Matthews International Corporation (NASDAQ GSM: MATW) today
announced financial results for its second quarter of fiscal 2023.
In discussing the results for the Company’s
fiscal 2023 second quarter, Joseph C. Bartolacci, President and
Chief Executive Officer, stated:
“I am pleased to report very good operating
results on a consolidated basis for the fiscal 2023 second quarter.
Our consolidated sales increased 7.8% from the same quarter a year
ago, resulting in higher adjusted EBITDA. On a constant currency
basis, consolidated sales increased 10.0%. These results were
driven principally by growth in our Industrial Technologies and
Memorialization segments.
“For the fiscal 2023 second quarter, our
Industrial Technologies segment reported an increase of $47.4
million, or 60.6%, in sales from the same quarter a year ago.
Higher sales for our energy storage solutions business and the
acquisitions of Olbrich GmbH and R+S Automotive GmbH (August 2022)
were the significant contributors to this increase. Our energy
storage solutions business continues to grow and interest in our
offerings is increasing. Our Industrial Technologies segment is on
track to approach sales of $500 million for fiscal 2023, more than
double its sales of $228.5 million three years ago (fiscal
2020).
“Our Memorialization segment also reported sales
growth for the current quarter despite a significant decline in
U.S. casketed deaths. The increase for the current quarter
primarily reflected growth in sales of cemetery memorial products
and mausoleums, improved price realization, and the acquisition of
Eagle Granite Company (February 2023). These increases were
partially offset by lower casket unit volume reflecting the lower
death rates.
“Sales for the SGK Brand Solutions business
continued to be challenged due to unfavorable currency rate changes
and difficult European market conditions. However, recent cost
reduction actions mitigated some of this impact. In addition,
further cost structure actions have been initiated in our European
operations which, together with our actions to date, should yield
improved margins for the balance of the fiscal year.
“Additionally, as a result of strong operating
cash flow, we reported a $59.1 million reduction in outstanding
debt during the fiscal 2023 second quarter, reducing our net
leverage ratio to 3.5 at March 31, 2023. We expect further debt
reduction over the remaining two quarters of this fiscal year.”
Second Quarter
Fiscal 2023 Consolidated Results
(Unaudited)
($ in millions, except per
share data) |
Q2 FY2023 |
|
Q2 FY2022 |
|
Change |
|
% Change |
Sales |
$ |
479.6 |
|
$ |
445.0 |
|
|
$ |
34.6 |
|
|
7.8 |
% |
Net income (loss) attributable
to Matthews |
$ |
9.1 |
|
$ |
(1.9 |
) |
|
$ |
11.0 |
|
|
NM |
|
Diluted earnings (loss) per share |
$ |
0.29 |
|
$ |
(0.06 |
) |
|
$ |
0.35 |
|
|
NM |
|
Non-GAAP adjusted net
income |
$ |
20.3 |
|
$ |
23.5 |
|
|
$ |
(3.2 |
) |
|
(13.6 |
)% |
Non-GAAP adjusted EPS |
$ |
0.65 |
|
$ |
0.74 |
|
|
$ |
(0.09 |
) |
|
(12.2 |
)% |
Adjusted EBITDA |
$ |
58.4 |
|
$ |
55.2 |
|
|
$ |
3.2 |
|
|
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. |
|
NM: Not
meaningful |
|
|
|
Consolidated sales for the quarter ended
March 31, 2023 were $479.6 million, compared to $445.0 million
for the same quarter a year ago, representing an increase of $34.6
million, or 7.8%. On a constant currency basis, consolidated sales
increased $44.5 million, or 10.0%, from a year ago. Changes in
foreign currency exchange rates were estimated to have an
unfavorable impact of $9.9 million on fiscal 2023 second quarter
sales compared to the prior year.
Net income attributable to the Company for the
quarter ended March 31, 2023 was $9.1 million, or $0.29 per
share, compared to a loss of $1.9 million, or $0.06 per share in
the prior year. The second quarter last year reflected asset
write-downs related to the Russia-Ukraine conflict. On a non-GAAP
adjusted basis, earnings for the fiscal 2023 second quarter were
$0.65 per share, compared to $0.74 per share a year ago. The
decrease was primarily attributable to higher interest expense
compared to a year ago, offset partially by the increase in
consolidated adjusted EBITDA (net income before interest expense,
income taxes, depreciation and amortization, and other adjustments)
for the current quarter. Adjusted EBITDA for the fiscal 2023 second
quarter was $58.4 million. On a constant currency basis, adjusted
EBITDA was $60.0 million for the current quarter, compared to $55.2
million a year ago, primarily reflecting higher adjusted EBITDA for
the Memorialization and Industrial Technologies segments partially
offset by a decline in the SGK Brand Solutions segment.
