Item 5. Market for Registrant’s Common Equity
ITEM 5. 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, 2023, 30,469,213 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. Under the current authorization, 1,195,013 shares remain available for repurchase as of September 30, 2023. All purchases of the Company's common stock during fiscal 2023 were part of this repurchase program.
The following table shows the monthly fiscal 2023 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 2022
— $ — — 1,294,842
November 2022
88,042 27.54 88,042 1,206,800
December 2022
983 27.54 983 1,205,817
January 2023
— — — 1,205,817
February 2023
549 37.09 549 1,205,268
March 2023
7,057 37.79 7,057 1,198,211
April 2023
— — — 1,198,211
May 2023
— — — 1,198,211
June 2023
2,068 38.86 2,068 1,196,143
July 2023
— — — 1,196,143
August 2023
1,130 32.79 1,130 1,195,013
September 2023
— — — 1,195,013
Total 99,829 $ 28.61 99,829
Holders:
Based on records available to the Company, the number of record holders of the Company's common stock was 473 at October 31, 2023.
Securities Authorized for Issuance Under Equity Compensation Plans:
See Equity Compensation Plans in Item 12 "Security Ownership of Certain Beneficial Owners and Management."
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS, (continued)
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN *
AMONG MATTHEWS INTERNATIONAL CORPORATION,
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, 2018 through September 30, 2023. The graph assumes that on October 1, 2018, $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 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.
* Total return assumes dividend reinvestment
ITEM 6. [Reserved].
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the consolidated financial statements of Matthews and related notes thereto. In addition, see "Cautionary Statement Regarding Forward-Looking Information" included in Part I of this Annual Report on Form 10-K.
RESULTS OF OPERATIONS:
The Company manages its businesses under three segments: Memorialization, Industrial Technologies and SGK Brand Solutions. The Memorialization segment consists primarily of bronze and granite memorials and other memorialization products, caskets, cremation-related products, and cremation and incineration equipment primarily for the cemetery and funeral home industries. The Industrial Technologies segment includes the design, manufacturing, service and distribution of high-tech custom energy storage solutions; product identification and warehouse automation technologies and solutions, including order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products; and coating and converting lines for the packaging, pharma, foil, décor and tissue industries. The SGK Brand Solutions segment consists of brand management, pre-media services, printing plates and cylinders, imaging services, digital asset management, merchandising display systems, and marketing and design services primarily for the consumer goods and retail industries.
The Company's primary measure of segment profitability is adjusted earnings before interest, income taxes, depreciation and amortization ("adjusted EBITDA"). Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results. These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges. This presentation is consistent with how the Company's chief operating decision maker (the “CODM”) evaluates the results of operations and makes strategic decisions about the business. For these reasons, the Company believes that adjusted EBITDA represents the most relevant measure of segment profit and loss.
In addition, the CODM manages and evaluates the operating performance of the segments, as described above, on a pre-corporate cost allocation basis. Accordingly, for segment reporting purposes, the Company does not allocate corporate costs to its reportable segments. Corporate costs include management and administrative support to the Company, which consists of certain aspects of the Company’s executive management, legal, compliance, human resources, information technology (including operational support) and finance departments. These costs are included within "Corporate and Non-Operating" in the following table to reconcile to consolidated adjusted EBITDA and are not considered a separate reportable segment. Management does not allocate non-operating items such as investment income, other income (deductions), net and noncontrolling interest to the segments.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued)
The following table sets forth sales and adjusted EBITDA for the Company's Memorialization, Industrial Technologies and SGK Brand Solutions segments for each of the last three fiscal years. Refer to Note 20, "Segment Information" in Item 8 - "Financial Statements and Supplemental Data" for the Company's financial information by segment.
Years Ended September 30,
2023 2022 2021
(Dollar amounts in thousands)
Sales to external customers:
Memorialization $ 842,997 $ 840,124 $ 769,016
Industrial Technologies 505,751 335,523 284,495
SGK Brand Solutions 532,148 586,756 617,519
Consolidated Sales $ 1,880,896 $ 1,762,403 $ 1,671,030
Adjusted EBITDA:
Memorialization $ 163,986 $ 151,849 $ 165,653
Industrial Technologies 66,278 56,762 34,889
SGK Brand Solutions 57,128 60,120 91,435
Corporate and Non-Operating (61,583) (58,323) (64,227)
Total Adjusted EBITDA (1)
$ 225,809 $ 210,408 $ 227,750
(1) Total Adjusted EBITDA is a non-GAAP financial measure. See the "Non-GAAP Financial Measures" section below.
Comparison of Fiscal 2023 and Fiscal 2022:
Sales for the year ended September 30, 2023 were $1.88 billion, compared to $1.76 billion for the year ended September 30, 2022, representing an increase of $118.5 million. The increase in fiscal 2023 sales reflected higher sales in the Industrial Technologies and Memorialization segments, partially offset by lower sales in the SGK Brand Solutions segment. On a consolidated basis, changes in foreign currency exchange rates were estimated to have an unfavorable impact of $23.6 million on fiscal 2023 sales compared to the prior year.
Memorialization segment sales for fiscal 2023 were $843.0 million, compared to $840.1 million for fiscal 2022. The sales increase reflected improved price realization, higher sales of mausoleums and cremation equipment in the U.S., and benefits from the acquisition of Eagle Granite Company (see Acquisitions and Divestitures below). These increases were partially offset by lower unit sales of caskets and bronze memorial products, reflecting a decrease in coronavirus disease 2019 ("COVID-19") related deaths in fiscal 2023, and lower sales of cremation and incineration products in Europe. Changes in foreign currency exchange rates had an unfavorable impact of $1.8 million on the segment's sales compared to the prior year. Industrial Technologies segment sales for fiscal 2023 were $505.8 million, compared to $335.5 million for fiscal 2022. The sales increase primarily reflected the impact of the fiscal 2022 acquisitions of OLBRICH GmbH (“OLBRICH”) and R+S Automotive GmbH (“R+S Automotive”) (see Acquisitions and Divestitures below). The increase in sales also reflected higher sales of purpose-built engineered products (primarily energy storage solutions for the electric vehicle market) and higher product identification sales. These increases were partially offset by lower sales of warehouse automation solutions. Changes in foreign currency exchange rates had an unfavorable impact of $5.7 million on the segment's sales compared to the prior year. In the SGK Brand Solutions segment, sales for fiscal 2023 were $532.1 million, compared to $586.8 million in fiscal 2022. Changes in foreign currency exchange rates had an unfavorable impact of $16.1 million on the segment's sales compared to the prior year. The decrease in sales also reflected lower brand sales in the U.S. and Europe (including lower retail-based sales) and a decline in sales of cylinder (packaging) products in Europe. These decreases were partially offset by higher brand sales in the Asia-Pacific market and improved price realization.
Gross profit for the year ended September 30, 2023 was $577.7 million, compared to $522.3 million for fiscal 2022. Consolidated gross profit as a percent of sales was 30.7% and 29.6% in fiscal 2023 and fiscal 2022, respectively. The increase in gross profit primarily reflected the impact of higher sales (including benefits from recent acquisitions), lower transportation costs, and benefits from the realization of productivity improvements and other cost-reduction initiatives. These increases in gross profit were partially offset by the impact of higher material and labor costs, and lower margins on purpose-built engineered products. Gross profit also included acquisition integration costs and other charges primarily in connection with cost-reduction initiatives totaling $12.2 million and $12.6 million in fiscal 2023 and 2022, respectively. Fiscal 2022 gross
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