Document

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

____________________________________________________________



☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2019



☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from _____ to _____

Commission File No. 0-09115

____________________________________________________________

MATTHEWS INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)



Pennsylvania	25-0644320
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)



Two Northshore Center,	Pittsburgh,	PA	15212‑5851
(Address of principal executive offices)			(Zip Code)

(412)			442-8200
(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)



Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, $1.00 par value	MATW	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	ý	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

As of June 30, 2019, shares of common stock outstanding were: Class A Common Stock 31,488,459 shares.

PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollar amounts in thousands)



	June 30, 2019					September 30, 2018
ASSETS
Current assets:
Cash and cash equivalents				$	33,603				$	41,572
Accounts receivable, net				318,717					331,463
Inventories, net				188,658					180,451
Other current assets				73,467					61,592

Total current assets				614,445					615,078

Investments				88,887					45,430
Property, plant and equipment, net				247,169					252,775
Deferred income taxes				2,680					1,837
Other assets				36,210					49,820
Goodwill				935,107					948,894
Other intangible assets, net				420,795					443,910

Total assets				$	2,345,293				$	2,357,744

LIABILITIES
Current liabilities:
Long-term debt, current maturities				$	58,080				$	31,260
Trade accounts payable				68,318					70,044
Accrued compensation				41,415					51,490
Accrued income taxes				12,102					11,413
Other current liabilities				134,132					122,195

Total current liabilities				314,047					286,402

Long-term debt				921,520					929,342
Accrued pension				86,024					82,035
Postretirement benefits				17,457					17,753
Deferred income taxes				115,593					121,519
Other liabilities				42,227					51,979
Total liabilities				1,496,868					1,489,030

SHAREHOLDERS' EQUITY
Shareholders' equity-Matthews:
Common stock	$	36,334				$	36,334
Additional paid-in capital	136,211					129,252
Retained earnings	1,050,091					1,040,378
Accumulated other comprehensive loss	(179,874		)			(164,298		)
Treasury stock, at cost	(195,920		)			(173,315		)
Total shareholders' equity-Matthews				846,842					868,351
Noncontrolling interests				1,583					363
Total shareholders' equity				848,425					868,714

Total liabilities and shareholders' equity				$	2,345,293				$	2,357,744

The accompanying notes are an integral part of these consolidated financial statements.

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollar amounts in thousands, except per share data)



	Three Months Ended June 30,						Nine Months Ended June 30,
	2019			2018			2019			2018

Sales	$	379,294		$	411,621		$	1,144,871		$	1,195,136
Cost of sales	(242,116		)	(259,006		)	(745,001		)	(760,428		)

Gross profit	137,178			152,615			399,870			434,708

Selling expense	(32,857		)	(36,000		)	(102,238		)	(110,108		)
Administrative expense	(65,087		)	(68,961		)	(200,346		)	(211,451		)
Intangible amortization	(9,543		)	(8,334		)	(27,165		)	(23,264		)

Operating profit	29,691			39,320			70,121			89,885

Investment income	655			538			1,394			931
Interest expense	(10,508		)	(9,719		)	(31,068		)	(26,782		)
Other income (deductions), net	(1,425		)	(1,482		)	(3,416		)	(5,162		)

Income before income taxes	18,413			28,657			37,031			58,872

Income tax (provision) benefit	(3,989		)	(4,312		)	(4,429		)	18,703

Net income	14,424			24,345			32,602			77,575

Net loss attributable to noncontrolling interests	205			69			541			201

Net income attributable to Matthews shareholders	$	14,629		$	24,414		$	33,143		$	77,776

Earnings per share attributable to Matthews shareholders:
Basic	$	0.47		$	0.77		$	1.05		$	2.45

Diluted	$	0.46		$	0.77		$	1.05		$	2.44

The accompanying notes are an integral part of these consolidated financial statements.

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(Dollar amounts in thousands)




	Three Months Ended June 30,
	Matthews						Noncontrolling Interest						Total
	2019			2018			2019			2018			2019			2018

Net income (loss):	$	14,629		$	24,414		$	(205	)	$	(69	)	$	14,424		$	24,345
Other comprehensive income (loss) ("OCI"), net of tax:
Foreign currency translation adjustment	2,639			(38,669		)	(5		)	(23		)	2,634			(38,692		)
Pension plans and other postretirement benefits	705			1,256			—			—			705			1,256
Unrecognized (loss) gain on derivatives:
Net change from periodic revaluation	(2,372		)	393			—			—			(2,372		)	393
Net amount reclassified to earnings	(660		)	(399		)	—			—			(660		)	(399		)
Net change in unrecognized loss on derivatives	(3,032		)	(6		)	—			—			(3,032		)	(6		)
OCI, net of tax	312			(37,419		)	(5		)	(23		)	307			(37,442		)
Comprehensive income (loss)	$	14,941		$	(13,005	)	$	(210	)	$	(92	)	$	14,731		$	(13,097	)



	Nine Months Ended June 30,
	Matthews						Noncontrolling Interest						Total
	2019			2018			2019			2018			2019			2018

Net income (loss):	$	33,143		$	77,776		$	(541	)	$	(201	)	$	32,602		$	77,575
OCI, net of tax:
Foreign currency translation adjustment	(9,791		)	(19,658		)	1			80			(9,790		)	(19,578		)
Pension plans and other postretirement benefits	2,168			3,296			—			—			2,168			3,296
Unrecognized (loss) gain on derivatives:
Net change from periodic revaluation	(6,074		)	5,286			—			—			(6,074		)	5,286
Net amount reclassified to earnings	(1,879		)	(570		)	—			—			(1,879		)	(570		)
Net change in unrecognized (loss) gain on derivatives	(7,953		)	4,716			—			—			(7,953		)	4,716
OCI, net of tax	(15,576		)	(11,646		)	1			80			(15,575		)	(11,566		)
Comprehensive (loss) income	$	17,567		$	66,130		$	(540	)	$	(121	)	$	17,027		$	66,009

The accompanying notes are an integral part of these consolidated financial statements.

