☒
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
☐
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
PENNSYLVANIA
|
25‑0644320
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
Incorporation or organization)
|
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)
|
|
|
|
|
Yes ☒
|
|
No ☐
|
|
|
Yes ☒
|
|
No ☐
|
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
|
|
Emerging growth company
|
☐
|
|
Yes ☐
|
|
No ☒
|
|
|
December 31, 2018
|
|
September 30, 2018
|
||||||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
$
|
39,836
|
|
|
|
|
$
|
41,572
|
|
||||
Accounts receivable, net
|
|
|
313,246
|
|
|
|
|
331,463
|
|
||||||
Inventories, net
|
|
|
188,319
|
|
|
|
|
180,451
|
|
||||||
Other current assets
|
|
|
73,145
|
|
|
|
|
62,937
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Total current assets
|
|
|
614,546
|
|
|
|
|
616,423
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Investments
|
|
|
55,684
|
|
|
|
|
45,430
|
|
||||||
Property, plant and equipment, net
|
|
|
|
246,021
|
|
|
|
|
|
252,775
|
|
||||
Deferred income taxes
|
|
|
|
1,960
|
|
|
|
|
|
1,837
|
|
||||
Other assets
|
|
|
|
63,310
|
|
|
|
|
|
66,216
|
|
||||
Goodwill
|
|
|
|
931,457
|
|
|
|
|
|
948,894
|
|
||||
Other intangible assets, net
|
|
|
|
439,799
|
|
|
|
|
|
443,910
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total assets
|
|
|
|
$
|
2,352,777
|
|
|
|
|
|
$
|
2,375,485
|
|
||
|
|
|
|
|
|
|
|
||||||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt, current maturities
|
|
|
|
$
|
46,110
|
|
|
|
|
|
$
|
31,260
|
|
||
Trade accounts payable
|
|
|
|
67,444
|
|
|
|
|
|
70,044
|
|
||||
Accrued compensation
|
|
|
|
33,386
|
|
|
|
|
|
51,490
|
|
||||
Accrued income taxes
|
|
|
|
10,349
|
|
|
|
|
|
11,413
|
|
||||
Other current liabilities
|
|
|
|
143,419
|
|
|
|
|
|
139,936
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total current liabilities
|
|
|
|
300,708
|
|
|
|
|
|
304,143
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
|
|
|
936,897
|
|
|
|
|
|
929,342
|
|
||||
Accrued pension
|
|
|
|
83,331
|
|
|
|
|
|
82,035
|
|
||||
Postretirement benefits
|
|
|
|
17,470
|
|
|
|
|
|
17,753
|
|
||||
Deferred income taxes
|
|
|
|
121,433
|
|
|
|
|
|
121,519
|
|
||||
Other liabilities
|
|
|
|
48,923
|
|
|
|
|
|
51,979
|
|
||||
Total liabilities
|
|
|
|
1,508,762
|
|
|
|
|
|
1,506,771
|
|
||||
|
|
|
|
|
|
|
|
||||||||
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shareholders' equity-Matthews:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common stock
|
$
|
36,334
|
|
|
|
|
|
$
|
36,334
|
|
|
|
|
||
Additional paid-in capital
|
133,675
|
|
|
|
|
|
129,252
|
|
|
|
|
||||
Retained earnings
|
1,032,885
|
|
|
|
|
|
1,040,378
|
|
|
|
|
||||
Accumulated other comprehensive loss
|
(179,034
|
)
|
|
|
|
|
(164,298
|
)
|
|
|
|
||||
Treasury stock, at cost
|
(181,842
|
)
|
|
|
|
|
(173,315
|
)
|
|
|
|
||||
Total shareholders' equity-Matthews
|
|
|
|
842,018
|
|
|
|
|
|
868,351
|
|
||||
Noncontrolling interests
|
|
|
|
1,997
|
|
|
|
|
|
363
|
|
||||
Total shareholders' equity
|
|
|
|
844,015
|
|
|
|
|
|
868,714
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total liabilities and shareholders' equity
|
|
|
|
$
|
2,352,777
|
|
|
|
|
|
$
|
2,375,485
|
|
|
Three Months Ended
December 31, |
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
Sales
|
$
|
374,177
|
|
|
$
|
369,454
|
|
Cost of sales
|
(247,766
|
)
|
|
(238,041
|
)
|
||
|
|
|
|
||||
