 | NEWS RELEASE | ||||
Matthews International Corporation
Corporate Office
Two NorthShore Center
Pittsburgh, PA 15212-5851
Phone: (412) 442-8200
| April 28, 2022 | Contact: | Steven F. Nicola | William D. Wilson | ||||||||
| Chief Financial Officer and Secretary | Senior Director, Corporate Development | ||||||||||
MATTHEWS INTERNATIONAL REPORTS RESULTS FOR
FISCAL 2022 SECOND QUARTER
Financial Highlights:
•Record quarterly consolidated sales of $445 million
•Consolidated sales 6.7% higher than a year ago; all segments report growth
•Industrial Technologies sales increased 19.7% on continued strength in energy business
•$83.1 million reduction in debt
•Company re-affirms fiscal 2022 outlook
•Webcast: Friday, April 29, 2022, 9:00 a.m., (201) 689-8471
PITTSBURGH, PA, April 28, 2022 - Matthews International Corporation (NASDAQ GSM: MATW) today announced financial results for its second quarter of fiscal 2022 and six months ended March 31, 2022.
In discussing the results for the Company’s fiscal 2022 second quarter, Joseph C. Bartolacci, President and Chief Executive Officer, stated:
“Matthews reported record quarterly consolidated sales, another strong quarter of revenue growth, and solid operating performance for the fiscal 2022 second quarter. Due to the ongoing efforts and resilience demonstrated by our employees, we continued to effectively manage our businesses through the current economic challenges, including inflation, supply chain disruptions, and other geopolitical events. Despite these challenges, we remained focused on the execution of our revenue growth strategies, while maintaining our emphasis on cost reduction initiatives. In addition, due to the critical nature of our products and services, we were able to implement pricing actions to mitigate some of these cost impacts.
“Our Industrial Technologies segment continued to report strong sales growth for the fiscal 2022 second quarter. The segment’s current quarter sales were $78.2 million, compared to $65.3 million a year ago, representing an increase of $12.9 million, or 19.7%. The increase resulted primarily from higher sales for our energy storage solutions business in addition to growth in warehouse automation and product identification sales.
“Sales for the Memorialization segment for the fiscal 2022 second quarter were $220.0 million, compared to $205.5 million for the same quarter a year ago, representing an increase of $14.5 million, or 7.1%. The growth was primarily the result of higher cemetery memorial products sales and increased prices.
Matthews International Reports Results for Fiscal 2022 Second Quarter
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April 28, 2022
“The SGK Brand Solutions segment also reported an increase in sales for the current quarter. The segment reported strong sales growth for its agency and merchandising business. In addition, European packaging (primarily cylinders) sales volume was higher for the current quarter. Unfortunately, these improvements were significantly mitigated by unfavorable changes in currency rates compared to a year ago.
“In addition, we further reduced our outstanding debt balance by $83.1 million during the fiscal 2022 second quarter. A significant portion of the reduction resulted from changes we implemented in the replacement of our securitization facility that facilitated reductions in our debt and trade receivables balances. As of March 31, 2022, net debt (debt less cash) was under $700 million with our leverage ratio on a net debt basis at 3.2. Over the last 2 years (since the beginning of the pandemic), we have reduced our outstanding debt balance by over $200 million and our accrued pension balance by over $100 million.”
Second Quarter Fiscal 2022 Consolidated Results (Unaudited)
| ($ in millions, except per share data) | Q2 FY2022 | Q2 FY2021 | Change | % Change | |||||||||||||||||||
| Sales | $ | 445.0 | $ | 417.2 | $ | 27.8 | 6.7 | % | |||||||||||||||
| Net (loss) income attributable to Matthews | $ | (1.9) | $ | 5.0 | $ | (6.9) | (138.2) | % | |||||||||||||||
| Diluted (loss) earnings per share | $ | (0.06) | $ | 0.16 | $ | (0.22) | (137.5) | % | |||||||||||||||
| Non-GAAP adjusted net income | $ | 23.5 | $ | 28.8 | $ | (5.3) | (18.4) | % | |||||||||||||||
| Non-GAAP adjusted EPS | $ | 0.74 | $ | 0.89 | $ | (0.15) | (16.9) | % | |||||||||||||||
| Adjusted EBITDA | $ | 55.2 | $ | 60.9 | $ | (5.7) | (9.4) | % | |||||||||||||||
| Note: See the attached tables for additional important disclosures regarding Matthews’ use of non-GAAP measures as well as reconciliations of non-GAAP measures to corresponding GAAP measures. Organic sales represent changes in sales excluding the impact of acquisitions, divestitures, and changes in foreign currency exchange rates. | |||||||||||||||||||||||
Consolidated sales for the quarter ended March 31, 2022 were $445.0 million, compared to $417.2 million for the same quarter a year ago, representing an increase of $27.8 million, or 6.7%. The increase reflected higher sales in all three of the Company's segments. Changes in foreign currency exchange rates were estimated to have an unfavorable impact of $11.1 million on fiscal 2022 second quarter sales compared to the prior year.
Net loss attributable to the Company for the quarter ended March 31, 2022 was $1.9 million, or $0.06 per share, compared to income of $5.0 million, or $0.16 per share in the prior year. The current quarter reflected asset write-downs related to the Russia-Ukraine conflict. In addition, both periods reflected the impacts of intangible amortization expense.
On a non-GAAP adjusted basis, earnings for the fiscal 2022 second quarter were $0.74 per share, compared to $0.89 per share a year ago. Adjusted EBITDA (net income before interest expense, income taxes, depreciation and amortization, and other adjustments) for the fiscal 2022 second quarter was $55.2 million, compared to $60.9 million a year ago. The impact of higher consolidated sales was offset by significant material cost increases, higher labor costs, and other inflationary cost increases.
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April 28, 2022
Fiscal 2022 Year-to-Date Consolidated Results (Unaudited)
| ($ in millions, except per share data) | YTD FY2022 | YTD FY2021 | Change | % Change | |||||||||||||||||||
| Sales | $ | 883.6 | $ | 803.8 | $ | 79.8 | 9.9 | % | |||||||||||||||
| Net (loss) income attributable to Matthews | $ | (21.7) | $ | 3.2 | $ | (24.9) | 771.9 | % | |||||||||||||||
| Diluted (loss) earnings per share | $ | (0.68) | $ | 0.10 | $ | (0.78) | 780.0 | % | |||||||||||||||
| Non-GAAP adjusted net income | $ | 47.1 | $ | 50.4 | $ | (3.3) | (6.5) | % | |||||||||||||||
| Non-GAAP adjusted EPS | $ | 1.48 | $ | 1.57 | $ | (0.09) | (5.7) | % | |||||||||||||||
| Adjusted EBITDA | $ | 108.5 | $ | 115.7 | $ | (7.2) | (6.2) | % | |||||||||||||||
| Note: See the attached tables for additional important disclosures regarding Matthews’ use of non-GAAP measures as well as reconciliations of non-GAAP measures to corresponding GAAP measures. Organic sales represent changes in sales excluding the impact of acquisitions, divestitures, and changes in foreign currency exchange rates. | |||||||||||||||||||||||
Consolidated sales for the six months ended March 31, 2022 were $883.6 million, compared to $803.8 million a year ago, representing an increase of $79.8 million, or 9.9%. The increase for fiscal 2022 reflected higher sales across all of the Company's segments. Changes in foreign currency exchange rates were estimated to have an unfavorable impact of $15.2 million on fiscal 2022 sales compared to the prior year.
Net loss attributable to the Company for the first six months of fiscal 2022 was $21.7 million, or $0.68 per share, compared to income of $3.2 million, or $0.10 per share in the prior year. The loss in the current year-to-date period primarily resulted from the settlement of the Company’s principal defined benefit pension plan in the fiscal 2022 first quarter and asset write-downs related to the Russia-Ukraine conflict.
On a non-GAAP adjusted basis, earnings for the first six months of fiscal 2022 were $1.48 per share, compared to $1.57 per share a year ago. Adjusted EBITDA for the first six months of fiscal 2022 was $108.5 million, compared to $115.7 million a year ago. The impact of higher consolidated sales was offset by significant material cost increases, higher labor costs, and other inflationary cost increases.
Outlook
Mr. Bartolacci further stated: “Based on our second quarter performance, we remain on track to deliver on our earnings outlook. We continue to project consolidated sales growth with adjusted EBITDA of at least $220 million for fiscal 2022.
