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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, 2021
or   
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)
____________________________________________________________
Pennsylvania25-0644320
(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 classTrading SymbolName of each exchange on which registered
Class A Common Stock, $1.00 par valueMATWNasdaq 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
 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).    
Yes No ý

As of March 31, 2021, shares of common stock outstanding were: Class A Common Stock 31,656,210 shares.



PART I ‑ FINANCIAL INFORMATION

Item 1.   Financial Statements

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollar amounts in thousands)
 March 31, 2021September 30, 2020
ASSETS    
Current assets:    
Cash and cash equivalents $46,980  $41,334 
Accounts receivable, net 292,703  295,185 
Inventories, net 186,522  175,100 
Other current assets 73,410  63,954 
Total current assets 599,615  575,573 
Investments 49,048  63,250 
Property, plant and equipment, net 228,362  236,788 
Operating lease right-of-use assets78,944 72,011 
Deferred income taxes 3,457  3,757 
Goodwill 777,823  765,388 
Other intangible assets, net 305,295  333,498 
Other assets21,216 22,368 
Total assets $2,063,760  $2,072,633 
LIABILITIES    
Current liabilities:    
Long-term debt, current maturities $4,274  $26,824 
Current portion of operating lease liabilities24,458 23,942 
Trade accounts payable 89,321  82,921 
Accrued compensation 57,547  58,058 
Accrued income taxes 2,764  3,612 
Other current liabilities 145,906  121,511 
Total current liabilities 324,270  316,868 
Long-term debt 778,209  807,710 
Operating lease liabilities55,984 49,297 
Accrued pension 150,995  149,848 
Postretirement benefits 18,629  18,600 
Deferred income taxes 83,861  78,911 
Other liabilities 32,213  39,966 
Total liabilities 1,444,161  1,461,200 
SHAREHOLDERS' EQUITY    
Shareholders' equity-Matthews:    
Common stock$36,334  $36,334  
Additional paid-in capital143,324  135,187  
Retained earnings848,254  859,002  
Accumulated other comprehensive loss(224,493) (240,719) 
Treasury stock, at cost(184,373) (178,997) 
Total shareholders' equity-Matthews 619,046  610,807 
Noncontrolling interests 553  626 
Total shareholders' equity 619,599  611,433 
Total liabilities and shareholders' equity $2,063,760  $2,072,633 

The accompanying notes are an integral part of these consolidated financial statements.
2



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,
 2021202020212020
Sales$417,154 $374,800 $803,811 $739,744 
Cost of sales(276,143)(250,036)(537,302)(499,253)
Gross profit141,011 124,764 266,509 240,491 
Selling expense(32,360)(33,182)(63,155)(65,445)
Administrative expense(70,749)(68,399)(139,858)(138,864)
Intangible amortization(22,930)(17,872)(38,151)(35,814)
Goodwill write-down (90,408) (90,408)
Operating profit (loss)14,972 (85,097)25,345 (90,040)
Investment income (loss)969 (1,108)2,046 191 
Interest expense(7,233)(9,613)(14,961)(18,853)
Other income (deductions), net(2,584)(1,843)(4,318)(4,662)
Income (loss) before income taxes6,124 (97,661)8,112 (113,364)
Income tax (provision) benefit(972)11,066 (4,952)16,463 
Net income (loss)5,152 (86,595)3,160 (96,901)
Net (income) loss attributable to noncontrolling interests(163)231 71 71 
Net income (loss) attributable to Matthews shareholders$4,989 $(86,364)$3,231 $(96,830)
Earnings (loss) per share attributable to Matthews shareholders:
Basic$0.16 $(2.77)$0.10 $(3.11)
Diluted$0.16 $(2.77)$0.10 $(3.11)

The accompanying notes are an integral part of these consolidated financial statements.
3



MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(Dollar amounts in thousands)
 Three Months Ended March 31,
 MatthewsNoncontrolling InterestTotal
 202120202021202020212020
Net income (loss):$4,989 $(86,364)$163 $(231)$5,152 $(86,595)
Other comprehensive income (loss) ("OCI"), net of tax:      
Foreign currency translation adjustment(8,898)(30,648)1 1 (8,897)(30,647)
Pension plans and other postretirement benefits2,255 1,827   2,255 1,827 
Unrecognized gain (loss) on derivatives:      
Net change from periodic revaluation2,088 (4,305)  2,088 (4,305)
Net amount reclassified to earnings567 (137)  567 (137)
Net change in unrecognized gain (loss) on derivatives2,655 (4,442)  2,655 (4,442)
OCI, net of tax(3,988)(33,263)1 1 (3,987)(33,262)
Comprehensive income (loss)$1,001 $(119,627)$164 $(230)$1,165 $(119,857)

 Six Months Ended March 31,
 MatthewsNoncontrolling InterestTotal
 202120202021202020212020
Net income (loss):$3,231 $(96,830)$(71)$(71)$3,160 $(96,901)
OCI, net of tax:      
Foreign currency translation adjustment8,157 (19,537)(2)(4)8,155 (19,541)
Pension plans and other postretirement benefits4,379 3,554   4,379 3,554 
Unrecognized gain (loss) on derivatives:      
Net change from periodic revaluation2,441 (3,739)  2,441 (3,739)
Net amount reclassified to earnings1,249 (412)  1,249 (412)
Net change in unrecognized gain (loss) on derivatives3,690 (4,151)  3,690 (4,151)
OCI, net of tax16,226 (20,134)(2)(4)16,224 (20,138)
Comprehensive income (loss)$19,457 $(116,964)$(73)$(75)$19,384 $(117,039)

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

4



MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the three and six months ended March 31, 2021 and 2020 (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 

















 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 

The accompanying notes are an integral part of these consolidated financial statements.
5



MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands)

Six Months Ended
March 31,
 20212020
Cash flows from operating activities:  
Net income (loss)$3,160 $(96,901)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:  
Depreciation and amortization62,530 58,250 
Stock-based compensation expense7,247 4,539 
Deferred tax provision (benefit)930 (6,155)
(Gain) loss on sale of assets, net(511)27 
Unrealized (gain) loss on investments (844)70 
Loss from equity-method investments 1,345 
Goodwill write-down 90,408 
Changes in working capital items2,730 19,384 
Decrease in other assets2,556 5,587 
Increase (decrease) in other liabilities12,962 (1,107)
Other operating activities, net1,422 (9,452)
Net cash provided by operating activities92,182 65,995 
Cash flows from investing activities:  
Capital expenditures(15,819)(19,082)
Acquisitions, net of cash acquired(13,100) 
Proceeds from sale of assets2,065 181 
Proceeds from sale of investments15,000  
Investments and advances (9,637)
Net cash used in investing activities(11,854)(28,538)
Cash flows from financing activities:  
Proceeds from long-term debt249,833 942,692 
Payments on long-term debt(303,781)(921,359)
Purchases of treasury stock(4,486)(2,351)
Dividends(13,979)(13,183)
Acquisition holdback and contingent consideration payments(1,556)(1,739)
Other financing activities(1,484)(3,475)
Net cash (used in) provided by financing activities(75,453)585 
Effect of exchange rate changes on cash771 (1,006)
Net change in cash and cash equivalents5,646 37,036 
Cash and cash equivalents at beginning of year41,334 35,302 
Cash and cash equivalents at end of period$46,980 $72,338 

The accompanying notes are an integral part of these consolidated financial statements.
6



MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2021
(Dollar amounts in thousands, except per share data)


Note 1.   Nature of Operations

Matthews International Corporation ("Matthews" or the "Company"), founded in 1850 and incorporated in Pennsylvania in 1902, is a global provider of brand solutions, memorialization products and industrial technologies. Brand solutions consists of brand management, pre-media services, printing plates and cylinders, engineered products, imaging services, digital asset management, merchandising display systems, and marketing and design services primarily for the consumer goods and retail industries. Memorialization products consist primarily of bronze and granite memorials and other memorialization products, caskets, and cremation and incineration equipment primarily for the cemetery and funeral home industries. Industrial technologies include marking and coding equipment and consumables, industrial automation products and order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products.
The Company has facilities in North America, Europe, Asia, Australia, and Central and South America.


