Matthews International Corporation (NASDAQ GSM: MATW) today
announced financial results for the quarter and fiscal year ended
September 30, 2023.
In discussing the Company’s operating results,
Joseph C. Bartolacci, President and Chief Executive Officer,
stated:
“We had a strong finish to fiscal 2023 as
demonstrated by our fourth quarter results. I am pleased to report
that the Company generated higher sales on a consolidated basis,
and adjusted EBITDA growth in all three of our business segments,
compared to a year ago.
“In our Industrial Technologies segment, we
reported another quarter of solid growth in operating results on
the strength of our energy storage solutions. Fiscal 2023 sales for
this segment exceeded the $500 million target that we set at the
beginning of the fiscal year, resulting in growth exceeding 50%
over last year’s sales of $335.5 million. Interest in our solutions
remains high as we continue to work with auto manufacturers and
battery producers in their development of dry battery electrode
(DBE) solutions.
“The Memorialization segment also performed well
again in the fiscal 2023 fourth quarter, completing a very good
year. Despite the continued decline in U.S. deaths (reflecting
lower COVID-related deaths), the segment’s sales remained
relatively stable compared to a year ago. In addition, adjusted
EBITDA for the segment increased for the quarter and fiscal year
reflecting improved price realization and continued emphasis on
productivity improvements.
“Finally, recent cost reduction actions taken by
SGK Brand Solutions resulted in improved operating performance for
the segment in the fiscal 2023 fourth quarter. Although European
market conditions continued to challenge the business, we reported
higher adjusted EBITDA and improved margins during the recent
quarter.
“We improved our net leverage ratio during the
recent quarter on the strength of our operating results. Total
outstanding debt increased modestly as we continued to build
working capital in our growing energy storage solutions
business.
“With respect to fiscal 2024, we expect another
year of consolidated growth in sales and adjusted EBITDA. We
continue to have a high level of confidence in the long-term growth
opportunities for each of the segments, particularly our Industrial
Technologies segment. As the level of larger longer-term projects
increases, especially for our energy storage solutions, the timing
of new orders and execution of existing orders can significantly
influence quarterly results. Accordingly, while we expect our
fiscal 2024 result to exceed fiscal 2023, the level of growth is
more difficult to predict at this time. For the near term, we are
expecting a solid start to fiscal 2024 compared to a year ago and
we anticipate providing updated guidance on the full year as we
have more clarity on orders and related timing.”
Fourth Quarter Fiscal
2023 Consolidated Results
(Unaudited)
($ in millions, except per
share data) |
Q4 FY2023 |
|
Q4 FY2022 |
|
Change |
|
% Change |
Sales |
$ |
480.2 |
|
|
$ |
457.1 |
|
|
$ |
23.1 |
|
|
5.0 |
% |
Net income (loss) attributable
to Matthews |
$ |
17.7 |
|
|
$ |
(81.0 |
) |
|
$ |
98.7 |
|
|
(121.9 |
)% |
Diluted earnings (loss) per share |
$ |
0.56 |
|
|
$ |
(2.63 |
) |
|
$ |
3.19 |
|
|
(121.3 |
)% |
Non-GAAP adjusted net
income |
$ |
30.3 |
|
|
$ |
25.6 |
|
|
$ |
4.7 |
|
|
18.4 |
% |
Non-GAAP adjusted EPS |
$ |
0.96 |
|
|
$ |
0.82 |
|
|
$ |
0.14 |
|
|
17.1 |
% |
Adjusted EBITDA |
$ |
61.9 |
|
|
$ |
55.9 |
|
|
$ |
6.0 |
|
|
10.7 |
% |
Note: See the
attached tables for additional important disclosures regarding
Matthews’ use of non-GAAP measures as well as reconciliations of
non-GAAP measures to corresponding GAAP measures. |
|
Consolidated sales for the fiscal 2023 fourth
quarter were $480.2 million, compared to $457.1 million for the
fiscal 2023 fourth quarter, representing an increase of $23.1
million. The increase primarily reflected sales growth in the
Industrial Technologies segment and the impact of the recent
acquisitions of Olbrich GmbH and R+S Automotive GmbH. These
increases were partially offset by lower reported sales for the SGK
Brand Solutions segment.
Net income attributable to the Company for the
quarter ended September 30, 2023 was $17.7 million, or $0.56
per share, compared to a net loss of $81.0 million, or $2.63 per
share, for the same quarter last year. The loss in the prior year
fourth quarter reflected a goodwill impairment charge of $82.5
million ($2.59 per share) and charges in connection with cost
reduction initiatives in the SGK Brand Solutions segment.
Adjusted EBITDA (net income before interest
expense, income taxes, depreciation and amortization, and other
adjustments) for the fiscal 2023 fourth quarter was $61.9 million,
compared to $55.9 million a year ago. On a non-GAAP adjusted basis,
earnings for the fiscal 2023 fourth quarter were $0.96 per share,
compared to $0.82 per share a year ago. Higher adjusted EBITDA was
partially offset by increased interest expense for the current
quarter, primarily reflecting the higher interest rate environment.
