Q3 2021 Matthews International Corp Earnings Call
[music].
Greetings and welcome to Matthews International Corporation's third quarter fiscal 2020, 1 financial results.
At this time all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
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Please press star zero on your telephone keypad.
And 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 Finance and corporate development. Please go ahead.
Hey, Thank you Brooks and good morning, everyone and welcome to the masses.
International third quarter fiscal year 2021earnings conference call. This is bill Wilson Senior director of corporate development with US today are Joe Burton Lacy, 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.
Matthew stock repurchase release were posted to our website www dot and a tw dot com and the investors section.
The presentation for our call can also be accessed and the investors section of the website.
As a reminder, 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 1090 Fives Dr.
Factors that could cause the companys results to differ from those discussed today are set forth and the Companys annual report on form 10-K, and other periodic filings with the SEC.
In addition.
And 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.
We will cite.
And now I'll turn the call over to Steve.
Thank you Bill good morning.
I'll start with slide 4.
As provided on the earnings release yesterday, the company reported consolidated sales of $428.4 million and net income on a GAAP basis of $3.4 million.
<unk> or <unk> 10 per share for the quarter ended June 32021.
Compared to sales of $359.4 million and net income on a GAAP basis of $2.3 million or <unk> <unk> per share last year.
On a year to date basis, the company reported consolidated sales.
On our web 1.23 billion.
And net income on a GAAP basis of $6.6 million or 21 per share as of June 32021, compared to sales of $1.1 billion and a GAAP net loss of $94.6 million or $3.
Of <unk> <unk> per share last year, the GAAP net loss a year ago, primarily reflected the impact of a goodwill write down.
The key financial highlights for the fiscal 2021 third quarter included first the company's consolidated sales of $428.4 million.
Established another new quarterly record for the company and represented an increase of $69 million or 19, 2% compared to a year ago.
Second consolidated adjusted EBITDA for the quarter ended June 32021 was $60 million compared.
$49.4 million last year, representing a year over year increase of 21, 5%.
Third adjusted earnings per share for the fiscal 2021 third quarter was 91 per share compared with 80 for the fiscal 2023rd quarter.
Representing growth of approximately 14%.
Lastly, during the recent quarter the company again reduced its net debt leverage ratio.
At June 32021, our net debt leverage ratio measured based on net debt relative to the last 12 months adjusted EBITDA.
<unk> declined to 231.
3.2 at March 31, 2021, and $3.9 at September 32020.
As I noted earlier on a GAAP basis. The company reported earnings per share of 10 cents for the current quarter compared to <unk> <unk>.
Per share last year.
Earnings per share on a GAAP basis for both quarters included the impact of intangible amortization, primarily from the acceleration of the amortization of certain intangible assets and the <unk> brand solution segment.
And charges in connection with our cost reduction initiatives and COVID-19.
And related costs.
Consolidated intangible amortization expense was $23 million or <unk> 53 per share for the fiscal 2021 third quarter compared to $17.8 million or <unk> 43 per share a year ago.
And intangible amortization expense for the 9 months.
And at June 32021 was $61.2 million Corp.
$1.41 per share compared to $53.6 million or $1.29 per share last year.
On a non-GAAP basis adjusted basis earnings for the fiscal.
Fiscal 2021 third quarter were <unk> 91 per share compared to 80 per share a year ago.
Non-GAAP earnings for the 9 months ended June 32021 were $2.48 per share compared to $1.90 per share a year ago. The increase was primarily reflected.
Higher adjusted EBITDA and lower interest expense.
Adjusted EBITDA, which represents net income before interest expense income taxes, depreciation and amortization and other adjustments was $60 million for the fiscal 2021 third quarter compared to $49.4 million a year ago.
Representing an increase of 21, 5%.
For the 9 months ended June 32021, adjusted EBITDA was $175.7 million.
Compared to $139 million, a year ago, representing an increase of 26, 4%.
The improvements primarily reflected.
And the impacts of higher consolidated sales in addition to realize savings from the company's cost reduction programs.
These increases were partially offset by higher material and labor costs. Please.
Please see the reconciliations of adjusted EBITDA and non-GAAP adjusted earnings per share and our earnings release.
Investment income for the 3 months ended June 32021 was $959000 compared to $1.3 million for the same quarter a year ago.
For the 9 months ended June 32021 investment income was $3 million.
Compared to $1.4 million last year.
Prior year investment income through June 30th reflected some of the initial market impacts of COVID-19.
Investment income primarily reflects the changes and the value of investments held in trust for certain of the company's benefit plans.
Interest expense for the quarter and 9 months ended June 32000.
Lease on 1 declined to $6.7 million, and $21.7 million, respectively, compared to $8.1 million and $26.9 million respectively for the same periods, a year ago, primarily reflecting lower average debt levels and lower interest rates for the current year.
Ear.
Other income and deductions net for the quarter and 9 months ended June 32021 represented reductions to pretax income of $2.4 million and $6.8 million, respectively, compared to $2.8 million and $7.4 million respectively for the same.
Periods a year ago.
Other income and deductions include the non service portion of pension and post retirement costs.
For the current quarter and year to date periods. The non service portion of pension and post retirement costs was $1.9 million and $5.7 million respectively compared to 2.
$2 million and $6.7 million, respectively for the same periods last year.
Other income and other income and deductions also include banking related fees and the impact of currency gains and losses on certain intercompany debt and foreign denominated cash balances.
And for these consolidated income taxes for the 3 months ended June 32021 represented a benefit of $2.3 million compared to a benefit of $6.2 million a year ago consolidated income taxes for the 9 months ended June 32021, where and expense of $2.6 million.
Compared to a benefit of $22.7 million last year.
The year over year changes principally reflected the company's pretax income for the current periods.
Versus the year to date pre tax losses, resulting mainly from the goodwill charge last year.
Additionally.
Fiscal 2021 included discrete tax expenses, primarily related to foreign losses, while fiscal 2020 included discrete tax benefits from the closure of certain tax audits.
Please turn to slide 5 to begin a review of our segment results.
Memorial <unk> segment sales for the fiscal 2021 third quarter were $184.3 million compared to $162.1 million a year ago, representing an increase of $22.2 million or 13, 7%.
The increase was primarily attributable to higher.
Higher sales of cemetery memorial products, and cremation equipment and improved price realization.
Third quarter casket unit volume was lower than a year ago as expected, resulting from the decrease and U S deaths, reflecting the declining impact of Covid.
For the 9 months ended June 32020.
1 memorialized <unk> segment sales were $573.1 million.
Compared to $478.3 million a year ago.
The year to date increase resulted mainly from increased sales of Caskets Cemetery memorial products and cremation equipment.
And the company also completed and acquisition.
<unk> of a small cemetery products business during the fiscal 2021 second quarter.
Changes in foreign currency exchange rates had favorable impacts of $1.7 million and $4 million, respectively on current quarter and year to date sales compared to a year ago.
Memorial <unk> segment adjusted EBITDA.
And our fiscal 2021 third quarter was $36.4 million compared.
Compared to $37.7 million a year ago, the favorable effect of higher sales was offset by the unfavorable impacts of higher commodity costs, mainly steel lumbar and brands.
The lower margin projects and our U K.
K cremation and incineration equipment business and increased labor and freight costs during the current quarter.
Year to date and memorial <unk>, adjusted EBITDA was $132.1 million for the current year compared to $103 million last year, the increase primarily reflected the benefits of higher sales.
<unk> and productivity initiatives offset partially by higher material costs lower margin UK projects and increased labor and freight costs.
Cost for the segment's primary direct materials continued to increase during the recent quarter, which is expected to have an unfavorable impact.
And into next fiscal year.
Please turn to slide 6.
Sales for the SDK brand solution segment were $199.7 million for the quarter ended June 32021, compared to $165.8 billion, a year ago, representing an increase of $33.9 million.
Or 25%.
The increase primarily reflected higher sales for the segments engineered products business, principally energy solutions, and an increase and the segment's core brand sales, particularly in the Europe and Asia Pacific markets and.
In addition, the segment reported.
Seasonally higher revenues and its retail based businesses, which we believe are indicative of a recovery in these markets.
As you will recall the segments retail based businesses have been significantly impacted by COVID-19.
For the first 9 months of fiscal 2021, the segment sales were.
Modest $138.9 million compared.
Compared to $513.5 million last year.
