Matthews International Corporation · NASDAQ:MATW
Matthews International — Investor Presentation (March 2011)
32 slides from Matthews International's investor presentation, Mar 31, 2011
Slide 1: Matthews
Matthews 3/31/11
Slide 2: Business Overview
Matthews Business Overview Matthews
Slide 3: Disclaimer
Disclaimer Any forward-looking statements in connection with this discussion are being made 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 a
Slide 4: Founded in 1850 – headquartered in Pittsburgh, PA
Founded in 1850 – headquartered in Pittsburgh, PA Two principal business lines: ◦ Memorialization products and services Bronze Casket Cremation ◦ Brand Solutions Graphics Imaging Group Marking Products Merchandising Solutions 4,900 employees Voluntary employee ownership until 199
Slide 5: YTD Fiscal 2011 Sales
YTD FISCAL 2011 SALES Memorialization: Bronze 24% Casket 29% Cremation 5% 58% Brand Solutions: Graphics Imaging 29% Marking Products 7% Merchandising Solutions 6% 42% 5
Slide 6: Memorialization
Matthews MEMORIALIZATION Matthews
Slide 7: Regal Rose Memorial and flush bronze memorials
The Regal Rose Memorial Building signs are is one of many styles of an example of the flush bronze memorials segment’s produced by Matthews architectural product offerings. Lasting Memories TM products illustrate photographs cast in a bronze memorial or urn. Cremation gardens can be designed to incl
Slide 8: Wood Caskets are manufactured in York, PA
The Casket segment is a leading manufacturer and distributor of caskets in North America, producing a wide variety of wood and metal caskets. Wood Caskets are manufactured in York, PA 8
Slide 9: Power Pak II cremation system
The Power Pak II cremation system with automatic casket loader, one of the most popular cremation systems in North America. Bio-cremation is a water-based (versus flame-based) cremation process. The Master Touch cremation arrangement center assists funeral directors in educating the cremation consum
Slide 10: Memorialization growth strategies
◦ “Total Solutions” to funeral service providers ◦ Cremation Memorialization European market Service ◦ Granite memorials ◦ Architectural plaques/signage ◦ Acquisitions ◦ Cost structure improvements 10
Slide 11: Cremation rate and total deaths
5,000 4,500 Total Deaths 4,000 3,500 3,000 66.0% 65.0% 64.0% 2,500 62.3% Cremation Rate 2,000 60.6% 58.9% 1,500 50.0% 46.0% 1,000 39.8% 32.3% 500 26.2% 0 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047 2049 Source: CANA 11
Slide 12: Brand Solutions
BRAND SOLUTIONS Matthews
Slide 13: Graphics Imaging printing plates and tools
Printing plates for the packaging industry are one of the Graphics Imaging segment’s principal product lines. Saueressig is a manufacturer of gravure printing and embossing tools used in the packaging, wallpaper and tobacco industries. Graphics Imaging offers a wide range of services to the corrugat
Slide 14: Marking Products segment
The Marking Products segment designs and manufactures Matthews continues to be one of the market leaders in industrial quality printers for in-line marking. The ProPoint automated conveyor controls. printer uses an etching process to mark items. Non-contact ink-jet printing units apply dot matrix co
Slide 15: Merchandising Solutions segment
The Merchandising Solutions segment provides value-added comprehensive merchandising solutions to consumer products marketers and retailers. 15
Slide 16: Brand Solutions growth strategies
◦ U.S. Graphics Primary packaging Gravure ◦ Skill extension ◦ Geographic expansion ◦ New product development ◦ Acquisitions ◦ Cost structure improvements 16
Slide 17: Financial Overview
Matthews FINANCIAL OVERVIEW Matthews
Slide 18: Growth strategies: internal growth, acquisitions, share repurchases
Internal Growth ◦ Expand market presence of existing products ◦ New product development ◦ Manufacturing/cost structure improvements Acquisitions Share Repurchases 18
Slide 19: Sources of sales growth
16.0% 14.0% 12.0% Currency changes, 1.0% 10.0% Share repurchases, 1.4% 8.0% Acquisitions, 4.9% 6.0% 4.0% Organic Growth, 4.7% 2.0% 0.0% 12.0% 19
Slide 20: Acquisition criteria and performance
Principal objective: Support the business plan and long-term growth objectives of the Company and specific operating segment. Financial criteria: Immediately accretive to Earnings per Share. Achieve long-term target of an annual pre-tax Return on Invested Capital of 20%. Performance of companies acq
Slide 21: Sales, operating profit, net income and EPS
(Dollars in thousands, except per share data) YTD March 31, 2008 2009 2010 2010 2011 Sales $818,623 $780,908 $821,829 $393,839 $427,495 % Change 9.2% -4.6% 5.2% 1.3% 8.5% Operating Profit $132,952 $101,011 (b) $116,581 $49,294 $50,451 % Change 18.9% -24.0% 15.4% 13.3% 2.3% Net Income $79,484 (a) $57
Slide 22: Sales by segment
(Dollars in thousands) YTD March 31, 2008 2009 2010 2010 2011 Memorialization: Bronze $243,063 $215,934 $224,247 $102,978 $103,370 Casket 219,792 203,247 210,279 105,913 126,122 Cremation 26,665 30,909 39,356 17,491 19,460 Total Memorialization $489,520 $450,090 $473,882 $226,382 $248,952 Brand Solu
Slide 23: Operating profit by segment
(Dollars in thousands) YTD March 31, 2008 2009 2010 2010 2011 Memorialization: Bronze $71,576 $57,598 $56,167 $22,560 $20,937 Casket 23,339 17,716 26,242 14,548 14,791 Cremation 5,474 5,036 4,910 2,083 2,170 Total Memorialization $100,389 $80,350 $87,319 $39,191 $37,898 Brand Solutions: Graphics Ima
Slide 24: Operating profit margin by segment
YTD 2006 2007 2008 2009 2010 2011 Memorialization: Bronze 29.8% 28.8% 29.4% 26.7% 25.0% 20.3% Casket 8.4% 5.6% 10.6% 8.7% 12.5% 11.7% Cremation 13.0% 14.4% 20.5% 16.3% 12.5% 11.2% Total Memorialization 19.2% 17.6% 20.5% 17.9% 18.4% 15.2% Brand Solutions: Graphics Imaging 11.7% 9.9% 9.1% 8.2% 8.8% 7.
Slide 25: Fiscal 2010 free cash flow
Fiscal 2010 (in thousands) Net Income $69,057 Depreciation and Amortization 27,322 $96,379 Capital Expenditures (21,437) Free Cash Flow $74,942 25
Slide 26: EPS growth, 10-year average increase 12%
$3.00 $2.55 $2.31 $2.50 $2.06 $2.04 $1.90 $2.00 $1.79 $1.68 10-year average $1.35 annual increase $1.50 $1.16 in EPS – 12%. $0.97 $1.00 $0.50 $0.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 26
Slide 27: Stock price history
$60 $50.74 $50 $43.80 $38.55 $37.80 $36.79 $40 $35.38 $35.36 $33.88 $26.42 $30 $23.37 $20 $10 $0 9/30/02 9/30/03 9/30/04 9/30/05 9/30/06 9/30/07 9/30/08 9/30/09 9/30/10 3/31/11 27
Slide 28: Return on average equity
25% 18.2% 18.5% 15.8% 20% 13.2% 14.8% 15% 10% 5% 0% 2006 2007 2008 2009 2010 (in thousands) 2006 2007 2008 2009 2010 Net Income $ 66,444 $ 64,726 $ 79,484 $ 57,732 $ 69,057 Average Equity $365,087 $409,602 $430,367 $436,425 $466,311 28
Slide 29: Dividend increase and analyst coverage
Increased quarterly dividend 14% to 8.0 cents (October 2010) ◦ 16th dividend increase since the IPO Sales of $302 million (37% of total) generated outside the U.S. in fiscal 2010 Generated record operating cash flow of $106 million in fiscal 2010 Stock followed by five analysts: ◦ Janney Mon
Slide 30: Institutional ownership
Shares 3/31/2011 Neuberger Berman LLC 2,161,888 Fidelity Management & Research Co. 2,073,408 Artisan Partners LP 2,024,642 BlackRock Fund Advisors 1,874,169 Vanguard Group, Inc. 1,501,825 State Street Global Advisors 1,143,300 T. Rowe Price Associates, Inc. 1,095,289 Wellington Management Co. LLP 97
Slide 31: 52-week stock price and P/E vs peers
52-Week (03/31/11) High – Low Stock Price P/E Carriage Services (CSV) $ 5.98 - $ 4.00 $ 5.51 12 Service Corp. (SCI) $ 11.25 - $ 7.09 $ 11.06 22 Stewart Enterprises (STEI) $ 7.92 - $ 4.60 $ 7.64 24 StoneMor Partners LP (STON) $33.51 - $18.22 $ 28.24 25 Hillenbrand (HI) $26.21 - $18.98 $ 21.50 15 Scha
Slide 32: Investment highlights
Long-term track record of EPS growth Strong financial position and consistent free cash flow ◦ Ability to support growth strategies, share repurchases and debt reduction Successful acquisition program ◦ Additional opportunities exist Strong management team 32
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