Fiscal 2023
Year-to-Date Consolidated Results (Unaudited)
($ in millions, except per
share data) |
YTD FY2023 |
|
YTD FY2022 |
|
Change |
|
% Change |
Sales |
$ |
928.8 |
|
$ |
883.6 |
|
|
$ |
45.2 |
|
|
5.1 |
% |
Net income (loss) attributable
to Matthews |
$ |
12.8 |
|
$ |
(21.7 |
) |
|
$ |
34.5 |
|
|
159.1 |
% |
Diluted earnings (loss) per share |
$ |
0.41 |
|
$ |
(0.68 |
) |
|
$ |
1.09 |
|
|
160.3 |
% |
Non-GAAP adjusted net
income |
$ |
36.8 |
|
$ |
47.1 |
|
|
$ |
(10.3 |
) |
|
(21.9 |
)% |
Non-GAAP adjusted EPS |
$ |
1.18 |
|
$ |
1.48 |
|
|
$ |
(0.30 |
) |
|
(20.3 |
)% |
Adjusted EBITDA |
$ |
107.7 |
|
$ |
108.5 |
|
|
$ |
(0.8 |
) |
|
(0.7 |
)% |
Note: See the
attached tables for additional important disclosures regarding
Matthews’ use of non-GAAP measures as well as reconciliations of
non-GAAP measures to corresponding GAAP measures. |
|
Consolidated sales for the six months ended
March 31, 2023 were $928.8 million, compared to $883.6 million
a year ago, representing an increase of $45.2 million, or 5.1%. On
a constant currency basis, consolidated sales increased $72.2
million, or 8.2%, from a year ago. Changes in foreign
currency exchange rates were estimated to have an unfavorable
impact of $27.0 million on fiscal 2023 sales compared to the prior
year.
Net income attributable to the Company for the
first six months of fiscal 2023 was $12.8 million, or $0.41 per
share, compared to a net loss of $21.7 million, or $0.68 per share
in the prior year. The loss in the prior year-to-date period
included the settlement of the Company’s principal defined benefit
pension plan and asset write-downs related to the Russia-Ukraine
conflict.
On a non-GAAP adjusted basis, earnings for the
first six months of fiscal 2023 were $1.18 per share, compared to
$1.48 per share a year ago, representing an decrease of $0.30 per
share or 20.3%. The decrease primarily reflected higher interest
expense and modestly lower year-to-date adjusted EBITDA. Adjusted
EBITDA for the first six months of fiscal 2023 was $107.7 million,
compared to $108.5 million a year ago, representing a decrease of
$0.8 million. The impact of higher consolidated sales was offset by
significant material cost increases, higher labor costs, and other
inflationary cost increases.
Outlook
Mr. Bartolacci further stated: “With respect to
the balance of fiscal 2023, we are pleased with the progress and
direction of each of our businesses and we are on track to our
guidance. In our energy storage solutions business, we are in the
earlier stages of the orders that we announced in January 2023,
which will benefit the balance of this fiscal year into mid-fiscal
2024. For our Warehouse Automation business, backlog remains solid,
particularly for deliveries through the end of this fiscal year. In
addition, our Memorialization business continues to perform well
despite the return to normal death rates following coronavirus
disease 2019 ("COVID-19"). Lastly, pricing conditions for the SGK
Brand Solutions business appear to be improving and we have started
to realize the benefits from our recent cost reduction actions.
"Based on these considerations, we are
maintaining our previously reported guidance for fiscal 2023
(adjusted EBITDA range of $215 million to $235 million)."
Webcast
The Company will host a conference call and
webcast on Friday, April 28, 2023 at 9:00 a.m. Eastern Time to
review its financial and operating results and discuss its
corporate strategies and outlook. A question-and-answer session
will follow. The conference call can be accessed by dialing (201)
689-8471. The audio webcast can be monitored at www.matw.com. As
soon as available after the call, a transcript of the call will be
posted on the Investor Relations section of the Company’s website
at www.matw.com.