See reconciliations of adjusted EBITDA and non-GAAP adjusted
earnings per share below.
Fiscal 2023
Consolidated Results (Unaudited)
($ in millions, except per
share data) |
YTD FY2023 |
|
YTD FY2022 |
|
Change |
|
% Change |
Sales |
$ |
1,880.9 |
|
|
$ |
1,762.4 |
|
|
$ |
118.5 |
|
|
6.7 |
% |
Net income (loss) attributable
to Matthews |
$ |
39.3 |
|
|
$ |
(99.8 |
) |
|
$ |
139.1 |
|
|
(139.4 |
)% |
Diluted earnings (loss) per share |
$ |
1.26 |
|
|
$ |
(3.18 |
) |
|
$ |
4.44 |
|
|
(139.6 |
)% |
Non-GAAP adjusted net
income |
$ |
90.1 |
|
|
$ |
90.4 |
|
|
$ |
(0.3 |
) |
|
(0.3 |
)% |
Non-GAAP adjusted EPS |
$ |
2.88 |
|
|
$ |
2.88 |
|
|
$ |
— |
|
|
— |
% |
Adjusted EBITDA |
$ |
225.8 |
|
|
$ |
210.4 |
|
|
$ |
15.4 |
|
|
7.3 |
% |
Note: See the
attached tables for additional important disclosures regarding
Matthews’ use of non-GAAP measures as well as reconciliations of
non-GAAP measures to corresponding GAAP measures. |
|
Consolidated sales for the year ended
September 30, 2023 were $1.88 billion, compared to $1.76
billion a year ago, representing an increase of $118.5 million, or
6.7%, from the prior year. On a constant currency basis,
consolidated sales increased $142.1 million, or 8.1%, from a year
ago. Changes in foreign currency exchange rates were estimated to
have an unfavorable impact of $23.6 million on fiscal 2023 sales
compared to last year.
Net income attributable to the Company for the
year ended September 30, 2023 was $39.3 million ($1.26 per
share), compared to a net loss of $99.8 million ($3.18 per share)
for fiscal 2022. The prior year loss primarily reflected the fourth
quarter goodwill impairment and charges in connection with cost
reduction initiatives in the SGK Brand Solutions segment. The loss
for the prior year also included charges from the settlement of the
Company’s principal defined benefit pension plan in the fiscal 2022
first quarter and asset write-downs related to the Russia-Ukraine
conflict in the fiscal 2022 second quarter.
Adjusted EBITDA for the year ended
September 30, 2023, was $225.8 million, compared to $210.4
million a year ago. On a non-GAAP adjusted basis, earnings for the
year ended September 30, 2023 were $2.88 per share, compared
to $2.88 per share last year. Higher adjusted EBITDA was offset by
increased interest expense for the current year, primarily
reflecting the higher interest rate environment. See
reconciliations of adjusted EBITDA and non-GAAP adjusted earnings
per share below.
Webcast
The Company will host a conference call and
webcast on Friday, November 17, 2023, at 9:00 a.m. Eastern Time to
review its financial and operating results and discuss its
corporate strategies and outlook. A question-and-answer session
will follow. The conference call can be accessed by dialing (201)
689-8471. The audio webcast can be monitored at www.matw.com. As
soon as available after the call, a transcript of the call will be
posted on the Investor Relations section of the Company’s website
at www.matw.com.
About Matthews International
Corporation
Matthews International Corporation is a global
provider of memorialization products, industrial technologies, and
brand solutions. The Memorialization segment is a leading provider
of memorialization products, including memorials, caskets,
cremation-related products, and cremation and incineration
equipment, primarily to cemetery and funeral home customers that
help families move from grief to remembrance. The Industrial
Technologies segment includes the design, manufacturing, service
and distribution of high-tech custom energy storage solutions;
product identification and warehouse automation technologies and
solutions, including order fulfillment systems for identifying,
tracking, picking and conveying consumer and industrial products;
and coating and converting lines for the packaging, pharma, foil,
décor and tissue industries. The SGK Brand Solutions segment is a
leading provider of packaging solutions and brand experiences,
helping companies simplify their marketing, amplify their brands
and provide value. The Company has approximately 12,000 employees
in more than 30 countries on six continents that are committed to
delivering the highest quality products and services.