Changes in foreign currency rates had favorable impacts of $10.6 million and $21 million, respectively. On the segment sales compared with the same quarter and year to date periods last year.
Fiscal 2021 third quarter adjusted EBITDA for the SDK brand solution segment was $33.3 million compared.
Compared to $28 million a year ago the increase.
Primarily reflective reflected the impact of higher sales and realized savings from the segment's recent cost structure initiatives.
The segment's year to date, adjusted EBITDA was $75.4 million for the current fiscal year compared to $61.8 million last year.
Please turn to slides 7 and <unk>.
Sales for the industrial Technology segment were $44.3 million for the quarter ended June 32021.
Compared to $31.5 million, a year ago, representing an increase of $12.8 million or 41% year.
Year to date the segment sales were $122 million for fiscal 2021 compared to $107.3 million last year, representing an.
Increase of $12.9 million or 12, 1% the.
And the segment sales increases for the quarter and year to date periods resulted from higher sales for both the warehouse automation and product identification and businesses.
Additionally, incoming orders for these businesses continued to be strong.
Changes in currency rates had favorable impacts of $938000 and $2.4 million, respectively on the segments quarter and year to date sales compared with last year.
Adjusted EBITDA for the industrial technology segment for the fiscal 2021 third quarter was $5.7 million.
Compared with $4.7 million a year ago.
The increase primarily reflected the impact of higher sales for the quarter, which was partially offset by an unfavorable change and sales mix lower margin warehouse sales.
Labor costs, and an increase in product development costs and.
And the segments.
Year to date, adjusted EBITDA was $15.2 million, which was relatively consistent with a year ago.
Please turn to slide 8.
Cash flow from operating activities for the 9 months ended June 32021 was $106.9 million compared.
Compared to 123.
<unk> $6 million last year op.
Operating cash flow for the current quarter was impacted by several factors, including at discretionary cash contribution of $15 million to the company's pension plan.
And increase in accounts receivable, primarily reflecting the company's record third quarter.
Sales and an increase in inventories due to higher commodity costs.
In addition, the company made a payment of $8.4 million during the recent quarter related to FICA taxes deferred from calendar 2020 under federal COVID-19 relief regulations.
Our.
And the debt was $792.5 million at June 32021, with net debt, which represents outstanding debt less cash at $743.746 $3 million, but.
The leverage ratio covenant and our domestic credit facility is based on net debt.
During the current quarter, our net debt leverage ratio declined to 3.1 at June 32021, compared to $3..2 at March 31, 2021, and $3.9 at September 32020.
Approximately $31.6 million shares were outstanding at June 32020.
And we won during the recent quarter. The company purchased approximately 46000 shares under its share repurchase program.
At June 32021, the company had remaining authorization of approximately 325000 shares under the program.
As a result, the board this week approved an authorization.
And of $2.5 million additional shares for the program.
Finally, the board this week declared a dividend of $21.5 per share on the company's common stock. The dividend is payable August 23, 2021 to stockholders of record August 9.2021.
<unk>.
This concludes the financial review and Joe will now comment on our operations.
Thank you Steve good morning.
As you might expect we are very pleased with our record setting results for the quarter each of our segments delivered revenue growth during the quarter and our consolidated adjusted EBITDA grew significantly as well.
And memorial as Asian segment continued to deliver strong results, except this quarter as expected. The performance was provided by our cemetery products business, while our funeral home products business began to see the normalization of the death rate, resulting from the vaccine implementation and North America.
Our current order rates and our semi.
And products business continued to be strong and we expect at least another strong quarter to come.
Similarly.
Our SDK brand business saw good revenue growth during the quarter driven by the Europe region, and our energy storage business equally.
Equally important however was that the profitability of the business returned to normal as we re.
<unk> the benefits of our cost reduction initiatives and higher revenue.
And our industrial technologies segment higher revenues and EBITDA contributed to a great quarter and reflect a very strong black backlogs and this segments, which bodes well for a very strong fourth quarter and beyond.
I'm proud of our team and the results we have generated and what still remains a.
Cemetery and environment in many parts of the world and which we operate.
Much of this achievement comes from the environments, where we are still and less than optimum operating conditions.
Despite these challenges our teams around the world continue to win new business, while satisfying the needs of our existing clients.
And our energy storage business as.
We noted in the past we continue to be very optimistic about our opportunities.