About Matthews International
Corporation
Matthews International Corporation is a global
provider of memorialization products, industrial technologies, and
brand solutions. The Memorialization segment is a leading provider
of memorialization products, including memorials, caskets,
cremation-related products, and cremation and incineration
equipment, primarily to cemetery and funeral home customers that
help families move from grief to remembrance. The Industrial
Technologies segment designs, manufactures, services and
distributes high-tech custom energy storage solutions, product
identification, and warehouse automation technologies and
solutions. 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. Such
forward-looking statements involve known and unknown risks and
uncertainties that may cause the Company’s actual results in future
periods to be materially different from management’s expectations.
Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, no assurance can be
given that such expectations will prove correct. Factors that could
cause the Company's results to differ materially from the results
discussed in such forward-looking statements principally include
changes in domestic or international economic conditions, changes
in foreign currency exchange rates, changes in interest rates,
changes in the cost of materials used in the manufacture of the
Company's products, 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, cybersecurity concerns, effectiveness of
the Company's internal controls, compliance with domestic and
foreign laws and regulations, technological factors beyond the
Company's control, impact of pandemics or similar outbreaks, or
other disruptions to our industries, customers, or supply chains,
the impact of global conflicts, such as the current war between
Russia and Ukraine, and other factors described in the Company’s
Annual Report on Form 10-K and other periodic filings with the U.S.
Securities and Exchange Commission.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) |
(In thousands, except per share data) |
|
|
Three Months EndedMarch 31, |
|
|
|
Six Months EndedMarch 31, |
|
|
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
Sales |
$ |
479,580 |
|
|
$ |
444,978 |
|
|
7.8 |
% |
|
$ |
928,820 |
|
|
$ |
883,557 |
|
|
5.1 |
% |
Cost of sales |
|
(329,957 |
) |
|
|
(320,459 |
) |
|
3.0 |
% |
|
|
(640,267 |
) |
|
|
(627,401 |
) |
|
2.1 |
% |
Gross profit |
|
149,623 |
|
|
|
124,519 |
|
|
20.2 |
% |
|
|
288,553 |
|
|
|
256,156 |
|
|
12.6 |
% |
Gross margin |
|
31.2 |
% |
|
|
28.0 |
% |
|
|
|
|
|
31.1 |
% |
|
|
29.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative expenses |
|
(116,055 |
) |
|
|
(105,200 |
) |
|
10.3 |
% |
|
|
(227,415 |
) |
|
|
(204,512 |
) |
|
11.2 |
% |
Amortization of intangible assets |
|
(10,517 |
) |
|
|
(11,953 |
) |
|
(12.0 |
)% |
|
|
(20,859 |
) |
|
|
(33,499 |
) |
|
(37.7 |
)% |
Operating profit |
|
23,051 |
|
|
|
7,366 |
|
|
NM |
|
|
|
40,279 |
|
|
|
18,145 |
|
|
122.0 |
% |
Operating margin |
|
4.8 |
% |
|
|
1.7 |
% |
|
|
|
|
|
4.3 |
% |
|
|
2.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other deductions, net |
|
(10,544 |
) |
|
|
(6,025 |
) |
|
75.0 |
% |
|
|
(22,813 |
) |
|
|
(43,242 |
) |
|
(47.2 |
)% |
Income (loss) before
income taxes |
|
12,507 |
|
|
|
1,341 |
|
|
NM |
|
|
|
17,466 |
|
|
|
(25,097 |
) |
|
169.6 |
% |
Income taxes |
|
(3,382 |
) |
|
|
(3,277 |
) |
|
3.2 |
% |
|
|
(4,694 |
) |
|
|
3,351 |
|
|
NM |
|
Net income (loss) |
|
9,125 |
|
|
|
(1,936 |
) |
|
NM |
|
|
|
12,772 |
|
|
|
(21,746 |
) |
|
158.7 |
% |
Non-controlling interests |
|
2 |
|
|
|
31 |
|
|
(93.5 |
)% |
|
|
58 |
|
|
|
38 |
|
|
NM |
|
Net income (loss)
attributable to Matthews |
$ |
9,127 |
|
|
$ |
(1,905 |
) |
|
NM |
|
|
$ |
12,830 |
|
|
$ |
(21,708 |
) |
|
159.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share -- diluted |
$ |
0.29 |
|
|
$ |
(0.06 |
) |
|
NM |
|
|
$ |
0.41 |
|
|
$ |
(0.68 |
) |
|
160.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share --
non-GAAP(1) |
$ |
0.65 |
|
|
$ |
0.74 |
|
|
(12.2 |
)% |
|
$ |
1.18 |
|
|
$ |
1.48 |
|
|
(20.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per
share |
$ |
0.23 |
|
|
$ |
0.22 |