Gross profit
|
126,411
|
|
|
131,413
|
|
||
|
|
|
|
||||
Selling expense
|
(35,029
|
)
|
|
(36,917
|
)
|
||
Administrative expense
|
(67,103
|
)
|
|
(68,466
|
)
|
||
Intangible amortization
|
(8,113
|
)
|
|
(6,681
|
)
|
||
|
|
|
|
||||
Operating profit
|
16,166
|
|
|
19,349
|
|
||
|
|
|
|
||||
Investment (loss) income
|
(1,352
|
)
|
|
467
|
|
||
Interest expense
|
(10,301
|
)
|
|
(7,801
|
)
|
||
Other income (deductions), net
|
(924
|
)
|
|
(2,084
|
)
|
||
|
|
|
|
||||
Income before income taxes
|
3,589
|
|
|
9,931
|
|
||
|
|
|
|
||||
Income tax (provision) benefit
|
(605
|
)
|
|
25,227
|
|
||
|
|
|
|
||||
Net income
|
2,984
|
|
|
35,158
|
|
||
|
|
|
|
||||
Net loss attributable to noncontrolling interests
|
113
|
|
|
22
|
|
||
|
|
|
|
||||
Net income attributable to Matthews shareholders
|
$
|
3,097
|
|
|
$
|
35,180
|
|
|
|
|
|
||||
Earnings per share attributable to Matthews shareholders:
|
|
|
|
|
|
||
Basic
|
$
|
0.10
|
|
|
$
|
1.11
|
|
|
|
|
|
||||
Diluted
|
$
|
0.10
|
|
|
$
|
1.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
||||||||||||||||||||||
|
Matthews
|
|
Noncontrolling Interest
|
|
Total
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss):
|
$
|
3,097
|
|
|
$
|
35,180
|
|
|
$
|
(113
|
)
|
|
$
|
(22
|
)
|
|
$
|
2,984
|
|
|
$
|
35,158
|
|
Other comprehensive income (loss) ("OCI"), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
(12,564
|
)
|
|
7,598
|
|
|
(13
|
)
|
|
13
|
|
|
(12,577
|
)
|
|
7,611
|
|
||||||
Pension plans and other postretirement benefits
|
729
|
|
|
1,018
|
|
|
—
|
|
|
—
|
|
|
729
|
|
|
1,018
|
|
||||||
Unrecognized (loss) gain on derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net change from periodic revaluation
|
(2,346
|
)
|
|
1,633
|
|
|
—
|
|
|
—
|
|
|
(2,346
|
)
|
|
1,633
|
|
||||||
Net amount reclassified to earnings
|
(555
|
)
|
|
(38
|
)
|
|
—
|
|
|
—
|
|
|
(555
|
)
|
|
(38
|
)
|
||||||
Net change in unrecognized (loss) gain on derivatives
|
(2,901
|
)
|
|
1,595
|
|
|
—
|
|
|
—
|
|
|
(2,901
|
)
|
|
1,595
|
|
||||||
OCI, net of tax
|
(14,736
|
)
|
|
10,211
|
|
|
(13
|
)
|
|
13
|
|
|
(14,749
|
)
|
|
10,224
|
|
||||||
Comprehensive (loss) income
|
$
|
(11,639
|
)
|
|
$
|
45,391
|
|
|
$
|
(126
|
)
|
|
$
|
(9
|
)
|
|
$
|
(11,765
|
)
|
|
$
|
45,382
|
|
|
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
|
|
|
Shareholders' Equity
|
||||||||||||||||||||||||||
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
(Loss) Income
|
|
Treasury
Stock
|
|
Non-
controlling
interests
|
|
Total
|
||||||||||||||
Balance,
September 30, 2017 |
$
|
36,334
|
|
|
$
|
123,432
|
|
|
$
|
948,830
|
|
|
$
|
(154,115
|
)
|
|
$
|
(164,774
|
)
|
|
$
|
552
|
|
|
$
|
790,259
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
35,180
|
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
|
35,158
|
|
|||||||
Minimum pension liability
|
—
|
|
|
—
|
|
|
—
|
|
|
1,018
|
|
|
—
|
|
|
—
|
|
|
1,018
|
|
|||||||
Translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
7,598
|
|
|
—
|
|
|
13
|
|
|
7,611
|
|
|||||||
Fair value of derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
1,595
|
|
|
—
|
|
|
—
|
|
|
1,595
|
|
|||||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,382
|
|
|||||||
Stock-based compensation
|
—
|
|
|
5,474
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,474
|
|
|||||||
Purchase of 75,765 shares of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,415
|
)
|
|
—
|
|
|
(4,415
|
)
|
|||||||