Forward-looking Information
Any forward-looking statements contained in this
release are included pursuant to the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to,
statements regarding the expectations, hopes, beliefs, intentions
or strategies of the Company regarding the future, and may be
identified by the use of words such as “expects,” “believes,”
“intends,” “projects,” “anticipates,” estimates,” “plans,” “seeks,”
“forecasts,” “predicts,” “objective,” “potential,” “outlook,”
“may,” “will,” “could” or the negative of these terms, other
comparable terminology and variations thereof. Such forward-looking
statements involve known and unknown risks and uncertainties that
may cause the Company’s actual results in future periods to be
materially different from management’s expectations. Although the
Company believes that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be
given that such expectations will prove correct. Factors that could
cause the Company's results to differ materially from the results
discussed in such forward-looking statements principally include
changes in domestic or international economic conditions, changes
in foreign currency exchange rates, changes in interest rates,
changes in the cost of materials used in the manufacture of the
Company's products, any impairment of goodwill or intangible
assets, environmental liability and limitations on the Company’s
operations due to environmental laws and regulations, disruptions
to certain services, such as telecommunications, network server
maintenance, cloud computing or transaction processing services,
provided to the Company by third-parties, changes in mortality and
cremation rates, changes in product demand or pricing as a result
of consolidation in the industries in which the Company operates,
or other factors such as supply chain disruptions, labor shortages
or labor cost increases, changes in product demand or pricing as a
result of domestic or international competitive pressures, ability
to achieve cost-reduction objectives, unknown risks in connection
with the Company's acquisitions and divestitures, cybersecurity
concerns and costs arising with management of cybersecurity
threats, effectiveness of the Company's internal controls,
compliance with domestic and foreign laws and regulations,
technological factors beyond the Company's control, impact of
pandemics or similar outbreaks, or other disruptions to our
industries, customers, or supply chains, the impact of global
conflicts, such as the current war between Russia and Ukraine, and
other factors described in the Company’s Annual Report on Form 10-K
and other periodic filings with the U.S. Securities and Exchange
Commission.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)(In
thousands, except per share data) |
|
Three Months Ended September 30, |
|
|
|
|
Year EndedSeptember 30, |
|
|
|
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
Sales |
$ |
480,168 |
|
|
$ |
457,127 |
|
|
5.0 |
% |
|
$ |
1,880,896 |
|
|
$ |
1,762,403 |
|
|
6.7 |
% |
Cost of sales |
|
(329,354 |
) |
|
|
(311,870 |
) |
|
5.6 |
% |
|
|
(1,303,224 |
) |
|
|
(1,240,125 |
) |
|
5.1 |
% |
Gross profit |
|
150,814 |
|
|
|
145,257 |
|
|
3.8 |
% |
|
|
577,672 |
|
|
|
522,278 |
|
|
10.6 |
% |
Gross margin |
|
31.4 |
% |
|
|
31.8 |
% |
|
|
|
|
|
30.7 |
% |
|
|
29.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative expenses |
|
(113,931 |
) |
|
|
(124,067 |
) |
|
(8.2 |
)% |
|
|
(447,487 |
) |
|
|
(426,677 |
) |
|
4.9 |
% |
Intangible amortization |
|
(10,569 |
) |
|
|
(11,781 |
) |
|
(10.3 |
)% |
|
|
(42,068 |
) |
|
|
(57,084 |
) |
|
(26.3 |
)% |
Goodwill write-downs |
|
— |
|
|
|
(82,454 |
) |
|
100.0 |
% |
|
|
— |
|
|
|
(82,454 |
) |
|
100.0 |
% |
Operating profit (loss) |
|
26,314 |
|
|
|
(73,045 |
) |
|
(136.0 |
)% |
|
|
88,117 |
|
|
|
(43,937 |
) |
|
NM |
Operating margin |
|
5.5 |
% |
|
(16.0 |
)% |
|
|
|
|
|
4.7 |
% |
|
|
(2.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other, net |
|
(10,983 |
) |
|
|
(9,992 |
) |
|
9.9 |
% |
|
|
(47,207 |
) |
|
|
(60,282 |
) |
|
(21.7 |
)% |
Income (loss) before
income taxes |
|
15,331 |
|
|
|
(83,037 |
) |
|
(118.5 |
)% |
|
|
40,910 |
|
|
|
(104,219 |
) |
|
(139.3 |
)% |
Income taxes |
|
2,362 |
|
|
|
2,080 |
|
|
13.6 |
% |
|
|
(1,774 |
) |
|
|
4,391 |
|
|
(140.4 |
)% |
Net income (loss) |
|
17,693 |
|
|
|
(80,957 |
) |
|
(121.9 |
)% |
|
|
39,136 |
|
|
|
(99,828 |
) |
|
(139.2 |
)% |
Non-controlling interests |
|
30 |
|
|
|
(2 |
) |
|
NM |
|
|
155 |
|
|
|
54 |
|
|
187.0 |
% |
Net income (loss)
attributable to Matthews |
