Investor Presentation - Matthews International

Investor Presentation - Matthews International

9/30/11
Business Overview
2
Disclaimer
Any forward-looking statements in connection with this discussion are being made
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 from those discussed today
are set forth in the Company’s Annual Report on Form 10-K and other periodic
filings with the Securities and Exchange Commission (“SEC”).
3


Founded in 1850 – headquartered in Pittsburgh, PA
Two principal business lines:
◦ Memorialization products and services
 Bronze
 Casket
 Cremation
◦ Brand Solutions
 Graphics Imaging Group
 Marking Products
 Merchandising Solutions




5,300 employees
Voluntary employee ownership until 1994
Listed on NASDAQ – MATW – July 1994; $3.50/share (split-adjusted)
28.4 million shares outstanding
4
FISCAL 2011 SALES
Memorialization
Brand Solutions
56%
44%
Memorialization:
Bronze
Casket
Cremation
25%
26%
5%
56%
Brand Solutions:
Graphics Imaging
30%
Marking Products
7%
Merchandising Solutions 7%
44%
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6
The Regal Rose Memorial
is one of many styles of
flush bronze memorials
produced by Matthews
Building signs are
an example of the
segment’s
architectural
product offerings.
Lasting Memories TM products
illustrate photographs cast in
a bronze memorial or urn.
Cremation gardens can be designed to include bronze and granite
products.
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The Casket segment is a
leading manufacturer
and distributor of
caskets in North
America, producing a
wide variety of wood ,
metal and cremation
caskets.
Wood Caskets are manufactured in York, PA
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The Power Pak II cremation system
with automatic casket loader, one
of the most popular cremation
systems in North America.
Bio-cremation is a water-based (versus flame-based)
cremation process.
The Master Touch cremation arrangement
center assists funeral directors in educating
the cremation consumer in the options
available to them in services, merchandise
and memorialization.
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◦ “Total Solutions” to funeral service providers
◦ Cremation
 Memorialization
 European market
 Service
◦ Granite memorials
◦ Architectural products/signage
◦ Acquisitions
◦ Cost structure improvements
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5,000
4,500
4,000
Total Deaths
3,500
3,000
64.0%
62.3%
65.0%
66.0%
2,500
Cremation Rate
2,000
60.6%
1,500
58.9%
50.0%
39.8%
26.2%
1,000
46.0%
32.3%
500
Source: CANA
2049
2047
2045
2043
2041
2039
2037
2035
2033
2031
2029
2027
2025
2023
2021
2019
2017
2015
2013
2011
2009
2007
2005
2003
2001
1999
0
11
12
Graphics Imaging offers a wide range of services to
the corrugated and flexible packaging industries,
including creative graphic design.
Printing plates for the packaging industry
are one of the Graphics Imaging segment’s
principal product lines.
Saueressig is a manufacturer of gravure
printing and embossing tools used in the
packaging, wallpaper and tobacco
industries.
13
The Marking Products segment designs and manufactures
industrial quality printers for in-line marking. The ProPoint
printer uses an etching process to mark items.
Matthews continues to be one of the market leaders in
automated conveyor controls.
Non-contact ink-jet printing units
apply dot matrix coding on products.
Marking Products manufactures industrial inks for
offset, contact and ink-jet printing systems.
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The Merchandising Solutions segment provides value-added comprehensive merchandising
solutions to consumer products marketers and retailers.
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◦ U.S. Graphics
 Primary packaging
 Gravure
◦ Skill extension
◦ Geographic expansion
◦ New product development
◦ Acquisitions
◦ Cost structure improvements
16
FINANCIAL OVERVIEW
17

Internal Growth
◦ Expand market presence of existing products
◦ New product development
◦ Manufacturing/cost structure improvements