Issuance of 223,971 shares of treasury stock
|
—
|
|
|
(8,922
|
)
|
|
—
|
|
|
—
|
|
|
8,922
|
|
|
—
|
|
|
—
|
|
|||||||
Cancellations of 5,214 shares of treasury stock
|
—
|
|
|
310
|
|
|
—
|
|
|
—
|
|
|
(310
|
)
|
|
—
|
|
|
—
|
|
|||||||
Dividends, $0.19 per share
|
—
|
|
|
—
|
|
|
(6,071
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,071
|
)
|
|||||||
Balance,
December 31, 2017 |
$
|
36,334
|
|
|
$
|
120,294
|
|
|
$
|
977,939
|
|
|
$
|
(143,904
|
)
|
|
$
|
(160,577
|
)
|
|
$
|
543
|
|
|
$
|
830,629
|
|
|
Three Months Ended
December 31, |
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
2,984
|
|
|
$
|
35,158
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
19,226
|
|
|
17,238
|
|
||
Stock-based compensation expense
|
3,647
|
|
|
5,474
|
|
||
Deferred tax provision (benefit)
|
1,050
|
|
|
(38,052
|
)
|
||
Gain on sale of assets
|
(58
|
)
|
|
(576
|
)
|
||
Loss on divestiture
|
4,465
|
|
|
—
|
|
||
Unrealized loss (gain) on investments
|
1,990
|
|
|
(489
|
)
|
||
Changes in working capital items
|
(21,060
|
)
|
|
(9,999
|
)
|
||
Decrease (increase) in other assets
|
1,426
|
|
|
(5,336
|
)
|
||
(Decrease) increase in other liabilities
|
(159
|
)
|
|
902
|
|
||
Other operating activities, net
|
(5,125
|
)
|
|
3,317
|
|
||
|
|
|
|
||||
Net cash provided by operating activities
|
8,386
|
|
|
7,637
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Capital expenditures
|
(8,458
|
)
|
|
(11,647
|
)
|
||
Acquisitions, net of cash acquired
|
(8,404
|
)
|
|
(85,964
|
)
|
||
Proceeds from sale of assets
|
361
|
|
|
1,163
|
|
||
Proceeds from divestiture
|
8,254
|
|
|
—
|
|
||
Investments and advances
|
(7,371
|
)
|
|
(11,730
|
)
|
||
|
|
|
|
||||
Net cash used in investing activities
|
(15,618
|
)
|
|
(108,178
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from long-term debt
|
149,366
|
|
|
509,622
|
|
||
Payments on long-term debt
|
(128,659
|
)
|
|
(396,321
|
)
|
||
Purchases of treasury stock
|
(7,751
|
)
|
|
(4,415
|
)
|
||
Dividends
|
(6,414
|
)
|
|
(6,071
|
)
|
||
Other financing activities
|
(724
|
)
|
|
—
|
|
||
|
|
|
|
||||
Net cash provided by financing activities
|
5,818
|
|
|
102,815
|
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash
|
(322
|
)
|
|
353
|
|
||
|
|
|
|
||||
Net change in cash and cash equivalents
|
$
|
(1,736
|
)
|
|
$
|
2,627
|
|
|
|
|
|
||||
Non-cash investing and financing activities:
|
|
|
|
||||
Acquisition of long-term asset under financing arrangement
|
$
|
—
|
|
|
$
|
14,544
|
|
|
|
SGK Brand Solutions
|
|
Memorialization
|
|
Industrial Technologies
|
|
Consolidated
|
||||||||||||||||||||
|
|
Three Months Ended
December 31, |
|
Three Months Ended
December 31, |
|
Three Months Ended
December 31, |
|
Three Months Ended
December 31, |
||||||||||||||||||||
|
|
2018
|
2017
|
|
2018
|
2017
|
|
2018
|
2017
|
|
2018
|
2017
|
||||||||||||||||
North America
|
|
$
|
79,582
|
|
$
|
86,953
|
|
|
$
|
143,293
|
|
$
|
132,749
|
|
|
$
|
27,714
|
|
$
|
23,859
|
|
|
$
|
250,589
|
|
$
|
243,561
|
|
Central and South America
|
|
1,217
|
|
1,565
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
1,217
|
|
1,565
|
|
||||||||
Europe
|
|
90,518
|
|
88,870
|
|
|
8,158
|
|
9,245
|
|
|
6,337
|
|
7,631
|
|
|
105,013
|
|
105,746
|
|
||||||||
Australia
|
|
2,959
|
|
3,003
|
|
|
2,435
|
|
2,895
|
|
|
—
|
|
—
|
|
|
5,394
|
|
5,898
|
|
||||||||
Asia
|
|
11,024
|
|
11,375
|
|
|
—
|
|
—
|
|
|
940
|
|
1,309
|
|
|
11,964
|
|
12,684
|
|
||||||||
Total Sales