$ |
17,723 |
|
|
$ |
(80,959 |
) |
|
(121.9 |
)% |
|
$ |
39,291 |
|
|
$ |
(99,774 |
) |
|
(139.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share -- diluted |
$ |
0.56 |
|
|
$ |
(2.63 |
) |
|
(121.3 |
)% |
|
$ |
1.26 |
|
|
$ |
(3.18 |
) |
|
(139.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share --
non-GAAP(1) |
$ |
0.96 |
|
|
$ |
0.82 |
|
|
17.1 |
% |
|
$ |
2.88 |
|
|
$ |
2.88 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per
share |
$ |
0.23 |
|
|
$ |
0.22 |
|
|
4.5 |
% |
|
$ |
0.92 |
|
|
$ |
0.88 |
|
|
4.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
shares |
|
31,517 |
|
|
|
30,825 |
|
|
|
|
|
|
31,289 |
|
|
|
31,367 |
|
|
|
|
(1)See reconciliation of non-GAAP financial information provided in
tables at the end of this release |
NM: Not meaningful |
SEGMENT INFORMATION (Unaudited)(In
thousands) |
|
Three Months EndedSeptember 30, |
|
Year EndedSeptember 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Sales: |
|
|
|
|
|
|
|
|
|
|
Memorialization |
$ |
204,878 |
|
|
$ |
206,256 |
|
|
$ |
842,997 |
|
|
$ |
840,124 |
|
Industrial Technologies |
|
140,561 |
|
|
|
104,595 |
|
|
|
505,751 |
|
|
|
335,523 |
|
SGK Brand Solutions |
|
134,729 |
|
|
|
146,276 |
|
|
|
532,148 |
|
|
|
586,756 |
|
|
$ |
480,168 |
|
|
$ |
457,127 |
|
|
$ |
1,880,896 |
|
|
$ |
1,762,403 |
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
Memorialization |
$ |
36,890 |
|
|
$ |
33,445 |
|
|
$ |
163,986 |
|
|
$ |
151,849 |
|
Industrial Technologies |
|
23,470 |
|
|
|
23,385 |
|
|
|
66,278 |
|
|
|
56,762 |
|
SGK Brand Solutions |
|
17,512 |
|
|
|
16,698 |
|
|
|
57,128 |
|
|
|
60,120 |
|
Corporate and Non-Operating |
|
(15,989 |
) |
|
|
(17,667 |
) |
|
|
(61,583 |
) |
|
|
(58,323 |
) |
Total Adjusted EBITDA(1) |
$ |
61,883 |
|
|
$ |
55,861 |
|
|
$ |
225,809 |
|
|
$ |
210,408 |
|
|
|
|
|
|
|
|
|
(1)See reconciliation of non-GAAP financial information provided in
tables at the end of this release |
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
(Unaudited)(In thousands) |
|
|
September 30, 2023 |
|
September 30, 2022 |
ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
42,101 |
|
|
$ |
69,016 |
|
Accounts receivable, net |
|
|
207,526 |
|
|
|
221,015 |
|
Inventories, net |
|
|
260,409 |
|
|
|
225,440 |
|
Other current assets |
|
|
138,221 |
|
|
|
113,145 |
|
Total current assets |
|
|
648,257 |
|
|
|
628,616 |
|
Property, plant and equipment,
net |
|
|
270,326 |
|
|
|
256,065 |
|
Goodwill |
|
|
698,109 |
|
|
|
675,421 |
|
Other intangible assets,
net |
|
|
160,478 |
|
|
|
202,154 |
|
Other long-term assets |
|
|
110,211 |
|
|
|
120,515 |
|
Total
assets |
|
$ |
1,887,381 |
|
|
$ |
1,882,771 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Long-term debt, current
maturities |
|
$ |
3,696 |
|
|
$ |
3,277 |
|
Other current liabilities |
|
|
390,904 |
|
|
|
408,098 |
|
Total current liabilities |
|
|
394,600 |
|
|
|
411,375 |
|
Long-term debt |
|
|
786,484 |
|
|
|
795,291 |
|
Other long-term
liabilities |
|
|
181,016 |
|
|
|
189,029 |
|
Total liabilities |
|
|
1,362,100 |
|
|
|
1,395,695 |
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY |
|
|
|
|
Total shareholders' equity |
|
|
525,281 |
|
|
|
487,076 |
|
Total liabilities and
shareholders' equity |
|
$ |
1,887,381 |
|
|
$ |
1,882,771 |
|
CONDENSED CONSOLIDATED CASH FLOWS INFORMATION
(Unaudited)(In thousands) |
|
Year Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
Net income (loss) |
$ |
39,136 |
|
|
$ |
(99,828 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
Depreciation and amortization |
|
96,530 |
|
|
|
104,056 |
|
Changes in working capital items |
|
(35,503 |
) |
|
|
29,590 |
|
Goodwill write-downs |
|
— |
|
|
|
82,454 |
|
Other operating activities |
|
(20,639 |
) |
|
|
10,588 |
|
Net cash provided by operating activities |
|
79,524 |
|
|
|
126,860 |
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Capital expenditures |
|
(50,598 |
) |
|
|
(61,321 |
) |
Acquisitions, net of cash acquired |
|
(15,341 |
) |
|
|
(44,469 |
) |
Other investing activities |
|
7,214 |
|
|
|
24,938 |
|
Net cash used in investing activities |
|
(58,725 |
) |
|
|
(80,852 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Net (payments) proceeds from long-term debt |
|
(18,224 |
) |
|
|
35,688 |
|
Purchases of treasury stock |
|
(2,857 |
) |
|
|
(41,717 |
) |
Dividends |
|
(28,202 |
) |
|
|
(27,685 |
) |
Other financing activities |
|
(912 |
) |
|
|
(3,499 |
) |
Net cash used in financing activities |
|
(50,195 |
) |
|
|
(37,213 |
) |
|
|
|
|
Effect of exchange rate
changes on cash |
|
83 |
|
|
|
(5,724 |
