Finance

Inside the Numbers at Matthews International

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Matthews International reported its 2018 fiscal year 3rd quarter results last week.  You can read the company’s press release and report here.

As you may know the Pittsburgh, Pennsylvania based public company operates in three segments:  Brand Solutions, Industrial Technologies, and Memorialization.  Their Memorialization segment is what we are concerned with in the death care industry and they are leaders in cremation technology and supplies, granite and bronze sales, and casket sales thru their Aurora Casket business.

Overall, the company reported gross sales of $411.6 million for the quarter which is a 5.6% increase over the comparable quarter for 2017.  For the first nine months of FY2018 Matthews has reported gross sales of $1.195 billion as compared to $1.119 billion or an increase of 6.8%.  However, partly because of higher interest expense – I’m guessing from acquisitions – the company’s adjusted EBITDA, while higher at $178 million for the first nine months as compared to about $175 million in 2017, has dropped to 14.9% of gross sales as compared to last year’s 15.6% of gross sales.

Sales in the Memorialization segment for the quarter totaled $162 million which is an increase of $6.2 million (3.9%) over 3Q 2017 numbers.  The company in its report states, “Higher sales principally resulted from an increase in sales of cremation equipment in North America and the acquisition of Star Granite & Bronze.  Memorial and casket sales volumes for the fiscal 2018 third quarter were lower than a year ago, consistent with an estimated decline in U.S. casketed deaths.”

Our analysis found that while sales of the Memorialization segment held steady at about 39% of company sales for the Third Quarter, the percentage of sales in this segment dropped from over 41% for the first nine months of 2017 to 39.7% for the first nine months of FY18.

Here are some more observations that we have on the latest Matthews Quarterly Report:

  • Stock price is at about $50 today with a yearly high of $66.35 (August 2/17) and a yearly low of 47.70 (April 27/18).  The P/E ratio sits at just over 21.
  • Shareholder value of the company sits right at about $1.6 billion.  That is determined by the share price of about $50 multiplied by the number of shares outstanding – 32 million.  On an adjusted EBITDA rate based on the first three quarters of 2018 that would make the shareholder value equal to about 6.75  x EBITDA.
  • Analysts (according to E-Trade) expect to see both revenues and profits increase in Matthews International at least thru 2019.
  • Earnings per share for the quarter were $1.16 as compared to $1.05 in 2017
  • Earnings per share for the first nine months of 2018 were $2.72 as compared to $2.55 in 2017
  • Matthews has raised their dividend paid to shareholders to $0.76 per share annually or equal to about 1.5% of stock value.
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