|
|
$
|
185,300
|
|
$
|
191,766
|
|
|
$
|
153,886
|
|
$
|
144,889
|
|
|
$
|
34,991
|
|
$
|
32,799
|
|
|
$
|
374,177
|
|
$
|
369,454
|
|
|
December 31, 2018
|
|
September 30, 2018
|
||||
|
|
|
|
||||
Raw materials
|
$
|
37,502
|
|
|
$
|
34,880
|
|
Work in process
|
73,290
|
|
|
67,827
|
|
||
Finished goods
|
77,527
|
|
|
77,744
|
|
||
|
$
|
188,319
|
|
|
$
|
180,451
|
|
|
|
December 31, 2018
|
|
September 30, 2018
|
||||
Pay fixed swaps - notional amount
|
|
$
|
337,500
|
|
|
$
|
343,750
|
|
Net unrealized gain
|
|
$
|
7,467
|
|
|
$
|
11,309
|
|
Weighted-average maturity period (years)
|
|
2.5
|
|
|
2.7
|
|
||
Weighted-average received rate
|
|
2.50
|
%
|
|
2.26
|
%
|
||
Weighted-average pay rate
|
|
1.38
|
%
|
|
1.37
|
%
|
Derivatives
|
|
December 31, 2018
|
|
September 30, 2018
|
||||
Current assets:
|
|
|
|
|
||||
Other current assets
|
|
$
|
2,853
|
|
|
$
|
3,867
|
|
Long-term assets:
|
|
|
|
|
|
|
||
Other assets
|
|
4,614
|
|
|
7,442
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Other current liabilities
|
|
—
|
|
|
—
|
|
||
Long-term liabilities:
|
|
|
|
|
|
|
||
Other liabilities
|
|
—
|
|
|
—
|
|
||
Total derivatives
|
|
$
|
7,467
|
|
|
$
|
11,309
|
|
Derivatives in Cash Flow Hedging Relationships
|
|
Amount of (Loss) Gain
Recognized in AOCI on Derivatives
|
|
Location of Gain Reclassified From AOCI into Income (Effective Portion*)
|
|
Amount of Gain
Reclassified from
AOCI into Income
(Effective Portion*)
|
||||||||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
|
$
|
(2,346
|
)
|
|
$
|
1,633
|
|
|
Interest expense
|
|
$
|
555
|
|
|
$
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
*There is no ineffective portion or amount excluded from effectiveness testing.
|
|
Shares /Units
|
|
Weighted-
average
Grant-date
Fair Value
|
|||
Non-vested at September 30, 2018
|
554,233
|
|
|
$
|
55.71
|
|
Granted
|
262,200
|
|
|
42.21
|
|
|
Vested
|
(174,539
|
)
|
|
58.30
|
|
|
Expired or forfeited
|
(18,843
|
)
|
|
45.45
|
|
|
Non-vested at December 31, 2018
|
623,051
|
|
|
$
|
49.62
|
|
|
Three Months Ended
December 31, |
||||||
|
2018
|
|
2017
|
||||
Net income attributable to Matthews shareholders
|
$
|
3,097
|
|
|
$
|
35,180
|
|
|
|
|
|
||||
Weighted-average shares outstanding (in thousands):
|
|
|
|
|
|
||
Basic shares
|
31,604
|
|
|
31,738
|
|
||
Effect of dilutive securities
|
130
|
|
|
132
|
|
||
Diluted shares
|
31,734
|
|
|
31,870
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31,
|
||||||||||||||
|
Pension
|
|
Other Postretirement
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
2,000
|
|
|
$
|
2,039
|
|
|
$
|
61
|
|
|
$
|
84
|
|
Interest cost *
|
2,301
|
|
|
2,049
|
|
|
180
|
|
|
158
|
|
||||
Expected return on plan assets *
|
(2,596
|
)
|
|
(2,534
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Prior service cost
|
(46
|
)
|
|
(35
|
)
|
|
(49
|
)
|
|
(49
|
)
|
||||
Net actuarial loss (gain) *
|
1,061
|
|
|
1,752
|
|
|
(15
|
)
|
|
—
|
|
||||
Net benefit cost
|
$
|
2,720
|
|
|
$
|
3,271
|
|
|
$
|
177
|
|
|
$
|
193
|
|
Contributions
|
|
Pension
|
|
Other Postretirement
|
||||
Contributions during the three months ended December 31, 2018:
|
|
|
|
|
||||
Supplemental retirement plan
|
|
$
|
196
|
|
|
$
|
—
|
|
Other postretirement plan
|
|
—
|
|
|
498
|
|
||
|
|
|
|
|
||||
Additional contributions expected in fiscal 2019:
|
|
|
|
|
|
|
||
Supplemental retirement plan
|
|
$
|
661
|
|
|
$
|
—
|
|
Other postretirement plan
|
|
—
|