) |
|
|
|
|
Net change in cash,
cash equivalents and restricted cash |
$ |
(29,313 |
) |
|
$ |
3,071 |
|
|
Reconciliations of Non-GAAP Financial
Measures
Included in this report are measures of
financial performance that are not defined by GAAP, including,
without limitation, adjusted EBITDA, adjusted net income and EPS,
constant currency sales, constant currency adjusted EBITDA, net
debt and net debt leverage ratio. The Company defines net debt
leverage ratio as outstanding debt (net of cash) relative to
adjusted EBITDA. The Company uses non-GAAP financial measures to
assist in comparing its performance on a consistent basis for
purposes of business decision-making by removing the impact of
certain items that management believes do not directly reflect the
Company’s core operations including acquisition and divestiture
costs, ERP integration costs, strategic initiative and other
charges (which includes non-recurring charges related to
operational initiatives and exit activities), stock-based
compensation and the non-service portion of pension and
postretirement expense. Constant currency sales and constant
currency adjusted EBITDA remove the impact of changes due to
foreign exchange translation rates. To calculate sales and adjusted
EBITDA on a constant currency basis, amounts for periods in the
current fiscal year are translated into U.S. dollars using exchange
rates applicable to the comparable periods of the prior fiscal
year. Management believes that presenting non-GAAP financial
measures is useful to investors because it (i) provides investors
with meaningful supplemental information regarding financial
performance by excluding certain items that management believes do
not directly reflect the Company's core operations, (ii) permits
investors to view performance using the same tools that management
uses to budget, forecast, make operating and strategic decisions,
and evaluate historical performance, and (iii) otherwise provides
supplemental information that may be useful to investors in
evaluating the Company’s results. The Company's calculations of its
non-GAAP financial measures, however, may not be comparable to
similarly titled measures reported by other companies. The Company
believes that the presentation of these non-GAAP financial
measures, when considered together with the corresponding GAAP
financial measures and the reconciliations to those measures,
provided herein, provide investors with an additional understanding
of the factors and trends affecting the Company’s business that
could not be obtained absent these disclosures.
ADJUSTED EBITDA RECONCILIATION
(Unaudited)(In thousands) |
|
|
Three Months EndedSeptember 30, |
|
Year EndedSeptember 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income
(loss) |
$ |
17,693 |
|
|
$ |
(80,957 |
) |
|
$ |
39,136 |
|
|
$ |
(99,828 |
) |
|
Income tax (benefit)
provision |
|
(2,362 |
) |
|
|
(2,080 |
) |
|
|
1,774 |
|
|
|
(4,391 |
) |
Income
(loss) before income taxes |
$ |
15,331 |
|
|
$ |
(83,037 |
) |
|
|
40,910 |
|
|
|
(104,219 |
) |
|
Net loss (gain) attributable
to noncontrolling interests |
|
30 |
|
|
|
(2 |
) |
|
|
155 |
|
|
|
54 |
|
|
Interest expense, including
RPA and factory financing fees(1) |
|
12,746 |
|
|
|
9,345 |
|
|
|
48,690 |
|
|
|
28,771 |
|
|
Depreciation and
amortization* |
|
24,717 |
|
|
|
23,893 |
|
|
|
96,530 |
|
|
|
104,056 |
|
|
Acquisition and divestiture
related items(2) ** |
|
848 |
|
|
|
6,947 |
|
|
|
5,293 |
|
|
|
7,898 |
|
|
Strategic initiatives and
other charges(3) ** |
|
6,168 |
|
|
|
13,174 |
|
|
|
13,923 |
|
|
|
31,045 |
|
|
Highly inflationary accounting
impacts (primarily non-cash)(4) |
|
(1,714 |
) |
|
|
228 |
|
|
|
1,360 |
|
|
|
1,473 |
|
|
Defined benefit plan
termination related items(5) |
|
— |
|
|
|
(713 |
) |
|
|
— |
|
|
|
(429 |
) |
|
Asset write-downs, net(6) |
|
— |
|
|
|
33 |
|
|
|
— |
|
|
|
10,050 |
|
|
Goodwill write-downs(7) |
|
— |
|
|
|
82,454 |
|
|
|
— |
|
|
|
82,454 |
|
|
Stock-based compensation |
|
3,673 |
|
|
|
3,304 |
|
|
|
17,308 |
|
|
|
17,432 |
|
|
Non-service pension and
postretirement expense(8) |
|
84 |
|
|
|
235 |
|
|
|
1,640 |
|
|
|
31,823 |
|
Total
Adjusted EBITDA |
$ |
61,883 |
|
|
$ |
55,861 |
|
|
$ |
225,809 |
|
|
$ |
210,408 |
|
|
Adjusted EBITDA margin |
|
12.9 |
% |
|
|
12.2 |
% |
|
|
12.0 |
% |
|
|
11.9 |
% |
|
|
|
|
|
|
|
|
|
|
(1)Includes fees for receivables sold under the RPA and factoring
arrangements totaling $1,284 and $1,046 for the
three months ended September 30, 2023 and 2022,
respectively, and $4,042 and $1,046 for the
fiscal years ended September 30, 2023 and 2022, respectively. |
|
(2)Includes certain non-recurring costs associated with recent
acquisition and divestiture activities, and also includes a gain
of $1,827 for the three months and fiscal year ended
September 30,2023 related to the divestiture of a business in
the Industrial Technologies segment. |
|
(3)Includes certain non-recurring costs associated with
productivity and cost-reduction initiatives intended to result in
improved operating performance, profitability and working capital
levels and costs associated with global ERP system integration
efforts totaling $6,168 and $13,923 for the three months
ended September 30, 2023 and 2022, respectively, and
$12,393 and $28,060 for the fiscal years ended September
30, 2023 and 2022, respectively, net of loss recoveries
of $2,154 for the fiscal year ended September 30, 2023
related to a previously disclosed theft of funds by a former
employee initially identified in fiscal 2015. Also includes certain
non-recurring direct incremental costs (such as costs for purchases
of computer peripherals and devices to facilitate
working-from-home, additional personal protective equipment and
cleaning supplies and services, etc.) incurred in response to
COVID-19 totaling $781and $2,985for the three months and fiscal
year ended September 30, 2022, respectively. This amount does not
include the impact of any lost sales or underutilization due to
COVID-19. |
|
(4)Represents exchange gains and losses associated with highly
inflationary accounting related to the Company's Turkish
subsidiaries. |
|
(5)Represents items associated with the termination of the
Company's DB Plan, supplemental retirement plan and the defined
benefit portion of the officers retirement restoration
plan. |
|
(6)Represents asset write-downs, net of recoveries within the SGK
Brand Solutions segment. |
|
(7)Represents goodwill write-downs within the SGK Brand Solutions
segment. |
|
(8)Non-service pension and postretirement expense includes interest
cost, expected return on plan assets, amortization of actuarial
gains and losses, curtailment gains and losses, and settlement
gains and losses. These benefit cost components are excluded from
adjusted EBITDA since they are primarily influenced by external
market conditions that impact investment returns and interest
(discount) rates. Curtailment gains and losses and settlement gains
and losses are excluded from adjusted EBITDA since they generally
result from certain non-recurring events, such as plan amendments
to modify future benefits or settlements of plan obligations. The
service cost and prior service cost components of pension and
postretirement expense are included in the calculation of adjusted
EBITDA, since they are considered to be a better
reflection of the ongoing service-related costs of providing these
benefits. Please note that GAAP pension and postretirement expense
or the adjustment above are not necessarily indicative of the
current or future cash flow requirements related to these employee
benefit plans. |
* Depreciation and amortization was $6,646 and
$5,780 for the Memorialization segment, $5,600 and $3,744 for the
Industrial Technologies segment, $11,299 and $13,054 for the SGK
Brand Solutions segment, and $1,172 and $1,315 for Corporate and
Non-Operating, for the three months ended September 30, 2023
and 2022, respectively. Depreciation and amortization was $23,738
and $23,228 for the Memorialization segment, $23,184 and $11,387
for the Industrial Technologies segment, $44,842 and $64,173 for
the SGK Brand Solutions segment, and $4,766 and $5,268 for
Corporate and Non-Operating, for the fiscal years ended
September 30, 2023 and 2022, respectively.** Acquisition
costs, ERP integration costs, non-recurring/incremental COVID-19
costs, and strategic initiatives and other charges were $22 and
$1,474 for the Memorialization segment, $614 and $4,255 for the
Industrial Technologies segment, $3,878 and $12,420 for the SGK
Brand Solutions segment, and $2,502 and $1,972 for Corporate and
Non-Operating, for the three months ended September 30, 2023
and 2022, respectively. Acquisition costs, ERP integration costs,
non-recurring/incremental COVID-19 costs, and strategic initiatives
and other charges were $1,002 and $4,831 for the Memorialization
segment, $4,108 and $5,637 for the Industrial Technologies segment,
$10,905 and $20,558 for the SGK Brand Solutions segment, and $3,201
and $7,917 for Corporate and Non-Operating, for the fiscal years
ended September 30, 2023 and 2022, respectively.
