Matthews International Corporation

Greetings and welcome to Matthews International Third Quarter Fiscal 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Bill Wilson, Senior Director of Corporate Development.

Please go ahead, sir. Thank you, Bikram. Good morning, everyone, and welcome to the Massey's International Third Quarter Fiscal Year 2022 Financial Results Conference Call. This is Bill Wilson, Senior Director of Corporate Development. With me today are Joe Bartolese, President and Chief Executive Officer, and Steve Nicol, 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 the investor section last night. The presentation for our call can also be accessed in the investor section of the website. In addition, as a reminder, beginning in the first quarter of fiscal 22, the company transferred its surface as an engineering products business from the SDK brand solution segment to the industrial technology segment. Prior periods reflect this new segmentation. As a reminder, any forward-looking statements in connection with this discussion are being made pursuant to the safe harbor provisions of the Private Security 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'll 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 material located on our website. And now I'll turn the call over to Joe.

Thanks, Bill. Good morning. Our third quarter of fiscal 22 continued to present us with several challenges that we have faced throughout the year, but several new challenges accelerated quickly. Inflationary pressures in all of our businesses have impacted profitability, while supply chain issues have continued to impact our ability to control the timing of some deliveries. Additionally, during the quarter, we saw a rapid deterioration of the European market for our packaging business, resulting from the progressively more challenging economic environment in that part of the world. The economic deterioration in Europe further drove the rapid decline in the euro, and the UK pound negatively impacting our reported results. SGK was also faced with a couple of significant in-store project cancellation and delays in other projects due to supply chain challenges at our clients or the inability of certain retailers to staff their stores, negating the need for in-store marketing. The combination of these challenges caused our SGK brand solution segment to report very difficult results. Although these challenges are not the result of client losses or in any way of our making, we expect them to impact the balance of the year. Nevertheless, the remainder of our business has performed well in this difficult environment. On a constant currency basis, again, our industrial technology segment reported growth and remains on track to deliver a very strong year in 2022. More importantly, despite the continued positive performance, Our order intake in this segment remains strong. Several significant orders in our energy business continue to progress well while growing requests for proposals bode well for the future of this business. The recently announced acquisition of Olberg will add nicely to this segment as they add about $20 million of energy-related orders in the previous year as well. Like us, they are seeing strong interest in their product offerings which is complementary to our products and in some cases are used by the same customers. We have great hopes for this addition to our portfolio, which adds significant coating line capabilities to our already proven calendaring and embossing product lines. Together, we offer several critical pieces of equipment used in the production of dry electrodes for the lithium-ion battery industry. I remind you that we are the only producers of production-level equipment used in the production of dry electrode technology. a significant differentiator and in our advantage. Similarly, Ulbricht, like us, is seeing strong interest in hydrogen fuel cell production level equipment. We hope to speak about the success of our combined offerings more in the quarters to come. Although we are yet unsure of how Ulbricht will perform in the near term, our energy business is expected to finish the year strong as orders remain strong. Similarly, in our product identification and our warehouse automation business, we continue to see revenue and profit growth while order intake remains strong. Hardware delivery delays at several client warehouse sites slowed the installation of our automation systems, thus preventing us from having an even stronger quarter. We expect these businesses to finish the year strong as well, since much of the work we perform has to be delivered by the beginning of our next quarter. Regardless of the timing of the deliveries, evidence of the quality of our automation system solution is demonstrable when you look at our client list and installed base, and we look forward to using our reputation and success to expand this business over time thanks to the addition of the RNS Group, part of the Oldbrook acquisition. RNS brings us both engineering skills and capabilities to increase our service and delivery levels here in the United States. But R&S also brings us a much sought-after presence internationally, which should help us to expand our geographic footprint there as well. In addition, R&S will expand our total addressable market further to include factory automation, where R&S has significant experience and capabilities with some of the world's largest companies. In our memorialization segment, we continue to have strong execution at all levels. Despite declining casketed deaths, our funeral home products business saw relatively consistent volumes when compared to prior years. Our revenues for this business are up over prior year due to price increases, but profitability is down as inflationary pressures outweighed the pricing we have achieved as anticipated. Our cemetery products business, however, saw strong volume increases coupled with price increases to offset the rise in commodity costs. We expect this business to also finish the year strong, particularly since most of the revenue derived in this business are U.S.-based and thus not significantly impacted by currency. All in all, we are not satisfied with our performance this quarter. As I have noted, however, much of the challenges we faced are geographically concentrated and not of our making. We hope economic conditions will return to a more normal state soon. Until then, however, we remain confident of our businesses and the opportunities before us, Given the challenges in Europe, however, we believe that our full-year EBITDA guidance will be between $200 and $210 million. We hope to do better, but many things remain unclear at this time. Now let me turn it over to Steve Nicola, our CFO.