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MATW

Matthews International NasdaqGS:MATW Stock Report

Last Price

US$23.16

Market Cap

US$708.8m

7D

-5.1%

1Y

-32.9%

Updated

25 Sep, 2022

Data

Company Financials +
MATW fundamental analysis
Snowflake Score
Valuation5/6
Future Growth3/6
Past Performance0/6
Financial Health1/6
Dividends4/6

MATW Stock Overview

Matthews International Corporation provides brand solutions, memorialization products, and industrial technologies worldwide.

Matthews International Corporation Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Matthews International
Historical stock prices
Current Share PriceUS$23.16
52 Week HighUS$39.76
52 Week LowUS$22.67
Beta1.02
1 Month Change-11.43%
3 Month Change-20.98%
1 Year Change-32.95%
3 Year Change-35.49%
5 Year Change-62.80%
Change since IPO538.90%

Recent News & Updates

Sep 25

Matthews International: Single-Digit Multiple Despite Ecommerce, EV And Traceability Catalysts

Summary Almost all the declines are coming from the gross profit line or due to FX effects on the topline with a strengthening dollar and weakening EU businesses. Emerging industrial technologies segment is becoming a more important profit contributor, and it is supported by megatrends around EV battery production, ecommerce and traceability. Memorialization will keep driving MATW performance, and pricing there is likely to offset any current or potential inflation in the future, where inflation of lumber and steel is already reversing. SGK is the most exposed to consumer trends, but it's unlikely to see total collapse since retail is only a subset of its customers. MATW has about 50% of its debt at variable rates, but starting from low rates. The higher rate debt is fixed and matures in 2.5 years. With rate effects somewhat limited, MATW is a buy. Published on the Value Lab 12/9/22 Matthews International (MATW) is our next high conviction idea. While not completely immune on the downside due to some interest rate risk and some demonstrated inflation exposure, it is a rare issue that can offer long-term, all but guaranteed secular growth despite a very uncertain environment. They are going to be beneficiaries of the electrification push on one hand, and their casket and crematorium business on the other is exposed to positive US demographics and extraordinarily resilient demand. The only weak point on the demand side is the packaging and branding segment, SGK, which is more exposed to economic decline. Nonetheless, the electrification exposed businesses of industrial technology, which also has warehouse automation and disruptive marking equipment to boot, will come to offset SGK's declines in the profit mix very shortly due to its substantial growth. Trading at a very compressed multiple under 6x EV/EBITDA, the stock is a clear buy thanks to resilience in memorialization and compounding growth in the industrial technologies business as energy solutions applications ramp in demand, and the upside can be demonstrated in a sum-of-the-parts (SoTP) analysis. Business Run-down Let's begin with the EBITDA split: EBITDA Split (Q3 2022 Pres) Memorialization drives profits right now, but a growing industrial technology segment is soon to overtake SGK which is the most exposed business. Industrial tech has seen 50% EBITDA growth YoY based on YTD figures, while SGK has declined a little less than 5%. Segments (Q3 2022 Pres) Memorialization Primer Memorialization declined about 10% in EBITDA primarily due to gross profit contractions that occurred as a consequence of input cost inflation, mainly steel and lumber, and this totally offset a pretty meaningful 15% increase in the memorialization topline, which was driven entirely by pricing as volumes were flat. The reason there was such a big EBITDA hit despite pricing efforts is apparently due to troubled municipal waste to energy incineration contracts that hope to be partially recovered over the next quarters. Unfortunately this headwind is not very temporary and the current margin will persist for a bit. Also pricing was limited in the fact that some of the sales were preneed (in anticipation of death) and therefore not pricing in commodity inflation. The memorialization segment is the selling of caskets, urns, plaques and cremation equipment. The segment isn't a full-service funeral company that offers interment rights and owns cemetery properties, or organizes the services themselves. The MATW business is more upstream from the end-customer. This period saw cemetery products and not funeral home products driving topline and sustaining volumes, as pull-forward effects from COVID-19 mortality affected the funeral home business more than cemetery. From a commodity perspective steel prices are calming down as China deals with its housing and other economic woes, and likewise lumber prices have also come down as the building cycle moves from the early/mid stage to the later stages where construction is less lumber intensive. Housing slowdowns are likely to limit excitement in the next period for these products as well. Lumber Prices (tradingeconomics.com) Steel Prices (tradingeconomics.com) Starting in May, which is towards the end of the current June-ended results, is when the prices of these key commodities started to really turn around. These prices only really started to rise in the latter half of the 2021 FY, so they haven't helped ease the comps yet. In addition to deflation in the current period which will help EBITDA comps, a tough commodity environment in H2 2022 will also make an easier comp, and will show that run-rate results are not dire relative to the new normal in commodities, and are likely to improve. It should be noted that steel will take longer to digest due to the nature of supply contracts, and the deflation effects there won't be seen next quarter either. Copper is another important input for memorialization products and the story there is the same as for steel and lumber. Copper Prices (tradingeconomics.com) There is also wage inflation. That is less transient and continues to persist. However, besides digestion times, we feel that inflation of all kinds are fairly irrelevant for the businesses. The reality of the funeral industry is that people don't bargain-hunt for funeral services, and people want to honor their dead, and ultimately the industry sets the prices. You have to do something with the dead anyway, so you can't exactly opt out of being a customer. Also, the number of dead that are casketed is falling. This simply means that the rates at which