matw-20200331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

____________________________________________________________

FORM 10-Q

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

For the Quarterly Period Ended March 31, 2020

☐ 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 incorporation or organization)						(I.R.S. Employer 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)

Not Applicable

(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.

Yes ý No o

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).

Yes ý No o

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

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).

Yes ☐ No ý

As of March 31, 2020, shares of common stock outstanding were: Class A Common Stock 31,269,345 shares.

PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollar amounts in thousands)


	March 31, 2020						September 30, 2019
ASSETS
Current assets:
Cash and cash equivalents			$	72,338			$	35,302
Accounts receivable, net			294,587				318,756
Inventories, net			186,919				180,274
Other current assets			72,093				49,384

Total current assets			625,937				583,716

Investments			93,208				85,501


Property, plant and equipment, net			235,962				237,442
Deferred income taxes			4,940				5,032
Other assets			117,005				31,455
Goodwill			750,578				846,807
Other intangible assets, net			364,106				400,650

Total assets			$	2,191,736			$	2,190,603

LIABILITIES
Current liabilities:
Long-term debt, current maturities			$	26,077			$	42,503
Trade accounts payable			89,650				74,558
Accrued compensation			39,077				42,545
Accrued income taxes			1,894				5,997
Other current liabilities			165,604				114,276

Total current liabilities			322,302				279,879

Long-term debt			939,753				898,194
Accrued pension			137,284				133,762
Postretirement benefits			19,926				19,963
Deferred income taxes			92,832				102,482
Other liabilities			88,437				37,087
Total liabilities			1,600,534				1,471,367

SHAREHOLDERS' EQUITY
Shareholders' equity-Matthews:
Common stock	$	36,334			$	36,334
Additional paid-in capital	143,034				137,774
Retained earnings	862,581				972,594
Accumulated other comprehensive loss	(248,495)				(228,361)
Treasury stock, at cost	(203,307)				(200,235)
Total shareholders' equity-Matthews			590,147				718,106
Noncontrolling interests			1,055				1,130
Total shareholders' equity			591,202				719,236

Total liabilities and shareholders' equity			$	2,191,736			$	2,190,603

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 March 31,						Six Months Ended March 31,
	2020		2019		2020		2019

Sales	$	374,800	$	391,400	$	739,744	$	765,577
Cost of sales	(250,036)		(255,119)		(499,253)		(502,885)

Gross profit	124,764		136,281		240,491		262,692

Selling expense	(33,182)		(34,352)		(65,445)		(69,381)
Administrative expense	(68,399)		(68,156)		(138,864)		(135,259)
Intangible amortization	(17,872)		(9,509)		(35,814)		(17,622)
Goodwill write-down	(90,408)		—		(90,408)		—

Operating (loss) profit	(85,097)		24,264		(90,040)		40,430

Investment (loss) income	(1,108)		2,091		191		739
Interest expense	(9,613)		(10,259)		(18,853)		(20,560)
Other deductions, net	(1,843)		(1,067)		(4,662)		(1,991)

(Loss) income before income taxes	(97,661)		15,029		(113,364)		18,618

Income tax benefit (provision)	11,066		165		16,463		(440)

Net (loss) income	(86,595)		15,194		(96,901)		18,178

Net losses attributable to noncontrolling interests	231		223		71		336

Net (loss) income attributable to Matthews shareholders	$	(86,364)	$	15,417	$	(96,830)	$	18,514

(Loss) earnings per share attributable to Matthews shareholders:
Basic	$	(2.77)	$	0.49	$	(3.11)	$	0.59

Diluted	$	(2.77)	$	0.48	$	(3.11)	$	0.58

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 March 31,
	Matthews						Noncontrolling Interest						Total
	2020		2019		2020		2019		2020		2019

Net (loss) income:	$	(86,364)	$	15,417	$	(231)	$	(223)	$	(86,595)	$	15,194
Other comprehensive income (loss) ("OCI"), net of tax:
Foreign currency translation adjustment	(30,648)		134		1		19		(30,647)		153
Pension plans and other postretirement benefits	1,827		734		—		—		1,827		734
Unrecognized loss on derivatives:
Net change from periodic revaluation	(4,305)		(1,356)		—		—		(4,305)		(1,356)
Net amount reclassified to earnings	(137)		(664)		—		—		(137)		(664)
Net change in unrecognized loss on derivatives	(4,442)		(2,020)		—		—		(4,442)		(2,020)
OCI, net of tax	(33,263)		(1,152)		1		19		(33,262)		(1,133)
Comprehensive (loss) income	$	(119,627)	$	14,265	$	(230)	$	(204)	$	(119,857)	$	14,061


	Six Months Ended March 31,
	Matthews						Noncontrolling Interest						Total
	2020		2019		2020		2019		2020		2019

Net (loss) income:	$	(96,830)	$	18,514	$	(71)	$	(336)	$	(96,901)	$	18,178
OCI, net of tax:
Foreign currency translation adjustment	(19,537)		(12,430)		(4)		6		(19,541)		(12,424)
Pension plans and other postretirement benefits	3,554		1,463		—		—		3,554		1,463
Unrecognized loss on derivatives:
Net change from periodic revaluation	(3,739)		(3,702)		—		—		(3,739)		(3,702)
Net amount reclassified to earnings	(412)		(1,219)		—		—		(412)		(1,219)
Net change in unrecognized loss on derivatives	(4,151)		(4,921)		—		—		(4,151)		(4,921)
OCI, net of tax	(20,134)		(15,888)		(4)		6		(20,138)		(15,882)
Comprehensive (loss) income	$	(116,964)	$	2,626	$	(75)	$	(330)	$	(117,039)	$	2,296

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

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

for the three and six months ended March 31, 2020 and 2019 (Unaudited)

(Dollar amounts in thousands, except per share data)


	Shareholders' Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Non- controlling Interests		Total
Balance, September 30, 2019	$	36,334	$	137,774	$	972,594	$	(228,361)	$	(200,235)	$	1,130	$	719,236
Net (loss) income	—		—		(10,466)		—		—		160		(10,306)
Minimum pension liability	—		—		—		1,727		—		—		1,727
Translation adjustment	—		—		—		11,111		—		(5)		11,106
Fair value of derivatives	—		—		—		291		—		—		291
Total comprehensive income													2,818
Stock-based compensation	—		2,031		—		—		—		—		2,031
Purchase of 52,104 shares of treasury stock	—		—		—		—		(1,845)		—		(1,845)
Issuance of 11,225 shares of treasury stock	—		(450)		—		—		450		—		—
Cancellations of 17,509 shares of treasury stock	—		1,171		—		—		(1,171)		—		—
Dividends, $0.21 per share	—		—		(6,535)		—		—		—		(6,535)


Balance, December 31, 2019	$	36,334	$	140,526	$	955,593	$	(215,232)	$	(202,801)	$	1,285	$	715,705
Net loss	—		—		(86,364)		—		—		(231)		(86,595)
Minimum pension liability	—		—		—		1,827		—		—		1,827
Translation adjustment	—		—		—		(30,648)		—		1		(30,647)
Fair value of derivatives	—		—		—		(4,442)		—		—		(4,442)
Total comprehensive loss													(119,857)
Stock-based compensation	—		2,508		—		—		—		—		2,508
Purchase of 20,750 shares of treasury stock	—		—		—		—		(506)		—		(506)


Dividends, $0.21 per share	—		—		(6,648)		—		—		—		(6,648)


Balance, March 31, 2020	$	36,334	$	143,034	$	862,581	$	(248,495)	$	(203,307)	$	1,055	$	591,202


	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)