Note 2.   Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information for commercial and industrial companies and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the six months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2021. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2020.  The consolidated financial statements include all domestic and foreign subsidiaries in which the Company maintains an ownership interest and has operating control.  Investments in certain companies over which the Company exerts significant influence, but does not control the financial and operating decisions, are accounted for as equity method investments. Investments in certain companies over which the Company does not exert significant influence are accounted for as cost method investments. All intercompany accounts and transactions have been eliminated.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Pronouncements:

Adopted

In August 2018, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20), which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.  The adoption of this ASU in the first quarter ended December 31, 2020 had no material impact on the Company's consolidated financial statements and the Form 10-K disclosures for the year ended September 30, 2021 will reflect the adoption of this ASU.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), which provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each report date. Subsequently, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses and ASU No. 2020-02, Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842), that provide certain amendments to the new guidance. The adoption of these ASUs in the first quarter ended December 31, 2020 had no material impact on the Company's consolidated financial statements.




7



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 2.   Basis of Presentation (continued)

The following table summarizes the activity for the accounts receivable allowance for doubtful accounts for the six months ended March 31, 2021:
Accounts Receivable Allowance for Doubtful Accounts
Balance at October 1, 2020$9,618 
Current period expense / (deductions)(621)
Translation and other adjustments (1)
(216)
Balance at March 31, 2021
$8,781 
(1) Includes the impact of foreign currency fluctuations and amounts determined not to be collectible (including direct write-offs), net of recoveries.


Note 3.   Revenue Recognition

The Company delivers a variety of products and services through its business segments. The SGK Brand Solutions segment delivers brand management, pre-media services, printing plates and cylinders, engineered products, and imaging services for consumer goods and retail customers, merchandising display systems, and marketing and design services primarily to the consumer goods and retail industries. The Memorialization segment produces and delivers bronze and granite memorials and other memorialization products, caskets, and cremation and incineration equipment primarily for the cemetery and funeral home industries.  The Industrial Technologies segment delivers marking and coding equipment and consumables, industrial automation products and order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products for the warehousing and industrial industries.

The Company disaggregates revenue from contracts with customers by geography, as it believes geographic regions best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Disaggregated sales by segment and region for the three and six months ended March 31, 2021 and 2020 were as follows:
 SGK Brand SolutionsMemorializationIndustrial TechnologiesConsolidated
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
20212020202120202021202020212020
North America$66,282 $75,448 $190,253 $152,253 $32,260 $32,380 $288,795 $260,081 
Central and South America1,319 1,360     1,319 1,360 
Europe89,190 83,015 12,662 7,637 7,013 7,453 108,865 98,105 
Australia3,456 2,937 2,542 1,929   5,998 4,866 
Asia10,777 10,095   1,400 293 12,177 10,388 
Total Sales$171,024 $172,855 $205,457 $161,819 $40,673 $40,126 $417,154 $374,800 

 SGK Brand SolutionsMemorializationIndustrial TechnologiesConsolidated
Six Months Ended March 31,Six Months Ended March 31,Six Months Ended March 31,Six Months Ended March 31,
20212020202120202021202020212020
North America$136,684 $151,678 $360,577 $296,298 $59,895 $60,679 $557,156 $508,655 
Central and South America2,694 3,196     2,694 3,196 
Europe170,999 165,428 23,102 15,466 13,004 14,379 207,105 195,273 
Australia6,937 5,939 5,052 4,460   11,989 10,399 
Asia21,850 21,494   3,017 727 24,867 22,221 
Total Sales$339,164 $347,735 $388,731 $316,224 $75,916 $75,785 $803,811 $739,744 


8



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 4.   Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  A three level fair value hierarchy is used to prioritize the inputs used in valuations, as defined below:

Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2:
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: