Greetings, and welcome to the Matthews International second quarter fiscal 2024 financial results conference call. At this time, all participants are in a listen-only mode. A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bill Wilson, Senior Director of Corporate Development. Thank you, sir. You may begin. Thank you, Christine. Good morning, everyone, and welcome to the Matthews International second quarter 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 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 reconciliations 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'll turn the call over to Joe. Thank you, Bill. Good morning. We are generally pleased with our fiscal 2024 second quarter results, given the transitory challenges that we face in several of our businesses. Sales and adjusted EBITDA were relatively consistent, declining only slightly during the quarter due to macro trends impacting several of our businesses, while other businesses performed very well. Memorialization continues to maintain strong sales and EBITDA post-COVID, while SGK's digital initiatives and restructuring efforts are showing promise. As for our Industrial Technologies segment, Energy Solutions sales were higher, but we continued to see delays in customer installations. Additionally, the Warehouse Automation business reported lower sales consistent with the overall market, which has seen a moderation in new warehouse development recently. Despite these near-term events, however, we see both businesses continuing to offer strong long-term growth opportunities. Sales for the Memorialization business remained relatively consistent with the prior year, despite lower death rates. We're pleased with the trends in this business as the segment continues to outperform, with sales and Adjusted EBITDA run rates significantly exceeding pre-COVID levels. In addition, I'm pleased to add that we recently won another significant cemetery account, which we hope will afford us continued opportunity for growth as we offer our extensive portfolio of solutions. We continue to be encouraged by the performance of SGK as a segment reported sales growth in the second quarter, despite continued challenges in the European markets. Thanks to pricing and cost actions taken over the past twelve months, we also saw a significant increase in the segment's Adjusted EBITDA and margin improvement. The team at SGK continued to outperform and win new accounts, despite the challenges they have faced over the last year. They also continued to execute on the e-commerce digital initiative we mentioned last quarter. We expect this program to hit the $40 million sales target we set for the current year as our clients look for ways to consolidate their e-marketing spend more efficiently. With respect to our Industrial Technologies segment, total sales were lower for the quarter, primarily driven by market conditions that impacted our Warehouse Automation business, but offset by higher energy storage sales. As I mentioned on our earlier calls, we and other industry peers experienced a pullback dating back to the mid-last year as customers evaluated the prevailing economic conditions, highlighted by continued high interest rates and concerns about consumer confidence. We still see some softness in larger warehouse projects but continue to be brought in on customer upgrades, and we have seen a pickup in quoting activity. Our confidence in the growth opportunities for this business is supported by a recently published industry research that indicated more than 75% of respondents expected an increase in their investment in robotic systems in the next few years. We believe that advanced Warehouse Automation, like autonomous robots, which we manage, will drive demand for our warehouse execution systems software as we continue to enhance the platform through cloud and AI technology improvements. Turning to our new printhead solution, we made significant progress during the quarter. All milestones related to launching the product were met, and we remain on schedule to launch the solution by calendar year-end, as previously stated. We will continue to update you on our progress for this product. As for our Energy Solutions business, we reported sequential growth, reflecting the benefit of orders from multiple customers, though we continued to experience the previously discussed and anticipated customer installation delays from our largest customer, which are out of our control. Let me reiterate our strategic focus in this business segment, as we believe that we have a unique opportunity. We've had no shortage of interest in our dry battery electrode solutions, and we hope to have significant announcements to share before our fiscal year end. Interest in dry battery electrode across the globe remains very high. In the second quarter, we had good order entry, including two battery OEMs. But as we mentioned before, however, the dry battery electrode development cycle within the industry can be lengthy. Therefore, we are laser-focused on leveraging our technology advantage and assisting our customers in their development process. With that in mind, our hope is to accelerate adoption