Matthews International Corporation · NASDAQ:MATW
Matthews International — Q2 2018 Earnings Presentation
33 slides from Matthews International's earnings presentation, Jun 20, 2018
Slide 1: Investor Presentation 2nd Quarter Fiscal 2018
INVESTOR PRESENTATION 2nd QUARTER FISCAL 2018 ©2016 Matthews International Corporation. All Rights Reserved.
Slide 2: Business Overview
Business Overview ©2016 Matthews International Corporation. All Rights Reserved. 2
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
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 March 31, 2018 ©2016 Matthews International
Slide 5: Fiscal 2017 Sales
Fiscal 2017 Sales Memorialization 41% SGK Brand Solutions 51% 8% Industrial Technologies ©2016 Matthews International Corporation. All Rights Reserved. 5
Slide 6: SGK Brand Solutions
SGK BRAND SOLUTIONS ©2016 Matthews International Corporation. All Rights Reserved. 6
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
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
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
Slide 10: Memorialization
MEMORIALIZATION ©2016 Matthews International Corporation. All Rights Reserved. 10
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
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.
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
Slide 14: Industrial Technologies
INDUSTRIAL TECHNOLOGIES ©2016 Matthews International Corporation. All Rights Reserved. 14
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
Slide 16: Financial Overview
Financial Overview ©2016 Matthews International Corporation. All Rights Reserved. 16
Slide 17: Key Elements of Long-Term EPS Growth
Key Elements of Long-Term EPS Growth ➢ Internal Growth ▪ Expand market presence of existing products ▪ Manufacturing/cost structure improvements ▪ New product development ➢ Acquisitions ▪ Primary objective to support strategic business plans ▪ Leverage existing operating infrastructure ▪ Achieve lon
Slide 18: Consolidated Results
Consolidated Results (Dollars in thousands, Fiscal year ended September 30, YTD March 31, except per share data) 2015 2016 2017 2017 (a) 2018 (unaudited) (unaudited) Sales $ 1,426,068 $ 1,480,464 $ 1,515,608 $ 729,914 $ 783,515 Operating Profit $ 105,023 $ 118,815 $ 112,603 $ 45,891 $ 47,715 Adj. Op
Slide 19: Segment Operating Results (as reported)
Segment Operating Results (as reported) (Dollars in thousands) Fiscal year ended September 30, YTD March 31, 2015 2016 2017 2017 2018 Sales: (unaudited) (unaudited) SGK Brand Solutions $ 798,339 $ 755,975 $ 770,181 $ 365,921 $ 398,818 Memorialization 508,058 610,142 615,882 307,730 313,578 Industria
Slide 20: Segment Results – Sales & Adjusted EBITDA
Segment Results – Sales & Adjusted EBITDA (Dollars in thousands) Fiscal year ended September 30, YTD March 31, 2015 2016 2017 2017 2018 Sales: (unaudited) (unaudited) SGK Brand Solutions $ 798,339 $ 755,975 $ 770,181 $ 365,921 $ 398,818 Memorialization 508,058 610,142 615,882 307,730 313,578 Industr
Slide 21: Free Cash Flow
Free Cash Flow (Dollars in thousands) Fiscal year ended September 30, 2015 2016 2017 Net Income $ 63,449 $ 66,749 $ 74,368 Depreciation and Amortization 62,620 65,480 67,981 Stock-Based Compensation 9,097 10,612 14,562 Pension Cost (non-service portion) 5,677 8,413 8,773 Subtotal 140,843 151,254 165
Slide 22: Free Cash Flow Yield
Free Cash Flow Yield (Dollars in thousands) Fiscal year ended September 30, 2015 2016 2017 Free Cash Flow (1) $ 92,592 $ 109,572 $ 120,749 Market Capitalization $ 1,609,892 $ 1,952,929 $ 2,001,249 Free Cash Flow Yield (1) 5.75% 5.61% 6.03% Free Cash Flow Yield (based on 3/31/2018 Market Capitalizati
