I would say that we are winning accounts across the portfolio. As we move forward, we would get some of the gains that we had throughout COVID on the funeral home side. We've retained and picked up others. We picked up cemetery products as well. So, yes, the answer to the question is, it is a broad mix of market share growth.

And on the cremation side and other business has gotten sort of lumpy because of the systems projects. But how is that shaping up based on the end of the quarter? How's it shaping up for the rest of the year?

Well, we're looking at hopefully a good year in that business as well. We are in the midst of another contract opportunity in the U.K that we hope to win of significance. So as that starts to ramp up, we should be able to give you an update on that over the course of the next quarter. But we are respecting solid results out of cremation over the course of the year.

Right. Thanks, Joe.

Yes.

We have reached the end of our question-and-answer session. I would like to turn the conference back over to Bill for closing comments.

Great. Thank you Sherry, and thank you everyone for joining us today and your interest in Matthews. For additional information about the company and our financial results, please contact me or visit our website. Enjoy the rest of your day. Thank you.

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