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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
____________________________________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 2024
____________________________________________________________
MATTHEWS INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
____________________________________________________________
| | | | | | | | |
| Pennsylvania | 0-09115 | 25-0644320 |
| (State or other jurisdiction of | (Commission | (I.R.S. Employer |
| Incorporation or organization) | File Number) | Identification No.) |
Two Northshore Center, Pittsburgh, PA 15212-5851
(Address of principal executive offices) (Zip Code)
(412) 442-8200
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
_____________________________________________________________________________________________ Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| | | | | | | | | | | | | | |
| Securities registered pursuant to Section 12(b) of the Act: | | |
| Title of each class | | Trading Symbol | | Name of each exchange on which registered |
| Class A Common Stock, $1.00 par value | | MATW | | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On August 1, 2024, Matthews International Corporation ("Matthews" or the "Company") issued a press release announcing its earnings for the third fiscal quarter of 2024. A copy of the press release is furnished hereto as Exhibit 99.1.
Item 7.01 Regulation FD Disclosure.
On August 1, 2024, Matthews posted to the Company's website (www.matw.com/investors) its earnings teleconference presentation which includes selected financial results for the third fiscal quarter of 2024. The presentation is furnished herewith as Exhibit 99.2. This information, including exhibits attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. This information shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference to this Form 8-K in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| | | | | | | | |
Exhibit
Number | | Description |
| | | |
| | Press Release, dated August 1, 2024, issued by Matthews International Corporation |
| | Matthews International Corporation earnings teleconference presentation for the third fiscal quarter of 2024 |
| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | | | | | | | | | |
| MATTHEWS INTERNATIONAL CORPORATION |
| (Registrant) |
| | | |
| By: | /s/ Steven F. Nicola | |
| | | |
| | Steven F. Nicola | |
| | Chief Financial Officer and Secretary | |
Date: August 2, 2024
Matthews International Corporation
Corporate Office
Two NorthShore Center
Pittsburgh, PA 15212-5851
Phone: (412) 442-8200 | | | | | | | | | | | |
| August 1, 2024 | Contact: | Steven F. Nicola | William D. Wilson |
| | Chief Financial Officer and Secretary | Senior Director, Corporate Development |
| |
MATTHEWS INTERNATIONAL REPORTS RESULTS FOR
FISCAL 2024 THIRD QUARTER
| | |
Fiscal 2024 Third Quarter Financial Highlights: |
•Outstanding debt reduced by $12.6 million during the quarter
•3rd Quarter GAAP EPS of $0.06; non-GAAP adjusted EPS of $0.56
•SGK Brand Solutions segment reports sales growth for the quarter
•Energy storage sales impacted by customer delays
•Company announces cost reduction initiatives
•Webcast: Friday, August 2, 2024, 9:00 a.m., (201) 689-8471
PITTSBURGH, PA, August 1, 2024 - Matthews International Corporation (NASDAQ GSM: MATW) today announced financial results for its third quarter of fiscal 2024.
In discussing the results for the Company’s fiscal 2024 third quarter, Joseph C. Bartolacci, President and Chief Executive Officer, stated:
“Our consolidated financial results continue to be underpinned by the strength of our core businesses, particularly from our Memorialization and SGK Brand Solutions segments, which generated another quarter of solid performance. The Memorialization segment reported sales relatively consistent with the same quarter last year, despite a decline in U.S. casketed deaths. The impact of unit volume declines in cemetery memorials and caskets related to the lower deaths was substantially offset by improved pricing and higher sales of mausoleums.
“Sales for the SGK Brand Solutions segment were modestly higher for the current quarter. The segment’s improvement primarily reflected growth in the private label market and in its European packaging business. The pricing environment to mitigate inflationary cost increases in this business also continues to improve.
“With respect to the Industrial Technologies segment, sales for our product identification business also remained relatively consistent with a year ago. However, further customer delays of shipments and related installations for our energy storage business unfavorably impacted the segment’s sales compared to a year ago. Additionally, slow conditions in the general warehouse automation market contributed to the year-over-year decline in sales for this segment.
“For the three months ended June 30, 2024, we reported another quarter of solid cash flow which facilitated further reduction of $12.6 million in our outstanding debt. We are currently projecting further
Matthews International Reports Results for Fiscal 2024 Third Quarter
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August 1, 2024
debt reduction in the fiscal 2024 fourth quarter. With respect to our outstanding bonds, which are scheduled to mature on December 1, 2025, we expect this refinancing to be completed in advance of December 1, 2024.
“Looking forward to our fiscal 2024 fourth quarter, we currently project adjusted EBITDA to be relatively consistent with a year ago. The Memorialization segment is expected to be generally in line with last year despite lower projected deaths, and the SGK Brand Solutions segment is expected to finish fiscal 2024 relatively consistent as well. We expect energy storage shipments and installations to pick up in the fiscal 2024 fourth quarter, and into fiscal 2025. Also, order rates for the warehouse automation business began to improve in the third quarter, which has continued into the early part of our fourth quarter. As a result, we are currently projecting adjusted EBITDA for fiscal 2024 to be in the range of $205 million to $210 million.
“As we have previously indicated, our proprietary dry battery electrode equipment technology significantly reduces the production cost of batteries. As you are aware, Tesla recently filed a suit attempting to restrict us from offering our innovative solutions to others. We remain confident in our ability to sell our equipment solutions into the growing electric vehicle market as our experienced global engineering talent brings a unique and valuable knowledge base to this market. Battery and automobile equipment manufacturers from around the world continue to solicit us for an opportunity to work with our Company and we have continued to receive orders. We do not currently believe Tesla's suit will have a material impact on the Company and we continue to strongly believe that there is no merit to the claims against the Company.
“Lastly, beginning in our fiscal 2024 fourth quarter, we are initiating cost reduction programs which will span several of our business units as well as our corporate functions. We are targeting annual consolidated savings from these programs of up to $50 million, with the most significant portion from our engineering and tooling operations in Europe. These initiatives are designed to position these businesses to capitalize on future growth opportunities. We currently estimate our one-time costs to achieve these savings to approximate $40 million.”
Third Quarter Fiscal 2024 Consolidated Results (Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| ($ in millions, except per share data) | Q3 FY2024 | | Q3 FY2023 | | Change | | % Change |
| Sales | $ | 427.8 | | | $ | 471.9 | | | $ | (44.1) | | | (9.3) | % |
| Net income attributable to Matthews | $ | 1.8 | | | $ | 8.7 | | | $ | (7.0) | | | (79.7) | % |
| Diluted earnings per share | $ | 0.06 | | | $ | 0.28 | | | $ | (0.22) | | | (78.6) | % |
| Non-GAAP adjusted net income | $ | 17.3 | | | $ | 23.0 | | | $ | (5.7) | | | (24.7) | % |
| Non-GAAP adjusted EPS | $ | 0.56 | | | $ | 0.74 | | | $ | (0.18) | | | (24.3) | % |
| Adjusted EBITDA | $ | 44.7 | | | $ | 56.2 | | | $ | (11.4) | | | (20.4) | % |
| 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 quarter ended June 30, 2024 were $427.8 million, compared to $471.9 million for the same quarter a year ago, representing a decrease of $44.1 million, or 9.3%. Changes in foreign currency exchange rates were estimated to have an unfavorable impact of $4.1 million on fiscal 2024 third quarter sales compared to the prior year.
Net income attributable to the Company for the quarter ended June 30, 2024 was $1.8 million, or $0.06 per share, compared to $8.7 million, or $0.28 per share in the prior year. On a non-GAAP adjusted basis, earnings for the fiscal 2024 third quarter were $0.56 per share, compared to $0.74 per share a year ago. The decrease was primarily attributable to lower consolidated adjusted EBITDA and higher interest expense for the current quarter compared to a year ago, partially offset by income tax benefits. Adjusted EBITDA for the fiscal 2024 third quarter was $44.7 million, compared to $56.2 million a year ago,
Matthews International Reports Results for Fiscal 2024 Third Quarter
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August 1, 2024
primarily reflecting lower adjusted EBITDA in the Industrial Technologies segment, partially offset by lower corporate and non-operating costs.
Fiscal 2024 Year-to-Date Consolidated Results (Unaudited) | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in millions, except per share data) | YTD FY2024 | | YTD FY2023 | | Change | | % Change |
| Sales | $ | 1,349.0 | | | $ | 1,400.7 | | | $ | (51.7) | | | (3.7) | % |
| Net income attributable to Matthews | $ | 8.5 | | | $ | 21.6 | | | $ | (13.1) | | | (60.6) | % |
| Diluted earnings per share | $ | 0.27 | | | $ | 0.69 | | | $ | (0.42) | | | (60.9) | % |
| Non-GAAP adjusted net income | $ | 50.5 | | | $ | 59.8 | | | $ | (9.3) | | | (15.6) | % |
| Non-GAAP adjusted EPS | $ | 1.62 | | | $ | 1.92 | | | $ | (0.30) | | | (15.6) | % |
| Adjusted EBITDA | $ | 147.0 | | | $ | 163.9 | | | $ | (16.9) | | | (10.3) | % |
| 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 nine months ended June 30, 2024 were $1.35 billion, compared to $1.40 billion a year ago, representing an decrease of $51.7 million, or 3.7%. Changes in foreign currency rates were estimated to have a favorable impact of $660,000 on fiscal 2024 consolidated sales compared to last year.
Net income attributable to the Company for the nine months ended June 30, 2024 was $8.5 million, or $0.27 per share, compared to $21.6 million, or $0.69 per share in the prior year. On a non-GAAP adjusted basis, earnings for the nine months ended June 30, 2024 were $1.62 per share, compared to $1.92 per share a year ago. The decrease was primarily attributable to lower consolidated adjusted EBITDA and higher interest expense for the current period compared to a year ago, partially offset by income tax benefits. Adjusted EBITDA for the first nine months of fiscal 2024 was $147.0 million, compared to $163.9 million a year ago, reflecting lower adjusted EBITDA in the Industrial Technologies and Memorialization segments, partially offset by higher adjusted EBITDA in the SGK Brand Solutions segment and lower corporate and non-operating costs.
Webcast
The Company will host a conference call and webcast on Friday, August 2, 2024 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.
Matthews International Reports Results for Fiscal 2024 Third Quarter
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August 1, 2024
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,” “targets,” “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, and 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, the outcome of the Company's dispute with Tesla, Inc. ("Tesla"), 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.