of dry battery electrode as the definitive solution for battery production. We intend to build a production scale system, which would allow our clients to run their formulation at speed, thus significantly shortening the adoption cycle. Our total addressable market of over $8 billion remains unchanged, but our timeline is extended due to the current EV market cooldown. Demand remains in place, and we expect the market to move toward our dry battery electrode solution, given the inherent advantages it offers, including lower required investment, lower OpEx, faster build-out, and improved battery performance and a solvent-free process. In the end, it offers a cheaper and better battery. Secondly, on the hydrogen fuel cell side, we are focused on creating a solution that significantly reduces the cost for components of the fuel cell stack via throughput increases utilizing our proprietary know-how. We hope to announce a significant partnership for this development as well by our year-end. Finally, with respect to our balance sheet, we will continue to emphasize debt reduction in our capital allocation and expect to further improve our leverage ratio by the end of the fiscal year. As we progress through fiscal 2024, we anticipate continued demand in our Energy Storage Solutions business, as evidenced by the recent flow of orders from multiple customers in the second quarter. We caution that customer delays within the energy business, outside of our control, have and may continue to impact our forecasted results. With that said, we expect to start deliveries of some of the orders soon. We expect further reductions in working capital in the latter half of the fiscal year and well into next year as those orders are delivered. As a result, we project Adjusted EBITDA for fiscal 2024 to be around $220 million. I'll now turn it over to Steve for more insight on our financial results. Steve? Thank you, Joe. Good morning. Let's begin with slide 7. For the fiscal 2024 second quarter, net income attributable to the company was $9 million or $0.29 per share, compared to $9.1 million or $0.29 per share a year ago. On a non-GAAP adjusted basis, earnings for the current quarter were $0.69 per share, compared to $0.65 per share last year. Income tax benefits for the current quarter generally offset the impact of slightly lower consolidated Adjusted EBITDA and higher interest expense. Consolidated sales for the quarter ended March 31, 2024, were $471.2 million, compared to $479.6 million a year ago. Sales for the SGK Brand Solutions segment increased for the current quarter, and Memorialization sales remained relatively stable compared to last year. The Industrial Technologies segment reported lower sales than the same quarter a year ago, with energy storage solution sales offset by lower Warehouse Automation sales. Changes in currency rates were estimated to have a favorable impact of $4.8 million on fiscal 2024 consolidated sales compared to a year ago. Consolidated adjusted EBITDA for the fiscal 2024 second quarter was $56.8 million, compared to $58.4 million a year ago. The SGK Brand Solutions segment reported higher adjusted EBITDA for the current quarter, which was offset by lower adjusted EBITDA in the Memorialization and Industrial Technologies segments. Please see the reconciliations of adjusted EBITDA and non-GAAP adjusted earnings per share provided in our earnings release. Please move to slide 8 to review our segment results. Sales for the Memorialization segment for the fiscal 2024 second quarter were $222.2 million, which was relatively consistent with sales of $222.9 million for the same quarter a year ago. The recent acquisitions of our granite business in February 2023 and a casket distributor in January 2024, combined with the benefit of improved price realization, generally offset declines in sales volumes for cemetery memorials and caskets resulting from lower U.S. deaths post-COVID. Memorialization segment Adjusted EBITDA for the current quarter was $46.6 million, compared to $48 million for the same quarter last year. The increase primarily resulted from the impact of lower memorial sales volumes and increased labor and material costs. These increases were partially offset by the favorable impact of recent acquisitions, improved pricing, and benefits from cost savings initiatives. Please move to slide 9. Sales for the Industrial Technologies segment for the fiscal 2024 second quarter were $116.1 million, compared to $125.5 million a year ago. The decline primarily resulted from lower sales for the segment's Warehouse Automation and automotive engineering businesses. These decreases were partially offset by higher sales for the Energy Storage Solutions business. Currency rate changes had a favorable impact of $944,000 on the segment's current quarter sales compared to a year ago. Adjusted EBITDA for the Industrial Technologies segment for the current quarter was $10 million, compared to $15.6 million a year ago. The decrease primarily reflected the impact of lower Warehouse Automation sales, higher labor costs, and lower margins for the engineering business compared to a year ago. The reduction in engineering margins primarily