Matthews International Corporation · NASDAQ:MATW

Matthews International — FY2018 Earnings Presentation

34 slides from Matthews International's earnings presentation, Nov 27, 2018

  1. Slide 1: Investor Presentation Fiscal Year Ended September 30, 2018

    INVESTOR PRESENTATION FISCAL YEAR ENDED SEPTEMBER 30, 2018 ©2016 Matthews International Corporation. All Rights Reserved.

  2. Slide 2: Business Overview

    Business Overview ©2016 Matthews International Corporation. All Rights Reserved. 2

  3. Slide 3: Disclaimer

    Disclaimer Any forward-looking statements with respect to Matthews International Corporation (the “Company”) in connection with this presentation are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve kno

  4. Slide 4: Matthews

    Matthews ➢ Founded in 1850 – headquartered in Pittsburgh, PA ➢ Three business segments: ▪ SGK Brand Solutions ▪ Memorialization ▪ Industrial Technologies ➢ Approximately 11,000 employees ➢ Over 25 countries ➢ NASDAQ – 32.1 million shares outstanding, as of September 30, 2018 ©2016 Matthews Internati

  5. Slide 5: Fiscal 2018 Sales

    Fiscal 2018 Sales Memorialization 40% SGK Brand Solutions 50% 10% Industrial Technologies ©2016 Matthews International Corporation. All Rights Reserved. 5

  6. Slide 6: SGK Brand Solutions

    SGK BRAND SOLUTIONS ©2016 Matthews International Corporation. All Rights Reserved. 6

  7. Slide 7: SGK Brand Solutions

    SGK Brand Solutions Monoprix, a major city center retailer in France, teamed up with Brandimage to Anthem developed a three-year “Live Your Break” connected platform for launch its new Food To Go line. Nestlé KitKat. The activity combines connected packaging via a mobile digital hub of user generate

  8. Slide 8: SGK Brand Solutions

    SGK Brand Solutions Marketing / Packaging Execution Marketing / Packaging Creative / Adaptive SGK Brand Solutions Execution + = Premedia / Tooling / Merchandising ©2016 Matthews International Corporation. All Rights Reserved. 8

  9. Slide 9: SGK Brand Solutions

    SGK Brand Solutions • SGK Brand Solutions has longstanding relationships with a large, blue chip customer base consisting of many of the Fortune 100 and Fortune 50 companies • Through brand development, SGK Brand Solutions has developed “strategic” relationships rather than “vendor” relationships wh

  10. Slide 10: Memorialization

    MEMORIALIZATION ©2016 Matthews International Corporation. All Rights Reserved. 10

  11. Slide 11: Memorialization

    Memorialization Matthews Architectural Products - Building signs are an example of the segment’s architectural product offerings. Bronze Memorials Forest Park West Cemetery Cremation Garden ©2016 Matthews International Corporation. All Rights Reserved. 11

  12. Slide 12: Memorialization

    Memorialization The Company is a leading manufacturer and distributor of caskets (wood, metal and cremation) in North America. The Super Power Pak III Plus cremation unit has some of the most advanced features in combustion technology as well as industry leading performance, reliability and support.

  13. Slide 13: Memorialization: Casketed Deaths vs. Total Deaths

    Memorialization ❖ Casketed Deaths vs. Total Deaths 4,000,000 Total US Deaths Casketed Deaths 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 - 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Company estimates. Dat

  14. Slide 14: Industrial Technologies

    INDUSTRIAL TECHNOLOGIES ©2016 Matthews International Corporation. All Rights Reserved. 14

  15. Slide 15: Industrial Technologies

    Industrial Technologies Multiple integrated distribution and fulfillment systems (including laser-based identification and dimensioning technologies) communicate in a warehouse to identify and route items and parcels through the facility and out to a customer. Pyramid introduced a new warehouse exec

  16. Slide 16: Financial Overview

    Financial Overview ©2016 Matthews International Corporation. All Rights Reserved. 16