Matthews International Reports Results for Fiscal 2024 Third Quarter
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August 1, 2024
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | | | | Nine Months Ended
June 30, | | | |
| 2024 | | 2023 | | % Change | | | 2024 | | 2023 | | % Change | |
| Sales | $ | 427,833 | | | $ | 471,908 | | | (9.3) | % | | | $ | 1,349,042 | | | $ | 1,400,728 | | | (3.7) | % | |
| Cost of sales | (295,996) | | | (333,603) | | | (11.3) | % | | | (936,670) | | | (973,870) | | | (3.8) | % | |
| Gross profit | 131,837 | | | 138,305 | | | (4.7) | % | | | 412,372 | | | 426,858 | | | (3.4) | % | |
| Gross margin | 30.8 | % | | 29.3 | % | | | | | 30.6 | % | | 30.5 | % | | | |
| | | | | | | | | | | | | |
| Selling and administrative expenses | (116,098) | | | (106,141) | | | 9.4 | % | | | (347,124) | | | (333,556) | | | 4.1 | % | |
| Amortization of intangible assets | (9,037) | | | (10,640) | | | (15.1) | % | | | (27,791) | | | (31,499) | | | (11.8) | % | |
| | | | | | | | | | | | | |
| Operating profit | 6,702 | | | 21,524 | | | (68.9) | % | | | 37,457 | | | 61,803 | | | (39.4) | % | |
| Operating margin | 1.6 | % | | 4.6 | % | | | | | 2.8 | % | | 4.4 | % | | | |
| | | | | | | | | | | | | |
| Interest and other deductions, net | (13,754) | | | (13,411) | | | 2.6 | % | | | (39,633) | | | (36,224) | | | 9.4 | % | |
| (Loss) income before income taxes | (7,052) | | | 8,113 | | | (186.9) | % | | | (2,176) | | | 25,579 | | | (108.5) | % | |
| Income taxes | 8,829 | | | 558 | | | NM | | | 10,677 | | | (4,136) | | | NM | |
| Net income | 1,777 | | | 8,671 | | | (79.5) | % | | | 8,501 | | | 21,443 | | | (60.4) | % | |
| Non-controlling interests | — | | | 67 | | | (100.0) | % | | | — | | | 125 | | | (100.0) | % | |
| Net income attributable to Matthews | $ | 1,777 | | | $ | 8,738 | | | (79.7) | % | | | $ | 8,501 | | | $ | 21,568 | | | (60.6) | % | |
| | | | | | | | | | | | | |
| Earnings per share -- diluted | $ | 0.06 | | | $ | 0.28 | | | (78.6) | % | | | $ | 0.27 | | | $ | 0.69 | | | (60.9) | % | |
| | | | | | | | | | | | | |
Earnings per share -- non-GAAP (1) | $ | 0.56 | | | $ | 0.74 | | | (24.3) | % | | | $ | 1.62 | | | $ | 1.92 | | | (15.6) | % | |
| | | | | | | | | | | | | |
| Dividends declared per share | $ | 0.24 | | | $ | 0.23 | | | 4.3 | % | | | $ | 0.72 | | | $ | 0.69 | | | 4.3 | % | |
| | | | | | | | | | | | | |
| Diluted Shares | 31,228 | | | 31,244 | | | | | | 31,223 | | | 31,129 | | | | |
(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 Ended
June 30, | | Nine Months Ended
June 30, |
| | 2024 | | 2023 | | 2024 | | 2023 |
| Sales: | | | | | | | |
| Memorialization | $ | 202,664 | | | $ | 208,728 | | | $ | 632,891 | | | $ | 638,119 | |
| Industrial Technologies | 91,731 | | | 130,533 | | | 319,241 | | | 365,190 | |
| SGK Brand Solutions | 133,438 | | | 132,647 | | | 396,910 | | | 397,419 | |
| | $ | 427,833 | | | $ | 471,908 | | | $ | 1,349,042 | | | $ | 1,400,728 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted EBITDA: | | | | | | | |
| Memorialization | $ | 38,737 | | | $ | 39,929 | | | $ | 122,051 | | | $ | 127,096 | |
| Industrial Technologies | 4,196 | | | 15,041 | | | 23,846 | | | 42,808 | |
| SGK Brand Solutions | 16,054 | | | 16,364 | | | 44,317 | | | 39,616 | |
| Corporate and Non-Operating | (14,241) | | | (15,146) | | | (43,186) | | | (45,594) | |
Total Adjusted EBITDA (1) | $ | 44,746 | | | $ | 56,188 | | | $ | 147,028 | | | $ | 163,926 | |
| | | | | | | |
(1) See reconciliation of non-GAAP financial information provided in tables at the end of this release |
Matthews International Reports Results for Fiscal 2024 Third Quarter
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August 1, 2024
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION (Unaudited)
(In thousands) | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2024 | September 30, 2023 |
| ASSETS | | | | | | |
| Cash and cash equivalents | | | $ | 42,745 | | | | $ | 42,101 | |
| Accounts receivable, net | | | 192,817 | | | | 207,526 | |
| Inventories, net | | | 248,644 | | | | 260,409 | |
| Other current assets | | | 157,873 | | | | 138,221 | |
| Total current assets | | | 642,079 | | | | 648,257 | |
| Property, plant and equipment, net | | | 272,875 | | | | 270,326 | |
| Goodwill | | | 706,219 | | | | 698,109 | |
| Other intangible assets, net | | | 134,801 | | | | 160,478 | |
| Other long-term assets | | | 105,903 | | | | 110,211 | |
| Total assets | | | $ | 1,861,877 | | | | $ | 1,887,381 | |
| | | | | | |
| LIABILITIES | | | | | | |
| Long-term debt, current maturities | | | $ | 5,476 | | | | $ | 3,696 | |
| Other current liabilities | | | 380,676 | | | | 390,904 | |
| Total current liabilities | | | 386,152 | | | | 394,600 | |
| Long-term debt | | | 824,745 | | | | 786,484 | |
| Other long-term liabilities | | | 147,288 | | | | 181,016 | |
| Total liabilities | | | 1,358,185 | | | | 1,362,100 | |
| | | | | | |
| SHAREHOLDERS' EQUITY | | | | | | |
| Total shareholders' equity | | | 503,692 | | | | 525,281 | |
| Total liabilities and shareholders' equity | | | $ | 1,861,877 | | | | $ | 1,887,381 | |
CONDENSED CONSOLIDATED CASH FLOWS INFORMATION (Unaudited)
(In thousands) | | | | | | | | | | | |
| Nine Months Ended June 30, |
| | 2024 | | 2023 |
| Cash flows from operating activities: | | | |
| Net income | $ | 8,501 | | | $ | 21,443 | |
| Adjustments to reconcile net income to net cash flows from operating activities: | | |
| Depreciation and amortization | 70,441 | | | 71,813 | |
| Changes in working capital items | (29,154) | | | (16,131) | |
| Other operating activities | (6,452) | | | (219) | |
| Net cash provided by operating activities | 43,336 | | | 76,906 | |
| | | |
| Cash flows from investing activities: | | | |
| Capital expenditures | (33,180) | | | (37,107) | |
| Acquisitions, net of cash acquired | (5,825) | | | (15,341) | |
| Other investing activities | 374 | | | (1,269) | |
| Net cash used in investing activities | (38,631) | | | (53,717) | |
| | | |
| Cash flows from financing activities: | | | |
| | | |
| | | |
| Net payments from long-term debt | 27,780 | | | (31,442) | |
| Purchases of treasury stock | (20,525) | | | (2,818) | |
| Dividends | (24,063) | | | (21,184) | |
| Other financing activities | 12,712 | | | (913) | |
| Net cash used in financing activities | (4,096) | | | (56,357) | |
| | | |
| Effect of exchange rate changes on cash | 35 | | | 1,049 | |
| | | |
| Net change in cash and cash equivalents | $ | 644 | | | $ | (32,119) | |
Matthews International Reports Results for Fiscal 2024 Third Quarter
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August 1, 2024
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 certain commercial and 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.
Matthews International Reports Results for Fiscal 2024 Third Quarter
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August 1, 2024
ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands) | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | Nine Months Ended
June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
| Net income | $ | 1,777 | | | $ | 8,671 | | | $ | 8,501 | | | $ | 21,443 | |
| Income tax (benefit) provision | (8,829) | | | (558) | | | (10,677) | | | 4,136 | |
| (Loss) income before income taxes | $ | (7,052) | | | $ | 8,113 | | | $ | (2,176) | | | $ | 25,579 | |
| Net loss attributable to noncontrolling interests | — | | | 67 | | | — | | | 125 | |
Interest expense, including RPA and factoring financing fees (1) | 14,005 | | | 12,136 | | | 40,539 | | | 35,944 | |
Depreciation and amortization * | 23,657 | | | 23,936 | | | 70,441 | | | 71,813 | |
| | | | | | | |
Acquisition and divestiture related items (2)** | 2,266 | | | 308 | | | 5,565 | | | 4,445 | |
Strategic initiatives and other charges (3)** | 6,246 | | | 4,694 | | | 17,128 | | | 7,755 | |
| | | | | | | |
Highly inflationary accounting losses (primarily non-cash) (4) | 185 | | | 1,826 | | | 895 | | | 3,074 | |
| | | | | | | |
| | | | | | | |
| Stock-based compensation | 5,331 | | | 5,023 | | | 14,309 | | | 13,635 | |
Non-service pension and postretirement expense (5) | 108 | | | 85 | | | 327 | | | 1,556 | |
| Total Adjusted EBITDA | $ | 44,746 | | | $ | 56,188 | | | $ | 147,028 | | | $ | 163,926 | |
| Adjusted EBITDA margin | 10.5 | % | | 11.9 | % | | 10.9 | % | | 11.7 | % |
| | | | | | | |
| | | | | | | |
(1) Includes fees for receivables sold under the RPA and factoring arrangements totaling $1,225 and $1,212 for the three months ended June 30, 2024 and 2023, respectively, and $3,638 and $2,758 for the nine months ended June 30, 2024 and 2023, respectively. |
(2) Includes certain non-recurring items associated with recent acquisition and divestiture activities. |
(3) Includes certain non-recurring costs associated with commercial, operational and cost-reduction initiatives, and costs associated with global ERP system integration efforts. Fiscal 2024 also includes legal costs related to an ongoing dispute with Tesla, which totaled $3,166 and $8,138 for the three and nine months ended June 30, 2024, respectively. Fiscal 2023 includes loss recoveries totaling $2,154 for the nine months ended June 30, 2023, which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015. |
(4) Represents exchange losses associated with highly inflationary accounting related to the Company's Turkish subsidiaries. |
(5) 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 $7,073 and $5,807 for the Memorialization segment, $5,796 and $5,815 for the Industrial Technologies segment, $9,702 and $11,164 for the SGK Brand Solutions segment, and $1,086 and $1,150 for Corporate and Non-Operating, for the three months ended June 30, 2024 and 2023, respectively. Depreciation and amortization was $20,400 and $17,092 for the Memorialization segment, $17,744 and $17,584 for the Industrial Technologies segment, $28,943 and $33,543 for the SGK Brand Solutions segment, and $3,354 and $3,594 for Corporate and Non-Operating, for the nine months ended June 30, 2024 and 2023, respectively.
** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $1,108 and $270 for the Memorialization segment, $4,490 and $120 for the Industrial Technologies segment, $1,473 and $3,897 for the SGK Brand Solutions segment, and $1,441 and $715 for Corporate and Non-Operating, for the three months ended June 30, 2024 and 2023, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $2,204 and $981 for the Memorialization segment, $14,288 and $3,494 for the Industrial Technologies segment, $2,694 and $7,028 for the SGK Brand Solutions segment, and $3,507 and $697 for Corporate and Non-Operating, for the nine months ended June 30, 2024 and 2023, respectively.