“We are cautious in this outlook as the current economic challenges of inflation, supply chain issues and other geopolitical events are difficult to predict. However, based on current growth rates in our Industrial Technologies segment (energy, warehouse, and product identification) and strong backlogs in many of our businesses, together with actions we have taken to mitigate the impacts of the economic challenges, we have confidence in our ability to deliver on our outlook for the remainder of the fiscal year.”
Webcast
The Company will host a conference call and webcast on Friday, April 29, 2022 at 9:00 a.m. Eastern Time to review its financial and operating results and discuss its corporate strategies and outlook. A question-and-answer session will follow. The conference call can be accessed by calling (201) 689-8471. The audio webcast can be monitored at www.matw.com. As soon as available after the call, a transcript of the call will be posted in the Investor Relations section of the Company’s website at www.matw.com.
Matthews International Reports Results for Fiscal 2022 Second Quarter
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April 28, 2022
About Matthews International Corporation
Matthews International Corporation is a global provider of brand solutions, memorialization products and industrial technologies. The SGK Brand Solutions segment is a leading provider of packaging solutions and brand experiences, helping companies simplify their marketing, amplify their brands and provide value. The Memorialization segment is a leading provider of memorialization products, including memorials, caskets and cremation and incineration equipment, primarily to cemetery and funeral home customers that help families move from grief to remembrance. The Industrial Technologies segment designs, manufactures, services and distributes high-tech custom energy storage, marking, coding and industrial automation technologies and solutions. The Company has approximately 11,000 employees in more than 26 countries on six continents that are committed to delivering the highest quality products and services.
Forward-looking Information
Any forward-looking statements contained in this release are included pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties that may cause the Company’s actual results in future periods to be materially different from management’s expectations. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove correct. Factors that could cause the Company's results to differ materially from the results discussed in such forward-looking statements principally include changes in domestic or international economic conditions, changes in foreign currency exchange rates, changes in the cost of materials used in the manufacture of the Company's products, changes in mortality and cremation rates, changes in product demand or pricing as a result of consolidation in the industries in which the Company operates, or other factors such as supply chain disruptions, labor shortages or labor cost increases, changes in product demand or pricing as a result of domestic or international competitive pressures, ability to achieve cost-reduction objectives, unknown risks in connection with the Company's acquisitions, cybersecurity concerns, effectiveness of the Company's internal controls, compliance with domestic and foreign laws and regulations, technological factors beyond the Company's control, impact of pandemics or similar outbreaks, or other disruptions to our industries, customers, or supply chains, the impact of global conflicts, such as the current war between Russia and Ukraine, and other factors described in the Company’s Annual Report on Form 10-K and other periodic filings with the U.S. Securities and Exchange Commission.
Matthews International Reports Results for Fiscal 2022 Second Quarter
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April 28, 2022
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
| Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||||||||||||||||||||||
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | ||||||||||||||||||||||||||||||
