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Item 5. Market for Registrant’s Common Equity

2021-11-19 compared with 2020-11-20 · 53 added, 60 removed, 51 unchanged (69% of the section changed)

MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Market Information:

The authorized common stock of the Company consists of 70,000,000 shares of Class A Common Stock, $1.00 par value.

At September 30, 2021, 31,482,575 shares were outstanding.

The Company's Class A Common Stock is traded on the Nasdaq Global Select Market under the symbol "MATW".

The Company has a stock repurchase program.

The buy-back program is designed to increase shareholder value, enlarge the Company's holdings of its common stock, and add to earnings per share.

Repurchased shares may be retained in treasury, utilized for acquisitions, or reissued to employees or other purchasers, subject to the restrictions set forth in the Company's Restated Articles of Incorporation.

On July 28, 2021, the Company's Board of Directors approved the continuation of the stock repurchase program and increased the authorization for stock repurchases by an additional 2,500,000 shares.

Under the current authorization, 2,658,627 shares remain available for repurchase as of September 30, 2021.

All purchases of the Company's common stock during fiscal 2021 were part of this repurchase program.

The following table shows the monthly fiscal 2021 stock repurchase activity:

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 2020 40,000 $ 22.25 40,000 498,736

November 2020 34,789 25.82 34,789 463,947

December 2020 87,502 27.99 87,502 376,445

January 2021 — — — 376,445

February 2021 — — — 376,445

March 2021 6,000 41.36 6,000 370,445

April 2021 — — — 370,445

May 2021 — — — 370,445

June 2021 45,584 36.53 45,584 324,861

July 2021 50,842 35.19 50,842 2,774,019

August 2021 109,248 33.82 109,248 2,664,771

September 2021 6,144 36.81 6,144 2,658,627

Total 380,109 $ 31.21 380,109

Based on records available to the Company, the number of record holders of the Company's common stock was 544 at October 31, 2021.

Securities Authorized for Issuance Under Equity Compensation Plans:

See Equity Compensation Plans in Item 12 "Security Ownership of Certain Beneficial Owners and Management."

MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS, (continued)

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AMONG MATTHEWS INTERNATIONAL CORPORATION,

S&P 500 INDEX, RUSSELL 2000 VALUE INDEX, S&P MIDCAP 400 INDEX AND S&P SMALLCAP 600 INDEX

This graph compares the return on Matthews’ Common Stock with that of the Standard & Poor’s 500 Index, Russell 2000 Value Index, S&P MidCap 400 Index and S&P SmallCap 600 Index for the period from October 1, 2015 through September 30, 2020.

The graph assumes that on October 1, 2015, $100 was invested in each of the Company’s Common Stock , Standard & Poor’s 500 Index, Russell 2000 Value Index, S&P MidCap 400 Index and S&P SmallCap 600 Index .

S&P 500 INDEX AND RUSSELL 2000 VALUE INDEX

This graph compares the return on Matthews’ Common Stock with that of the Standard & Poor’s 500 Index and Russell 2000 Value Index for the period from October 1, 2016 through September 30, 2021.

The graph assumes that on October 1, 2016, $100 was invested in each of the Company’s Common Stock , Standard & Poor’s 500 Index and Russell 2000 Value Index.

The graph measures total stockholder return, which takes into account both changes in stock price and dividends.

It assumes that dividends paid are invested in like securities.

The Russell 2000 Value Index replaces the S&P MidCap 400 Index and S&P SmallCap 600 Index, which were used as the industry market index in the Company’s 2019 Annual Report on Form 10-K.

The Company believes that the Russell 2000 Value Index , which measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values, is a more appropriate industry market index because, among other reasons, it better reflects the price volatility that a share of Matthews International Corporation Common Stock experiences.

The following graph compares the total return on the Company’s Common Stock with that of the Standard & Poor’s 500 Index, the newly selected Russell 2000 Value Index, and each of the S&P MidCap 400 Index and S&P SmallCap 600 Index used in Matthews’ 2019 Annual Report on Form 10-K.

The following graph compares the total return on the Company’s Common Stock with that of the Standard & Poor’s 500 Index and the Russell 2000 Value Index .

The results are not necessarily indicative of future performance.

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SELECTED FINANCIAL DATA.

Years Ended September 30,

(Amounts in thousands, except per share data)

Net sales $ 1,498,306 $ 1,537,276 $ 1,602,580 $ 1,515,608 $ 1,480,464

Operating (loss) profit (64,193) 10,303 138,557 121,376 127,228

Interest expense 34,885 40,962 37,427 26,371 24,344

Net (loss) income attributable to

Matthews shareholders $ (87,155) $ (37,988) $ 107,371 $ 74,368 $ 66,749

(Loss) earnings per common share:

Basic $ (2.79) $ (1.21) $ 3.39 $ 2.31 $ 2.04

Diluted (2.79) (1.21) 3.37 2.28 2.03

Weighted-average common shares outstanding:

Basic 31,190 31,416 31,674 32,240 32,642

Diluted 31,190 31,416 31,861 32,570 32,904

Cash dividends per share $ 0.84 $ 0.80 $ 0.76 $ 0.68 $ 0.60

Total assets (6)

$ 2,072,633 $ 2,190,603 $ 2,357,744 $ 2,244,649 $ 2,091,041

Long-term debt, non-current (6)

807,710 898,194 929,342 881,602 844,807

(1) Fiscal 2020 included net pre-tax charges of $139,092, primarily related to a goodwill write-down, a legal matter reserve, non-recurring / incremental coronavirus disease 2019 ("COVID-19") costs, a gain on sale of ownership interests in a subsidiary, acquisition-related costs, and strategic cost-reduction initiatives.

Charges of $138,556 and $536 impacted operating profit and other deductions, respectively.

(2) Fiscal 2019 included net pre-tax charges of $114,768, primarily related to a goodwill write-down, losses from cost-method investments, losses on divestitures, acquisition-related costs, strategic cost-reduction initiatives, and net gains from the sale of buildings and vacant properties.

Charges of $111,069 and $3,699 impacted operating profit and other deductions, respectively.

(3) Fiscal 2018 included net pre-tax charges of $27,115 and income of $3,771, which impacted operating profit and other deductions, respectively.

These pre-tax charges primarily consisted of acquisition-related costs, and strategic cost-reduction initiatives.

The pre-tax income primarily consisted of gains recognized on the disposition of certain cost-method investments.

(4) Fiscal 2017 included net pre-tax charges of $38,458 and income of $10,483, which impacted operating profit and other deductions, respectively.

These pre-tax charges primarily consisted of acquisition-related costs, and strategic cost-reduction initiatives.

The pre-tax income primarily consisted of loss recoveries, net of related costs, related to the previously disclosed theft of funds by a former employee.

(5) Fiscal 2016 included net pre-tax charges of $36,057 and income of $78, which impacted operating profit and other deductions, respectively.

These amounts primarily consisted of acquisition-related costs and strategic cost-reduction initiatives.

(6) Reporting periods prior to fiscal year 2020 were not revised to reflect the adoption of Accounting Standards Update ("ASU") No.

2016-02, " Leases (Topic 842)".

Prior periods continue to be presented in accordance with previous lease accounting guidance under GAAP.

Not applicable.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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SGK Brand Solutions, Memorialization and Industrial Technologies.

The SGK Brand Solutions segment 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.

The SGK Brand Solutions segment consists of brand management, pre-media services, printing plates and cylinders, engineered products (including energy solutions), imaging services, digital asset management, merchandising display systems, and marketing and design services primarily for the consumer goods and retail industries.

The Memorialization segment consists primarily of 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 includes marking and coding equipment and consumables, industrial automation products and order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products.

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.

The Company's primary measure of segment profitability is adjusted earnings before interest, income taxes, depreciation and amortization ("adjusted EBITDA").

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Comparison of Fiscal 2021 and Fiscal 2020:

Sales for the year ended September 30, 2020 were $1.50 billion, compared to $1.54 billion for the year ended September 30, 2019, representing a decrease of $39.0 million.

The decrease in fiscal 2020 sales reflected lower sales in the SGK Brand Solutions and Industrial Technologies segments, partially offset by increased sales in the Memorialization segment.

Changes in foreign currency rates were estimated to have an unfavorable impact of $6.9 million on fiscal 2020 consolidated sales compared to a year ago.

Fiscal 2020 sales were unfavorably impacted by the global outbreak of COVID-19, which has caused some commercial impact and business disruptions in certain of the Company's segments and geographic locations.

While substantially all of the Company's operations have remained open during the COVID-19 pandemic, management expects COVID-19 to continue to impact its sales and results of operations in the short-term until the pandemic subsides (see "Forward Looking Information" below).

Sales for the year ended September 30, 2021 were $1.67 billion, compared to $1.50 billion for the year ended September 30, 2020, representing an increase of $172.7 million.

The increase in fiscal 2021 sales reflected higher sales in all of the Company's segments.

Changes in foreign currency exchange rates were estimated to have a favorable impact of $30.2 million on fiscal 2021 consolidated sales compared to a year ago.

Fiscal 2021 sales continued to be impacted by the global outbreak of COVID-19, which has caused some commercial impacts in certain of the Company's segments and geographic locations.

These impacts have included higher sales volumes for memorialization products and services, but have also included temporary business disruptions and customer project delays for certain of the Company's businesses.

Additionally, recent increases in the cost of certain raw materials and other inflationary pressures have had an unfavorable impact on the Company's results of operations.

While substantially all of the Company's operations have remained open during the COVID-19 pandemic, management expects COVID-19 to continue to impact its sales and results of operations in the short-term as the pandemic subsides (see "Forward Looking Information" below).

In the SGK Brand Solutions segment, sales for fiscal 2021 were $726.9 million, compared to $693.1 million in fiscal 2020.

The decrease primarily resulted from lower brand sales in the U.S.

and the U.K., sales declines in the private label brand market, and lower sales of cylinders and surfaces products in Europe.

These decreases were partially offset by increased revenues from purpose-built machinery projects and higher sales in the Asia-Pacific region.

Changes in foreign currency exchange rates had an unfavorable impact of $5.9 million on the segment's sales compared to the prior year.

The increase primarily resulted from higher sales of purpose-built engineered products (primarily energy storage solutions for the electric vehicle market), increased cylinder (packaging) sales, and higher brand sales in the Europe and Asia-Pacific markets.

These increases were partially offset by lower retail-based sales (principally merchandising solutions and private label brand market sales), decreased brand sales in the U.S., and reduced sales of surfaces products in Europe, all of which were unfavorably impacted by COVID-19.

Changes in foreign currency exchange rates had a favorable impact of $23.3 million on the segment's sales compared to the prior year.

Memorialization segment sales for fiscal 2021 were $769.0 million, compared to $656.0 million for fiscal 2020.

The increase in sales primarily resulted from increased unit sales of caskets due to COVID-19, improved price realization on caskets and cemetery memorial products, and higher sales of cremation and incineration equipment.

These increases were partially offset by lower unit sales of cemetery memorial products, which were impacted by COVID-19 related stay-at-home orders that limited families' access with cemeteries to arrange for their memorials.

Changes in foreign currency exchange rates had an unfavorable impact of $615,000 on the segment's sales compared to the prior year.

The increase in sales resulted from a significant increase in unit sales of caskets due to COVID-19.

The segment also reported higher sales of bronze and granite memorial products, mausoleums, and cremation equipment.

The increase in sales also reflected improved price realization and benefits from a recently completed acquisition of a small cemetery products business.

Changes in foreign currency exchange rates had a favorable impact of $4.4 million on the segment's sales compared to the prior year.

Industrial Technologies segment sales for fiscal 2021 were $175.1 million, compared to $149.2 million for fiscal 2020.

The decrease primarily reflected lower sales of warehouse automation systems.

Orders for warehouse automation solutions remained strong, but access to job sites to complete these projects has been restricted due to COVID-19.

Changes in foreign currency exchange rates had an unfavorable impact of $356,000 on the segment's sales compared to the prior year.

Gross profit for the year ended September 30, 2020 was $497.8 million, compared to $542.5 million for fiscal 2019.

Consolidated gross profit as a percent of sales was 33.2% and 35.3% in fiscal 2020 and fiscal 2019, respectively.

The decrease in gross profit primarily reflected lower sales, unfavorable changes in product mix, ongoing price competition in the brand market, and unfavorable changes in margins for cylinders, surfaces and engineered products.

These declines were partially offset by the realization of productivity improvements and cost-reduction initiatives.

Gross profit also included acquisition integration costs and other charges primarily in connection with cost-reduction initiatives totaling $12.4 million and $2.4 million in fiscal 2020 and 2019, respectively.

The sales increase primarily reflected higher sales of warehouse automation systems and increased product identification sales.

Changes in foreign currency exchange rates had a favorable impact of $2.6 million on the segment's sales compared to the prior year.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity