Fiscal 2023 3rd Quarter Financial Highlights:
- Sales increased $50.2 million from a year ago; Industrial Technologies sales 66% higher
- Net income of $8.7 million vs. $2.9 million last year; adjusted EBITDA 22.1% higher
- Outstanding debt declined $3.0 million during current quarter
- Company re-affirms guidance for fiscal 2023
- Webcast: Friday, July 28, 2023, 9:00 a.m., (201) 689-8471
PITTSBURGH, July 27, 2023 (GLOBE NEWSWIRE) -- Matthews International Corporation (NASDAQ GSM: MATW) today announced financial results for its third quarter of fiscal 2023.
In discussing the results for the Company’s fiscal 2023 third quarter, Joseph C. Bartolacci, President and Chief Executive Officer, stated:
“We continued to deliver on our strategies in the fiscal 2023 third quarter as the Company generated strong growth in consolidated sales and adjusted EBITDA (net income before interest expense, income taxes, depreciation and amortization, and other adjustments) for the fiscal 2023 third quarter compared to a year ago. Our performance for the current quarter reflected continued growth in the Industrial Technologies segment, the ongoing strength and stability of our Memorialization segment, and improved results for the SGK Brand Solutions segment.
“Our Industrial Technologies segment reported significant growth from the same quarter a year ago primarily resulting from the continued high growth of our energy storage solutions business. Interest in our solutions remains very strong as the industry increasingly recognizes the significant economic and technical advantages of our proprietary dry battery electrode production technology. The segment also benefited from recent acquisitions that increased capacity and resources required to support the execution of recent orders and the growing demand for our energy storage solutions.
“The Memorialization segment reported higher sales and adjusted EBITDA for the current quarter compared to a year ago. The segment continues to perform well post-pandemic reflecting good market share performance, price realization, and cremation-related products sales. The strength of our brands, strong customer service, continued innovation in our production processes, and the growing level of our cremation-related products sales remain significant elements in the ongoing success of this segment.
“Our SGK Brand Solutions segment also reported improved operating results for the quarter despite challenging European market conditions. The segment’s adjusted EBITDA increased from a year ago primarily due to more stable U.S. brand market conditions, including the ability to pass along cost increases, and the benefits of recent cost reduction actions. These actions included several site closures that, while also contributing to the year-over-year sales decline, favorably affected the segment’s adjusted EBITDA. Further cost reduction actions are planned over the next six months which are intended to contribute to continued margin improvement.
“Additionally, we further reduced our outstanding debt and improved our net leverage ratio during the current quarter reflecting the Company’s operating performance and cash flow.
“With respect to the remainder of fiscal 2023, we are still expecting full year results to be within our original guidance range of $215 million to $235 million, as we are currently projecting adjusted EBITDA of at least $220 million for the fiscal year. Fourth quarter adjusted EBITDA a year ago for the Industrial Technologies segment was particularly strong due to the timing of projects but we expect the current year fourth quarter to remain relatively in line on the strength of the energy storage solutions business. The Memorialization segment continues to perform well and recent cost actions in the SGK Brand Solutions segment are anticipated to drive margin improvements.”
Third Quarter Fiscal 2023 Consolidated Results (Unaudited)
| ($ in millions, except per share data) | Q3 FY2023 | Q3 FY2022 | Change | % Change | |||||||
| Sales | $ | 471.9 | $ | 421.7 | $ | 50.2 | 11.9 | % | |||
| Net income attributable to Matthews | $ | 8.7 | $ | 2.9 | $ | 5.8 | NM | ||||
| Diluted earnings per share | $ | 0.28 | $ | 0.09 | $ | 0.19 | NM | ||||
| Non-GAAP adjusted net income | $ | 23.0 | $ | 17.8 | $ | 5.2 | 29.4 | % | |||
| Non-GAAP adjusted EPS | $ | 0.74 | $ | 0.58 | $ | 0.16 | 27.6 | % | |||
| Adjusted EBITDA | $ | 56.2 | $ | 46.0 | $ | 10.2 | 22.1 | % | |||
| 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 June 30, 2023 were $471.9 million, compared to $421.7 million for the same quarter a year ago, representing an increase of $50.2 million, or 11.9%. On a constant currency basis, consolidated sales increased $51.9 million, or 12.3%, from a year ago. Changes in foreign currency exchange rates were estimated to have an unfavorable impact of $1.7 million on fiscal 2023 third quarter sales compared to the prior year.
Industrial Technologies segment sales were higher for the current quarter compared to a year ago primarily reflecting higher engineering (energy storage) sales, and the impact of the acquisitions of Olbrich GmbH (“Olbrich”) and R+S Automotive GmbH (“R+S”). Memorialization segment sales increased for the current quarter compared to a year ago primarily reflecting improved pricing, higher sales of U.S. cremation equipment, and the impact of the acquisition of Eagle Granite, which more than offset lower unit sales for caskets and memorials resulting from the decline in COVID-related deaths. Sales for the SGK Brand Solutions segment declined compared to a year ago primarily reflecting lower European sales, unfavorable currency rate changes, and lower retail-based sales.