And fiscal 2019, our revenues were approximately $20 million.
We are now projecting revenues for this fiscal year of about $50 million and we continue to build our backlog for what we hope will be another significant growth year for this business.
The challenge as I noted last call our energy storage business has opportunities beyond lithium and we hope to soon to be able to speak more about the opportunities, we see and this and the hydrogen fuel cells.
All in all our businesses continue to operate and strong markets and our success and navigating the pandemic has been beneficial to the businesses.
And more than 1 way.
And our funeral home products business high client satisfaction reflects our strong performance during the pandemic.
And our brand business. The crisis has allowed us to adapt to new working models that will continue to reduce our operating costs going forward, while and on our industrial technology segment, our warehouse automation business has gained market share.
And more and more clients realize that ecommerce as a necessary solution to future success.
As we look forward, although our results are exceptional not all of our business are performing at a normalized rate and much of the world, particularly in the APAC region. We continue to see significant challenges from the pandemic as many economies.
Remain behind the United States and their ability to vaccinate their citizens.
As a result, we continue to operate at a lower efficiency, which is impacting our operating performance.
So.
Although we see continuing strong revenue trends that give us assurance to finishing off the year strong we like other companies.
And the impact of inflationary pressures, particularly on our raw materials and components. These.
These pressures will impact our margins at least in the near term, we expect those margins those pressures to ease, but not soon and the meantime, we are continuing to take cost and price actions where possible to mitigate these pressures.
Although we were awarded.
Our diligence, we do not expect to offset the full impact and the inflationary pressures.
Regarding our operating cash flow performance the third quarter results were impacted by some unusual payments and the timing of collections. Despite that given our operating performance. Our net debt leverage ratio is fast approaching our target of less than 3.
Award Day I'm also happy to report that our cash flow forecast indicates that we should reduce our net debt this coming quarter by over $40 million, bringing our total debt reduction since January 1 of 2020, when our stock was at $37 to over $200 million.
There is no better evidence of the quality of our.
And our demonstrated ability to generate cash and I assure you that our businesses are better positioned today than it was and on January 1.2020.
Our conviction and our Swift improvement and our debt leverage ratio gives us great flexibility and to continue to invest and the business or aggressively buyback our shares.
And at these very low prices.
And support of that the board has authorized a buyback or an additional 2.5 million shares based on our desire to return value to our shareholders.
Finally, as you May have noted we are optimistic about our situation for the balance of the year, but we remain cautious as evidenced excuse me as events outside.
Out of our control can still arise which could impact our results. Therefore, given our performance to date and the strength of our order intake we are raising our target and.
And expectations and we now believe that we will deliver at least $225 million and.
Adjusted EBITDA for fiscal 2021, now, let's open it up for <unk>.
<unk>.
Yes.
Thank you at this time, we'll be conducting a question and answer session.
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1 moment, please while we poll for questions.
Our first question today is from Daniel Moore of C. J S. Securities. Please proceed with your question.
Thank you good morning, Joe Good morning, Steve Thanks for taking the question.
Good morning, and when we start with.
Good morning, and start with warehouse automation are.
You know largely back and your customers' facilities.
And should we expect kind of similar revenue and Q4 versus Q3, just trying to see how much more business, we can squeeze and before you get kicked out for the holidays.
So we are not.
Back in all of our facilities and it has less to do with the pandemic than with our customers' ability to get hardware into their facilities. They are feeling the delays.
Conveyor systems and parts and components are causing on their warehouses. Despite that though the revenues that we saw this quarter should be stronger next quarter and.
Forecast reflects what we're seeing we also expect to leave the year with very very strong backlogs given what the trends are at this point debt.
Yeah.
Helpful Energy storage and closing in on $50 million and revenue I believe you said.
What's the potential size of the opportunity over the next.
And our 5 years, and maybe a little more detail around the hydrogen fuel cell at your positioning and where you hope to be.
So as it relates to what we project for next year, we're expecting another significant increase year over year based on our backlogs and we have strong backlogs and we don't even have all the orders we expect in house yet so.
3.
Feeling pretty comfortable next year, we're going to see another significant increase.
How big that could be is really not determined by us we have the orders in house, but we are a component to and overall facility and the timing of those deliveries deliveries will reflect when we can recognize revenues.