Matthews International Reports Results for Fiscal 2024 Third Quarter
Page 9 of 11
August 1, 2024
ADJUSTED NET INCOME AND EPS RECONCILIATION (Unaudited)
(In thousands, except per share data) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | Nine Months Ended
June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
| | per share | | | per share | | | per share | | | per share |
| Net income attributable to Matthews | $ | 1,777 | | $ | 0.06 | | | $ | 8,738 | | $ | 0.28 | | | $ | 8,501 | | $ | 0.27 | | | $ | 21,568 | | $ | 0.69 | |
Acquisition and divestiture costs (1) | 1,626 | | 0.05 | | | 233 | | — | | | 4,036 | | 0.13 | | | 3,248 | | 0.10 | |
Strategic initiatives and other charges (2) | 6,715 | | 0.22 | | | 4,129 | | 0.14 | | | 15,812 | | 0.51 | | | 7,069 | | 0.23 | |
| | | | | | | | | | | |
Highly inflationary accounting losses (primarily non-cash) (3) | 185 | | 0.01 | | | 1,826 | | 0.06 | | | 895 | | 0.03 | | | 3,074 | | 0.10 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Non-service pension and postretirement expense (4) | 82 | | — | | | 64 | | — | | | 246 | | 0.01 | | | 1,167 | | 0.04 | |
| Amortization | 6,777 | | 0.22 | | | 7,980 | | 0.26 | | | 20,843 | | 0.67 | | | 23,624 | | 0.76 | |
| | | | | | | | | | | |
Tax-related (5) | 136 | | — | | | — | | — | | | 136 | | — | | | — | | — | |
| Adjusted net income | $ | 17,298 | | $ | 0.56 | | | $ | 22,970 | | $ | 0.74 | | | $ | 50,469 | | $ | 1.62 | | | $ | 59,750 | | $ | 1.92 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Note: Adjustments to net income for non-GAAP reconciling items were calculated using an income tax rate of 13.0% and 18.8% for the three and nine months ended June 30, 2024, respectively, and 24.1% and 25.3% for the three and nine months ended June 30, 2023, respectively. |
(1) Includes certain non-recurring costs associated with recent acquisition and divestiture activities. |
(2) Includes certain non-recurring costs associated with commercial, operational and cost-reduction initiatives, and costs associated with global ERP system integration efforts. Fiscal 2024 also includes legal costs related to an ongoing dispute with Tesla, which totaled $3,166 and $8,138 for the three and nine months ended June 30, 2024, respectively. Fiscal 2023 includes loss recoveries totaling $2,154 for the nine months ended June 30, 2023, which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015. |
(3) Represents exchange losses associated with highly inflationary accounting related to the Company's Turkish subsidiaries. |
(4) 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. |
(5) Represents tax-related items incurred in connection with the derecognition of deferred tax assets for a joint venture that is being terminated. |
Matthews International Reports Results for Fiscal 2024 Third Quarter
Page 10 of 11
August 1, 2024
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 June 30, 2024 | $ | 202,664 | | | $ | 91,731 | | | $ | 133,438 | | | $ | — | | | $ | 427,833 | |
| Changes in foreign exchange translation rates | 147 | | | 1,398 | | | 2,559 | | | — | | | 4,104 | |
Constant currency sales for the quarter ended June 30, 2024 | $ | 202,811 | | | $ | 93,129 | | | $ | 135,997 | | | $ | — | | | $ | 431,937 | |
| | | | | | | | | |
Reported sales for the nine months ended June 30, 2024 | $ | 632,891 | | | $ | 319,241 | | | $ | 396,910 | | | $ | — | | | $ | 1,349,042 | |
| Changes in foreign exchange translation rates | (256) | | | (3,277) | | | 2,873 | | | — | | | (660) | |
Constant currency sales for the nine months ended June 30, 2024 | $ | 632,635 | | | $ | 315,964 | | | $ | 399,783 | | | $ | — | | | $ | 1,348,382 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Reported adjusted EBITDA for the quarter ended June 30, 2024 | $ | 38,737 | | | $ | 4,196 | | | $ | 16,054 | | | $ | (14,241) | | | $ | 44,746 | |
| Changes in foreign exchange translation rates | 25 | | | 217 | | | 168 | | | 21 | | | 431 | |
Constant currency adjusted EBITDA for the quarter ended June 30, 2024 | $ | 38,762 | | | $ | 4,413 | | | $ | 16,222 | | | $ | (14,220) | | | $ | 45,177 | |
| | | | | | | | | |
Reported adjusted EBITDA for the nine months ended June 30, 2024 | $ | 122,051 | | | $ | 23,846 | | | $ | 44,317 | | | $ | (43,186) | | | $ | 147,028 | |
| Changes in foreign exchange translation rates | 122 | | | (292) | | | 299 | | | (86) | | | 43 | |
Constant currency adjusted EBITDA for the nine months ended June 30, 2024 | $ | 122,173 | | | $ | 23,554 | | | $ | 44,616 | | | $ | (43,272) | | | $ | 147,071 | |
Matthews International Reports Results for Fiscal 2024 Third Quarter
Page 11 of 11
August 1, 2024
NET DEBT AND NET DEBT LEVERAGE RATIO RECONCILIATION (Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | | March 31, 2024 | | December 31, 2023 | | September 30, 2023 |
| | | | | | | |
| Long-term debt, current maturities | $ | 5,476 | | | $ | 5,419 | | | $ | 4,948 | | | $ | 3,696 | |
| Long-term debt | 824,745 | | | 837,357 | | | 857,423 | | | 786,484 | |
| Total debt | 830,221 | | | 842,776 | | | 862,371 | | | 790,180 | |
| | | | | | | |
| Less: Cash and cash equivalents | (42,745) | | | (45,497) | | | (37,921) | | | (42,101) | |
| | | | | | | |
| Net Debt | $ | 787,476 | | | $ | 797,279 | | | $ | 824,450 | | | $ | 748,079 | |
| | | | | | | |
| Adjusted EBITDA (trailing 12 months) | $ | 208,911 | | | $ | 220,353 | | | $ | 222,000 | | | $ | 225,809 | |
| | | | | | | |
| Net Debt Leverage Ratio | 3.8 | | 3.6 | | 3.7 | | 3.3 |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
- ### -
www.matw.com | Nasdaq: MATW Third Quarter Fiscal 2024 Earnings Review August 2, 2024 Joseph C. Bartolacci President and Chief Executive Officer Steven F. Nicola Chief Financial Officer