Acquisitions

Share Repurchases
18
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
Currency changes, 1.3%
Share repurchases, 1.3%
Acquisitions, 4.7%
4.0%
2.0%
Organic Growth, 3.6%
0.0%
10.9%
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Principal objective:
Support the business plan and long-term growth objectives of the Company and
specific operating segment.
Financial criteria:
Immediately accretive to Earnings per Share. Achieve long-term target of an annual
pre-tax Return on Invested Capital of 20%.
Performance of companies acquired within last 10 years:
Strong
Performers
Acceptable
Performers
Marginal
Performers
FCC
Casket Distributors
Cloverleaf (reduced cost structure)
Holjeron
Gem
Doyle Group (reduced cost structure)
IPTI / Lightning Pick
InTouch
United Memorial (granite business plan)
Munich
Kenuohua
Saueressig
Milso
York Bronze
Reynoldsville Casket
York Casket
20
(Dollars in thousands, except per share data)
2008
Sales
% Change
Operating Profit
% Change
Net Income
% Change
EPS
% Change
(a)
(b)
(c)
(d)
Fiscal year ended September 30,
2009
2010
$818,623
$780,908
9.2%
-4.6%
$132,952
$101,011
18.9%
$79,484
(a)
$57,732
(b)
$1.90
25.0%
-25.5%
9.4%
$116,581
$118,516
15.4%
(b)
-27.4%
(a)
$898,821
5.2%
-24.0%
22.8%
$2.55
$821,829
$69,057
1.7%
(d)
19.6%
(b)
$2.31
21.6%
2011
$72,372
(d)
4.8%
(d)
$2.46
(d)
6.5%
Includes net favorable $0.06 per share impact of an unusual income tax benefit.
Includes net unfavorable $0.31 per share impact of unusual items.
Includes net favorable $0.03 per share impact of an unusual income tax benefit.
Includes net favorable $0.02 per share impact of an unusual income tax benefit.
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(Dollars in thousands)
2008
Memorialization:
Bronze
Fiscal year ended September 30,
2009
2010
2011
$243,063
$215,934
$224,247
$224,773
219,792
203,247
210,279
238,753
26,665
30,909
39,356
43,816
Total Memorialization
489,520
450,090
473,882
507,342
Brand Solutions:
Graphics Imaging
203,703
234,966
239,957
268,975
Marking Products
60,031
42,355
51,069
61,938
Merchandising Solutions
65,369
53,497
56,921
60,566
329,103
330,818
347,947
391,479
$818,623
$780,908
$821,829
$898,821
Casket
Cremation
Total Brand Solutions
Total
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(Dollars in thousands)
2008
Memorialization:
Bronze
Fiscal year ended September 30,
2009
2010
2011
$71,576
$57,598
$56,167
$52,474
23,339
17,716
26,242
26,785
5,474
5,036
4,910
5,733
100,389
80,350
87,319
84,992
Brand Solutions:
Graphics Imaging
18,617
19,217
21,077
22,427
Marking Products
9,137
1,500
5,817
7,819
Merchandising Solutions
4,809
2,368
3,278
Casket
Cremation
Total Memorialization
Total Brand Solutions
Total
(56)
32,563
20,661
29,262
33,524
$132,952
$101,011
$116,581
$118,516
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2007
Fiscal year ended September 30,
2008
2009
2010
2011
28.8%
29.4%
26.7%
25.0%
23.3%
5.6%
10.6%
8.7%
12.5%
11.2%
14.4%
20.5%
16.3%
12.5%
13.1%
17.6%
20.5%
17.9%
18.4%
16.8%
Brand Solutions:
Graphics Imaging
9.9%
9.1%
8.2%
8.8%
8.3%
Marking Products
17.3%
15.2%
3.5%
11.4%
12.6%
7.1%
7.4%
-0.1%
4.2%
5.4%
Total Brand Solutions
10.6%
9.9%
6.2%
8.4%
8.6%
Total
14.9%
16.2%
12.9%
14.2%
13.2%
Memorialization:
Bronze
Casket
Cremation
Total Memorialization
Merchandising Solutions
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Fiscal 2011
(in thousands)
Net Income
Depreciation and Amortization
Stock-Based Compensation
$72,372
27,661
6,972
107,005
Capital Expenditures
(22,440)
Free Cash Flow
$84,565
25
12%
9.7%
10%
7.8%
8%
6.9%
6.2%
5.9% 5.7%
6%
5.3%
6.2%
5.0%
4.4%
4%
2%
0%
9/30/02
9/30/03
9/30/04
9/30/05
9/30/06
9/30/07
9/30/08
9/30/09
9/30/10
9/30/11
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$3.00
$2.55
$2.46
$2.31
$2.50
$2.06 $2.04
$2.00
$1.50
$1.68
$1.90
$1.79
10-year average
annual increase
in EPS – 10.9%.
$1.35
$1.16
$1.00
$0.50
$0.00
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
27
$3.50
$3.12
$3.00
$2.73
$2.88
$2.45
$2.50
$2.24
$2.15
$1.92
$2.00
$1.63
$1.56
$1.50
$1.22
$1.00
$0.50
$0.00
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
28
$4.00
$3.58
$3.36
$3.50
$3.25
$3.00
$3.00
$2.53
$2.50
$2.35
$2.17
$2.05
$2.00
$1.74
$1.81
$1.50
$1.00
$0.50
$0.00
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
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$60
$50.74
$50
$43.80
$37.80 $36.79
$40
$33.88
$35.38 $35.36
$30.73
$30
$26.42
$23.37
$20
$10
$0
9/30/02 9/30/03 9/30/04 9/30/05 9/30/06 9/30/07 9/30/08 9/30/09 9/30/10 9/30/11
30
25%
20%
18.3%
15.8%
14.8%
15.0%
13.2%
15%
10%
5%
0%
2007
2008
2009
2010
2011
31