| Sales | $ | 444,978 | $ | 417,154 | 6.7 | % | $ | 883,557 | $ | 803,811 | 9.9 | % | |||||||||||||||||||||||
| Cost of sales | (320,459) | (276,143) | 16.0 | % | (627,401) | (537,302) | 16.8 | % | |||||||||||||||||||||||||||
| Gross profit | 124,519 | 141,011 | (11.7) | % | 256,156 | 266,509 | (3.9) | % | |||||||||||||||||||||||||||
| Gross margin | 28.0 | % | 33.8 | % | 29.0 | % | 33.2 | % | |||||||||||||||||||||||||||
| Selling and administrative expenses | (105,200) | (103,109) | 2.0 | % | (204,512) | (203,013) | 0.7 | % | |||||||||||||||||||||||||||
| Amortization of intangible assets | (11,953) | (22,930) | (47.9) | % | (33,499) | (38,151) | (12.2) | % | |||||||||||||||||||||||||||
| Operating profit | 7,366 | 14,972 | (50.8) | % | 18,145 | 25,345 | 28.4 | % | |||||||||||||||||||||||||||
| Operating margin | 1.7 | % | 3.6 | % | 2.1 | % | 3.2 | % | |||||||||||||||||||||||||||
| Interest and other deductions, net | (6,025) | (8,848) | (31.9) | % | (43,242) | (17,233) | 150.9 | % | |||||||||||||||||||||||||||
| Income (loss) before income taxes | 1,341 | 6,124 | 78.1 | % | (25,097) | 8,112 | 409.4 | % | |||||||||||||||||||||||||||
| Income taxes | (3,277) | (972) | 237.1 | % | 3,351 | (4,952) | (167.7) | % | |||||||||||||||||||||||||||
| Net (loss) income | (1,936) | 5,152 | (137.6) | % | (21,746) | 3,160 | 788.2 | % | |||||||||||||||||||||||||||
| Non-controlling interests | 31 | (163) | (119.0) | % | 38 | 71 | (46.5) | % | |||||||||||||||||||||||||||
| Net (loss) income attributable to Matthews | $ | (1,905) | $ | 4,989 | (138.2) | % | $ | (21,708) | $ | 3,231 | 771.9 | % | |||||||||||||||||||||||
| (Loss) earnings per share -- diluted | $ | (0.06) | $ | 0.16 | (137.5) | % | $ | (0.68) | $ | 0.10 | 780.0 | % | |||||||||||||||||||||||
Earnings per share -- non-GAAP (1) | $ | 0.74 | $ | 0.89 | (16.9) | % | $ | 1.48 | $ | 1.57 | (5.7) | % | |||||||||||||||||||||||
| Dividends declared per share | $ | 0.22 | $ | 0.215 | 2.3 | % | $ | 0.44 | $ | 0.43 | 2.3 | % | |||||||||||||||||||||||
| Diluted Shares | 31,692 | 32,083 | 31,695 | 32,034 | |||||||||||||||||||||||||||||||
(1) See reconciliation of non-GAAP financial information provided in tables at the end of this release | |||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION (Unaudited) (2)
(In thousands)
| Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Sales: | |||||||||||||||||||||||
| SGK Brand Solutions | $ | 146,820 | $ | 146,415 | $ | 300,362 | $ | 296,374 | |||||||||||||||
| Memorialization | 220,004 | 205,457 | 430,710 | 388,731 | |||||||||||||||||||
| Industrial Technologies | 78,154 | 65,282 | 152,485 | 118,706 | |||||||||||||||||||
| $ | 444,978 | $ | 417,154 | $ | 883,557 | $ | 803,811 | ||||||||||||||||
| Adjusted EBITDA: | |||||||||||||||||||||||
| SGK Brand Solutions | $ | 13,462 | $ | 18,364 | $ | 28,876 | $ | 40,197 | |||||||||||||||
| Memorialization | 42,944 | 51,606 | 86,314 | 95,678 | |||||||||||||||||||
| Industrial Technologies | 14,385 | 8,277 | 21,568 | 11,273 | |||||||||||||||||||
| Corporate and Non-Operating | (15,601) | (17,307) | (28,235) | (31,445) | |||||||||||||||||||
Total Adjusted EBITDA (1) | $ | 55,190 | $ | 60,940 | $ | 108,523 | $ | 115,703 | |||||||||||||||
(1) See reconciliation of non-GAAP financial information provided in tables at the end of this release | |||||||||||||||||||||||
(2) Effective in the first quarter of fiscal 2022, the Company transferred its surfaces and engineered products businesses from the SGK Brand Solutions segment to the Industrial Technologies segment. This business segment change is consistent with internal management structure and reporting changes effective for fiscal 2022. Prior periods were revised to reflect retrospective application of this segment realignment. | |||||||||||||||||||||||
Matthews International Reports Results for Fiscal 2022 Second Quarter
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CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION (Unaudited)
(In thousands)
| March 31, 2022 | September 30, 2021 | ||||||||||||||||
| ASSETS | |||||||||||||||||
| Cash and cash equivalents | $ | 53,777 | $ | 49,176 | |||||||||||||