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Dollar amounts in thousands, except per share data) (Unaudited)



	Shareholders' Equity
	Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Treasury Stock			Non- controlling Interests			Total
Balance, September 30, 2018	$	36,334	$	129,252		$	1,040,378		$	(164,298	)	$	(173,315	)	$	363		$	868,714
Net income (loss)	—		—			3,097			—			—			(113		)	2,984
Minimum pension liability	—		—			—			729			—			—			729
Translation adjustment	—		—			—			(12,564		)	—			(13		)	(12,577		)
Fair value of derivatives	—		—			—			(2,901		)	—			—			(2,901		)
Total comprehensive loss																		(11,765		)
Stock-based compensation	—		3,647			—			—			—			—			3,647
Purchase of 186,417 shares of treasury stock	—		—			—			—			(7,751		)	—			(7,751		)
Issuance of 2,822 shares of treasury stock	—		(115		)	—			—			115			—			—
Cancellations of 19,433 shares of treasury stock	—		891			—			—			(891		)	—			—
Dividends, $0.20 per share	—		—			(6,414		)	—			—			—			(6,414		)
Acquisition	—		—			—			—			—			1,760			1,760
Cumulative tax adjustment for intra-entity transfers	—		—			(4,176		)	—			—			—			(4,176		)
Balance, December 31, 2018	$	36,334	$	133,675		$	1,032,885		$	(179,034	)	$	(181,842	)	$	1,997		$	844,015
Net income (loss)	—		—			15,417			—			—			(223		)	15,194
Minimum pension liability	—		—			—			734			—			—			734
Translation adjustment	—		—			—			134			—			19			153
Fair value of derivatives	—		—			—			(2,020		)	—			—			(2,020		)
Total comprehensive income																		14,061
Stock-based compensation	—		1,366			—			—			—			—			1,366
Purchase of 143,092 shares of treasury stock	—		—			—			—			(5,535		)	—			(5,535		)
Cancellations of 41 shares of treasury stock	—		14			—			—			(14		)	—			—
Dividends, $0.20 per share	—		—			(6,446		)	—			—			—			(6,446		)
Balance, March 31, 2019	$	36,334	$	135,055		$	1,041,856		$	(180,186	)	$	(187,391	)	$	1,793		$	847,461
Net income (loss)	—		—			14,629			—			—			(205		)	14,424
Minimum pension liability	—		—			—			705			—			—			705
Translation adjustment	—		—			—			2,639			—			(5		)	2,634
Fair value of derivatives	—		—			—			(3,032		)	—			—			(3,032		)
Total comprehensive income																		14,731
Stock-based compensation	—		1,156			—			—			—			—			1,156
Purchase of 240,155 shares of treasury stock	—		—			—			—			(8,529		)	—			(8,529		)
Dividends, $0.20 per share	—		—			(6,394		)	—			—			—			(6,394		)
Balance, June 30, 2019	$	36,334	$	136,211		$	1,050,091		$	(179,874	)	$	(195,920	)	$	1,583		$	848,425

The accompanying notes are an integral part of these consolidated financial statements.



	Shareholders' Equity
	Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Treasury Stock			Non- controlling Interests			Total
Balance, September 30, 2017	$	36,334	$	123,432		$	948,830		$	(154,115	)	$	(164,774	)	$	552		$	790,259
Net income (loss)	—		—			35,180			—			—			(22		)	35,158
Minimum pension liability	—		—			—			1,018			—			—			1,018
Translation adjustment	—		—			—			7,598			—			13			7,611
Fair value of derivatives	—		—			—			1,595			—			—			1,595
Total comprehensive income																		45,382
Stock-based compensation	—		5,474			—			—			—			—			5,474
Purchase of 75,765 shares of treasury stock	—		—			—			—			(4,415		)	—			(4,415		)
Issuance of 223,971 shares of treasury stock	—		(8,922		)	—			—			8,922			—			—
Cancellations of 5,214 shares of treasury stock	—		310			—			—			(310		)	—			—
Dividends, $0.19 per share	—		—			(6,071		)	—			—			—			(6,071		)
Balance, December 31, 2017	$	36,334	$	120,294		$	977,939		$	(143,904	)	$	(160,577	)	$	543		$	830,629
Net income (loss)	—		—			18,182			—			—			(110		)	18,072
Minimum pension liability	—		—			—			1,022			—			—			1,022
Translation adjustment	—		—			—			11,413			—			90			11,503
Fair value of derivatives	—		—			—			3,127			—			—			3,127
Total comprehensive income																		33,724
Stock-based compensation	—		2,658			—			—			—			—			2,658
Purchase of 260,621 shares of treasury stock	—		—			—			—			(13,890		)	—			(13,890		)
Issuance of 102,856 shares of treasury stock	—		883			—			—			4,117			—			5,000
Dividends, $0.19 per share	—		—			(6,039		)	—			—			—			(6,039		)
Balance, March 31, 2018	$	36,334	$	123,835		$	990,082		$	(128,342	)	$	(170,350	)	$	523		$	852,082
Net income (loss)	—		—			24,414			—			—			(69		)	24,345
Minimum pension liability	—		—			—			1,256			—			—			1,256
Translation adjustment	—		—			—			(38,669		)	—			(23		)	(38,692		)
Fair value of derivatives	—		—			—			(6		)	—			—			(