|
|
577
|
|
|
|
Post-retirement benefit plans
|
|
Currency translation adjustment
|
|
Derivatives
|
|
Total
|
||||||||
Attributable to Matthews:
|
|
|
|
|
|
|
|
|
||||||||
Balance, September 30, 2018
|
|
$
|
(37,876
|
)
|
|
$
|
(134,960
|
)
|
|
$
|
8,538
|
|
|
$
|
(164,298
|
)
|
OCI before reclassification
|
|
—
|
|
|
(12,564
|
)
|
|
(2,346
|
)
|
|
(14,910
|
)
|
||||
Amounts reclassified from AOCI
|
|
729
|
|
(a)
|
—
|
|
|
(555
|
)
|
(b)
|
174
|
|
||||
Net current-period OCI
|
|
729
|
|
|
(12,564
|
)
|
|
(2,901
|
)
|
|
(14,736
|
)
|
||||
Balance, December 31, 2018
|
|
$
|
(37,147
|
)
|
|
$
|
(147,524
|
)
|
|
$
|
5,637
|
|
|
$
|
(179,034
|
)
|
Attributable to noncontrolling interest:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, September 30, 2018
|
|
—
|
|
|
$
|
467
|
|
|
—
|
|
|
$
|
467
|
|
||
OCI before reclassification
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
||||
Net current-period OCI
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
||||
Balance, December 31, 2018
|
|
—
|
|
|
454
|
|
|
—
|
|
|
454
|
|
|
|
Post-retirement benefit plans
|
|
Currency translation adjustment
|
|
Derivatives
|
|
Total
|
||||||||
Attributable to Matthews:
|
|
|
|
|
|
|
|
|
||||||||
Balance, September 30, 2017
|
|
$
|
(43,623
|
)
|
|
$
|
(112,907
|
)
|
|
$
|
2,415
|
|
|
$
|
(154,115
|
)
|
OCI before reclassification
|
|
—
|
|
|
7,598
|
|
|
1,633
|
|
|
9,231
|
|
||||
Amounts reclassified from AOCI
|
|
1,018
|
|
(a)
|
—
|
|
|
(38
|
)
|
(b)
|
980
|
|
||||
Net current-period OCI
|
|
1,018
|
|
|
7,598
|
|
|
1,595
|
|
|
10,211
|
|
||||
Balance, December 31,2017
|
|
$
|
(42,605
|
)
|
|
$
|
(105,309
|
)
|
|
$
|
4,010
|
|
|
$
|
(143,904
|
)
|
Attributable to noncontrolling interest:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, September 30, 2017
|
|
—
|
|
|
$
|
396
|
|
|
—
|
|
|
$
|
396
|
|
||
OCI before reclassification
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||
Net current-period OCI
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||
Balance, December 31, 2017
|
|
—
|
|
|
$
|
409
|
|
|
—
|
|
|
$
|
409
|
|
(a)
|
Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note 9).
|
(b)
|
Amounts were included in interest expense in the periods the hedged item affected earnings (see Note 6).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount reclassified from AOCI
|
||||||||
Details about AOCI Components
|
|
Three Months Ended December 31, 2018
|
|
Three Months Ended
December 31, 2017 |
|
Affected line item in the Statement of income
|
||||
|
|
|
|
|
|
|
||||
Postretirement benefit plans
|
|
|
|
|
|
|
||||
Prior service (cost) credit
|
|
$
|
95
|
|
(a)
|
$
|
84
|
|
|
|
Actuarial losses
|
|
(1,046
|
)
|
(a)
|
(1,752
|
)
|
|
|
||
|
|
(951
|
)
|
(b)
|
(1,668
|
)
|
|
Income before income tax
|
||
|
|
222
|
|
|
650
|
|
|
Income taxes
|
||
|
|
$
|
(729
|
)
|
|
$
|
(1,018
|
)
|
|
Net income
|
Derivatives
|
|
|
|
|
|
|
|
|
||
Interest rate swap contracts
|
|
$
|
735
|
|
|
$
|
63
|
|
|
Interest expense
|
|
|
735
|
|
(b)
|
63
|
|
|
Income before income tax
|
||
|
|
(180
|
)
|
|
(25
|
)
|
|
Income taxes
|
||
|
|
$
|
555
|
|
|
$
|
38
|
|
|
Net income
|
(a)
|
Prior service cost amounts are included in the computation of pension and other postretirement benefit expense, which is reported in both cost of goods sold and selling and administrative expenses. Actuarial losses are reported in other income (deductions), net. For additional information, see Note 9.
|
(b)
|
For pre-tax items, positive amounts represent income and negative amounts represent expense.
|
|
|
Three Months Ended
December 31, |
||||||
|
|
2018
|
|
2017
|
||||
Sales:
|
|
|
||||||
SGK Brand Solutions
|
|
$
|
185,300
|
|
|
$
|
191,766
|
|
Memorialization
|
|
153,886
|
|
|
144,889
|
|
||
Industrial Technologies
|
|
34,991
|
|
|
32,799
|
|
||
Consolidated Sales
|
|
$
|
374,177
|
|
|
$
|
369,454
|
|
Adjusted EBITDA:
|
|
|
|
|
||||
SGK Brand Solutions
|
|
$
|
27,351
|
|
|
$
|
30,852
|
|
Memorialization
|
|
30,321
|
|
|
28,443
|
|
||
Industrial Technologies
|
|
3,595
|
|
|
3,687
|
|
||
Corporate and Non-Operating
|
|
(14,786
|
)
|
|
(16,486
|
)
|
||
Total Adjusted EBITDA
|
|
$
|
46,481
|
|
|
$
|
46,496
|
|
|
|
|
|
|
||||
Acquisition costs
(1)**
|
|
(2,032
|
)
|
|
(1,931
|
)
|
||
ERP integration costs
(2)**
|
|
(2,177
|
)
|
|
(2,027
|
)
|
||
Strategic initiatives and other charges
(3)**
|
|
—
|
|
|
(647
|
)
|
||
Loss on divestiture
(4)
|
|
(4,465
|
)
|
|
—
|
|
||
Stock-based compensation
|
|
(3,647
|
)
|
|
(5,474
|
)
|
||
Non-service pension and postretirement expense
(5)
|
|
(931
|
)
|
|
(1,425
|
)
|
||
Depreciation and amortization
*
|
|
(19,226
|
)
|
|
(17,238
|
)
|
||
Interest expense
|
|
(10,301
|
)
|
|
(7,801
|
)
|
||
Net loss attributable to noncontrolling interests
|
|
(113
|
)
|
|
(22
|
)
|
||
Income before income taxes
|
|
3,589
|
|
|
9,931
|
|
||
Income tax (provision) benefit
|
|
(605
|
)
|
|
25,227
|
|
||
Net income
|
|
$
|
2,984
|
|
|
$
|
35,158
|
|
(1)
Includes certain non-recurring costs associated with recent acquisition activities.
|
(2)
Represents costs associated with global ERP system integration efforts.
|
(3)
Includes certain non-recurring costs associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels.
|
(4)
Represents a loss on the sale of a controlling interest in a Memorialization business.
|
(5)
Non-service pension and postretirement expense includes interest cost, expected return on plan assets and amortization of actuarial 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. 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 $11,442 and $11,005 for the SGK Brand Solutions segment, $5,019 and $4,142 for the Memorialization segment, $1,526 and $1,126 for the Industrial Solutions segment, and $1,239 and $965 for Corporate and Non-Operating, for the three months ended December 31, 2018 and 2017, respectively.
|
** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $601 and $1,650 for the SGK Brand Solutions segment, $4,465 and $288 for the Memorialization segment, and $3,608 and $2,577 for Corporate and Non-Operating, for the three months ended December 31, 2018 and 2017, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $90 for the Industrial Solutions segment for the three months ended December 31, 2017.
