Second Quarter Financial
Highlights:
- Consolidated sales of $391.4
million
- GAAP EPS of $0.48; non-GAAP adjusted
EPS of $0.90
- Adjusted EBITDA of $56.2
million
Year-to-date Financial
Highlights:
- Consolidated sales of $765.6
million
- GAAP EPS of $0.58; non-GAAP adjusted
EPS of $1.40
- Adjusted EBITDA of $102.7
million
Matthews International Corporation (NASDAQ GSM: MATW) today
announced financial results for its fiscal second quarter and six
months ended March 31, 2019.
In discussing the Company’s results for the quarter, Joseph C.
Bartolacci, President and Chief Executive Officer, stated: “Our
businesses demonstrated solid underlying performance, which was
muted by significant headwinds during the quarter, including the
impact of changes in foreign currency rates and a decline in U.S.
casketed deaths. We remain focused on building upon our leading
market positions and the strength of our brands and capabilities,
while reducing our cost structure. As a result, we are continuing
to win new accounts and build market share by providing creative
solutions for our customers.
“The significant headwinds during the quarter included a $12.8
million negative sales impact from changes in foreign currency
rates and a decrease in casket sales of approximately $6 million
related to an estimated decline in U.S. casketed deaths. As a
result, our reported sales and adjusted EBITDA for the period were
below our internal expectations. In addition, comparability with
last year continued to be affected by the impact of the
previously-reported significant brand client account that
transitioned their work in house. Combined, the three headwinds
accounted for an approximate $26 million unfavorable impact on
sales for the quarter.
“Apart from these items, our core consolidated operating
performance improved for the fiscal 2019 second quarter compared to
last year. We again reported organic sales growth in our Industrial
Technologies segment on the continued strength of the warehouse
automation business. In addition, last quarter, we discussed
softening conditions for this segment’s product identification
sales, but recent trends in order rates are reflecting
improvement.
“Sales to the private label brand market also increased during
the quarter reflecting the benefit of recent new account wins. We
reported on these new accounts beginning last fiscal year and we
are starting to see the benefits of these efforts. In addition,
sales for our surfaces and engineered products business (part of
the SGK Brand Solutions segment) were higher for the quarter. This
sales improvement reflected a combination of organic sales growth
and the recent acquisition of Frost Converting Systems.
“In our Memorialization segment, sales of bronze and granite
memorial products in the U.S. increased on an organic basis for the
quarter despite the decline in U.S. casketed deaths. The
acquisition of Star Granite and Bronze also contributed to the
year-over-year increase in memorial product sales.
“We continue to emphasize cost containment efforts which
contributed to a decrease in consolidated selling and
administrative expense for the current year. The decrease also
reflected lower performance-related compensation and, as planned, a
reduction in ERP implementation costs. In addition, we reduced our
outstanding debt by $7.3 million during the fiscal 2019 second
quarter.”
Second Quarter Fiscal 2019 Consolidated
Results (Unaudited)
($ in millions, except per share data)
Q2 FY2019 Q2 FY2018
Change % Change Sales $ 391.4 $ 414.1 $
(22.7 ) (5.5 )% Net income attributable to Matthews $ 15.4 $ 18.2 $
(2.8 ) (15.4 )% Diluted EPS $ 0.48 $ 0.57 $ (0.09 ) (15.8 )%
Non-GAAP adjusted net income $ 28.6 $ 29.6 $ (1.0 ) (3.4 )%
Non-GAAP adjusted EPS $ 0.90 $ 0.93 $ (0.03 )
(3.2
)%
Adjusted EBITDA $ 56.2 $ 62.5 $ (6.3 ) (10.1 )%
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. Organic sales represent changes in
sales excluding the impact of acquisitions, divestitures, and
changes in foreign currency exchange rates.
Consolidated sales for the quarter ended March 31, 2019
were $391.4 million. Changes in foreign currency exchange rates had
an unfavorable impact of $12.8 million on consolidated sales
compared to a year ago. In addition, the impact of a significant
brand client account loss and an estimated significant decline in
U.S. casketed deaths contributed to the year-over-year sales
decrease. Consolidated sales for the current quarter were favorably
impacted by sales growth in the private label brand market,
increased sales of surfaces and engineered products, higher
warehouse automation sales and increased sales of bronze and
granite memorial products in the U.S. In addition, recent
acquisitions also contributed to sales for the current quarter.