© 2024 Matthews International Corporation. All Rights Reserved. DISCLAIMER 2 Any forward-looking statements contained in this presentation 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,” “targets,” “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, and 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, the outcome of the Company's dispute with Tesla, Inc. ("Tesla"), 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. Included in this report are measures of financial performance that are not defined by generally accepted accounting principles in the United States (“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 and divestiture costs, ERP integration costs, strategic initiative and other charges (which includes non-recurring charges related to certain commercial and 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, provides investors with an additional understanding of the factors and trends affecting the Company’s business that could not be obtained absent these disclosures. The Company believes that adjusted EBITDA provides relevant and useful information, which is used by the Company’s management in assessing the performance of its business. Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results. These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges. Adjusted EBITDA provides the Company with an understanding of earnings before the impact of investing and financing charges and income taxes, and the effects of certain acquisition and divestiture and ERP integration costs, and items that do not reflect the ordinary earnings of the Company’s operations. This measure may be useful to an investor in evaluating operating performance. It is also useful as a financial measure for lenders and is used by the Company’s management to measure business performance. Adjusted EBITDA is not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to net income or other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of the Company's liquidity. The Company's definition of adjusted EBITDA may not be comparable to similarly titled measures used by other companies. The Company has presented constant currency sales and constant currency adjusted EBITDA and believes these measures provide relevant and useful information, which is used by the Company's management in assessing the performance of its business on a consistent basis by removing the impact of changes due to foreign exchange translation rates. These measures allow management, as well as investors, to assess the Company’s sales and adjusted EBITDA on a constant currency basis. The Company has also presented adjusted net income and adjusted earnings per share and believes each measure provides relevant and useful information, which is widely used by analysts and investors, as well as by the Company’s management in assessing the performance of its business. Adjusted net income and adjusted earnings per share provides the Company with an understanding of the results from the primary operations of our business by excluding the effects of certain acquisition, divestiture, and system-integration costs, and items that do not reflect the ordinary earnings of our operations. These measures provide management with insight into the earning value for shareholders excluding certain costs, not related to the Company’s primary operations. Likewise, these measures may be useful to an investor in evaluating the underlying operating performance of the Company’s business overall, as well as performance trends, on a consistent basis. Lastly, the Company has presented net debt and a net debt leverage ratio and believes each measure provides relevant and useful information, which is widely used by analysts and investors as well as by our management. These measures provide management with insight on the indebtedness of the Company, net of cash and cash equivalents and relative to adjusted EBITDA. These measures allow management, as well as analysts and investors, to assess the Company’s leverage.
BUSINESS OVERVIEW
© 2024 Matthews International Corporation. All Rights Reserved. 4 SGK BRAND SOLUTIONS MEMORIALIZATION • Benefits from recent acquisitions and improved price realization • Return to normalized death rates; current sales and adjusted EBITDA run-rates remain well ahead of pre-COVID levels • Improved pricing and growth in the private label market and European packaging business • Strategy to extend to digital services BUSINESS UPDATE INDUSTRIAL TECHNOLOGIES • Timing of energy projects impacted current quarter sales • Warehouse automation impacted by market conditions • Progress on new printhead solution
© 2024 Matthews International Corporation. All Rights Reserved. Key Drivers • Projected adjusted EBITDA to be in the range of $205 million to $210 million • Initiating cost reduction programs in fiscal 2024 fourth quarter • Projected further reductions in outstanding debt by the end of the fiscal year OUTLOOK FOR FISCAL 2024 5
FINANCIAL OVERVIEW
© 2024 Matthews International Corporation. All Rights Reserved. Q3 2024 SUMMARY 7 Q3 2023 Q3 2024 Sales $ 471.9 $ 427.8 Diluted EPS $ 0.28 $ 0.06 Non-GAAP Adjusted EPS* $ 0.74 $ 0.56 Net Income Attributable to Matthews $ 8.7 $ 1.8 Adjusted EBITDA* $ 56.2 $ 44.7 ($ in millions except per-share amounts) Q3 YTD YTD 2023 YTD 2024 Sales $ 1,400.7 $ 1,349.0 Diluted EPS $ 0.69 $ 0.27 Non-GAAP Adjusted EPS* $ 1.92 $ 1.62 Net Income Attributable to Matthews $ 21.6 $ 8.5 Adjusted EBITDA* $ 163.9 $ 147.0 3rd Quarter ("Q3") Highlights Sales • SGK Brand Solutions segment current quarter sales higher than a year ago • Lower sales for the Industrial Technologies segment GAAP EPS • Lower net income and higher interest expense, partially offset by income tax benefits Adjusted EBITDA • Lower adjusted EBITDA, primarily in the Industrial Technologies segment • Partially offset by lower corporate and non-operating costs Adjusted EPS • Lower adjusted EBITDA and higher interest expense, partially offset by income tax benefits • Debt decreased by $12.6 million during the quarter * See supplemental slides for Adjusted EPS and Adjusted EBITDA reconciliations and other important disclaimers regarding Matthews’ use of Non-GAAP measures