| Accounts receivable, net | 223,283 | 309,818 | |||||||||||||||
| Inventories, net | 201,566 | 189,088 | |||||||||||||||
| Other current assets | 133,666 | 76,083 | |||||||||||||||
| Total current assets | 612,292 | 624,165 | |||||||||||||||
| Property, plant and equipment, net | 213,104 | 223,707 | |||||||||||||||
| Goodwill | 769,111 | 773,787 | |||||||||||||||
| Other intangible assets, net | 227,255 | 261,542 | |||||||||||||||
| Other long-term assets | 131,031 | 148,877 | |||||||||||||||
| Total assets | $ | 1,952,793 | $ | 2,032,078 | |||||||||||||
| LIABILITIES | |||||||||||||||||
| Long-term debt, current maturities | $ | 3,872 | $ | 4,624 | |||||||||||||
| Other current liabilities | 334,687 | 349,601 | |||||||||||||||
| Total current liabilities | 338,559 | 354,225 | |||||||||||||||
| Long-term debt | 749,092 | 759,086 | |||||||||||||||
| Other long-term liabilities | 236,127 | 282,364 | |||||||||||||||
| Total liabilities | 1,323,778 | 1,395,675 | |||||||||||||||
| SHAREHOLDERS' EQUITY | |||||||||||||||||
| Total shareholders' equity | 629,015 | 636,403 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,952,793 | $ | 2,032,078 | |||||||||||||
CONDENSED CONSOLIDATED CASH FLOWS INFORMATION (Unaudited)
(In thousands)
| Six Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net (loss) income | $ | (21,746) | $ | 3,160 | |||||||
| Adjustments to reconcile net (loss) income to net cash flows from operating activities: | |||||||||||
| Depreciation and amortization | 57,225 | 62,530 | |||||||||
| Changes in working capital items | 18,842 | 2,730 | |||||||||
| Other operating activities | 18,402 | 23,762 | |||||||||
| Net cash provided by operating activities | 72,723 | 92,182 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | (28,096) | (15,819) | |||||||||
| Other investing activities | 3,357 | 3,965 | |||||||||
| Net cash used in investing activities | (24,739) | (11,854) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Net payments from long-term debt | (10,538) | (53,948) | |||||||||
| Purchases of treasury stock | (12,138) | (4,486) | |||||||||
| Dividends | (13,952) | (13,979) | |||||||||
| Other financing activities | (2,047) | (3,040) | |||||||||
| Net cash used in financing activities | (38,675) | (75,453) | |||||||||
| Effect of exchange rate changes on cash | (1,580) | 771 | |||||||||
| Net change in cash, cash equivalents and restricted cash | $ | 7,729 | $ | 5,646 | |||||||
Matthews International Reports Results for Fiscal 2022 Second Quarter
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April 28, 2022
Reconciliations of Non-GAAP Financial Measures
Included in this report are measures of financial performance that are not defined by GAAP, including, without limitation, adjusted EBITDA, adjusted net income and EPS, net debt and net debt leverage ratio. The Company defines net debt leverage ratio as outstanding debt (net of cash) relative to adjusted EBITDA. The Company uses non-GAAP financial measures to assist in comparing its performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the Company’s core operations including acquisition costs, ERP integration costs, strategic initiative and other charges (which includes non-recurring charges related to operational initiatives and exit activities), stock-based compensation and the non-service portion of pension and postretirement expense. Management believes that presenting non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items that management believes do not directly reflect the Company's core operations, (ii) permits investors to view performance using the same tools that management uses to budget, forecast, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating the Company’s results. The Company's calculations of its non-GAAP financial measures, however, may not be comparable to similarly titled measures reported by other companies. The Company believes that the presentation of these non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provided herein, provide investors with an additional understanding of the factors and trends affecting the Company’s business that could not be obtained absent these disclosures.