reflected project timing, as the prior period reflected higher margin engineering design work. The declines were partially offset by higher margins and improved pricing for the Product Identification business. Changes in currency exchange rates had a favorable impact of $103,000 on the segment's current quarter Adjusted EBITDA compared to a year ago. Please move to slide 10. Sales for the SGK Brand Solutions segment increased to $132.9 million for the quarter ended March 31, 2024, compared to $131.2 million a year ago. The increase primarily reflected higher sales in the U.S. brand market and for the European packaging and private label businesses. The segment also continued to benefit from improved pricing. Currency rates had an unfavorable impact of $1.3 million on current quarter sales compared to a year ago. Adjusted EBITDA for the SGK Brand Solutions segment was $15.4 million for the current quarter, compared to $11 million a year ago. The increase primarily reflected the benefits of higher sales, improved pricing, and the segment's recent cost reduction actions, offset partially by the impacts of higher labor-related costs and bonus expense. Please move to slide 11. The company's consolidated cash flow from operations for the quarter ended March 31, 2024, was $57.1 million, compared to $80.9 million a year ago. Operating cash flow for the current quarter primarily reflected the benefits of the company's consolidated Adjusted EBITDA and working capital reduction. Operating cash flow last year reflected the benefits of the new UK receivables financing facility and cash received from the settlement of several interest rate swaps, in addition to working capital reductions. Outstanding debt was $843 million at March 31, 2024, compared to $862 million at December 31, 2023, representing a reduction of $19.6 million during the second quarter. Net debt, which represents outstanding debt less cash, was $797 million at March 31, 2024, compared to $824 million at December 31, 2023, representing a reduction of $27.2 million during the second quarter. At March 31, 2024, the company's leverage ratio, based on net debt and trailing twelve months Adjusted EBITDA, was reduced to 3.62, compared to 3.71 at the end of last quarter. Additionally, we renewed our $750 million domestic revolving credit facility during the fiscal 2024 second quarter, and are now focused on refinancing of our bonds, which do not mature until December 2025. We fully expect this refinancing to be completed before the end of this fiscal year. For the fiscal 2024 second quarter, the company purchased only 1,029 shares under its stock repurchase program, primarily reflecting our focus on debt reduction. While we will remain focused on debt reduction through the end of the fiscal year, we may also increase repurchase activity in light of current stock price levels and forecasted cash flow. Approximately 30.7 million shares were outstanding at the end of the fiscal 2024 second quarter. Finally, the Board last week declared a quarterly dividend of $0.24 per share on the company's common stock. The dividend is payable May 20, 2024, to stockholders of record, May 6, 2024. This concludes the financial review, and we will now open the call for any questions. Christine? Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Our first question comes from the line of Daniel Moore with CJS Securities. Please proceed with your question. Thank you. Good morning, Joe. Good morning, Steve. Appreciate your time. Good morning, Dan. Let me start with energy storage. EV, yep, obviously, you know, the end market slowdown in EV is very well documented, so absolutely no surprise there. Just looking beyond the next few quarters, you know, you talked about it in your prepared remarks, Joe, but elaborate on what you're seeing and hearing, you know, from your customers as it relates to the longer-term transition to the dry battery, to DBE, you know, production. Do you still expect that transition and the opportunity to be on par with what you would have thought, you know, maybe 4-6 quarters ago? I would tell you the transition is in place. I think the issue is timing. It's, you, as you mentioned, Dan, it is slowing a little, but our interest level has never been higher. You know, the reality is the cost benefits the efficiency, the productivity, that comes out of our system and the better battery, will ultimately be the winner, we believe. And, it'll just—it's just slowed in the timing of when that will occur. So, we hope to have more discussion about this over the coming quarters, but nothing has changed from our perspective. All right. And in the prepared remarks, you mentioned that platform is not the right word. I wasn't typing fast enough, but- Yep. you plan to build out a platform Yeah ... to enable faster production. Just elaborate on that, and is there any incremental expense or CapEx associated with it? Yeah. So the reality is that the cycle for adoption in the auto industry is lengthy, especially when something was as innovative and new as our technology. The process of going through from development to full production could take multiple years. A lot of that has to do with the fact