Increased quarterly dividend 12.5% to 9.0 cents (October 2011)
◦ 17th consecutive annual dividend increase since the IPO

Reported record sales of $899 million in fiscal 2011

Sales of $339 million (38% of total) generated outside the U.S. in fiscal 2011

Analyst coverage:
◦
◦
◦
◦
◦
CJS Securities (D. Moore)
Davenport & Company (C. Fendley)
Great Lakes Review (E. Schlang/G. Halter)
Janney Montgomery Scott (L. Burke)
Sidoti & Company (J. Clement)
32
Shares
9/30/2011
Neuberger Berman LLC
Artisan Partners LP
BlackRock Fund Advisors
Vanguard Group, Inc.
Fidelity Management & Research Co.
Wellington Management Co. LLP
State Street Global Advisors
T. Rowe Price Associates, Inc.
Robecco Investment Management
Lazard Asset Management
Top Ten Institutions
145 Institutions
Total Institutional Ownership
2,053,393
1,981,442
1,790,284
1,589,497
1,546,701
1,200,008
936,181
922,760
819,364
577,853
13,417,483
47.2% of outstanding shares
8,927,554
22,345,037
78.7% of outstanding shares
33
52-Week
High – Low
(09/30/11)
Stock Price
P/E
Carriage Services (CSV)
$ 6.57 - $ 4.50
$ 5.92
12
Service Corp. (SCI)
$ 12.12 - $ 7.86
$ 9.16
16
Stewart Enterprises (STEI)
$ 8.39 - $ 5.14
$ 5.95
14
StoneMor Partners LP (STON)
$33.51 - $23.10
$ 27.85
N/A
Hillenbrand (HI)
$24.20 - $16.33
$ 18.40
11
Schawk, Inc. (SGK)
$21.06 - $ 9.86
$ 9.87
17
Matthews (MATW)
$41.08 - $28.57
$ 30.73
12
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
Long-term track record of EPS growth

Strong financial position and consistent free cash flow
◦ Ability to support growth strategies, share repurchases and debt reduction

Successful acquisition program
◦ Additional opportunities exist

Strong management team
35