ADJUSTED NET INCOME AND EPS RECONCILIATION
(Unaudited)(In thousands, except per share
data) |
|
|
Three Months Ended September 30, |
|
Year Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
per share |
|
|
per share |
|
|
per share |
|
|
per share |
Net income (loss) attributable to Matthews |
$ |
17,723 |
|
$ |
0.56 |
|
|
$ |
(80,959 |
) |
$ |
(2.63 |
) |
|
$ |
39,291 |
|
$ |
1.26 |
|
|
$ |
(99,774 |
) |
$ |
(3.18 |
) |
|
Acquisition and divestiture items(1) |
|
1,626 |
|
|
0.05 |
|
|
|
5,581 |
|
|
0.18 |
|
|
|
4,874 |
|
|
0.15 |
|
|
|
6,319 |
|
|
0.20 |
|
|
Strategic initiatives and
other charges(2) |
|
4,053 |
|
|
0.13 |
|
|
|
12,736 |
|
|
0.41 |
|
|
|
11,106 |
|
|
0.36 |
|
|
|
26,092 |
|
|
0.84 |
|
|
Highly inflationary accounting
impacts (primarily non-cash)(3) |
|
(1,714 |
) |
|
(0.05 |
) |
|
|
228 |
|
|
0.01 |
|
|
|
1,360 |
|
|
0.04 |
|
|
|
1,473 |
|
|
0.05 |
|
|
Defined benefit plan
termination related items(4) |
|
649 |
|
|
0.02 |
|
|
|
(537 |
) |
|
(0.02 |
) |
|
|
665 |
|
|
0.02 |
|
|
|
(182 |
) |
|
(0.01 |
) |
|
Asset write-downs, net(5) |
|
— |
|
|
— |
|
|
|
38 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
9,993 |
|
|
0.32 |
|
|
Goodwill write-downs(6) * |
|
— |
|
|
— |
|
|
|
79,762 |
|
|
2.59 |
|
|
|
— |
|
|
— |
|
|
|
79,762 |
|
|
2.54 |
|
|
Non-service pension and
postretirement expense(7) |
|
63 |
|
|
— |
|
|
|
50 |
|
|
— |
|
|
|
1,230 |
|
|
0.04 |
|
|
|
23,867 |
|
|
0.76 |
|
|
Intangible amortization
expense |
|
7,927 |
|
|
0.25 |
|
|
|
8,655 |
|
|
0.28 |
|
|
|
31,551 |
|
|
1.01 |
|
|
|
42,813 |
|
|
1.36 |
|
Adjusted
net income |
$ |
30,327 |
|
$ |
0.96 |
|
|
$ |
25,554 |
|
$ |
0.82 |
|
|
$ |
90,077 |
|
$ |
2.88 |
|
|
$ |
90,363 |
|
$ |
2.88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Adjustments
to net income for non-GAAP reconciling items were calculated using
an income tax rate of 26.9% and 7.5%, for the three months ended
September 30, 2023 and 2022, respectively, and 25.7% and 14.5% for
the fiscal year ended September 30, 2023 and 2022,
respectively. |
|
(1)Includes
certain non-recurring costs associated with recent acquisition and
divestiture activities, and also includes a gain in
fiscal year 2023 related to the divestiture of a business in the
Industrial Technologies segment. |
|
(2)Includes
certain non-recurring costs associated with productivity and
cost-reduction initiatives intended to result in improved operating
performance, profitability and working capital levels and costs
associated with global ERP system integration efforts, net of loss
recoveries in fiscal year 2023 related to a previously disclosed
theft of funds by a former employee initially identified in fiscal
2015. Also includes certain non-recurring direct incremental costs
(such as costs for purchases of computer peripherals and devices to
facilitate working-from-home, additional personal protective
equipment and cleaning supplies and services, etc.) incurred in
response to COVID-19. This amount does not include the impact of
any lost sales or underutilization due to COVID-19. |
|
(3)Represents exchange gains and losses associated with highly
inflationary accounting related to the Company's Turkish
subsidiaries |
|
(4)Represents items associated with the termination of the
Company's DB Plan, supplemental retirement plan and the defined
benefit portion of the officers retirement restoration
plan. |
|
(5)Represents asset write-downs, net of recoveries within the SGK
Brand Solutions segment. |
|
(6)Represents goodwill write-downs within the SGK Brand Solutions
segment. |
|
(7)Non-service pension and postretirement expense includes interest
cost, expected return on plan assets, amortization of actuarial
gains and losses, curtailment gains and losses, and settlement