Net income attributable to the Company for the quarter ended
March 31, 2019 was $15.4 million, or $0.48 per share. On a
non-GAAP adjusted basis, earnings for the fiscal 2019 second
quarter were $0.90 per share. The decrease from the fiscal 2018
second quarter primarily reflected the impacts of lower
consolidated sales and unfavorable changes in foreign currency
exchange rates compared to last year, which were partially offset
by reduced selling and administrative expenses, higher investment
income, and lower income taxes for the current quarter.
Adjusted EBITDA (net income before interest expense, income
taxes, depreciation and amortization, and other adjustments) for
the fiscal 2019 second quarter was $56.2 million. Changes in
foreign currency rates (primarily translation) were estimated to
have an unfavorable impact of $2.8 million ($0.06 per share) on
adjusted EBITDA, compared to the same quarter last year. See
reconciliation of adjusted EBITDA below.
Sales for the SGK Brand Solutions segment were $190.7 million
for the quarter ended March 31, 2019, compared to $207.1
million a year ago. Changes in foreign currency exchange rates had
an unfavorable impact of $11.1 million on the segment’s sales
compared with the same quarter last year. In addition, a
significant brand client account loss unfavorably impacted sales by
approximately $7 million for the current quarter, compared to a
year ago. Sales for the SGK Brand Solutions segment for the current
quarter reflected higher sales in the private label brand market,
organic sales growth in Europe and Asia, and increased sales of
surfaces and engineered products. In addition, the current quarter
benefited from the impact of the acquisition of Frost Converting
Systems (acquired November 2018).
Memorialization segment sales for the fiscal 2019 second quarter
were $162.2 million, compared to $168.7 million a year ago. The
segment’s casket sales were approximately $6 million lower for the
current quarter reflecting an estimated decline in U.S. casketed
deaths. In addition, fiscal 2019 sales for the Memorialization
segment were impacted by the divestiture of a controlling interest
in the pet cremation business. Changes in foreign currency exchange
rates had an unfavorable impact of nearly $1.0 million on the
segment’s sales compared with the same quarter last year. The
segment reported higher sales of bronze and granite memorial
products in the U.S. and the current quarter included the benefit
of the acquisition of Star Granite and Bronze (acquired February
2018).
Sales for the Industrial Technologies segment were $38.6 million
for the quarter ended March 31, 2019, compared to $38.3
million a year ago. The segment reported an increase in warehouse
automation sales for the quarter, which were partially offset by
lower product identification (marking products) sales. Changes in
foreign currency exchange rates had an unfavorable impact of
$713,000 on the segment’s sales compared with the same quarter last
year.
The Company purchased approximately 143,000 shares under its
repurchase program during the fiscal 2019 second quarter.
First Half Fiscal 2019 Consolidated
Results (Unaudited)
($ in millions, except per share data)
YTD FY2019 YTD FY2018
Change % Change Sales $ 765.6 $ 783.5 $
(17.9 ) (2.3 )% Net income attributable to Matthews $ 18.5 $ 53.4 $
(34.9 ) (65.4 )% Diluted EPS $ 0.58 $ 1.68 $ (1.10 ) (65.5 )%
Non-GAAP adjusted net income $ 44.5 $ 49.9 $ (5.4 ) (10.8 )%
Non-GAAP adjusted EPS $ 1.40 $ 1.57 $ (0.17 ) (10.8 )% Adjusted
EBITDA $ 102.7 $ 109.0 $ (6.3 ) (5.8 )%
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. Organic sales represent changes in
sales excluding the impact of acquisitions, divestitures, and
changes in foreign currency exchange rates.
Consolidated sales for the first six months of fiscal 2019 were
$765.6 million, compared to $783.5 million a year ago, representing
a decrease of $17.9 million from the prior year. Changes in foreign
currency exchange rates had an unfavorable impact of $18.6 million
on consolidated sales compared to a year ago. In addition, the
current year reflected the impact of a significant brand client
account loss and an estimated decline in U.S. casketed deaths.
Consolidated sales for the first half of fiscal 2019 were favorably
impacted by organic sales growth in Europe, in the private label
brand market, and for surfaces and engineered products; higher
warehouse automation sales; and increased sales of bronze and
granite memorial products in the U.S. In addition, recent
acquisitions also contributed to sales for the current year.
Net income attributable to the Company for the first six months
of fiscal 2019 was $18.5 million, or $0.58 per share. A substantial
portion of the decrease from the prior period reflected the
favorable impact on last year’s earnings of U.S. Federal tax
regulation changes. In addition, the results for the first six
months of fiscal 2019 included a loss on the divestiture of a
controlling interest in the pet cremation business and an increase
in interest expense primarily related to the Company’s bond
offering in December 2017, compared with a year ago.
On a non-GAAP adjusted basis, earnings for the first six months
of fiscal 2019 were $1.40 per share. The decrease primarily
reflected the impacts of lower consolidated sales, higher interest
expense and unfavorable changes in foreign currency exchange rates
compared to last year.
Adjusted EBITDA for the first six months of fiscal 2019 was
$102.7 million. Changes in foreign currency rates (primarily
translation) were estimated to have an unfavorable impact of $4.1
million ($0.09 per share) on adjusted EBITDA compared to last year.
See reconciliation of adjusted EBITDA below.
Sales for the SGK Brand Solutions segment were $376.0 million
for the six months ended March 31, 2019, compared to $398.8
million a year ago. Changes in foreign currency exchange rates had
an unfavorable impact of $15.8 million on the segment’s sales
compared with last year. In addition, a significant brand client
account loss unfavorably impacted sales by approximately $12
million for the current year compared to a year ago. Sales for the
SGK Brand Solutions segment for the current year reflected organic
sales growth in Europe, in the private label brand market, and for
surfaces and engineered products. In addition, the current year
reflected the impact of the acquisition of Frost Converting
Systems.
Memorialization segment sales for the first six months of fiscal
2019 were $316.1 million, compared to $313.6 million a year ago,
representing an increase of $2.5 million, or 0.8%. The increase
reflected higher sales of bronze and granite memorial products in
the U.S. and the benefit of the acquisition of Star Granite and
Bronze. These increases were partially offset by lower casket sales
reflecting an estimated decline in U.S. casketed deaths. In
addition, fiscal 2019 sales for the segment were impacted by the
divestiture of a controlling interest in the pet cremation
business. Changes in foreign currency exchange rates had an
unfavorable impact of $1.5 million on the segment’s sales compared
with last year.
Sales for the Industrial Technologies segment were $73.6 million
for the six months ended March 31, 2019, compared to $71.1
million a year ago, representing an increase of $2.5 million, or
3.4%. The segment’s sales for fiscal 2019 reflected an increase in
warehouse automation sales and the benefit of the acquisition of
Compass Engineering (acquired November 2017). Product
identification sales were lower for the current year and changes in
foreign currency exchange rates had an unfavorable impact of $1.3
million on sales compared with last year.
The Company purchased approximately 330,000 shares under its
repurchase program during the first six months of fiscal 2019.
Outlook
Mr. Bartolacci further stated: “We currently expect the
headwinds of year-over-year currency rate changes and the decline
in U.S. casketed deaths to impact our full year results for fiscal
2019. As a result, achievement of our initial fiscal 2019 earnings
targets has become more challenging.
“We remain encouraged by the continued strong order rates for
warehouse automation and engineered products and the recent growth
from new account wins in the private label brand market. In
addition, improving trends in product identification sales, recent
U.S. brand account wins, and a strong current backlog for
merchandising solutions will have a positive impact on the
remainder of the fiscal year. We also see potential new project
opportunities for our engineered products and incineration
equipment.
“Based on these factors, we have revised our earnings targets
and are currently projecting adjusted EBITDA for fiscal 2019 in the
range of $240 million to $250 million and adjusted earnings per
share in the range of $3.60 to $3.75.”
Typically, sales and earnings for the Company are stronger in
the second half of the fiscal year, compared to the first half.
Webcast
The Company will host a conference call and webcast on Friday,
May 3, 2019 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 calling (201) 689-8471.
The audio webcast can be monitored at www.matw.com. A telephonic replay will be
available from 12:00 p.m. ET on the day of the call through Friday,
May 17, 2019. To listen to the archived call, dial (412) 317-6671
and enter the pass code 13689435. The webcast replay will be
available in the investor relations section of the Company’s
website at www.matw.com, where a
transcript will also be posted once available.
About Matthews International Corporation
Matthews International Corporation is a global provider of brand
solutions, memorialization products and industrial technologies.
The SGK Brand Solutions segment is a leader in providing brand
development, deployment and delivery services that help build our
clients’ brands and consumers’ desire for them. The Memorialization
segment is a leading provider of memorialization products,
including memorials, caskets and cremation equipment, primarily to
cemetery and funeral home customers that help families move from
grief to remembrance. The Industrial Technologies segment designs,
manufactures and distributes marking, coding and industrial
automation technologies and solutions. The Company has
approximately 11,000 employees in more than 25 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. 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 the cost of
materials used in the manufacture of the Company's products,
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, changes in product demand or pricing as a
result of domestic or international competitive pressures, unknown
risks in connection with the Company's acquisitions, cybersecurity
concerns, effectiveness of the Company's internal controls,
compliance with domestic and foreign laws and regulations,
technological factors beyond the Company's control, 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 EndedMarch
31,
Six Months EndedMarch
31,
2019 2018(1) % Change
2019 2018(1) % Change
Sales $ 391,400 $ 414,061
(5.5 )% $ 765,577 $
783,515 (2.3 )% Cost of sales (255,119 )
(263,381 ) (3.1 )% (502,885 ) (501,422 ) 0.3 %
Gross profit
136,281 150,680 (9.6 )% 262,692
282,093 (6.9 )% Gross margin 34.8 % 36.4 %
34.3 % 36.0 % Selling and administrative expenses (102,508 )
(111,215 ) (7.8 )% (204,640 ) (216,598 ) (5.5 )% Amortization of
intangible assets (9,509 ) (8,249 ) 15.3 % (17,622 ) (14,930 ) 18.0
%
Operating profit 24,264 31,216
(22.3 )% 40,430 50,565
(20.0 )% Operating margin 6.2 % 7.5 % 5.3 % 6.5 %
Interest and other income (deductions), net (9,235 ) (10,932
) (15.5 )% (21,812 ) (20,350 ) 7.2 %
Income before income
taxes 15,029 20,284 (25.9 )%
18,618 30,215 (38.4 )% Income taxes 165
(2,212 ) (107.5 )% (440 ) 23,015 (101.9 )% Net income
15,194 18,072 (15.9 )% 18,178 53,230 (65.9 )% Non-controlling
interests 223 110 102.7 % 336 132 154.5
%
Net income attributable to Matthews $ 15,417
$ 18,182 (15.2 )%
$ 18,514 $ 53,362
(65.3 )% Earnings per share -- diluted
$ 0.48 $ 0.57
(15.8 )% $ 0.58 $
1.68 (65.5 )% Earnings per
share -- non-GAAP(2) $ 0.90
$ 0.93 (3.2 )% $
1.40 $ 1.57 (10.8
)% Dividends declared per share $
0.20 $ 0.19 5.3 %
$ 0.40 $ 0.38 5.3
% (1) Information for the three and six months ended
March 31, 2018 has been adjusted to reflect the adoption of ASU No.
2017-07. The Company adopted this standard on October 1, 2018
applying the presentation requirements retrospectively resulting in
a reclassification of net benefit costs of $714, $226 and $485 from
cost of sales, selling expense and administrative expense,
respectively, to other income (deductions), net for the three
months ended March 31, 2019; and $1,428, $452 and $970 from cost of
sales, selling expense and administrative expense, respectively, to
other income (deductions), net for the six months ended March 31,
2019 (2) See reconciliation of non-GAAP financial information
provided in tables at the end of this release
SEGMENT INFORMATION
(Unaudited)(In thousands)
Three Months EndedMarch
31,
Six Months EndedMarch
31,
2019 2018 2019 2018
Sales: SGK Brand Solutions $ 190,651 $ 207,052 $ 375,951 $
398,818 Memorialization 162,176 168,689 316,062 313,578 Industrial
Technologies 38,573 38,320 73,564 71,119
$ 391,400 $ 414,061 $ 765,577 $ 783,515
Adjusted EBITDA:(1)
SGK Brand Solutions $ 29,370 $ 35,099 $ 56,721 $ 65,951
Memorialization 34,965 39,478 65,286 67,921 Industrial Technologies
4,792 4,881 8,387 8,568 Corporate and Non-Operating (12,939 )
(17,003 ) (27,725 ) (33,489 ) Total Adjusted EBITDA(2) $ 56,188
$ 62,455 $ 102,669 $ 108,951 (1)
Beginning in fiscal 2019, the Company changed its primary measure
of segment profitability from operating profit to adjusted EBITDA
on a pre-corporate cost allocation basis. This presentation is
consistent with how the Company's chief operating decision maker
evaluates the results of operations and makes strategic decisions
about the business. (2) See reconciliation of non-GAAP financial
information provided in tables at the end of this release
CONDENSED CONSOLIDATED BALANCE SHEET
INFORMATION (Unaudited)(In thousands)
March 31, 2019 September 30,
2018 ASSETS Cash and cash equivalents $ 37,730 $ 41,572
Accounts receivable, net 318,147 331,463 Inventories, net 187,653
180,451 Other current assets 74,274 61,592 Total current
assets 617,804 615,078 Property, plant and equipment, net 243,493
252,775 Goodwill 933,748 948,894 Other intangible assets, net
430,706 443,910 Other long-term assets 110,146 97,087
Total assets $ 2,335,897 $ 2,357,744
LIABILITIES Long-term debt, current maturities $ 56,596 $
31,260 Other current liabilities 250,971 255,142 Total
current liabilities 307,567 286,402 Long-term debt 919,102 929,342
Other long-term liabilities 261,767 273,286
Total
liabilities 1,488,436 1,489,030
SHAREHOLDERS'
EQUITY Total shareholders' equity 847,461 868,714
Total liabilities and shareholders' equity $ 2,335,897
$ 2,357,744
CONDENSED CONSOLIDATED CASH FLOWS
INFORMATION (Unaudited)(In thousands)
Six Months Ended March 31, 2019
2018 Cash flows from operating activities: Net
income $ 18,178 $ 53,230 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 40,276 36,986 Changes in working capital items (17,552
) (7,818 ) Other operating activities 4,387 (26,128 )
Net
cash provided by operating activities 45,289 56,270
Cash flows from investing activities: Capital
expenditures (19,170 ) (21,854 ) Acquisitions, net of cash acquired
(11,525 ) (119,689 ) Other investing activities (2,772 ) (10,015 )
Net cash used in investing activities (33,467 ) (151,558 )
Cash flows from financing activities: Net proceeds
from long-term debt 14,267 132,083 Purchases of treasury stock
(13,286 ) (18,305 ) Dividends (12,860 ) (12,110 ) Other financing
activities (3,486 ) —
Net cash (used in) provided by
financing activities (15,365 ) 101,668 Effect of
exchange rate changes on cash (299 ) 936
Net
change in cash and cash equivalents $ (3,842 ) $ 7,316
Reconciliations of Non-GAAP Financial Measures
Included in this report are measures of financial performance
that are not defined by GAAP. 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 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.