that the development cycle is currently being done in-house at a lot of these locations, whether it be battery manufacturers or other OEMs. We believe that we have enough know-how and the ability to build a what I would call a production-like facility, just for dry battery electrode, allowing our customers to come in-house with their formulation and accelerating the adoption. So they can basically produce their own batteries with their own formulations, do the testing that is necessary, and already know what a production-like machine will look like. So I would call it the serialization of manufacturing the equipment and, at least, eliminating a lot of the customization and testing that is done in advance. That's going to require probably $40 million worth of CapEx over the next 12-18 months, but well within our ability to fund. Got it. Very helpful. And then on the printhead solution, Product ID, just update us on the transition to the new chip provider, and your confidence in ramping that product as we think about 2025. Do you have orders in hand, or and it's just a matter of getting the technology buttoned up, or do we need to kind of go out and test again, as that new chip is implemented and, and integrated and functioning smoothly? So we have we've had great success and very happy with the new provider out of Sweden that is helping us with the new chip. The current batch of wafers that have come in are exceptional. We've had so far no issues with respect to that. We expect. As we described before, we are in line with our expectation to be in market early calendar 2025. So by January, end of December, January, we should start to be out there. Do we have customers? These are not multimillion-dollar projects, Dan. These are $10,000-$15,000 each, but there's a lot of them are sold. With the people we've already spoken to about what's coming, there's a lot of interest. Obviously, we're not gonna start with the largest CPGs that are out there day one, just to make sure that what we believe is correct, and what we believe is a new and novel approach is functional and working well, so we don't burn it. But at the same time, we'll be in market here at the beginning of next year with a lot of upside to go. It's a very significant market out there that we don't participate in. Perfect. And then I guess just one more. I'll jump back in to you, and on, on SGK and Schawk, on the SGK Brand Solutions. How much of the improvement in revenue is, you know, kind of easier comps, and how much is a more sustained commitment to spending that you're seeing or hearing from your customers? Thanks again. I guess the best way to describe it is, you've heard me, us speak about it, and you've read about it in the newspapers over the last several quarters. As CPGs have exhausted their ability to raise prices, they're having to reinvest in their brands through innovation and new product development. We believe this is sustainable. Most of the increase in top line came from North America, so you can see where that... what's driving the markets, and we hope to be the leader as an industry into that spend. So I would tell you it's much more sustainable and more-- hopefully more to come. Our next question comes from the line of Liam Burke with B. Riley Securities. Please proceed with your question. Thank you. Good morning, Joe. Good morning, Steve. Hello, Liam. Good morning, Liam. Joe, on Memorialization, cremation is still an important part of the business mix. How did that perform this quarter, and what's the outlook for the rest of the year? So, as we've said publicly before, we do about $125 million in product and services in the cremation segment. It performed well. I would tell you that we still have some opportunities to improve performance out of our cremation equipment manufacturing business that the team is looking at right now, which should give us a good tailwind from that business going into next year, Liam. Okay, great. Getting back to SGK, you did, on your prepared statements, talk about Europe branding, I guess, being up. But generally, you said that Europe remains a challenge. Are you just looking at easy comps, or are you looking at sort of a fragile recovery there? I would say easy comps. I mean, I wouldn't say we've seen a recovery in Europe. The performance of the business still remains North America, and some help out of the APAC region. Europe has a while to go yet. How did APAC do this year? This quarter was okay. North America being the driver for the quarter. Super. Thank you, Joe. Our next question comes from the line of Justin Bergner with Gabelli. Please proceed with your question. Good morning, Joe. Good morning, Steve. Good morning, Justin. Good morning. As you think about the revised EBITDA guidance for the current fiscal year, beyond the delays from your major energy storage customer, what are the other puts and takes to think about? In terms of how comfortable we are? Justin, help me understand the question a little better. Just, you know, parts of the business that are looking a little bit better- Oh. than they were Okay. At the start of the fiscal year, and parts of the business that were looking a little bit more challenged