Matthews International Corporation · NASDAQ:MATW

Matthews International — Q3 2018 Earnings Presentation

35 slides from Matthews International's earnings presentation, Aug 3, 2018

  1. Slide 1: Investor Presentation 3rd Quarter Fiscal 2018

    INVESTOR PRESENTATION 3rd QUARTER FISCAL 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 June 30, 2018 ©2016 Matthews International

  5. 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

  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 ▪ Expand market penetration with existing products ▪ Manufacturing/cost structure improvements ▪ New product development Acquisitions ▪ Support segment business plans ▪ Leverage existing operating infrastructure ▪ Achieve long-term annual retu

  18. Slide 18: Consolidated Results

    Consolidated Results (Dollars in thousands, Fiscal year ended September 30, YTD June 30, except per share data) 2015 2016 2017 2017 (a) 2018 (unaudited) (unaudited) Sales $ 1,426,068 $ 1,480,464 $ 1,515,608 $ 1,119,544 $ 1,195,136 Operating Profit $ 105,023 $ 118,815 $ 112,603 $ 82,677 $ 85,610 Adj.

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

    Segment Operating Results (as reported) (Dollars in thousands) Fiscal year ended September 30, YTD June 30, 2015 2016 2017 2017 2018 Sales: (unaudited) (unaudited) SGK Brand Solutions $ 798,339 $ 755,975 $ 770,181 $ 566,527 $ 601,794 Memorialization 508,058 610,142 615,882 463,567 475,557 Industrial

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

    Segment Results – Sales & Adjusted EBITDA (Dollars in thousands) Fiscal year ended September 30, YTD June 30, 2015 2016 2017 2017 2018 Sales: (unaudited) (unaudited) SGK Brand Solutions $ 798,339 $ 755,975 $ 770,181 $ 566,527 $ 601,794 Memorialization 508,058 610,142 615,882 463,567 475,557 Industri

  21. 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

  22. 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 6/30/2018 Market Capitalizati

  23. 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

  24. 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

  25. Slide 25: Common Stock Price

    Common Stock Price $70.00 $62.25 $60.76 $58.80 $60.00 $50.74 $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 6/30/2018 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) $1,026.4 ➢ Debt reduction $911.1 $790.3 $833.2 ▪ 4.1x Net debt : adjusted EBITDA (See Appendix F for reconciliation of non-GAAP measure) ▪ Goal of under 3x $57.5 $53.7 ➢ Dividends 9/30

  27. Slide 27: Recent Developments

    Recent Developments ➢ Reaffirmed expectations of fiscal 2018 growth in non-GAAP earnings per share of at least 10% over fiscal 2017 ➢ Posted consolidated sales of $1.195 billion for YTD 6/30/18 ➢ Achieved EPS of $2.44 and adjusted EPS of $2.72 for YTD 6/30/18 ➢ Acquired Star Granite & Bronze for $41

  28. Slide 28: 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,

  29. Slide 29: Appendices

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

  30. Slide 30: Appendix A: Adjusted Operating Profit Non-GAAP Reconciliation

    Appendix A Adjusted Operating Profit Non-GAAP Reconciliation Fiscal year ended September 30, YTD June 30, (Dollars in thousands) 2015 2016 2017 2017 2018 SGK B rand So lut io ns Operating Profit $ 21,864 $ 42,909 $ 24,919 $ 19,941 $ 16,550 Acquisition-related items (1) 33,605 24,872 21,103 17,895 14

  31. Slide 31: Appendix B: EBITDA and Adjusted EBITDA Non-GAAP Reconciliation

    Appendix B EBITDA and Adjusted EBITDA Non-GAAP Reconciliation Fiscal year ended September 30, YTD June 30, (Dollars in thousands) 2015 2016 2017 2017 (1) 2018 Net Income $ 63,449 $ 66,749 $ 74,368 $ 54,727 $ 77,776 Interest expense 20,610 24,344 26,371 19,750 26,782 Income tax provision (benefit) (2

  32. Slide 32: Appendix C: Adjusted Net Income and EPS Reconciliation

    Appendix C Adjusted Net Income and EPS Non-GAAP Reconciliation (Dollars in thousands, except per share data) Fiscal year ended September 30, YTD June 30, 2015 2016 2017 2017 (1) 2018 Net income attributable to Matthews $ 63,449 $ 66,749 $ 74,368 $ 54,727 $ 77,776 Acquisition-related items 26,428 23,

  33. Slide 33: Appendix D: Adjusted EBITDA by Segment

    Appendix D Adjusted EBITDA by Segment Non-GAAP (Dollars in thousands) Fiscal year ended Sept ember 30, YTD June 30, 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 $ 19,941 $ 16,550 Reconciliation Depreciat ion and amort izat ion (2) 47,215 42,4

  34. Slide 34: Appendix E: Additional Segment Information

    Appendix E Additional Segment Information Supplemental Asset Data (Dollars in thousands) SGK Brand Industrial (unaudited) Solutions Memorialization Technologies Other Total Nine Months Ended June 30, 2018 Operating assets (a) $ 402,783 $ 267,096 $ 72,494 $ 25,065 $ 767,438 Intangible assets, net 794

  35. Slide 35: Appendix F: Net Debt Ratio Non-GAAP Reconciliation

    Appendix F Net Debt Ratio Non-GAAP Reconciliation (amounts in thousands) (unaudited) Balance Sheet Information as of June 30, 2018 Long-term debt, current maturities $ 27,567 Long-term debt 998,852 Total Debt $ 1,026,419 Cash and cash equivalents 53,715 Net Debt $ 972,704 12 Month Adj EBITDA Informa

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