Matthews International Reports Results for Fiscal 2022 Second Quarter
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ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands)
| Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net (loss) income | $ | (1,936) | $ | 5,152 | $ | (21,746) | $ | 3,160 | |||||||||||||||
| Income tax provision (benefit) | 3,277 | 972 | (3,351) | 4,952 | |||||||||||||||||||
| Income (loss) before income taxes | $ | 1,341 | $ | 6,124 | (25,097) | 8,112 | |||||||||||||||||
| Net loss (income) attributable to noncontrolling interests | 31 | (163) | 38 | 71 | |||||||||||||||||||
| Interest expense | 6,260 | 7,233 | 12,767 | 14,961 | |||||||||||||||||||
Depreciation and amortization * | 23,724 | 35,179 | 57,225 | 62,530 | |||||||||||||||||||
Strategic initiatives and other charges (1)** | 6,750 | 5,093 | 10,573 | 16,285 | |||||||||||||||||||
Non-recurring / incremental COVID-19 costs (2)*** | 1,213 | 1,572 | 1,903 | 2,696 | |||||||||||||||||||
Defined benefit plan termination related items (3) | (79) | — | 347 | — | |||||||||||||||||||
Asset write-downs (4) | 10,486 | — | 10,486 | — | |||||||||||||||||||
| Stock-based compensation | 5,222 | 4,001 | 8,931 | 7,247 | |||||||||||||||||||
Non-service pension and postretirement expense (5) | 242 | 1,901 | 31,350 | 3,801 | |||||||||||||||||||
| Total Adjusted EBITDA | $ | 55,190 | $ | 60,940 | $ | 108,523 | $ | 115,703 | |||||||||||||||
| Adjusted EBITDA margin | 12.4 | % | 14.6 | % | 12.3 | % | 14.4 | % | |||||||||||||||
(1) Includes certain non-recurring items associated with recent acquisition activities, costs associated with global ERP system integration efforts, and certain non-recurring costs associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels. | |||||||||||||||||||||||
(2) Includes certain non-recurring direct incremental costs (such as costs for purchases of computer peripherals and devices to facilitate working-from-home, additional personal protective equipment and cleaning supplies and services, etc.) incurred in response to COVID-19. This amount does not include the impact of any lost sales or underutilization due to COVID-19. | |||||||||||||||||||||||
(3) Represents items associated with the termination of the Company's DB Plan, supplemental retirement plan and the defined benefit portion of the officers retirement restoration plan. | |||||||||||||||||||||||
(4) Represents asset write-downs within the SGK Brand Solutions segment. | |||||||||||||||||||||||
(5) Non-service pension and postretirement expense includes interest cost, expected return on plan assets, amortization of actuarial gains and losses, curtailment gains and losses, and settlement gains and losses. These benefit cost components are excluded from adjusted EBITDA since they are primarily influenced by external market conditions that impact investment returns and interest (discount) rates. Curtailment gains and losses and settlement gains and losses are excluded from adjusted EBITDA since they generally result from certain non-recurring events, such as plan amendments to modify future benefits or settlements of plan obligations. The service cost and prior service cost components of pension and postretirement expense are included in the calculation of adjusted EBITDA, since they are considered to be a better reflection of the ongoing service-related costs of providing these benefits. Please note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans. | |||||||||||||||||||||||
* Depreciation and amortization was $14,060 and $25,261 for the SGK Brand Solutions segment, $5,803 and $5,709 for the Memorialization segment, $2,531 and $2,880 for the Industrial Technologies segment, and $1,330 and $1,329 for Corporate and Non-Operating, for the three months ended March 31, 2022 and 2021, respectively. Depreciation and amortization was $37,785 and $43,109 for the SGK Brand Solutions segment, $11,613 and $11,178 for the Memorialization segment, $5,184 and $5,620 for the Industrial Technologies segment, and $2,643 and $2,623 for Corporate and Non-Operating, for the six months ended March 31, 2022 and 2021, respectively.
** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $4,475 and $2,865 for the SGK Brand Solutions segment, charges of $516 and income of $335 for the Memorialization segment, charges of $161 and $126 for the Industrial Technologies segment, and $1,598 and $2,437 for Corporate and Non-Operating, for the three months ended March 31, 2022 and 2021, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $5,703 and $7,561 for the SGK Brand Solutions segment, $1,188 and $795 for the Memorialization segment, $193 and $2,785 for the Industrial Technologies segment, and $3,489 and $5,144 for Corporate and Non-Operating, for the six months ended March 31, 2022 and 2021, respectively.
*** Non-recurring/incremental COVID-19 costs were $170 and $297 for the SGK Brand Solutions segment, $579 and $1,240 for the Memorialization segment, $1 and $12 for the Industrial Technologies segment, and $463 and $23 for Corporate and Non-Operating, for the three months ended March 31, 2022 and 2021, respectively. Non-recurring/incremental COVID-19 costs were $390 and $706 for the SGK Brand Solutions segment, $1,043 and $1,890 for the Memorialization segment, $5 and $30 for the Industrial Technologies segment, and $465 and $70 for Corporate and Non-Operating, for the six months ended March 31, 2022 and 2021, respectively.