outside of the, you know, delays from the major energy storage customer. I would tell you my summary comments are pretty consistent with that. Memorialization is performing much better than we had maybe initially expected for the year. There's a lot of unknowns when you start a year, especially on the demand side of that business, and we obviously think we picked up some market share, and that's performing well, and the new recent win should help us as well. SGK as well is performing well. We expect that to continue to be the case. You could have a quarter that's going to change, but at the end of the day, we think that that is a sustainable business, that this year will be a contributor to our results. Product identification as well, performing very well. That... There's a new team in place over there, and they are performing very well, and getting ready for the new launch, should only make that business a bigger contributor as we go forward. Warehouse is challenged. I mean, it's not, I mean, we are. It's making money. This is not a question of whether it's profitable or not. It's a question of what we would have expected going into the year. If you look into the automated warehouse marketplace, you'll see our competitors, who are much more public about it, struggling as well. I mean, these numbers could be off 20%-30% on a top line. We're consistent with that, but we think that turns. I think that's a large capital spend. We've seen a number of our clients pull back on contracts because of the size of the capital spend, and maybe the interest rate environment might be impacting that as well. So warehouse has been a little bit of a challenge in going forward. I think I've covered just about all the businesses other than energy at that point. Okay, great. That's very helpful. On the energy side, you mentioned in the press release, benefit of orders from multiple customers. You know, as the broader set of potential customers are able to kind of order, production equipment more flexibly, looking into, you know, later 2024 and early 2025, is that kind of really opening up the spigot for orders, and is that driving this, you know, likely $40 million CapEx investment to, you know, standardize or serialize, the manufacturing equipment? Yeah. So I would... I mean, as it relates to the development cycle, to help you understand, you go from what I would call pre-production machine to a production prototype to a production machine. That is a multi-quarter process at a minimum. So what we're doing is with the investment, taking one of those turns out, that prototype machine, as well as a lot of the testing that is done from the product that comes off the manufacturing. So right now, the orders that we're seeing, I would say, would be on the smaller side. They're beyond just a what I would call lab machine. We're trying to take you from concept directly to production equipment with our investment, and that should shorten that cycle significantly. Okay, fantastic. But I guess the other part of my question was- Oh. you know, I think, there were some intellectual property, I guess, issues that might have, hindered the ability of some of your potential customers in the energy storage side to, you know, order production equipment. That's probably rolling off. Got it. Is that an acceleration- Yes, that's right. for customer interest in the present time? Yes. Now I understand your question. Yes, there are patents that are held on dry battery electrode products that expires here in July. So the acceleration of interest and the, what I call the, interest in investing, has accelerated because of that. No question about that, and we're trying to facilitate that with our investment. Great. Thanks so much. Sure. Our next question comes from the line of Nick Rippostella with NR Management. Please proceed with your question. Good morning. This is more of a big picture question. You know, all the investments you've made in these other businesses outside of Memorialization, how have they really benefited shareholders? You know, if you look at the stock price. So at any point, would you change the strategy and, you know, split up the businesses? Because, you know, shareholders really have not benefited for a long time- Yeah ... from these businesses being together. Yeah, I understand your question. We have had... We've been fairly public with the commentary. Our hope is to continue to build these smaller businesses to a scale, and then to begin to look at the strategy of what the business looks like going forward. As they, as a couple of these things come to market, whether it be the new print head and the new Product Identification, and as energy starts to get some legs to it, I think it's fair to say that there will be an evaluation of what we're what the business looks like at that time. At this point, with these three businesses still being relatively nascent, I would say that we're probably not at that point just yet. Okay, fair, fair enough. Well, I'll just say this, and by the way, your investor relations contact, you know, apparently because I'm not an institutional, but I'm still a shareholder, a long-term shareholder, you know, you can't get