|
|
SGK Brand
Solutions
|
|
Memorialization
|
|
Industrial Technologies
|
|
Consolidated
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
$
|
491,070
|
|
|
$
|
376,550
|
|
|
$
|
92,026
|
|
|
$
|
959,646
|
|
Accumulated impairment losses
|
(5,752
|
)
|
|
(5,000
|
)
|
|
—
|
|
|
(10,752
|
)
|
||||
Balance at September 30, 2018
|
485,318
|
|
|
371,550
|
|
|
92,026
|
|
|
948,894
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Additions during period
|
1,415
|
|
|
—
|
|
|
—
|
|
|
1,415
|
|
||||
Divestiture during period
|
—
|
|
|
(14,970
|
)
|
|
—
|
|
|
$
|
(14,970
|
)
|
|||
Translation and other adjustments
|
(4,429
|
)
|
|
750
|
|
|
(203
|
)
|
|
(3,882
|
)
|
||||
Goodwill
|
$
|
488,056
|
|
|
$
|
362,330
|
|
|
$
|
91,823
|
|
|
$
|
942,209
|
|
Accumulated impairment losses
|
(5,752
|
)
|
|
(5,000
|
)
|
|
—
|
|
|
(10,752
|
)
|
||||
Balance at December 31, 2018
|
$
|
482,304
|
|
|
$
|
357,330
|
|
|
$
|
91,823
|
|
|
$
|
931,457
|
|
|
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||
December 31, 2018:
|
|
|
|
|
|
||||||
Trade names
|
$
|
126,047
|
|
|
$
|
—
|
|
*
|
$
|
126,047
|
|
Trade names
|
53,319
|
|
|
(6,493
|
)
|
|
46,826
|
|
|||
Customer relationships
|
376,456
|
|
|
(117,384
|
)
|
|
259,072
|
|
|||
Copyrights/patents/other
|
20,745
|
|
|
(12,891
|
)
|
|
7,854
|
|
|||
|
$
|
576,567
|
|
|
$
|
(136,768
|
)
|
|
$
|
439,799
|
|
|
|
|
|
|
|
||||||
September 30, 2018
:
|
|
|
|
|
|
|
|
|
|||
Trade names
|
$
|
126,047
|
|
|
$
|
—
|
|
*
|
$
|
126,047
|
|
Trade names
|
53,523
|
|
|
(5,444
|
)
|
|
48,079
|
|
|||
Customer relationships
|
372,382
|
|
|
(110,760
|
)
|
|
261,622
|
|
|||
Copyrights/patents/other
|
20,848
|
|
|
(12,686
|
)
|
|
8,162
|
|
|||
*Not subject to amortization
|
$
|
572,800
|
|
|
$
|
(128,890
|
)
|
|
$
|
443,910
|
|
|
|
Three Months Ended
December 31, |
||||||
|
|
2018
|
|
2017
|
||||
Sales:
|
|
(Dollar amounts in thousands)
|
||||||
SGK Brand Solutions
|
|
$
|
185,300
|
|
|
$
|
191,766
|
|
Memorialization
|
|
153,886
|
|
|
144,889
|
|
||
Industrial Technologies
|
|
34,991
|
|
|
32,799
|
|
||
Consolidated Sales
|
|
$
|
374,177
|
|
|
$
|
369,454
|
|
Adjusted EBITDA:
|
|
|
|
|
||||
SGK Brand Solutions
|
|
$
|
27,351
|
|
|
$
|
30,852
|
|
Memorialization
|
|
30,321
|
|
|
28,443
|
|
||
Industrial Technologies
|
|
3,595
|
|
|
3,687
|
|
||
Corporate and Non-Operating
|
|
(14,786
|
)
|
|
(16,486
|
)
|
||
Total Adjusted EBITDA
(1)
|
|
$
|
46,481
|
|
|
$
|
46,496
|
|
|
|
Three Months Ended
December 31, |
||||||
|
|
2018
|
|
2017
|
||||
|
|
(Dollar amounts in thousands)
|
||||||
Net income
|
|
$
|
2,984
|
|
|
$
|
35,158
|
|
Income tax provision (benefit)
|
|
605
|
|
|
(25,227
|
)
|
||
Income before income taxes
|
|
3,589
|
|
|
9,931
|
|
||
Net loss attributable to noncontrolling interests
|
|
113
|
|
|
22
|
|
||
Interest expense
|
|
10,301
|
|
|
7,801
|
|
||
Depreciation and amortization
*
|
|
19,226
|
|
|
17,238
|
|
||
Acquisition costs
(1)**
|
|
2,032
|
|
|
1,931
|
|
||
ERP integration costs
(2)**
|
|
2,177
|
|
|
2,027
|
|
||
Strategic initiatives and other charges
(3)**
|
|
—
|
|
|
647
|
|
||
Loss on divestiture
(4)
|
|
4,465
|
|
|
—
|
|
||
Stock-based compensation
|
|
3,647
|
|
|
5,474
|
|
||
Non-service pension and postretirement expense
(5)
|
|
931
|
|
|
1,425
|
|
||
Total Adjusted EBITDA
|
|
$
|
46,481
|
|
|
$
|
46,496
|
|
(1)
Includes certain non-recurring costs associated with recent acquisition activities.
|
(2)
Represents costs associated with global ERP system integration efforts.
|
(3)
Includes certain non-recurring costs associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels.
|
(4)
Represents a loss on the sale of a controlling interest in a Memorialization business.
|
(5)
Non-service pension and postretirement expense includes interest cost, expected return on plan assets and amortization of actuarial 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. 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 $11.5 million and $11.0 million for the SGK Brand Solutions segment, $5.0 million and $4.1 million for the Memorialization segment, $1.5 million and $1.1 million for the Industrial Solutions segment, and $1.2 million and $1.0 million for Corporate and Non-Operating, for the three months ended December 31, 2018 and 2017, respectively.