When it comes to hydrogen.
And again, we are in the rotary processing business, we take.
Material and process it through large cylinders.
And that way tons and tons that are hyper.
Hyper pressurize hyper controlled and precision mill and manufactured and.
Whereby sophisticated plc.
This is a very very complex business, but we think we can expand our footprint and our knowledge base into into.
And to the fuel sales side of our business.
Made a small acquisition area and the year you saw that they bring they bring.
How to the business, we bring our capabilities from the engineering side to manufacturer production rate equipment and our expectation. Unlike in the lithium business is not only to provide equipment to our customers that may want it and we intend to deliver fuel sales if we.
Canada is our own product.
Helpful and maybe 1 more if I could.
A lot of comments and just trying to triangulate them all sort of beyond let's say the next quarter. You said you expect positive momentum across some of the businesses to mitigate some of the unfavorable.
Impacts of lower caskets and margins. So overall should we think about EBITDA being maybe net slightly lower for a few quarters.
On a year over year basis, do you think you can offset it and grow a little bit just any and just how we should be interpreting those so greatly helpful.
Clear.
Clearly, we like all the other companies and the world are fueling the inflationary pressures many of which we're starting to see that subside, but many of them have not started to subside given how they flow through our inventories it could take a quarter or 2 or 3 but as we go through that we're not prepared today to tell you how that's going to impact us because we do have strength in a lot of our other businesses.
But more importantly, given where our net leverage ratio has gotten too. We now have flexibility that we can do a lot of different things.
A few acquisitions out there we'd like to talk about.
There are other opportunities to continue to improve our business and invest.
Or as I said at these prices, we intend to be aggressive with our share buyback program.
So a lot of different pieces of the puzzle at this point that will allow us to deliver value to the shareholders.
Alright, and stole my last 1 as well so I'll jump back in queue with any follow ups. Thanks.
The next question is from Liam Burke of B Riley. Please proceed with your question.
Thank you and good morning, Doug.
Morning, Steve.
Good morning, Liam worrying land.
Joe you had a nice contribution from cremation and incineration was that the major driver of the revenue growth added Memorial day shift and what does the backlog numbers look like with the deliveries and the third quarter.
Goodbye.
And Youre right, we've got modest growth it's nice.
Both for that business and in and of itself, but and valued or there was being delivered was out of our cemetery product side of the business.
We also saw a pretty good mix of products coming through on our funeral home products side. So as a result, the real drivers were.
Cemetery products secondary mixed secondary mix on the funeral home products and third our cremation business.
And the backlog on a cremation systems is that sales are.
And strong.
15, and 16 months.
Great. Thank you.
And then on looking.
First how are you on.
Anticipating and store display are you anticipating any kind of step.
Step up.
Modestly higher year over year revenue.
Expect that revenue growth to accelerate going into the holiday season, and the back to school season.
Interestingly enough Liam I would say that.
We would have hoped to but we're seeing reasonable, but not what I would call normalized spending and retail yet just yet.
We're not disappointed with how our businesses are operating there are better than they have been but not at what I would expect.
Normal Christmas season.
And back to school season to.
For in store displays and that's pretty much the story with all of our retail side of the business whether it be private label packaging point of sale display work marketing branding and things of that nature that are more retail and nature. There is still behind it which further.
Further buttresses the strength that we had out of S. G K given.
Given the performance, we have and what we call our core business, which is packaging for cpg's.
Okay, and Super and just 1 more quick 1 you mentioned higher development costs and industrial.
The printer and development costs.
Yes, It is live and that is our printhead debt.
And now out in beta testing at several sites.
So suffice it to say that we're extremely satisfied with its performance.
Confirming its value proposition that we've all talked about for a long time.
We're in the midst of moving that production from more of a university setting to a professional silicon chip fabrication lab that process.
Site seek a bit of time and a little bit of expense as we go through that process, but we've kind of confirmed the science. We've confirmed the value proposition is now to get it to production.
Great. Thank you Joe.
Yes.
The next question is from David and I would Ah Phoenix. Please proceed with your.
A question.
Sir your line is open.
Hi, sorry, I was on mute Hi, Steve.
Hi, Joe and Hi, Bill.
Good morning, and our last quarterly conference call, there's been a line.