  17. Slide 17: Driving Growth Amidst Change

    Driving Growth Amidst Change EPS Growth Strategy Organic ▪ New product introductions ▪ Synergies and manufacturing/cost structure improvements ▪ Expanding market penetration with existing products Acquisitions ▪ Support segment business plans ▪ Leverage existing operating infrastructure ▪ Achieve lo

  18. Slide 18: Consolidated Results

    Consolidated Results (Dollars in thousands, Fiscal year ended September 30, except per share data) 2016 2017 2018 Sales $ 1,480,464 $ 1,515,608 $ 1,602,580 Operating Profit $ 118,815 $ 112,603 $ 132,834 EBITDA (a) $ 185,646 $ 191,074 $ 212,654 Adj. EBITDA (b) $ 239,586 $ 238,683 $ 255,114 Diluted EP

  19. Slide 19: Segment Operating Results (as reported)

    Segment Operating Results (as reported) (Dollars in thousands) Fiscal year ended September 30, 2016 2017 2018 Sales: SGK Brand Solutions $ 755,975 $ 770,181 $ 805,274 Memorialization 610,142 615,882 631,392 Industrial Technologies 114,347 129,545 165,914 Consolidated $ 1,480,464 $ 1,515,608 $ 1,602,

  20. Slide 20: Segment Results – Sales & Adjusted EBITDA

    Segment Results – Sales & Adjusted EBITDA (Dollars in thousands) Fiscal year ended September 30, 2016 2017 2018 Sales: SGK Brand Solutions $ 755,975 $ 770,181 $ 805,274 Memorialization 610,142 615,882 631,392 Industrial Technologies 114,347 129,545 165,914 Consolidated $ 1,480,464 $ 1,515,608 $ 1,60

  21. Slide 21: Free Cash Flow

    Free Cash Flow (Dollars in thousands) Fiscal year ended September 30, 2016 2017 2018 Net Income Attributable to Matthews $ 66,749 $ 74,368 $ 107,371 Depreciation and Amortization 65,480 67,981 76,974 Stock-Based Compensation 10,612 14,562 13,460 Pension Cost (non-service portion) 8,413 8,773 5,723 W

  22. Slide 22: Free Cash Flow Yield

    Free Cash Flow Yield (Dollars in thousands) Fiscal year ended September 30, 2016 2017 2018 Free Cash Flow (1) $ 123,287 $ 126,533 $ 121,244 Market Capitalization $ 1,952,929 $ 2,001,249 $ 1,608,551 Free Cash Flow Yield (1) 6.31% 6.32% 7.54% (1) See Disclaimer (Page 3) for Management’s assessment of

  23. Slide 23: Earnings Per Share

    Earnings Per Share Earnings Per Share Adjusted Earnings Per Share $3.96 $4.00 $4.00 $3.60 $3.37 $3.38 $3.50 $3.50 $3.03 $3.00 $3.00 $2.74 $2.50 $2.28 $2.50 $2.03 $1.91 $2.00 $2.00 $1.49 $1.50 $1.50 $1.00 $1.00 $0.50 $0.50 $0.00 $0.00 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Note: Adjusted e

  24. Slide 24: EBITDA

    EBITDA (Dollars in millions) EBITDA Adjusted EBITDA $300.0 $300.0 $255.1 $239.6 $238.7 $250.0 $250.0 $212.7 $216.0 $185.6 $191.1 $200.0 $200.0 $173.0 $172.1 $150.0 $150.0 $120.9 $100.0 $100.0 $50.0 $50.0 $0.0 $0.0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Note: EBITDA represents earnings bef

  25. Slide 25: Common Stock Price

    Common Stock Price $70.00 $60.76 $62.25 $60.00 $50.74 $50.15 $48.97 $50.00 $43.89 $38.08 $40.00 $35.18 $35.36 $30.73 $29.82 $30.00 $20.00 $10.00 $0.00 9/30/2008 9/30/2009 9/30/2010 9/30/2011 9/30/2012 9/30/2013 9/30/2014 9/30/2015 9/30/2016 9/30/2017 9/30/2018 Note: Stock price obtained from NASDAQ