|
** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $0.6 million and $1.7 million for the SGK Brand Solutions segment, $4.5 million and $0.3 million for the Memorialization segment, and $3.6 million and $2.6 million for Corporate and Non-Operating, for the three months ended December 31, 2018 and 2017, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $90,000 for the Industrial Solutions segment for the three months ended December 31, 2017.
|
|
|
December 31, 2018
|
|
September 30, 2018
|
||||
Pay fixed swaps - notional amount
|
|
$
|
337,500
|
|
|
$
|
343,750
|
|
Net unrealized gain
|
|
$
|
7,467
|
|
|
$
|
11,309
|
|
Weighted-average maturity period (years)
|
|
2.5
|
|
|
2.7
|
|
||
Weighted-average received rate
|
|
2.50
|
%
|
|
2.26
|
%
|
||
Weighted-average pay rate
|
|
1.38
|
%
|
|
1.37
|
%
|
|
Payments due in fiscal year:
|
||||||||||||||||||
|
Total
|
|
2019
Remainder
|
|
2020 to 2021
|
|
2022 to 2023
|
|
After
2023
|
||||||||||
Contractual Cash Obligations:
|
(Dollar amounts in thousands)
|
||||||||||||||||||
Revolving credit facilities
|
$
|
346,966
|
|
|
$
|
—
|
|
|
$
|
346,966
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Securitization Facility
|
109,200
|
|
|
—
|
|
|
109,200
|
|
|
—
|
|
|
—
|
|
|||||
Senior secured term loan
|
205,876
|
|
|
18,750
|
|
|
187,126
|
|
|
—
|
|
|
—
|
|
|||||
2025 Senior Notes
|
406,561
|
|
|
7,875
|
|
|
31,500
|
|
|
31,500
|
|
|
335,686
|
|
|||||
Notes payable to banks
|
17,551
|
|
|
382
|
|
|
17,169
|
|
|
—
|
|
|
—
|
|
|||||
Short-term borrowings
|
2,829
|
|
|
2,829
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital lease obligations
|
5,525
|
|
|
835
|
|
|
1,454
|
|
|
792
|
|
|
2,444
|
|
|||||
Non-cancelable operating leases
|
73,580
|
|
|
17,650
|
|
|
32,543
|
|
|
14,180
|
|
|
9,207
|
|
|||||
Other
|
14,075
|
|
|
2,356
|
|
|
6,144
|
|
|
3,998
|
|
|
1,577
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total contractual cash obligations
|
$
|
1,182,163
|
|
|
$
|
50,677
|
|
|
$
|
732,102
|
|
|
$
|
50,470
|
|
|
$
|
348,914
|
|
Period
|
|
Total number of shares purchased
|
|
Weighted-average price paid per share
|
|
Total number of shares purchased as part of a publicly announced plan
|
|
Maximum number of shares that may yet be purchased under the plan
|
|||||
October 2018
|
|
332
|
|
|
$
|
51.88
|
|
|
332
|
|
|
1,421,950
|
|
November 2018
|
|
141,722
|
|
|
42.16
|
|
|
141,722
|
|
|
1,280,228
|
|
|
December 2018
|
|
44,363
|
|
|
39.63
|
|
|
44,363
|
|
|
1,235,865
|
|
|
Total
|
|
186,417
|
|
|
$
|
41.58
|
|
|
186,417
|
|
|
|
|
(a)
|
Exhibits
|
|
|
|
|
|
|
|
Exhibit No.
|
Description
|
Method of Filing
|
|
|
|
|
|
31.1
|
Filed herewith
|
|
|
31.2
|
Filed herewith
|
|
|
32.1
|
Furnished herewith
|
|
|
32.2
|
Furnished herewith
|
|
|
101.INS
|
XBRL Instance Document
|
Filed herewith
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
Filed herewith
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
Filed herewith
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
Filed herewith
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
Filed herewith
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
Filed herewith
|
|
|
|
MATTHEWS INTERNATIONAL CORPORATION
|
|
|
|
(Registrant)
|
|
|
|
|
Date:
|
February 1, 2019
|
|
By: /s/ Joseph C. Bartolacci
|
|
|
|
Joseph C. Bartolacci, President
|
|
|
|
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
Date:
|
February 1, 2019
|
|
By: /s/ Steven F. Nicola
|
|
|
|
Steven F. Nicola, Chief Financial Officer
|
|
|
|
and Secretary
|
|
|
|
|