through to anyone to speak to or ask questions. I find that a little troubling, but- I'm sorry. I'm sorry to hear that. Well, I left many messages. But anyway, here's the issue. We all wanna be long-term investors, and, you know, there are promising technologies. I just hope that if this stock ends up, you know, under 20 or 19, and you never know what'll happen as there's more push-outs and things, I'd like to see, you know, insiders buying a lot of stock, you know? I just hope that's the case. Because you're levered, you have to pay down debt now. You're in a situation where you really can't take advantage in any dramatic way. But that's it. I just wanted to reflect my opinions, my feelings. Thank you so much. And Nick, we will. I'll I'll see to it that somebody can try to reach out to if we can get your information. I'm sorry about the investor contact. Okay, thanks. Our next question is a follow-up question from Daniel Moore with CJS Securities. Please proceed with your question. Oh, just gotta get off mute. Thank you again. Just looking... Steve, just kind of looking at the industrial tech, I think you called out some less engineering work. But just kind of looking at the decrementals, you know, this quarter to Q2 last year, EBITDA margin, you know, the decrementals closer to 60% and a little bit higher than what, you know, we'd normally think. So anything else going on or weighing on margins that you know might be unusual or temporary? Dan, no- The revenue decline. Yeah, the two things to mention, just to highlight with respect to the industrial margins are, one, it's the revenue decline, particularly on the warehouse side. And again, it's, when we look at the engineering business, revenue was higher, but the stage of the phases of the work that we're working on now versus where we were comparable to a year ago, last year was more the higher margin design-related work, engineering design-related work. So that's, those are the two major elements to the margin impact. Okay, helpful, and appreciate the update on the debt. It just... You know, if you were to go to market today, any sense for what terms could look like on the refinancing of bonds or, you know, wait and see, given you have, you know, at least a reasonable amount of time between now and year-end? Yeah, we're actually working through that now and just starting to get and understand some of those market indications. All right. Thank you again. Our next question is a follow-up question from Justin Bergner with Gabelli. Please proceed with your question. Thanks. Two quick follow-ups here. You mentioned that as you deliver more equipment on the energy storage side, that that will release working capital. Is there any way for you to frame sort of how much working capital is tied up and can be sort of released in that business? See, I'm looking at Steve. Steve, why don't you give you a perspective on it? I would tell you that it is a significant amount of working capital, but closer to $80 million-$90 million, I would say. Steve? Yeah, Justin, I'd say the, if... You know, when we release our 10-Q today, you'll see our balance sheet. But the areas, you know, the biggest area where you notice the working capital and the opportunity is gonna be in an area called, the line item called contract assets, contract liabilities, 'cause those are the line items of working capital that really reflect the work that we've done based on, not necessarily what we've built, because that would sit in accounts receivable, but the work that we've done, and the difference between the revenue recognized versus when we've reached the milestones for billing purposes. Gotcha. Okay, so it would be a contract asset or liability in this case? It would actually be... It could, it could be both, depending on where we sit with milestone payments on particular, you know, on a particular aspect of a project. Okay, gotcha. You should, you should see both line items. Gotcha. And then the other quick question was the auto engineering business, which I assume relates to the acquisitions, from a couple of years ago. I realize that's, more to support your energy storage business, or at least- Right The acquisitions were. But is that business now, you know, profitable on an EBITDA basis, or does it still have a little ways to go? So there's a couple of things that are happening in that business. We are incrementally better than prior year, modestly profitable at this point. But we are looking at a substantial change in that organization, starting hopefully here on in the latter part of this fiscal year, as we've been in negotiations with the unions over there for quite a while, trying to get an adjustment, both in terms of compensation as well as headcount. That's fairly significant. So we hope to talk a little bit more about that, Justin, a little later in the fiscal year once we get confirmation. Great. Thanks. Sure. Thank you. Mr. Wilson, we have no further questions at this time. I would like to turn the floor back over to you for closing comments. Okay, thank you, Christine. And again, thank you 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. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.