We will take a street price as it relates to your energy storage.
Business.
And a lot of the industry price indicate.
And that you are very much connected to what's known as the $46.80, cylindrical lithium ion dry electrode battery process.
And since.
And in that news flow it seems that there are several additional.
Large battery companies that are evaluating the $46.80.
The question is do you know any 46.80 processes or.
Future players who are not doing this.
And my battery electrodes and if they are doing and as dry battery electrode is it reasonable to assume that you were speaking to all of that and that's my first question and then I have a follow up.
Okay. So your first question, David and Interestingly enough, we've talked about this and the past.
We are a cylindrical rotary.
Reprocessing equipment manufacturers with specialty knowledge and in dry cell.
Lithium processing with some patents around it and and other IP that we've been we've had years of experience in this space. We also operate in what I would call the wet sell process, but to a lower extent.
We are.
Great.
<unk> selling proposition into the.
And to the Wetzel process is not necessarily unique on.
And our dry cell world, where we are unique.
But at the same time, they're the people were being contacted by our both wet and dry so and suffice it to say.
That at least when it comes to the Western European World, We're talking to just about everybody.
Okay.
And.
Without naming names our customers.
The commercialization of the 46.80 sale.
Yeah.
<unk>.
And my and battery and.
There is a large player out there who says that they are not quite there yet but are very close and and has to do with the cylindrical.
Formats and.
Of those large cylinders.
And in your mind, how how solvable.
And then.
Lithium that final hurdle to commercialization.
At this point, David we're not and are positioned to speak to it because theres a lot of components that are associated with not necessarily just our processes, but also the formulation.
And the lithium mix.
And the the feeding.
And that mix through our process. So I can't tell you what we control is solvable I can't tell you with respect to everything else.
I appreciate that and understand that I got on the leads for these questions, but I appreciate the answers very much and wish you guys continued success.
Thank you David.
The next question is from Scott Blumenthal of Emerald Advisors. Please proceed with your question.
Good morning, Joe Steve Bill.
Good morning, Scott Morningstar.
Joe There is a natural ratio between Cree nation, Caskets and memorial inflation and.
Over the past year memorial inflation lagged.
And I know on your comments, Utah, you said that you thought you.
And I might be caught up.
And maybe by the end of the year here.
On.
But it would seem to me that.
Essentially a year of depressed.
And memorialize Asian sales youre going to catch up and maybe a quarter on quarter and a half or 2 quarters.
Do you really think that by the end of the year here and memorialize Asia caught up.
Hello, My comments, Scott, where we have strong backlogs and we expect at least.
And another strong quarter so.
And it's difficult to tell I would tell you there is a.
A normal ramp to.
And to memorialize and then there'll be a tapering off of volumes I expect that to go through much of 2023.2022 excuse me.
But how much and we.
And and so forth are current forecast reflects what our expectations are today.
Could it be more could it be less.
Sure we have strong backlogs at this point.
Understood. Thank you and just providing us with what you think is going to happen for the rest of the year and not making any commentary.
Good day on next year absolutely.
Absolutely not.
And I really appreciate that okay.
And also can you talk and maybe about incineration and cremation equipment, which would seem to me that that would be something that would be demand would be strong for worldwide.
Terry and what we've seen happening in certain places and I know you've had some business wins outside of the U S and Europe.
<unk> been able to kind of and expand the cremation and incineration opportunity and.
What do you believe that the total Tam is there.
On the market continues to grow as you might expect.
We are the leading provider of human cremation equipment and the world, we sell more equipment than anybody else by a long shot as a result.
Our reach gets broader and broader.
But I will tell you that.
Outside of the United States most of the sales are made to municipalities and as those municipalities.
<unk> has been constrained by what's going on with Covid and in and of itself you would expect those things to come over time our backlog.
Included a lot of product and Latin and South America, Australia and we.
There are a lot of backlog and Europe, eastern and western as well, we're pretty comfortable that this is what we expect it to.
To be a strong long term consistent player that continues to deliver value to to the business.
Okay, I know that new.
I know that you haven't given backlog numbers historically can you give us an idea maybe joe kind of on the flipside of that.
As to you know where you stand maybe with book to Bill This last quarter or maybe over the last couple of quarters.
Which business.
Sure.