Matthews International Reports Results for Fiscal 2022 Second Quarter
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ADJUSTED NET INCOME AND EPS RECONCILIATION (Unaudited)
(In thousands, except per share data)
| Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
| per share | per share | per share | per share | ||||||||||||||||||||||||||||||||
| Net (loss) income attributable to Matthews | $ | (1,905) | $ | (0.06) | $ | 4,989 | $ | 0.16 | $ | (21,708) | $ | (0.68) | $ | 3,231 | $ | 0.10 | |||||||||||||||||||
Strategic initiatives and other charges (1) | 4,965 | 0.16 | 4,272 | 0.13 | 7,974 | 0.24 | 14,116 | 0.44 | |||||||||||||||||||||||||||
Non-recurring / incremental COVID-19 costs (2) | 905 | 0.03 | 1,174 | 0.03 | 1,441 | 0.05 | 2,047 | 0.06 | |||||||||||||||||||||||||||
Defined benefit plan termination related costs (3) | 82 | — | — | — | 401 | 0.01 | — | — | |||||||||||||||||||||||||||
Asset write-downs (4) | 10,308 | 0.33 | — | — | 10,308 | 0.33 | — | — | |||||||||||||||||||||||||||
Non-service pension and postretirement expense (5) | 181 | — | 1,407 | 0.05 | 23,512 | 0.74 | 2,813 | 0.09 | |||||||||||||||||||||||||||
| Amortization | 8,964 | 0.28 | 16,968 | 0.52 | 25,124 | 0.79 | 28,231 | 0.88 | |||||||||||||||||||||||||||
| Adjusted net income | $ | 23,500 | $ | 0.74 | $ | 28,810 | $ | 0.89 | $ | 47,052 | $ | 1.48 | $ | 50,438 | $ | 1.57 | |||||||||||||||||||
| Note: Adjustments to net income for non-GAAP reconciling items were calculated using an income tax rate of 16.9% and 22% for the three and six months ended March 31, 2022, respectively, and 26% for the three and six months ended March 31, 2021. | |||||||||||||||||||||||||||||||||||
(1) Includes certain non-recurring items associated with recent acquisition activities, costs associated with global ERP system integration efforts, and certain non-recurring costs associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels. | |||||||||||||||||||||||||||||||||||
(2) Includes certain non-recurring direct incremental costs (such as costs for purchases of computer peripherals and devices to facilitate working-from-home, additional personal protective equipment and cleaning supplies and services, etc.) incurred in response to COVID-19. This amount does not include the impact of any lost sales or underutilization due to COVID-19. | |||||||||||||||||||||||||||||||||||
(3) Represents items associated with the termination of the Company's DB Plan, supplemental retirement plan and the defined benefit portion of the officers retirement restoration plan. | |||||||||||||||||||||||||||||||||||
(4) Represents asset write-downs within the SGK Brand Solutions segment. | |||||||||||||||||||||||||||||||||||
(5) Non-service pension and postretirement expense includes interest cost, expected return on plan assets, amortization of actuarial gains and losses, curtailment gains and losses, and settlement gains and losses. These benefit cost components are excluded from adjusted EBITDA since they are primarily influenced by external market conditions that impact investment returns and interest (discount) rates. Curtailment gains and losses and settlement gains and losses are excluded from adjusted EBITDA since they generally result from certain non-recurring events, such as plan amendments to modify future benefits or settlements of plan obligations. The service cost and prior service cost components of pension and postretirement expense are included in the calculation of adjusted EBITDA, since they are considered to be a better reflection of the ongoing service-related costs of providing these benefits. Please note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans. | |||||||||||||||||||||||||||||||||||
Matthews International Reports Results for Fiscal 2022 Second Quarter
Page 10 of 10
April 28, 2022
NET DEBT AND NET DEBT LEVERAGE RATIO RECONCILIATION (Unaudited)
(Dollars in thousands)
| March 31, 2022 | September 30, 2021 | |||||||||||||
| Long-term debt, current maturities | $ | 3,872 | $ | 4,624 | ||||||||||
| Long-term debt | 749,092 | 759,086 | ||||||||||||
| Total debt | 752,964 | 763,710 | ||||||||||||
| Less: Cash and cash equivalents | (53,777) | (49,176) | ||||||||||||
| Net Debt | $ | 699,187 | $ | 714,534 | ||||||||||
| Adjusted EBITDA | $ | 220,570 | $ | 227,750 | ||||||||||
| Net Debt Leverage Ratio | 3.2 | 3.1 | ||||||||||||
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