matw-20220630

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 June 30, 2022

☐ 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 June 30, 2022, shares of common stock outstanding were: Class A Common Stock 30,605,547 shares.

PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollar amounts in thousands)


	June 30, 2022				September 30, 2021
ASSETS
Current assets:
Cash and cash equivalents			$	45,846			$	49,176
Accounts receivable, net			207,503				309,818
Inventories, net			211,161				189,088
Restricted cash, current			20,297				—
Other current assets			113,822				76,083

Total current assets			598,629				624,165

Restricted cash, non-current			—				19,167
Investments			23,600				30,438


Property, plant and equipment, net			209,110				223,707
Operating lease right-of-use assets			74,247				80,262
Deferred income taxes			2,740				3,489
Goodwill			754,649				773,787
Other intangible assets, net			213,371				261,542
Other assets			28,343				15,521

Total assets			$	1,904,689			$	2,032,078

LIABILITIES
Current liabilities:
Long-term debt, current maturities			$	3,364			$	4,624
Current portion of operating lease liabilities			23,567				25,151
Trade accounts payable			103,641				112,722
Accrued compensation			42,540				68,938
Accrued income taxes			3,260				4,235
Other current liabilities			133,419				138,555

Total current liabilities			309,791				354,225

Long-term debt			772,673				759,086
Operating lease liabilities			52,966				57,272
Accrued pension			32,721				84,803
Postretirement benefits			17,909				17,958
Deferred income taxes			109,093				97,416
Other liabilities			18,933				24,915
Total liabilities			1,314,086				1,395,675

SHAREHOLDERS' EQUITY
Shareholders' equity-Matthews:
Common stock	$	36,334			$	36,334
Additional paid-in capital	156,942				149,484
Retained earnings	794,581				834,208
Accumulated other comprehensive loss	(178,930)				(192,739)
Treasury stock, at cost	(218,055)				(190,739)
Total shareholders' equity-Matthews			590,872				636,548
Noncontrolling interests			(269)				(145)
Total shareholders' equity			590,603				636,403

Total liabilities and shareholders' equity			$	1,904,689			$	2,032,078

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,
	2022		2021		2022		2021

Sales	$	421,719	$	428,380	$	1,305,276	$	1,232,191
Cost of sales	(300,854)		(291,122)		(928,255)		(828,424)

Gross profit	120,865		137,258		377,021		403,767

Selling expense	(32,157)		(31,463)		(96,281)		(94,618)
Administrative expense	(65,941)		(73,484)		(206,329)		(213,342)
Intangible amortization	(11,804)		(23,039)		(45,303)		(61,190)


Operating profit	10,963		9,272		29,108		34,617

Investment income	59		959		735		3,005
Interest expense	(6,659)		(6,748)		(19,426)		(21,709)
Other income (deductions), net	(448)		(2,442)		(31,599)		(6,760)

Income (loss) before income taxes	3,915		1,041		(21,182)		9,153

Income tax (provision) benefit	(1,040)		2,325		2,311		(2,627)

Net income (loss)	2,875		3,366		(18,871)		6,526

Net loss (income) attributable to noncontrolling interests	18		(11)		56		60

Net income (loss) attributable to Matthews shareholders	$	2,893	$	3,355	$	(18,815)	$	6,586

Earnings (loss) per share attributable to Matthews shareholders:
Basic	$	0.09	$	0.11	$	(0.60)	$	0.21

Diluted	$	0.09	$	0.10	$	(0.60)	$	0.21

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
	2022		2021		2022		2021		2022		2021

Net income (loss):	$	2,893	$	3,355	$	(18)	$	11	$	2,875	$	3,366
Other comprehensive income (loss) ("OCI"), net of tax:
Foreign currency translation adjustment	(19,293)		2,904		15		—		(19,278)		2,904
Pension plans and other postretirement benefits	17		3,328		—		—		17		3,328

Unrecognized gain (loss) on derivatives:
Net change from periodic revaluation	1,223		(654)		—		—		1,223		(654)
Net amount reclassified to earnings	353		596		—		—		353		596
Net change in unrecognized gain (loss) on derivatives	1,576		(58)		—		—		1,576		(58)
OCI, net of tax	(17,700)		6,174		15		—		(17,685)		6,174
Comprehensive (loss) income	$	(14,807)	$	9,529	$	(3)	$	11	$	(14,810)	$	9,540


	Nine Months Ended June 30,
	Matthews				Noncontrolling Interest				Total
	2022		2021		2022		2021		2022		2021

Net (loss) income:	$	(18,815)	$	6,586	$	(56)	$	(60)	$	(18,871)	$	6,526
OCI, net of tax:
Foreign currency translation adjustment	(27,463)		11,061		23		(2)		(27,440)		11,059
Pension plans and other postretirement benefits	34,123		7,707		—		—		34,123		7,707

Unrecognized gain on derivatives:
Net change from periodic revaluation	5,636		1,787		—		—		5,636		1,787
Net amount reclassified to earnings	1,513		1,845		—		—		1,513		1,845
Net change in unrecognized gain on derivatives	7,149		3,632		—		—		7,149		3,632
OCI, net of tax	13,809		22,400		23		(2)		13,832		22,398
Comprehensive (loss) income	$	(5,006)	$	28,986	$	(33)	$	(62)	$	(5,039)	$	28,924

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 nine months ended June 30, 2022 and 2021 (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, 2021	$	36,334	$	149,484	$	834,208	$	(192,739)	$	(190,739)	$	(145)	$	636,403
Net loss	—		—		(19,803)		—		—		(7)		(19,810)
Minimum pension liability	—		—		—		34,133		—		—		34,133
Translation adjustment	—		—		—		(1,989)		—		4		(1,985)
Fair value of derivatives	—		—		—		1,481		—		—		1,481
Total comprehensive income													13,819
Stock-based compensation	—		3,709		—		—		—		—		3,709
Purchase of 62,746 shares of treasury stock	—		—		—		—		(2,435)		—		(2,435)
Issuance of 174,107 shares of treasury stock	—		(6,859)		—		—		6,859		—		—
Cancellations of 31,057 shares of treasury stock	—		2,091		—		—		(2,091)		—		—
Dividends, $0.22 per share	—		—		(6,824)		—		—		—		(6,824)


Balance, December 31, 2021	$	36,334	$	148,425	$	807,581	$	(159,114)	$	(188,406)	$	(148)	$	644,672
Net loss	—		—		(1,905)		—		—		(31)		(1,936)
Minimum pension liability	—		—		—		(27)		—		—		(27)
Translation adjustment	—		—		—		(6,181)		—		4		(6,177)
Fair value of derivatives	—		—		—		4,092		—		—		4,092
Total comprehensive loss													(4,048)
Stock-based compensation	—		5,222		—		—		—		—		5,222
Purchase of 289,184 shares of treasury stock	—		—		—		—		(9,703)		—		(9,703)
Issuance of 45,096 shares of treasury stock	—		(1,761)		—		—		1,761		—		—
Cancellations of 80 shares of treasury stock	—		5		—		—		(5)		—		—
Dividends, $0.22 per share	—		—		(7,128)		—		—		—		(7,128)


Balance, March 31, 2022	$	36,334	$	151,891	$	798,548	$	(161,230)	$	(196,353)	$	(175)	$	629,015
Net income (loss)	—		—		2,893		—		—		(18)		2,875
Minimum pension liability	—		—		—		17		—		—		17
Translation adjustment	—		—		—		(19,293)		—		15		(19,278)
Fair value of derivatives	—		—		—		1,576		—		—		1,576
Total comprehensive loss													(14,810)
Stock-based compensation	—		5,197		—		—		—		—		5,197
Purchase of 704,531 shares of treasury stock	—		—		—		—		(21,848)		—		(21,848)
Issuance of 3,830 shares of treasury stock	—		(146)		—		—		146		—		—

Dividends, $0.22 per share	—		—		(6,860)		—		—		—		(6,860)
Divestiture	—		—		—		—		—		(91)		(91)

Balance, June 30, 2022	$	36,334	$	156,942	$	794,581	$	(178,930)	$	(218,055)	$	(269)	$	590,603

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY, Continued

for the three and nine months ended June 30, 2022 and 2021 (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, 2020	$	36,334	$	135,187	$	859,002	$	(240,719)	$	(178,997)	$	626	$	611,433
Net loss	—		—		(1,758)		—		—		(234)		(1,992)
Minimum pension liability	—		—		—		2,124		—		—		2,124
Translation adjustment	—		—		—		17,055		—		(3)		17,052
Fair value of derivatives	—		—		—		1,035		—		—		1,035
Total comprehensive income													18,219
Stock-based compensation	—		3,246		—		—		—		—		3,246
Purchase of 162,291 shares of treasury stock	—		—		—		—		(4,237)		—		(4,237)
Issuance of 10,300 shares of treasury stock	—		(407)		—		—		407		—		—
Cancellations of 34,727 shares of treasury stock	—		1,982		—		—		(1,982)		—		—
Dividends, $0.215 per share	—		—		(6,808)		—		—		—		(6,808)


Balance, December 31, 2020	$	36,334	$	140,008	$	850,436	$	(220,505)	$	(184,809)	$	389	$	621,853
Net income	—		—		4,989		—		—		163		5,152
Minimum pension liability	—		—		—		2,255		—		—		2,255
Translation adjustment	—		—		—		(8,898)		—		1		(8,897)
Fair value of derivatives	—		—		—		2,655		—		—		2,655
Total comprehensive income													1,165
Stock-based compensation	—		4,001		—		—		—		—		4,001
Purchase of 6,000 shares of treasury stock	—		—		—		—		(249)		—		(249)
Issuance of 17,357 shares of treasury stock	—		(685)		—		—		685		—		—

Dividends, $0.215 per share	—		—		(7,171)		—		—		—		(7,171)

Balance, March 31, 2021	$	36,334	$	143,324	$	848,254	$	(224,493)	$	(184,373)	$	553	$	619,599
Net income	—		—		3,355		—		—		11		3,366
Minimum pension liability	—		—		—		3,328		—		—		3,328
Translation adjustment	—		—		—		2,904		—		—		2,904
Fair value of derivatives	—		—		—		(58)		—		—		(58)
Total comprehensive income													9,540
Stock-based compensation	—		5,713		—		—		—		—		5,713
Purchase of 45,584 shares of treasury stock	—		—		—		—		(1,663)		—		(1,663)
Issuance of 2,045 shares of treasury stock	—		(78)		—		—		78		—		—

Dividends, $0.215 per share	—		—		(6,877)		—		—		—		(6,877)


Balance, June 30, 2021	$	36,334	$	148,959	$	844,732	$	(218,319)	$	(185,958)	$	564	$	626,312

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

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollar amounts in thousands)


	Nine Months Ended June 30,
	2022		2021
Cash flows from operating activities:
Net (loss) income	$	(18,871)	$	6,526
Adjustments to reconcile net (loss) income to net cash flows from operating activities:
Depreciation and amortization	80,163		97,919
Stock-based compensation expense	14,128		12,960
Deferred tax (benefit) provision	(2,712)		967
Gain on sale of assets, net	(514)		(641)


Other investment loss (gain)	213		(1,336)
Pension settlement loss	30,856		—
Asset write-downs	10,017		—
Changes in working capital items	(8,393)		(7,513)
Decrease in other assets	14,923		2,632
Decrease in other liabilities	(44,837)		(6,064)

Other operating activities, net	9,394		1,407

Net cash provided by operating activities	84,367		106,857

Cash flows from investing activities:
Capital expenditures	(40,597)		(24,495)
Acquisitions, net of cash acquired	—		(15,623)
Proceeds from sale of assets	395		2,211
Proceeds from sale of investments	3,127		15,000
Purchases of investments	(2,198)		—
Other investing activities	344		—




Net cash used in investing activities	(38,929)		(22,907)

Cash flows from financing activities:
Proceeds from long-term debt	565,408		385,065
Payments on long-term debt	(551,645)		(434,089)

Purchases of treasury stock	(33,986)		(6,149)
Dividends	(20,812)		(20,856)
Acquisition holdback and contingent consideration payments	(613)		(1,556)
Other financing activities	(2,128)		(2,245)

Net cash used in financing activities	(43,776)		(79,830)

Effect of exchange rate changes on cash	(3,862)		776

Net change in cash, cash equivalents and restricted cash	(2,200)		4,896
Cash, cash equivalents and restricted cash at beginning of year	68,343