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 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 NET INCOME AND EPS
RECONCILIATION (Unaudited)(In thousands, except per share
data)
Three Months EndedMarch
31,
Six Months EndedMarch
31,
2019 2018 2019 2018
Net income attributable to Matthews $ 15,417
$ 18,182 $ 18,514 $
53,362 Acquisition costs 2,496 2,856 4,000 4,335 ERP
integration costs 1,336 2,620 2,947 4,120 Strategic initiatives and
other charges 1,563 1,160 1,563 1,640 Loss on divestiture — — 3,304
— Non-service pension and postretirement expense (1) 719 1,055
1,408 2,109 Intangible amortization expense 7,036 6,104 13,040
11,048 Tax-related (2) — (2,382 ) (300 ) (26,738 )
Adjusted net income $ 28,567 $
29,595 $ 44,476 $
49,876 Adjusted EPS $ 0.90
$ 0.93 $ 1.40
$ 1.57 Note: Adjustments to net income
for non-GAAP reconciling items were calculated using an income tax
rate of 26.0% for the three and six months ended March 31, 2019 and
2018, respectively. (1) The non-GAAP adjustment to pension and
postretirement expense represents the add-back of the non-service
related components of these costs. Non-service related components
include interest cost, expected return on plan assets and
amortization of actuarial gains and losses. The service cost and
prior service cost components of pension and postretirement expense
are considered to be a better reflection of the ongoing
service-related costs of providing these benefits. The other
components of GAAP pension and postretirement expense are primarily
influenced by general market conditions impacting investment
returns and interest (discount) rates. 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. (2) The
tax-related adjustments in fiscal 2018 consisted of income tax
regulation changes which included an estimated favorable tax
benefit of approximately $37,800 for the reduction in the Company’s
net deferred tax liability principally reflecting the lower U.S.
Federal tax rate, offset partially by an estimated repatriation
transition tax charge and other charges of approximately $11,000,
for the six month period ended March 31, 2018.
ADJUSTED EBITDA RECONCILIATION
(Unaudited)(In thousands)
Three Months EndedMarch
31,
Six Months EndedMarch
31,
2019 2018 2019 2018
Net income $ 15,194 $ 18,072
$ 18,178 $ 53,230 Income tax provision
(benefit) (165 ) 2,212 440 (23,015 )
Income before
income taxes $ 15,029 $ 20,284
18,618 30,215 Net loss attributable to noncontrolling
interests 223 110 336 132 Interest expense 10,259 9,262 20,560
17,063 Depreciation and amortization * 21,050 19,748 40,276 36,986
Acquisition costs (1)** 3,374 3,859 5,406 5,790 ERP integration
costs (2)** 1,805 3,541 3,982 5,568 Strategic initiatives and other
charges (3)** 2,112 1,568 2,112 2,215 Loss on divestiture (4) — —
4,465 — Stock-based compensation 1,366 2,658 5,013 8,132
Non-service pension and postretirement expense (5) 970 1,425
1,901 2,850
Total Adjusted EBITDA
$ 56,188 $ 62,455
$ 102,669 $ 108,951
Adjusted EBITDA margin 14.4 % 15.1 % 13.4 % 13.9 % (1)
Includes certain non-recurring costs associated with recent
acquisition activities. (2) Represents costs associated with global
ERP system integration efforts. (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. (4) Represents a loss on the sale of a
controlling interest in a Memorialization business. (5) Non-service
pension and postretirement expense includes interest cost, expected
return on plan assets and amortization of actuarial 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. 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 $13,165 and
$11,827 for the SGK Brand Solutions segment, $5,039 and $5,172 for
the Memorialization segment, $1,559 and $1,476 for the Industrial
Technologies segment, and $1,287 and $1,273 for Corporate and
Non-Operating, for the three months ended March 31, 2019 and 2018,
respectively. Depreciation and amortization was $24,607 and $22,832
for the SGK Brand Solutions segment, $10,058 and $9,314 for the
Memorialization segment, $3,085 and $2,602 for the Industrial
Technologies segment, and $2,526 and $2,238 for Corporate and
Non-Operating, for the six months ended March 31, 2019 and 2018,
respectively. ** Acquisition costs, ERP integration costs, and
strategic initiatives and other charges were $2,808 and $1,535 for
the SGK Brand Solutions segment and $4,483 and $6,294 for Corporate
and Non-Operating, for the three months ended March 31, 2019 and
2018, respectively. Acquisition costs, ERP integration costs, and
strategic initiatives and other charges were $642 for the
Memorialization segment and $497 for the Industrial Technologies
segment for the three months ended March 31, 2018. Acquisition
costs, ERP integration costs, and strategic initiatives and other
charges were $3,409 and $3,185 for the SGK Brand Solutions segment
and $8,091 and $8,871 for Corporate and Non-Operating, for the six
months ended March 31, 2019 and 2018, respectively. Acquisition
costs, ERP integration costs, and strategic initiatives and other
charges were $930 for the Memorialization segment and $587 for the
Industrial Technologies segment for the six months ended March 31,
2018.
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