© 2024 Matthews International Corporation. All Rights Reserved. MEMORIALIZATION 8 23.0% 21.1% $208.7 $202.7 Q3 FY2023 Q3 FY2024 $638.1 $632.9 FY2023 FY2024 $39.9 $38.7 Q3 FY2023 Q3 FY2024 $127.1 $122.1 FY2023 FY2024 19.1% 19.1% 19.9% 19.3% ($ in millions) Q3 Sales Q3 Adjusted EBITDA & Margin* YTD Sales YTD Adjusted EBITDA & Margin* Sales • Benefits from recent acquisitions, improved price realization, and higher mausoleum sales • U.S. death rates have normalized from higher pandemic levels, impacting unit volumes Adjusted EBITDA • Higher material and labor costs • Improved price realization and productivity initiatives * See supplemental slide for Adjusted EBITDA reconciliation and other important disclaimers regarding Matthews’ use of Non-GAAP measures
© 2024 Matthews International Corporation. All Rights Reserved. SGK BRAND SOLUTIONS ($ in millions) 9 15.4% 12.9% $132.6 $133.4 Q3 FY2023 Q3 FY2024 $397.4 $396.9 FY2023 FY2024 $16.4 $16.1 Q3 FY2023 Q3 FY2024 $39.6 $44.3 FY2023 FY2024 12.0%12.3% 10.0% 11.2% Q3 Sales Q3 Adjusted EBITDA & Margin* YTD Sales YTD Adjusted EBITDA & Margin* Sales • Q3 sales growth, primarily reflecting higher sales in the European packaging and private-label businesses, and improved pricing to help mitigate inflationary cost increases • Unfavorable currency impacts of $2.6 million for Q3 and $2.9 million YTD Adjusted EBITDA • Higher YTD adjusted EBITDA • Favorable impacts of cost reduction initiatives • Higher labor-related costs * See supplemental slide for Adjusted EBITDA reconciliation and other important disclaimers regarding Matthews’ use of Non-GAAP measures
© 2024 Matthews International Corporation. All Rights Reserved. INDUSTRIAL TECHNOLOGIES 10 15.5% 12.4% 15.6%10.3% ($ in millions) $130.5 $91.7 Q3 FY2023 Q3 FY2024 $365.2 $319.2 FY2023 FY2024 $15.0 $4.2 Q3 FY2023 Q3 FY2024 $42.8 $23.8 FY2023 FY2024 11.5% 4.6% 11.7% 7.5% Q3 Sales Q3 Adjusted EBITDA & Margin* YTD Sales YTD Adjusted EBITDA & Margin* Sales • Energy storage sales impacted by customer delays • Warehouse automation sales unfavorably impacted by market conditions Adjusted EBITDA • Primarily impacted by lower engineered products and warehouse automation sales • Lower performance-based compensation and benefits from cost-reduction initiatives * See supplemental slide for Adjusted EBITDA reconciliation and other important disclaimers regarding Matthews’ use of Non-GAAP measures
© 2024 Matthews International Corporation. All Rights Reserved. • Debt decreased by $12.6 million during the quarter • Current year operating cash flow reflects increased working capital investments related to energy storage solutions business • Operating cash flow for prior period reflected final payouts for the settlement of the Company’s supplemental retirement plan obligations and prior year swap settlement (favorable) • Net Debt Leverage Ratio* 3.77 as of June 30, 2024 • Quarterly dividend of $0.24/share, payable 8/19/24 CAPITALIZATION AND CASH FLOWS 11 * See supplemental slide for Net Debt and Net Debt Leverage Ratio reconciliation and other important disclaimers regarding Matthews’ use of Non-GAAP measures Note: Dark gray shades on the left represent Total Debt. Total Debt and Net Debt* $790.2 $830.2 $748.1 $787.5 09/30/23 06/30/24 ($ in millions) Cash $42.1 $42.7 9/30/23 06/30/24 Operating Cash Flow $76.9 $43.3 YTD FY2023 YTD FY2024
SUPPLEMENTAL INFORMATION
© 2024 Matthews International Corporation. All Rights Reserved. 13 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, and 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 certain commercial and 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 removes 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. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
© 2024 Matthews International Corporation. All Rights Reserved. * See Disclaimer (page 2) for Management’s assessment of supplemental information related to adjusted EBITDA. 14 Three Months Ended June 30, Nine Months Ended June 30, 2024 2023 2024 2023 Net income $ 1,777 $ 8,671 $ 8,501 $ 21,443 Income tax (benefit) provision (8,829) (558) (10,677) 4,136 (Loss) income before income taxes $ (7,052) $ 8,113 $ (2,176) $ 25,579 Net loss attributable to noncontrolling interests — 67 — 125 Interest expense, including RPA and factoring financing fees (1) 14,005 12,136 40,539 35,944 Depreciation and amortization * 23,657 23,936 70,441 71,813 Acquisition and divestiture related items (2)** 2,266 308 5,565 4,445 Strategic initiatives and other charges (3)** 6,246 4,694 17,128 7,755 Highly inflationary accounting losses (primarily non-cash) (4) 185 1,826 895 3,074 Stock-based compensation 5,331 5,023 14,309 13,635 Non-service pension and postretirement expense (5) 108 85 327 1,556 Total Adjusted EBITDA $ 44,746 $ 56,188 $ 147,028 $ 163,926 Adjusted EBITDA margin 10.5 % 11.9 % 10.9 % 11.7 % (1) Includes fees for receivables sold under the RPA and factoring arrangements totaling $1,225 and $1,212 for the three months ended June 30, 2024 and 2023, respectively, and $3,638 and $2,758 for the nine months ended June 30, 2024 and 2023, respectively. (2) Includes certain non-recurring items associated with recent acquisition and divestiture activities. (3) Includes certain non-recurring costs associated with commercial, operational and cost-reduction initiatives, and costs associated with global ERP system integration efforts. Fiscal 2024 also includes legal costs related to an ongoing dispute with Tesla, which totaled $3,166 and $8,138 for the three and nine months ended June 30, 2024, respectively. Fiscal 2023 includes loss recoveries totaling $2,154 for the nine months ended June 30, 2023, which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015. (4) Represents exchange losses associated with highly inflationary accounting related to the Company's Turkish subsidiaries. (5) 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 $7,073 and $5,807 for the Memorialization segment, $5,796 and $5,815 for the Industrial Technologies segment, $9,702 and $11,164 for the SGK Brand Solutions segment, and $1,086 and $1,150 for Corporate and Non-Operating, for the three months ended June 30, 2024 and 2023, respectively. Depreciation and amortization was $20,400 and $17,092 for the Memorialization segment, $17,744 and $17,584 for the Industrial Technologies segment, $28,943 and $33,543 for the SGK Brand Solutions segment, and $3,354 and $3,594 for Corporate and Non-Operating, for the nine months ended June 30, 2024 and 2023, respectively. ** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $1,108 and $270 for the Memorialization segment, $4,490 and $120 for the Industrial Technologies segment, $1,473 and $3,897 for the SGK Brand Solutions segment, and $1,441 and $715 for Corporate and Non-Operating, for the three months ended June 30, 2024 and 2023, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $2,204 and $981 for the Memorialization segment, $14,288 and $3,494 for the Industrial Technologies segment, $2,694 and $7,028 for the SGK Brand Solutions segment, and $3,507 and $697 for Corporate and Non-Operating, for the nine months ended June 30, 2024 and 2023, respectively. ADJUSTED EBITDA NON-GAAP RECONCILIATION (Unaudited) (In thousands)
© 2024 Matthews International Corporation. All Rights Reserved. ADJUSTED NET INCOME AND EARNINGS PER SHARE NON-GAAP RECONCILIATION (Unaudited) (In thousands, except per share data) * See Disclaimer (page 2) for Management’s assessment of supplemental information related to adjusted net income and adjusted EPS. 15 Three Months Ended June 30, Nine Months Ended June 30, 2024 2023 2024 2023 per share per share per share per share Net income attributable to Matthews $ 1,777 $ 0.06 $ 8,738 $ 0.28 $ 8,501 $ 0.27 $ 21,568 $ 0.69 Acquisition and divestiture costs (1) 1,626 0.05 233 — 4,036 0.13 3,248 0.10 Strategic initiatives and other charges (2) 6,715 0.22 4,129 0.14 15,812 0.51 7,069 0.23 Highly inflationary accounting losses (primarily non-cash) (3) 185 0.01 1,826 0.06 895 0.03 3,074 0.10 Non-service pension and postretirement expense (4) 82 — 64 — 246 0.01 1,167 0.04 Amortization 6,777 0.22 7,980 0.26 20,843 0.67 23,624 0.76 Tax-related (5) 136 — — — 136 — — — Adjusted net income $ 17,298 $ 0.56 $ 22,970 $ 0.74 $ 50,469 $ 1.62 $ 59,750 $ 1.92 Note: Adjustments to net income for non-GAAP reconciling items were calculated using an income tax rate of 13.0% and 18.8% for the three and nine months ended June 30, 2024, respectively, and 24.1% and 25.3% for the three and nine months ended June 30, 2023, respectively. (1) Includes certain non-recurring costs associated with recent acquisition and divestiture activities. (2) Includes certain non-recurring costs associated with commercial, operational and cost-reduction initiatives, and costs associated with global ERP system integration efforts. Fiscal 2024 also includes legal costs related to an ongoing dispute with Tesla, which totaled $3,166 and $8,138 for the three and nine months ended June 30, 2024, respectively. Fiscal 2023 includes loss recoveries totaling $2,154 for the nine months ended June 30, 2023, which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015. (3) Represents exchange losses associated with highly inflationary accounting related to the Company's Turkish subsidiaries. (4) 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. (5) Represents tax-related items incurred in connection with the derecognition of deferred tax assets for a joint venture that is being terminated.
© 2024 Matthews International Corporation. All Rights Reserved. * See Disclaimer (page 2) for Management’s assessment of supplemental information related to constant currency sales and constant currency adjusted EBITDA. 16 CONSTANT CURRENCY SALES AND ADJUSTED EBITDA NON-GAAP RECONCILIATION (Unaudited) (In thousands) Memorialization Industrial Technologies SGK Brand Solutions Corporate and Non- Operating Consolidated Reported sales for the quarter ended June 30, 2024 $ 202,664 $ 91,731 $ 133,438 $ — $ 427,833 Changes in foreign exchange translation rates 147 1,398 2,559 — 4,104 Constant currency sales for the quarter ended June 30, 2024 $ 202,811 $ 93,129 $ 135,997 $ — $ 431,937 Reported sales for the nine months ended June 30, 2024 $ 632,891 $ 319,241 $ 396,910 $ — $ 1,349,042 Changes in foreign exchange translation rates (256) (3,277) 2,873 — (660) Constant currency sales for the nine months ended June 30, 2024 $ 632,635 $ 315,964 $ 399,783 $ — $ 1,348,382 Reported adjusted EBITDA for the quarter ended June 30, 2024 $ 38,737 $ 4,196 $ 16,054 $ (14,241) $ 44,746 Changes in foreign exchange translation rates 25 217 168 21 431 Constant currency adjusted EBITDA for the quarter ended June 30, 2024 $ 38,762 $ 4,413 $ 16,222 $ (14,220) $ 45,177 Reported adjusted EBITDA for the nine months ended June 30, 2024 $ 122,051 $ 23,846 $ 44,317 $ (43,186) $ 147,028 Changes in foreign exchange translation rates 122 (292) 299 (86) 43 Constant currency adjusted EBITDA for the nine months ended June 30, 2024 $ 122,173 $ 23,554 $ 44,616 $ (43,272) $ 147,071
© 2024 Matthews International Corporation. All Rights Reserved. * See Disclaimer (page 2) for Management’s assessment of supplemental information related to net debt and net debt leverage ratio. 17 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 Long-term debt, current maturities $ 5,476 $ 5,419 $ 4,948 $ 3,696 Long-term debt 824,745 837,357 857,423 786,484 Total debt 830,221 842,776 862,371 790,180 Less: Cash and cash equivalents (42,745) (45,497) (37,921) (42,101) Net Debt $ 787,476 $ 797,279 $ 824,450 $ 748,079 Adjusted EBITDA (trailing 12 months) $ 208,911 $ 220,353 $ 222,000 $ 225,809 Net Debt Leverage Ratio 3.8 3.6 3.7 3.3 NET DEBT AND NET DEBT LEVERAGE RATIO NON-GAAP RECONCILIATION (Unaudited) (Dollars in thousands)
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Matthews (NASDAQ:MATW)
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