Matthews International Corporation

are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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. And 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 Bartolese, 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 the Investor section last night. The presentation for our call can also be accessed in the 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. And now I'll 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 industrial segment increased compared to the first quarter last year, and together with Ulbricht 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 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 inquiries reflects a continued vibrancy in the EV space and expect to announce developments on orders throughout the course of the year. Regarding other energy solutions news, I'm happy to announce that we landed our first significant order for the production of hydrogen fuel cell equipment and are in discussions with the major U.S. OEM on joint development work relating to hydrogen fuel cells. In addition, in collaboration with a well-known OEM, we've applied for federal funding for the joint development of a hydrogen fuel cell production facility here in the U.S. that we will own. Interest in hydrogen fuel cell production is growing, especially with heightened levels of government support in Europe and in the U.S. In light of these activities and discussions, coupled with the fact that we are still working through approximately half of the $200 million in orders we announced last year, we currently believe that the energy solutions revenue will be higher in fiscal 2024 than in the previous year. With respect to our other industrial technology businesses, our product identification and surfaces business experienced good volume in pricing growth during the first quarter. We anticipate this is a trend that will continue. We continue to make good progress on our new print engine product, which remains on track to be launched around the end of the calendar year. We will provide an update on the launch timeline this summer. As for warehouse automation, sales in the first quarter were lower on a year-over-year basis, consistent with what the overall market is seeing, but we believe this will recover in the second half of the year. Note that this business is typically slower in our first fiscal quarter due to the holiday shopping season. With that said, we did see a sopping in the market during the quarter, but continue to anticipate a solid year based on our existing backlog and mix. Our memorialization business performed modestly better than expected in the quarter, reporting $208 million in sales despite a decline in casket sales, which returned to normalized levels. The business benefited from the contribution of our recent acquisition, Eagle Granite. As we look to the balance of the year, we are currently seeing higher than normal volumes for the past few weeks, so we are expecting this business to continue to perform well. Our memorialization business continues to outperform pre-COVID operating results reflecting improvements that were made to the business over the last few years that have led to higher sales and higher performance overall. As a testament to these improvements, we continue to win new accounts in our memorialization segments. a reflection of the quality of our products and services. As I said before, we expect another solid year of results from memorialization. As for SGK, the segment reported operating results in the first quarter despite reporting solid operating results in the first quarter despite reporting slightly lower sales compared to the corresponding period in fiscal 23, thanks to pricing and cost actions taken over the past 12 months. U.S. and Asia-Pacific brand sales were relatively stable, and the lower retail base sales was primarily due to timing of projects pushed into the latter quarters. But we still continue to see softness in the European brand market. Our team at SGK should be commended for their work and commitment during this challenging period as we've won significant new business from several global brands that are just beginning to be transitioned. The team is also beginning to see the benefits of the strategy to extend our marketing execution services to e-commerce digital marketing services that we expect will reach over $40 million in sales this year. This platform places SGK ahead of significant competitors in the space and is a key differentiator as we continue to win new work from our competitors. We believe that this strategy will drive future market share growth in the enormous market for digital marketing. We expect this business to deliver a good year, particularly as our customers are beginning to realize the need to reinvest in their brands. Finally, Steve will provide greater detail on this, but I'm happy to announce that we renewed our revolving credit facility and extended it to 2029 with no major changes in pricing and terms and conditions. Having the comfort of access to capital and a supportive bank group during this extended period of uncertainty in the global economy is essential. Our leverage target is Our leverage target is to approach three by the end of the year. As we progress through 2024, we anticipate a reduction in working capital in the latter half of the fiscal year as we convert to cash from the orders we received last year. Due to the timing of deliveries, we should see stronger cash flow trends in the latter portion of the fiscal year and into the next. We are still currently projecting continued consolidated sales growth and EBITDA for the full year despite the current delays in energy. As discussed above, interest in our fast-growing business remains strong, with over $100 million in backlog at the end of the first quarter. I caution, however, given the increased level of larger long-term projects, the timing of order deliveries remains a wild card. We continue to expect our fiscal 24 results to exceed the prior year, but being more specific on growth levels is difficult to provide at this time. I'll now turn it over to Steve for more insight in our financial results. Steve?