Matthews International Corporation — FY2022 Form 10-K
Business context and reporting period. The filing covers the fiscal year ended September 30, 2022, not a standalone calendar-quarter report. Matthews operates in Memorialization, Industrial Technologies, and SGK Brand Solutions. Prior-period segment results were retrospectively realigned to transfer surfaces and engineered products from SGK to Industrial Technologies.
Key financial metrics
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $1,762.4 million | $1,671.0 million |
| Gross profit / margin | $522.3 million / 29.6% | $541.8 million / 32.4% |
| Operating income (loss) | $(43.9) million | $42.0 million |
| Net income (loss) attributable to Matthews shareholders | $(99.8) million; $(3.18) per diluted share | $2.9 million; $0.09 per diluted share |
| Adjusted EBITDA (non-GAAP) | $210.4 million | $227.8 million |
| Operating cash flow | $126.9 million | $162.8 million |
| Capital expenditures | $61.3 million | $34.3 million |
| Cash and cash equivalents at year-end | $69.0 million | $49.2 million |
| Total debt at year-end | $798.6 million | $763.7 million |
Year-end working capital was $217.2 million, down from $269.9 million; the current ratio was 1.5 versus 1.8. The company paid $27.7 million in dividends ($0.88 per share) and repurchased $41.7 million of shares.
Segment performance
- Memorialization: Revenue increased 9% to $840.1 million; adjusted EBITDA declined to $151.8 million from $165.7 million.
- Industrial Technologies: Revenue increased 18% to $335.5 million; adjusted EBITDA rose to $56.8 million from $34.9 million. Growth included energy storage, warehouse automation, product identification, and acquisitions.
- SGK Brand Solutions: Revenue decreased 5% to $586.8 million; adjusted EBITDA fell to $60.1 million from $91.4 million, reflecting currency, mix, margin, and cost pressures.
Material changes versus FY2021
- Revenue grew $91.4 million, but an estimated $56.3 million unfavorable foreign-exchange impact partially offset growth.
- Gross margin contracted 2.8 percentage points amid higher material, labor, and transportation costs, adverse sales mix, and weaker margins on some projects and cylinder products.
- Adjusted EBITDA declined $17.3 million despite stronger Industrial Technologies results; weaker results in Memorialization and SGK more than offset that improvement.
- GAAP results included an $82.5 million goodwill impairment in SGK and $10.1 million of net asset write-downs, primarily associated with Russia-related operations. The DB Plan settlement produced a separate $30.9 million non-cash pension charge.
- Operating cash flow fell $35.9 million, including $35.7 million of contributions to fully fund settlement of the DB Plan obligations.
Outlook, risks, and unusual items
- Management estimated FY2023 capital spending of approximately $75 million and expected operating cash flow to fund anticipated capital projects. The filing gives no specific consolidated revenue or earnings guidance.
- Management said Industrial Technologies order rates remained strong and were expected to support organic growth objectives into the following year. Current backlog was expected to be substantially filled in FY2023; custom machinery and cremation/incineration equipment backlogs generally extend many months.
- Management expects inflation, labor costs, and supply-chain challenges to affect near-term results, with partial mitigation anticipated from pricing and cost-reduction initiatives. SGK remains exposed to weak economic conditions, marketing-spend decisions, and currency movements.
- Goodwill impairment risk remains at SGK: after the FY2022 charge, estimated fair value approximated carrying value. Further impairment may be required if projections or valuation assumptions deteriorate.
- Other notable exposures include variable-rate debt, foreign-exchange movements, commodity costs, customer pricing constraints, labor availability, geopolitical disruption (including the Russia-Ukraine war), cybersecurity, and environmental compliance. Management said it was in compliance with debt covenants at year-end.
- The $750 million revolving credit facility matures in March 2025; $480.1 million was outstanding under revolving credit facilities at year-end. The company also had $299.6 million of 5.25% senior notes due December 2025. A $125 million receivables purchase agreement matures in March 2024; $96.6 million of receivables had been sold and derecognized at year-end.
- Subsequent to year-end, the company paid $24.2 million to settle SERP and ORRP obligations; it expected a further non-cash charge of approximately $1.3 million in FY2023.
- The auditor issued unqualified opinions on the financial statements and internal controls. The critical audit matter was valuation of SGK reporting-unit goodwill.
Important facts for investors to verify
- Whether SGK stabilizes and whether its carrying value remains supported by operating results and valuation assumptions.
- Whether pricing, productivity actions, and lower cost pressures recover gross margins and adjusted EBITDA.
- Cash conversion and working-capital trends, including the effect of receivables sales under the RPA on reported operating cash flow.
- Debt levels, borrowing costs, covenant headroom, and refinancing needs ahead of the 2025 facility and notes maturities.
- Delivery and profitability of Industrial Technologies’ backlog and integration of OLBRICH and R+S Automotive.
- Whether the FY2023 capital-spending estimate and expected pension-related settlement costs align with subsequent results.