Incineration and cremation equipment.
And as I said earlier, we've got backlog that is almost 15.16 months.
Issues.
That really not whether we've got product to sell.
It's more a question of whether a client is ready to accept the product.
I mean these are these are these are the pieces of equipment to go into other facilities. There is construction is permitting and everything else associated with that.
Sure sure and.
And can I ask can I say soon and then Joe that backlog.
And as expanded this past quarter.
Well it has expanded over the course of.
And the whole period modestly, but yes, the answer is yes.
Okay, I think 1.1 on 1 of the areas I think that is.
And it has come to fruition. During this pandemic has been the deferred maintenance and a lot of these facilities have pad.
And as long as it was operating they never really kind of did what they should be doing.
And those challenges came about throughout the pandemic as much of their equipment was unable to operate the way they would like we think Theres a.
Service function to come out for the next period of time.
And so forth.
Great to know.
Now if I, if I might ask 1 about packaging, we've seen kind of inflation.
We're seeing it and raw materials of course consumers are seeing that.
And the grocery store.
We've seen inflation impact.
Encouraging the CPE and the consumer.
Consumer packaging companies to.
So maybe kind of change downsize some of the packages.
Scene and.
Net of increasing prices on some of the products maybe.
Downsize.
Good site and size of the package and charging the same price are you seeing these trends and are they accelerating and I would suspect that.
That'd be pretty busy there.
And it's part of the reason what youre seeing coming through in our numbers, Scott I mean packaging.
We do not have huge.
And the stationary pressures and our packaging business, it's principally a service we have some wage pressures not material pressures, but the volumes that we're seeing are very high at this time. We also picked up some new business during that during the pandemic given what our how our performance has been.
Generally we're very pleased with where that is and.
And so this was going to go through this cycle and as <unk>.
Youre right.
Lot of these cpg's look to repackage.
Into smaller sizes, and new and improved or whatever it may be.
Alright, great.
And maybe a last 1 if I may.
Market opportunity for the print head to that.
And.
Not just a new sales, but also a replacement opportunity as well.
And that no question and I mean there.
As anticipated.
The anticipated life base.
Based on the number of prints that are consumed by the printer.
By the printer and then there is irreplaceable printed on.
Mike.
What has historically been out there and our repair and maintenance service.
So then we can safely assume that any existing Matthews installed printer is a candidate for an upgrade.
Every printer and.
And our competitive space.
Net potential upgrade.
Opportunity for Us I mean, we consider this a huge market opportunity now going to be realized today or tomorrow. This is this is a technology swing and.
And we've talked about this for a while but the opportunity is to take what we consider a great performing small.
Small business and our portfolio and make it a significant contributor to our overall portfolio overtime.
Got it thank you.
Okay. Thank you.
The next question is from Chris Mcginnis of Sidoti and company. Please proceed with your question.
Good morning, Thanks for taking my question.
Can you just because it seems like.
And there maybe a little bit of a change on the cemetery markets.
Just around Memorial day shouldn't have you seen that and is that.
May be changing and as people come out of the pandemic are recognizing and sell.
A little bit differently have you seen anything child.
We have not seen much of a significant change in fact, if you look some of the larger.
The larger competitors.
<unk> reported very significant preneed sales.
Cemetery properties and.
And our world, we're seeing revenue.
Revenue flows consistent with what we might expect to be.
Moralise from the recent death rate.
Okay, Thanks and.
And then 1 on the question just.
And just around the EV and the demand that youre seeing and thinking about you.
Can you just talk about any capital needs.
And what that demand.
Yes.
Celebrate.
I would say that the capital needs are light there may be some acquisition.
Candidates will need to pull into the fray.
But at the end of the day it is not a big capex.
Function, it's not to say that we're not going to spend money.
Absolutely spend.
But not to the degree that you might expect to grow to $100 million business and the near term.
Great. Thanks for taking my questions and good luck and keep Q4.
Thank you. Thank you.
There are no additional questions at this time I'd like to turn the call back to Bill Wilson for closing remarks.
Spend on thank you, Brian and thank you for joining us today and your interest and Matthews for additional information about the company and our financial results. Please contact me or visit our website.
<unk> and enjoy the rest of your day.
This concludes today's conference you may disconnect your lines at this time thank.
You for your participation.
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