Net income attributable to the Company for the quarter ended June 30, 2023 was $8.7 million, or $0.28 per share, compared to $2.9 million, or $0.09 per share in the prior year. On a non-GAAP adjusted basis, earnings for the fiscal 2023 third quarter were $0.74 per share, compared to $0.58 per share a year ago. The increase was primarily attributable to an increase in consolidated adjusted EBITDA for the current quarter, partially offset by higher interest expense compared to a year ago. Adjusted EBITDA for the fiscal 2023 third quarter was $56.2 million, compared to $46.0 million a year ago, reflecting higher adjusted EBITDA in all of the Company's segments.
Fiscal 2023 Year-to-Date Consolidated Results (Unaudited)
| ($ in millions, except per share data) | YTD FY2023 | YTD FY2022 | Change | % Change | |||||||||
| Sales | $ | 1,400.7 | $ | 1,305.3 | $ | 95.5 | 7.3 | % | |||||
| Net income (loss) attributable to Matthews | $ | 21.6 | $ | (18.8 | ) | $ | 40.4 | NM | |||||
| Diluted earnings (loss) per share | $ | 0.69 | $ | (0.60 | ) | $ | 1.29 | NM | |||||
| Non-GAAP adjusted net income | $ | 59.8 | $ | 64.8 | $ | (5.1 | ) | (7.8)% | |||||
| Non-GAAP adjusted EPS | $ | 1.92 | $ | 2.06 | $ | (0.14 | ) | (6.8)% | |||||
| Adjusted EBITDA | $ | 163.9 | $ | 154.5 | $ | 9.4 | 6.1 | % | |||||
| 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 nine months ended June 30, 2023 were $1.40 billion, compared to $1.31 billion a year ago, representing an increase of $95.5 million, or 7.3%. On a constant currency basis, consolidated sales increased $124.1 million, or 9.5%, from a year ago. Changes in foreign currency exchange rates were estimated to have an unfavorable impact of $28.6 million on fiscal 2023 sales compared to last year.
Net income attributable to the Company for the first nine months of fiscal 2023 was $21.6 million, or $0.69 per share, compared to a net loss of $18.8 million, or $0.60 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 war.
On a non-GAAP adjusted basis, earnings for the first nine months of fiscal 2023 were $1.92 per share, compared to $2.06 per share a year ago, representing a decrease of $0.14 per share or 6.8%. The decrease primarily reflected higher interest expense, partially offset by higher year-to-date adjusted EBITDA. Adjusted EBITDA for the first nine months of fiscal 2023 was $163.9 million, compared to $154.5 million a year ago, representing an increase of $9.4 million. The impact of higher consolidated sales was partially offset by significant material cost increases, higher labor costs, and other inflationary cost increases.
Webcast
The Company will host a conference call and webcast on Friday, July 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 Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||
| 2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||
| Sales | $ | 471,908 | $ | 421,719 | 11.9 | % | $ | 1,400,728 | $ | 1,305,276 | 7.3 | % | |||||||||
| Cost of sales | (333,603 | ) | (300,854 | ) | 10.9 | % | (973,870 | ) | (928,255 | ) | 4.9 | % | |||||||||
| Gross profit | 138,305 | 120,865 | 14.4 | % | 426,858 | 377,021 | 13.2 | % | |||||||||||||
| Gross margin | 29.3 | % | 28.7 | % | 30.5 | % | 28.9 | % | |||||||||||||
| Selling and administrative expenses | (106,141 | ) | (98,098 | ) | 8.2 | % | (333,556 | ) | (302,610 | ) | 10.2 | % | |||||||||
| Amortization of intangible assets | (10,640 | ) | (11,804 | ) | (9.9)% | (31,499 | ) | (45,303 | ) | (30.5)% | |||||||||||
| Operating profit | 21,524 | 10,963 | 96.3 | % | 61,803 | 29,108 | 112.3 | % | |||||||||||||
| Operating margin | 4.6 | % | 2.6 | % | 4.4 | % | 2.2 | % | |||||||||||||
| Interest and other deductions, net | (13,411 | ) | (7,048 | ) | 90.3 | % | (36,224 | ) | (50,290 | ) | (28.0)% | ||||||||||
| Income (loss) before income taxes | 8,113 | 3,915 | 107.2 | % | 25,579 | (21,182 | ) | NM | |||||||||||||
| Income taxes | 558 | (1,040 | ) | (153.7)% | (4,136 | ) | 2,311 | NM | |||||||||||||
| Net income (loss) | 8,671 | 2,875 | NM | 21,443 | (18,871 | ) | NM | ||||||||||||||
| Non-controlling interests | 67 | 18 | NM | 125 | 56 | 123.2 | % | ||||||||||||||
| Net income (loss) attributable to Matthews | $ | 8,738 | $ | 2,893 | NM | $ | 21,568 | $ | (18,815 | ) | NM | ||||||||||
| Earnings (loss) per share -- diluted | $ | 0.28 | $ | 0.09 | NM | $ | 0.69 | $ | (0.60 | ) | NM | ||||||||||
| Earnings per share -- non-GAAP (1) | $ | 0.74 | $ | 0.58 | 27.6 | % | $ | 1.92 | $ | 2.06 | (6.8)% | ||||||||||
| Dividends declared per share | $ | 0.23 | $ | 0.22 | 4.5 | % | |||||||||||||||
