matw-20200630

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, 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)

(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

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, 2020, shares of common stock outstanding were: Class A Common Stock 31,264,907 shares.

PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollar amounts in thousands)


	June 30, 2020						September 30, 2019
ASSETS
Current assets:
Cash and cash equivalents			$	42,904			$	35,302
Accounts receivable, net			271,238				318,756
Inventories, net			182,351				180,274
Other current assets			73,175				49,384

Total current assets			569,668				583,716

Investments			62,068				85,501


Property, plant and equipment, net			239,070				237,442
Deferred income taxes			4,756				5,032
Other assets			105,793				31,455
Goodwill			756,056				846,807
Other intangible assets, net			347,205				400,650

Total assets			$	2,084,616			$	2,190,603

LIABILITIES
Current liabilities:
Long-term debt, current maturities			$	23,114			$	42,503
Trade accounts payable			75,654				74,558
Accrued compensation			43,300				42,545
Accrued income taxes			3,044				5,997
Other current liabilities			159,920				114,276

Total current liabilities			305,032				279,879

Long-term debt			837,770				898,194
Accrued pension			139,046				133,762
Postretirement benefits			19,880				19,963
Deferred income taxes			92,707				102,482
Other liabilities			88,439				37,087
Total liabilities			1,482,874				1,471,367

SHAREHOLDERS' EQUITY
Shareholders' equity-Matthews:
Common stock	$	36,334			$	36,334
Additional paid-in capital	145,814				137,774
Retained earnings	858,220				972,594
Accumulated other comprehensive loss	(235,691)				(228,361)
Treasury stock, at cost	(203,570)				(200,235)
Total shareholders' equity-Matthews			601,107				718,106
Noncontrolling interests			635				1,130
Total shareholders' equity			601,742				719,236

Total liabilities and shareholders' equity			$	2,084,616			$	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 June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019

Sales	$	359,422	$	379,294	$	1,099,166	$	1,144,871
Cost of sales	(238,469)		(242,116)		(737,722)		(745,001)

Gross profit	120,953		137,178		361,444		399,870

Selling expense	(28,508)		(32,857)		(93,953)		(102,238)
Administrative expense	(69,374)		(65,087)		(208,238)		(200,346)
Intangible amortization	(17,825)		(9,543)		(53,639)		(27,165)
Goodwill write-down	—		—		(90,408)		—

Operating profit (loss)	5,246		29,691		(84,794)		70,121

Investment income	1,252		655		1,443		1,394
Interest expense	(8,082)		(10,508)		(26,935)		(31,068)
Other deductions, net	(2,776)		(1,425)		(7,438)		(3,416)

(Loss) income before income taxes	(4,360)		18,413		(117,724)		37,031

Income tax benefit (provision)	6,209		(3,989)		22,672		(4,429)

Net income (loss)	1,849		14,424		(95,052)		32,602

Net losses attributable to noncontrolling interests	420		205		491		541

Net income (loss) attributable to Matthews shareholders	$	2,269	$	14,629	$	(94,561)	$	33,143

Earnings (loss) per share attributable to Matthews shareholders:
Basic	$	0.07	$	0.47	$	(3.04)	$	1.05

Diluted	$	0.07	$	0.46	$	(3.04)	$	1.05

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
	2020		2019		2020		2019		2020		2019

Net income (loss):	$	2,269	$	14,629	$	(420)	$	(205)	$	1,849	$	14,424
Other comprehensive income (loss) ("OCI"), net of tax:
Foreign currency translation adjustment	11,240		2,639		—		(5)		11,240		2,634
Pension plans and other postretirement benefits	1,743		705		—		—		1,743		705
Unrecognized loss on derivatives:
Net change from periodic revaluation	(509)		(2,372)		—		—		(509)		(2,372)
Net amount reclassified to earnings	330		(660)		—		—		330		(660)
Net change in unrecognized loss on derivatives	(179)		(3,032)		—		—		(179)		(3,032)
OCI, net of tax	12,804		312		—		(5)		12,804		307
Comprehensive income (loss)	$	15,073	$	14,941	$	(420)	$	(210)	$	14,653	$	14,731


	Nine Months Ended June 30,
	Matthews						Noncontrolling Interest						Total
	2020		2019		2020		2019		2020		2019

Net (loss) income:	$	(94,561)	$	33,143	$	(491)	$	(541)	$	(95,052)	$	32,602
OCI, net of tax:
Foreign currency translation adjustment	(8,297)		(9,791)		(4)		1		(8,301)		(9,790)
Pension plans and other postretirement benefits	5,297		2,168		—		—		5,297		2,168
Unrecognized loss on derivatives:
Net change from periodic revaluation	(4,248)		(6,074)		—		—		(4,248)		(6,074)
Net amount reclassified to earnings	(82)		(1,879)		—		—		(82)		(1,879)
Net change in unrecognized loss on derivatives	(4,330)		(7,953)		—		—		(4,330)		(7,953)
OCI, net of tax	(7,330)		(15,576)		(4)		1		(7,334)		(15,575)
Comprehensive (loss) income	$	(101,891)	$	17,567	$	(495)	$	(540)	$	(102,386)	$	17,027

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, 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
Net income (loss)	—		—		2,269		—		—		(420)		1,849
Minimum pension liability	—		—		—		1,743		—		—		1,743
Translation adjustment	—		—		—		11,240		—		—		11,240
Fair value of derivatives	—		—		—		(179)		—		—		(179)
Total comprehensive income													14,653
Stock-based compensation	—		2,539		—		—		—		—		2,539
Purchase of 722 shares of treasury stock	—		—		—		—		(22)		—		(22)
Issuance of 900 shares of treasury stock	—		(36)		—		—		36		—		—
Cancellations of 4,616 shares of treasury stock	—		277		—		—		(277)		—		—
Dividends, $0.21 per share	—		—		(6,630)		—		—		—		(6,630)


Balance, June 30, 2020	$	36,334	$	145,814	$	858,220	$	(235,691)	$	(203,570)	$	635	$	601,742


	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	—		—