gains and losses. These benefit cost components are excluded from
adjusted EBITDA since they are primarily influenced by external
market conditions that impact investment returns and interest
(discount) rates. Curtailment gains and losses and settlement gains
and losses are excluded from adjusted EBITDA since they generally
result from certain non-recurring events, such as plan amendments
to modify future benefits or settlements of plan obligations. The
service cost and prior service cost components of pension and
postretirement expense are included in the calculation of adjusted
EBITDA, since they are considered to be a better
reflection of the ongoing service-related costs of providing these
benefits. Please note that GAAP pension and postretirement expense
or the adjustment above are not necessarily indicative of the
current or future cash flow requirements related to these employee
benefit plans. |
|
* Per share amounts based on the diluted shares for each respective
period. |
CONSTANT CURRENCY SALES AND ADJUSTED EBITDA RECONCILIATION
(Unaudited)(In thousands) |
|
Memorialization |
|
Industrial Technologies |
|
SGK Brand Solutions |
|
Corporate and Non-Operating |
|
Consolidated |
Reported sales for the quarter ended September 30, 2023 |
$ |
204,878 |
|
|
$ |
140,561 |
|
|
$ |
134,729 |
|
|
$ |
— |
|
|
$ |
480,168 |
|
Changes in foreign exchange translation rates |
|
(504 |
) |
|
|
(2,748 |
) |
|
|
(1,786 |
) |
|
|
— |
|
|
|
(5,038 |
) |
Constant currency sales for
the quarter ended September 30, 2023 |
$ |
204,374 |
|
|
$ |
137,813 |
|
|
$ |
132,943 |
|
|
$ |
— |
|
|
$ |
475,130 |
|
Reported sales for the year ended September 30, 2023 |
$ |
842,997 |
|
|
$ |
505,751 |
|
|
$ |
532,148 |
|
|
$ |
— |
|
|
$ |
1,880,896 |
|
Changes in foreign exchange translation rates |
|
1,759 |
|
|
|
5,744 |
|
|
|
16,088 |
|
|
|
— |
|
|
|
23,591 |
|
Constant currency sales for
the year ended September 30, 2023 |
$ |
844,756 |
|
|
$ |
511,495 |
|
|
$ |
548,236 |
|
|
$ |
— |
|
|
$ |
1,904,487 |
|
Reported adjusted EBITDA for the quarter ended September 30,
2023 |
$ |
36,890 |
|
|
$ |
23,470 |
|
|
$ |
17,512 |
|
|
$ |
(15,989 |
) |
|
$ |
61,883 |
|
Changes in foreign exchange translation rates |
|
135 |
|
|
|
(805 |
) |
|
|
235 |
|
|
|
13 |
|
|
|
(422 |
) |
Constant currency adjusted
EBITDA for the quarter ended September 30, 2023 |
$ |
37,025 |
|
|
$ |
22,665 |
|
|
$ |
17,747 |
|
|
$ |
(15,976 |
) |
|
$ |
61,461 |
|
Reported adjusted EBITDA for the year ended September 30,
2023 |
$ |
163,986 |
|
|
$ |
66,278 |
|
|
$ |
57,128 |
|
|
$ |
(61,583 |
) |
|
$ |
225,809 |
|
Changes in foreign exchange translation rates |
|
140 |
|
|
|
1,323 |
|
|
|
1,999 |
|
|
|
290 |
|
|
|
3,752 |
|
Constant currency adjusted
EBITDA for the year ended September 30, 2023 |
$ |
164,126 |
|
|
$ |
67,601 |
|
|
$ |
59,127 |
|
|
$ |
(61,293 |
) |
|
$ |
229,561 |
|
NET DEBT RECONCILIATION (Unaudited)(In
thousands) |
|
September 30, 2023 |
|
September 30, 2022 |
|
|
|
|
Long-term debt, current maturities |
$ |
3,696 |
|
|
$ |
3,277 |
|
Long-term debt |
|
786,484 |
|
|
|
795,291 |
|
Total long-term
debt |
|
790,180 |
|
|
|
798,568 |
|
|
|
|
|
Less: Cash and cash equivalents |
|
(42,101 |
) |
|
|
(69,016 |
) |
|
|
|
|
Net Debt |
$ |
748,079 |
|
|
$ |
729,552 |
|
|
|
|
|
Adjusted EBITDA |
$ |
225,809 |
|
|
$ |
210,408 |
|
|
|
|
|
Net Debt Leverage
Ratio |
|
3.3 |
|
|
|
3.5 |
|
|
|
|
|
|
|
|
|
Matthews International CorporationCorporate OfficeTwo NorthShore
CenterPittsburgh, PA 15212-5851Phone: (412) 442-8200
|
Contact: |
Steven F. Nicola |
William D. Wilson |
|
|
Chief Financial Officer |
Senior Director, |
|
|
and Secretary |
Corporate Development |
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