  26. Slide 26: Capital Allocation Priorities

    Capital Allocation Priorities ➢ Invest in organic growth Capitalization ▪ Annual capex ~3% of revenue (in millions) ➢ $911.1 $960.6 Debt reduction $868.7 $790.3 ▪ $65.8 million reduction in Q4 FY2018 ▪ 3.6x Net debt : adjusted EBITDA (See Appendix E for reconciliation of non-GAAP measure) $57.5 ▪ Go

  27. Slide 27: Recent Developments

    Recent Developments ➢ FY2019 Targets(1) • Adjusted EBITDA(2) targeted to grow mid-to-high single digit rate over FY2018 • Non-GAAP EPS(2) targeted to grow mid-single digit rate over FY2018; pre-tax to contribute mid-to-high-single digit growth, partially offset by higher taxes • Debt reduction remai

  28. Slide 28: Institutional Shareholders

    Institutional Shareholders Shares 9/30/2018 BlackRock, Inc. 4,564,558 The Vanguard Group, Inc. 3,356,290 Franklin Resources, Inc. 2,941,520 Dimensional Fund Advisors, L.P. 1,595,494 Clarkston Capital Partners, LLC 1,440,071 Wellington Management Group, LLP 1,246,067 T. Rowe Price Associates, Inc. 1,

  29. Slide 29: Appendices

    Appendices ©2016 Matthews International Corporation. All Rights Reserved. 29

  30. Slide 30: Appendix A: EBITDA and Adjusted EBITDA Non-GAAP Reconciliation

    Appendix A EBITDA and Adjusted EBITDA Non-GAAP Reconciliation (Dollars in thousands) Fiscal year ended September 30, 2016 2017 2018 Net income attributable to Matthews $ 66,749 $ 74,368 $ 107,371 Interest expense 24,344 26,371 37,427 Income tax provision (benefit) (1) 29,073 22,354 (9,118) Depreciat

  31. Slide 31: Appendix B: Adjusted Net Income and EPS Non-GAAP Reconciliation

    Appendix B Adjusted Net Income and EPS Non-GAAP Reconciliation (Dollars in thousands, except per share data) Fiscal year ended September 30, 2016 2017 2018 Net income attributable to Matthew s $ 66,749 $ 74,368 $ 107,371 Acquisition costs (1) 16,240 13,828 8,128 ERP integration costs (1) 7,338 6,787

  32. Slide 32: Appendix C: Adjusted EBITDA by Segment Non-GAAP Reconciliation

    Appendix C Adjusted EBITDA by Segment Non-GAAP Reconciliation (Dol l ar s i n thousands) Fiscal year ended Sept ember 30, S GK B r a nd S ol ut i ons 2016 2017 2018 Operat ing Prof it $ 42,909 $ 24,919 $ 35,443 Depreciat ion and amort izat ion (1) 42,471 43,508 48,970 Ot her (2) 662 4,877 1,323 EBIT

  33. Slide 33: Appendix D: Additional Segment Information

    Appendix D Additional Segment Information Supplemental Asset Data (Dollars in thousands) SGK Brand Industrial (unaudited) Solutions Memorialization Technologies Other Total Fiscal 2018 Operating assets (a) $ 408,167 $ 265,352 $ 64,655 $ 26,515 $ 764,689 Intangible assets, net 785,155 479,450 128,199

  34. Slide 34: Appendix E: Net Debt Ratio Non-GAAP Reconciliation

    Appendix E Net Debt Ratio Non-GAAP Reconciliation (amounts in thousands) (unaudited) Fiscal Year Ended September 30, 2016 2017 2018 Balance Sheet Information Long-term debt, current maturities $ 27,747 $ 29,528 $ 31,260 Long-term debt 844,807 881,602 929,342 Total Debt $ 872,554 $ 911,130 $ 960,602

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