|
|
4.5 |
% |
|
$ |
0.46 |
|
|
$ |
0.44 |
|
|
4.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
Shares |
|
31,179 |
|
|
|
31,692 |
|
|
|
|
|
|
31,071 |
|
|
|
31,695 |
|
|
|
(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 EndedMarch 31, |
|
Six Months EndedMarch 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Sales: |
|
|
|
|
|
|
|
|
|
|
|
Memorialization |
$ |
222,889 |
|
|
$ |
220,004 |
|
|
$ |
429,391 |
|
|
$ |
430,710 |
|
Industrial Technologies |
|
125,514 |
|
|
|
78,154 |
|
|
|
234,657 |
|
|
|
152,485 |
|
SGK Brand Solutions |
|
131,177 |
|
|
|
146,820 |
|
|
|
264,772 |
|
|
|
300,362 |
|
|
$ |
479,580 |
|
|
$ |
444,978 |
|
|
$ |
928,820 |
|
|
$ |
883,557 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Memorialization |
$ |
48,030 |
|
|
$ |
42,944 |
|
|
$ |
87,167 |
|
|
$ |
86,314 |
|
Industrial Technologies |
|
15,565 |
|
|
|
14,385 |
|
|
|
27,767 |
|
|
|
21,568 |
|
SGK Brand Solutions |
|
11,020 |
|
|
|
13,462 |
|
|
|
23,252 |
|
|
|
28,876 |
|
Corporate and Non-Operating |
|
(16,168 |
) |
|
|
(15,601 |
) |
|
|
(30,448 |
) |
|
|
(28,235 |
) |
Total Adjusted
EBITDA(1) |
$ |
58,447 |
|
|
$ |
55,190 |
|
|
$ |
107,738 |
|
|
$ |
108,523 |
|
|
(1) See reconciliation of non-GAAP financial information provided
in tables at the end of this release |
|
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
(Unaudited) |
(In thousands) |
|
|
|
|
March 31, 2023 |
September 30, 2022 |
ASSETS |
|
|
|
Cash and cash equivalents |
$ |
41,916 |
|
$ |
69,016 |
Accounts receivable, net |
|
216,140 |
|
|
221,015 |
Inventories, net |
|
254,557 |
|
|
225,440 |
Other current assets |
|
105,626 |
|
|
113,145 |
Total current assets |
|
618,239 |
|
|
628,616 |
Property, plant and equipment,
net |
|
268,247 |
|
|
256,065 |
Goodwill |
|
708,767 |
|
|
675,421 |
Other intangible assets, net |
|
190,387 |
|
|
202,154 |
Other long-term assets |
|
111,633 |
|
|
120,515 |
Total
assets |
$ |
1,897,273 |
|
$ |
1,882,771 |
|
|
|
|
LIABILITIES |
|
|
|
Long-term debt, current
maturities |
$ |
2,825 |
|
$ |
3,277 |
Other current liabilities |
|
391,616 |
|
|
408,098 |
Total current liabilities |
|
394,441 |
|
|
411,375 |
Long-term debt |
|
775,202 |
|
|
795,291 |
Other long-term liabilities |
|
215,239 |
|
|
189,029 |
Total liabilities |
|
1,384,882 |
|
|
1,395,695 |
|
|
|
|
SHAREHOLDERS'
EQUITY |
|
|
|
Total shareholders' equity |
|
512,391 |
|
|
487,076 |
Total liabilities and
shareholders' equity |
$ |
1,897,273 |
|
$ |
1,882,771 |
|
CONDENSED CONSOLIDATED CASH FLOWS INFORMATION
(Unaudited) |
(In thousands) |
|
|
Six Months Ended March 31, |
|
2023 |
|
2022 |
Cash flows from operating
activities: |
|
|
|
Net income (loss) |
$ |
12,772 |
|
|
$ |
(21,746 |
) |
Adjustments to reconcile net income (loss) to net cash flows from
operating activities: |
|
|
Depreciation and amortization |
|
47,877 |
|
|
|
57,225 |
|
Changes in working capital items |
|
(10,885 |
) |
|
|
18,842 |
|
Other operating activities |
|
(5,053 |
) |
|
|
18,402 |
|
Net cash provided by operating activities |
|
44,711 |
|
|
|
72,723 |
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
Capital expenditures |
|
(23,772 |
) |
|
|
(28,096 |
) |
Acquisitions, net of cash acquired |
|
(7,586 |
) |
|
|
— |
|
Other investing activities |
|
155 |
|
|
|
3,357 |
|
Net cash used in investing activities |
|
(31,203 |
) |
|
|
(24,739 |
) |
|
|
|
|
Cash flows from financing
activities: |
|
|
|
Net payments from long-term debt |
|
(27,120 |
) |
|
|
(10,538 |
) |
Purchases of treasury stock |
|
(2,739 |
) |
|
|
(12,138 |
) |
Dividends |
|
(14,126 |
) |
|
|
(13,952 |
) |
Other financing activities |
|
(914 |
) |
|
|
(2,047 |
) |
Net cash used in financing activities |
|
(44,899 |
) |
|
|
(38,675 |
) |
|
|
|
|
Effect of exchange rate changes
on cash |
|
1,893 |
|
|
|
(1,580 |
) |
|
|
|
|
Net change in cash, cash
equivalents and restricted cash |
$ |
(29,498 |
) |
|
$ |
7,729 |
|
|
Reconciliations of Non-GAAP Financial
Measures
Included in this report are measures of
financial performance that are not defined by GAAP, including,
without limitation, adjusted EBITDA, adjusted net income and EPS,
constant currency sales, constant currency adjusted EBITDA, net