Slide 23: Earnings Per Share
Earnings Per Share Earnings Per Share Adjusted Earnings Per Share $3.50 $4.00 $3.60 $3.38 $3.00 $3.50 $3.03 $2.74 $3.00 $2.59 $2.50 $2.28 $1.95 $2.03 $1.91 $2.50 $2.00 $1.49 $2.00 $1.50 $1.50 $1.00 $1.00 $0.50 $0.50 $0.00 $0.00 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Note: Adjusted earning
Slide 24: EBITDA
EBITDA (Dollars in millions) EBITDA Adjusted EBITDA $250.0 $250.0 $239.6 $238.7 $216.0 $191.1 $200.0 $185.6 $200.0 $173.0 $172.1 $160.6 $150.0 $150.0 $131.1 $120.9 $100.0 $100.0 $50.0 $50.0 $0.0 $0.0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Note: EBITDA represents earnings before interest e
Slide 25: Common Stock Price
Common Stock Price $70.00 $60.76 $62.25 $60.00 $50.74 $50.60 $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 3/31/2018 Note: Stock price obtained from NASDAQ
Slide 26: Recent Highlights
Recent Highlights ➢ Company raised fiscal 2018 non-GAAP earnings per share expectations to be at least 10% over fiscal 2017 ➢ Reported record sales of $1.52 billion in fiscal 2017 ➢ Increased quarterly dividend 11.8% to 19.0 cents (November 2017) ➢ 23rd consecutive annual dividend increase since the
Slide 27: Institutional Shareholders
Institutional Shareholders Shares 3/31/2018 BlackRock Institutional Trust Company, N.A. 4,134,966 The Vanguard Group, Inc. 3,235,155 Franklin Advisory Services, LLC 2,955,118 Wellington Management Company, LLP 1,450,766 Dimensional Fund Advisors, L.P. 1,340,204 Clarkston Capital Partners, LLC 1,123,
Slide 28: Appendices
Appendices ©2016 Matthews International Corporation. All Rights Reserved. 28
Slide 29: Appendix A: Adjusted Operating Profit Non-GAAP Reconciliation
Appendix A Adjusted Operating Profit Non-GAAP Reconciliation Fiscal year ended September 30, YTD M arch 31, (Dollars in thousands) 2015 2016 2017 2017 2018 SGK B rand So lut io ns Operating Profit $ 21,864 $ 42,909 $ 24,919 $ 8,551 $ 8,242 Acquisition-related items (1) 33,605 24,872 21,103 13,110 9,
Slide 30: Appendix B: EBITDA and Adjusted EBITDA Non-GAAP Reconciliation
Appendix B EBITDA and Adjusted EBITDA Non-GAAP Reconciliation Fiscal year ended September 30, YTD March 31, (Dollars in thousands) 2015 2016 2017 2017 (1) 2018 Net Income $ 63,449 $ 66,749 $ 74,368 $ 25,242 $ 53,362 Interest expense 20,610 24,344 26,371 12,762 17,063 Income tax provision (benefit) (
Slide 31: Appendix C: Adjusted Net Income and EPS Non-GAAP Reconciliation
Appendix C Adjusted Net Income and EPS Non-GAAP Reconciliation (Dollars in thousands, except per share data) Fiscal year ended September 30, YTD March 31, 2015 2016 2017 2017 (1) 2018 Net income attributable to Matthews $ 63,449 $ 66,749 $ 74,368 $ 25,242 $ 53,362 Acquisition-related items 26,428 23
Slide 32: Appendix D: Adjusted EBITDA by Segment Non-GAAP
Appendix D Adjusted EBITDA by Segment Non-GAAP (Dollars in thousands) Fiscal year ended Sept ember 30, YTD March 31, S GK B r a nd S ol ut i ons 2015 2016 2017 2017 (1) 2018 Operat ing Prof it $ 21,864 $ 42,909 $ 24,919 $ 8,551 $ 8,242 Reconciliation Depreciat ion and amort izat ion (2) 47,215 42,47
Slide 33: Appendix E: Additional Segment Information
Appendix E Additional Segment Information Supplemental Asset Data (Dollars in thousands) Fiscal 2017 (unaudited) SGK Brand Industrial Solutions Memorialization Technologies Corporate Total Operating assets (a) $ 391,716 $ 262,515 $ 55,040 $ 17,273 $ 726,544 Intangible assets, net 797,779 440,189 84,
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