debt and net debt leverage ratio. The Company defines
net debt leverage ratio as outstanding debt (net of cash) relative
to adjusted EBITDA. The Company uses non-GAAP financial measures to
assist in comparing its performance on a consistent basis for
purposes of business decision-making by removing the impact of
certain items that management believes do not directly reflect the
Company’s core operations including acquisition and divestiture
costs, ERP integration costs, strategic initiative and other
charges (which includes non-recurring charges related to
operational initiatives and exit activities), stock-based
compensation and the non-service portion of pension and
postretirement expense. Constant currency sales and
constant currency adjusted EBITDA remove the impact of changes due
to foreign exchange translation rates. To calculate
sales and adjusted EBITDA on a constant currency basis, amounts for
periods in the current fiscal year are translated into U.S. dollars
using exchange rates applicable to the comparable periods of the
prior fiscal year. Management believes that presenting
non-GAAP financial measures is useful to investors because it (i)
provides investors with meaningful supplemental information
regarding financial performance by excluding certain items that
management believes do not directly reflect the Company's core
operations, (ii) permits investors to view performance using the
same tools that management uses to budget, forecast, make operating
and strategic decisions, and evaluate historical performance, and
(iii) otherwise provides supplemental information that may be
useful to investors in evaluating the Company’s results. The
Company's calculations of its non-GAAP financial measures, however,
may not be comparable to similarly titled measures reported by
other companies. The Company believes that the presentation of
these non-GAAP financial measures, when considered together with
the corresponding GAAP financial measures and the reconciliations
to those measures, provided herein, provide investors with an
additional understanding of the factors and trends affecting the
Company’s business that could not be obtained absent these
disclosures.
ADJUSTED EBITDA RECONCILIATION (Unaudited) |
(In thousands) |
|
|
Three Months EndedMarch 31, |
|
Six Months EndedMarch 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net income (loss) |
$ |
9,125 |
|
|
$ |
(1,936 |
) |
|
$ |
12,772 |
|
|
$ |
(21,746 |
) |
Income tax provision (benefit) |
|
3,382 |
|
|
|
3,277 |
|
|
|
4,694 |
|
|
|
(3,351 |
) |
Income (loss) before
income taxes |
$ |
12,507 |
|
|
$ |
1,341 |
|
|
$ |
17,466 |
|
|
$ |
(25,097 |
) |
Net loss attributable to noncontrolling interests |
|
2 |
|
|
|
31 |
|
|
|
58 |
|
|
|
38 |
|
Interest expense |
|
12,047 |
|
|
|
6,260 |
|
|
|
22,262 |
|
|
|
12,767 |
|
Depreciation and amortization* |
|
24,148 |
|
|
|
23,724 |
|
|
|
47,877 |
|
|
|
57,225 |
|
RPA and factoring financing fees(1) |
|
1,090 |
|
|
|
— |
|
|
|
1,546 |
|
|
|
— |
|
Acquisition and divestiture costs(2)** |
|
2,852 |
|
|
|
— |
|
|
|
4,137 |
|
|
|
— |
|
Strategic initiatives and other charges(3)** |
|
1,280 |
|
|
|
6,750 |
|
|
|
3,040 |
|
|
|
10,573 |
|
Non-recurring / incremental coronavirus disease 2019 ("COVID-19")
costs(4)*** |
|
— |
|
|
|
1,213 |
|
|
|
— |
|
|
|
1,903 |
|
Exchange losses related to highly inflationary accounting(5) |
|
160 |
|
|
|
— |
|
|
|
1,248 |
|
|
|
— |
|
Defined benefit plan termination related items(6) |
|
— |
|
|
|
(79 |
) |
|
|
21 |
|
|
|
347 |
|
Asset write-downs(7) |
|
— |
|
|
|
10,486 |
|
|
|
— |
|
|
|
10,486 |
|
Stock-based compensation |
|
4,278 |
|
|
|
5,222 |
|
|
|
8,612 |
|
|
|
8,931 |
|
Non-service pension and postretirement expense(8) |
|
83 |
|
|
|
242 |
|
|
|
1,471 |
|
|
|
31,350 |
|
Total Adjusted
EBITDA |
$ |
58,447 |
|
|
$ |
55,190 |
|
|
$ |
107,738 |
|
|
$ |
108,523 |
|
Adjusted EBITDA margin |
|
12.2 |
% |
|
|
12.4 |
% |
|
|
11.6 |
% |
|
|
12.3 |
% |
|
|
|
|
|
|
|
|
(1)Represents fees for receivables sold under the RPA and factoring
arrangements. |
(2)Includes certain non-recurring costs associated with recent
acquisition and divestiture activities. |
(3)Includes certain non-recurring costs associated with
productivity and cost-reduction initiatives intended to result in
improved operating performance, profitability and working capital
levels and costs associated with global ERP system integration
efforts, net of loss recoveries related to a previously disclosed
theft of funds by a former employee initially identified in fiscal
2015. |
(4)Includes certain non-recurring direct incremental costs (such as
costs for purchases of computer peripherals and devices to
facilitate working-from-home, additional personal protective
equipment and cleaning supplies and services, etc.) incurred in
response to COVID-19. This amount does not include the impact of
any lost sales or underutilization due to COVID-19. |
(5)Represents exchange losses associated with highly inflationary
accounting related to the Company's Turkish subsidiaries. |
(6)Represents items associated with the termination of the
Company's DB Plan, supplemental retirement plan and the defined
benefit portion of the officers retirement restoration plan. |
(7)Represents asset write-downs within the SGK Brand Solutions
segment. |
(8)Non-service pension and postretirement expense includes interest
cost, expected return on plan assets, amortization of actuarial
gains and losses, curtailment gains and losses, and settlement
gains and losses. These benefit cost components are excluded from
adjusted EBITDA since they are primarily influenced by external
market conditions that impact investment returns and interest
(discount) rates. Curtailment gains and losses and settlement gains
and losses are excluded from adjusted EBITDA since they generally
result from certain non-recurring events, such as plan amendments
to modify future benefits or settlements of plan obligations. The
service cost and prior service cost components of pension and
postretirement expense are included in the calculation of adjusted
EBITDA, since they are considered to be a better reflection of the
ongoing service-related costs of providing these benefits. Please
note that GAAP pension and postretirement expense or the adjustment
above are not necessarily indicative of the current or future cash
flow requirements related to these employee benefit plans. |
|
* Depreciation and amortization was $5,711 and
$5,803 for the Memorialization segment, $5,916 and $2,531 for the
Industrial Technologies segment, $11,319 and $14,060 for the SGK
Brand Solutions segment, and $1,202 and $1,330 for Corporate and
Non-Operating, for the three months ended March 31, 2023 and
2022, respectively. Depreciation and amortization was $11,285 and
$11,613 for the Memorialization segment, $11,769 and $5,184 for the
Industrial Technologies segment, $22,379 and $37,785 for the SGK
Brand Solutions segment, and $2,444 and $2,643 for Corporate and
Non-Operating, for the six months ended March 31, 2023 and
2022, respectively.** Acquisition and divestiture costs, ERP
integration costs, and strategic initiatives and other charges were
$333 and $516 for the Memorialization segment, $2,437 and $161 for
the Industrial Technologies segment, $2,610 and $4,475 for the SGK
Brand Solutions segment, and income of $1,248 and charges of $1,598
for Corporate and Non-Operating, for the three months ended
March 31, 2023 and 2022, respectively. Acquisition and
divestiture costs, ERP integration costs, and strategic initiatives
and other charges were $711 and $1,188 for the Memorialization
segment, $3,374 and $193 for the Industrial Technologies segment,
$3,131 and $5,703 for the SGK Brand Solutions segment, and income
of $39 and charges of $3,489 for Corporate and Non-Operating, for
the six months ended March 31, 2023 and 2022, respectively.***
Non-recurring/incremental COVID-19 costs were $579 for the
Memorialization segment, $1 for the Industrial Technologies
segment, $170 for the SGK Brand Solutions segment, and $463 for
Corporate and Non-Operating, for the three months ended
March 31, 2022. Non-recurring/incremental COVID-19 costs were
$1,043 for the Memorialization segment, $5 for the Industrial
Technologies segment, $390 for the SGK Brand Solutions segment, and
$465 for Corporate and Non-Operating, for the six months ended
March 31, 2022.
ADJUSTED NET INCOME AND EPS RECONCILIATION
(Unaudited) |
(In thousands, except per share data) |
|
|
Three Months EndedMarch 31, |
|
Six Months EndedMarch 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
per share |
|
|
per share |
|
|
per share |
|
|
per share |
Net income (loss) attributable to Matthews |
$ |
9,127 |
$ |
0.29 |
|
$ |
(1,905 |
) |
$ |
(0.06 |
) |
|
$ |
12,830 |
$ |
0.41 |
|
$ |
(21,708 |
) |
$ |
(0.68 |
) |
Acquisition and divestiture costs(1) |
|
1,953 |
|
0.07 |
|
|
— |
|
|
— |
|
|
|
3,015 |
|
0.10 |
|
|
— |
|
|
— |
|
Strategic initiatives and other charges(2) |
|
1,153 |
|
0.03 |
|
|
4,965 |
|
|
0.16 |
|
|
|
2,924 |
|
0.09 |
|
|
7,974 |
|
|
0.24 |
|
Non-recurring / incremental COVID-19 costs(3) |
|
— |
|
— |
|
|
905 |
|
|
0.03 |
|
|
|
— |
|
— |
|
|
1,441 |
|
|
0.05 |
|
Exchange losses related to highly inflationary accounting(4) |
|
160 |
|
— |
|
|
— |
|
|
— |
|
|
|
1,248 |
|
0.04 |
|
|
— |
|
|
— |
|
Defined benefit plan termination related items(5) |
|
— |
|
— |
|
|
82 |
|
|
— |
|
|
|
16 |
|
— |
|
|
401 |
|
|
0.01 |
|
Asset write-downs(6) |
|
— |
|
— |
|
|
10,308 |
|
|
0.33 |
|
|
|
— |
|
— |
|
|
10,308 |
|
|
0.33 |
|
Non-service pension and postretirement expense(7) |
|
62 |
|
0.01 |
|
|
181 |
|
|
— |
|
|
|
1,103 |
|
0.04 |
|
|
23,512 |
|
|
0.74 |
|
Amortization |
|
7,887 |
|
0.25 |
|
|
8,964 |
|
|
0.28 |
|
|
|
15,644 |
|
0.50 |
|
|
25,124 |
|
|
0.79 |
|
Adjusted net
income |
$ |
20,342 |
$ |
0.65 |
|
$ |
23,500 |
|
$ |
0.74 |
|
|
$ |
36,780 |
$ |
1.18 |
|
$ |
47,052 |
|
$ |
1.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Adjustments to net income for non-GAAP reconciling items were
calculated using an income tax rate of 29.8% and 25.9% for the
three and six months ended March 31, 2023, respectively, and 16.9%
and 22% for the three and six months ended March 31, 2022,
respectively. |
(1) Includes certain non-recurring costs associated with recent
acquisition and divestiture activities. |
(2) Includes certain non-recurring costs associated with
productivity and cost-reduction initiatives intended to result in
improved operating performance, profitability and working capital
levels and costs associated with global ERP system integration
efforts, net of loss recoveries related to a previously disclosed
theft of funds by a former employee initially identified in fiscal
2015. |
(3) Includes certain non-recurring direct incremental costs (such
as costs for purchases of computer peripherals and devices to
facilitate working-from-home, additional personal protective
equipment and cleaning supplies and services, etc.) incurred in
response to COVID-19. This amount does not include the impact of
any lost sales or underutilization due to COVID-19. |
(4) Represents exchange losses associated with highly inflationary
accounting related to the Company's Turkish subsidiaries. |
(5) Represents items associated with the termination of the
Company's DB Plan, supplemental retirement plan and the defined
benefit portion of the officers retirement restoration plan. |
(6) Represents asset write-downs within the SGK Brand Solutions
segment. |
(7) Non-service pension and postretirement expense includes
interest cost, expected return on plan assets, amortization of
actuarial gains and losses, curtailment gains and losses, and
settlement gains and losses. These benefit cost components are
excluded from adjusted EBITDA since they are primarily influenced
by external market conditions that impact investment returns and
interest (discount) rates. Curtailment gains and losses and
settlement gains and losses are excluded from adjusted EBITDA since
they generally result from certain non-recurring events, such as
plan amendments to modify future benefits or settlements of plan
obligations. The service cost and prior service cost components of
pension and postretirement expense are included in the calculation
of adjusted EBITDA, since they are considered to be a better
reflection of the ongoing service-related costs of providing these
benefits. Please note that GAAP pension and postretirement expense
or the adjustment above are not necessarily indicative of the
current or future cash flow requirements related to these employee
benefit plans. |
|
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 March 31, 2023 |
$ |
222,889 |
|
|
$ |
125,514 |
|
$ |
131,177 |
|
$ |
— |
|
|
$ |
479,580 |
Changes in foreign exchange translation rates |
|
672 |
|
|
|
3,319 |
|
|
5,930 |
|
|
— |
|
|
|
9,921 |
Constant currency sales for the
quarter ended March 31, 2023 |
$ |
223,561 |
|
|
$ |
128,833 |
|
$ |
137,107 |
|
$ |
— |
|
|
$ |
489,501 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported sales for the six
months ended March 31, 2023 |
$ |
429,391 |
|
|
$ |
234,657 |
|
$ |
264,772 |
|
$ |
— |
|
|
$ |
928,820 |
Changes in foreign exchange translation rates |
|
2,153 |
|
|
|
8,140 |
|
|
16,659 |
|
|
— |
|
|
|
26,952 |
Constant currency sales for the
six months ended March 31, 2023 |
$ |
431,544 |
|
|
$ |
242,797 |
|
$ |
281,431 |
|
$ |
— |
|
|
$ |
955,772 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported adjusted EBITDA for the
quarter ended March 31, 2023 |
$ |
48,030 |
|
|
$ |
15,565 |
|
$ |
11,020 |
|
$ |
(16,168 |
) |
|
$ |
58,447 |
Changes in foreign exchange translation rates |
|
(46 |
) |
|
|
1,178 |
|
|
308 |
|
|
82 |
|
|
|
1,522 |
Constant currency adjusted EBITDA
for the quarter ended March 31, 2023 |
$ |
47,984 |
|
|
$ |
16,743 |
|
$ |
11,328 |
|
$ |
(16,086 |
) |
|
$ |
59,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported adjusted EBITDA for the
six months ended March 31, 2023 |
$ |
87,167 |
|
|
$ |
27,767 |
|
$ |
23,252 |
|
$ |
(30,448 |
) |
|
$ |
107,738 |
Changes in foreign exchange translation rates |
|
(184 |
) |
|
|
2,289 |
|
|
1,291 |
|
|
(266 |
) |
|
|
3,130 |
Constant currency adjusted EBITDA
for the six months ended March 31, 2023 |
$ |
86,983 |
|
|
$ |
30,056 |
|
$ |
24,543 |
|
$ |
(30,714 |
) |
|
$ |
110,868 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET DEBT AND NET DEBT LEVERAGE RATIO RECONCILIATION
(Unaudited) |
(Dollars in thousands) |
|
|
March 31, 2023 |
|
September 30, 2022 |
|
|
|
|
Long-term debt, current maturities |
$ |
2,825 |
|
|
$ |
3,277 |
|
Long-term debt |
|
775,202 |
|
|
|
795,291 |
|
Total debt |
|
778,027 |
|
|
|
798,568 |
|
|
|
|
|
Less: Cash and cash equivalents |
|
(41,916 |
) |
|
|
(69,016 |
) |
|
|
|
|
Net Debt |
$ |
736,111 |
|
|
$ |
729,552 |
|
|
|
|
|
Adjusted EBITDA |
$ |
209,623 |
|
|
$ |
210,408 |
|
|
|
|
|
Net Debt Leverage
Ratio |
|
3.5 |
|
|
|
3.5 |
|
|
Matthews International CorporationCorporate
OfficeTwo NorthShore CenterPittsburgh, PA 15212-5851Phone: (412)
442-8200
|
Contact: |
Steven F. Nicola |
William D. Wilson |
|
|
Chief Financial Officer and Secretary |
Senior Director, Corporate Development |
Matthews (NASDAQ:MATW)
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