people choose to cremate rather than bury the dead are rising. This is a trend across the industry, and is a bit of a mix pressure for downstream funeral homes. For MATW it doesn't matter too much. They sell products both for the cremated as well as the buried dead, and they even sell crematorium equipment, like incinerators, which is a secularly growing market. They also sell these incinerators to municipalities in Europe for waste-to-energy purposes and the incineration of trash, so there's a waste management angle there as well. Casketed Death (Q3 2022 Pres) A final tidbit on the memorialization side is that not only are US demographics going to create a very long-burning market for memorialization products, as baby boomers graduate into a higher mortality bracket, and Gen X bloats the center of the population pyramid to guarantee another 30 years of guaranteed mortality, but pet ownership has grown massively since 2020, by 28% actually. Pet demographics will support the urn and incineration equipment markets as well, as they sell to veterinary clinics pet crematoriums. So both US demographics, which is one of the most favorable in the western world and like a loaded syringe for the death care industry, and pet ownership support these memorialization markets for decades. It is a tank of a business. US Benefits from low dependency ratios (countryeconomy.com) Industrial Technology Primer Battery and Hydrogen Fuel Cell Production The next segment to discuss is industrial technology. There are a couple of major trends to discuss. The first is that this segment produces calendering machines, which are used to flatten plates. These surface technologies can be used on plastics and metal and have applications in the automotive, decor and leather industries, but they are also necessary for the production of plates in Li-ion batteries and for hydrogen fuel cells. The earmarked funds for the renewable energy transition are mostly (60%) allocated to production equipment for batteries, so calendering machines, and also the equipment that is produced by the newly acquired Olbrich and R+S, will ride the wave of this electrification investment. Olbrich produces equipment for manufacturing essential electrodes for both hydrogen fuel cells and Li-ion batteries, so no matter which direction the renewable transition goes MATW will benefit. These products are also high margin, and expand the margin substantially of the industrial technology segment. Where topline growth was a little over 10%, EBITDA growth was around 50% for the IT segment. That these energy solution products will grow in the mix will be a boon to the segment's EBITDA contribution. Olbrich and R+S will contribute about $100 million to the industrial technologies EBITDA annually (25% of current IT revenue, 5% of overall), and $43 million was paid for those companies. The energy businesses are primarily Europe based and therefore FX has limited sales growth this quarter despite the emerging energy solutions area. The contracts are large and measured on a completion milestone basis, and have been slowed down by logistics and supply chain. Growth here should accelerate once the gas is more off the goods pedal in markets. Warehouse Automation Another nice area in the IT segment is the warehouse automation segment which sells machines that help fulfilment for ecommerce and other logistics activities. Management had the following promising comments to say about this segment. Certainly, in our Product Identification and our Warehouse Automation business, we continue to see revenue and profit growth while order intake remained strong. Hardware delivery delays at several client warehouse site slowed the installation of our automation systems, thus preventing us from having an even stronger quarter. We expect these businesses to finish the year strong as well since much of the work we perform has to be delivered by the beginning of our next quarter. Joe Bartolacci, CEO of MATW Q3 Earnings Therefore we may experience some timing effects to the benefit of next quarter results as clients get conveyors, sorters etc. installed and ready for MATW's equipment. As of now, these segments are driving the majority of growth. The energy solutions business is more of a future growth area. The headline declines in sales for this quarter alone were caused by dollar strength, while there was over 10% growth for the YTD figures as mentioned before. The R+S acquisition brings automation expertise for this business within industrial technologies, and it's supposed to be a platform for European expansion of this business. Currently, almost all clients are in the US and relate to ecommerce. Industrial Printing Finally, there is another emerging opportunity that while not as aggressively secular as the electrification push, which is firing on both private and public cylinders, represents an attractive market area with great recurring revenue economics. Currently MATW produces equipment for drop-on-demand marking of porous and non-porous materials for logistical and tracking purposes but also retail purposes like barcoding. They can print directly on all sorts of materials, and there is overall secular growth here on account of greater product traceability requirements related to ESG but also health and ISO standards that support DoD printing markets for marking and coding purposes. The market structure is shown below. Drop-on-demand Opportunity (Q3 2022 Pres) They have developed a new product that should win share against the continuous inkjet technology which apparently is unwieldy and famously requires total rebuilds every so often, but is useful because of its print velocity and simpler solvents, even if it lacks in resolution and other characteristics where DoD printing wins out. Their new technology, which they decline to comment on in depth, will enter the market at the end of the calendar year and will apparently address these major issues for CIJ owners and put some of that market in MATW's pocket. SGK The last broad segment is SGK, which does branding and marketing advice combined with the technical expertise to prepare print bands for the packaging print process. They depend a fair bit on retail traffic, and a bit on FX outside of the dollar, so there's been a bit of pressure on both those bases. Supply chain issues have also slowed down the need for new packaging and branding initiatives, and there's been less investment in in-store branding and prints as consumer facing businesses start seeing the pressures of reduced consumer confidence, as well as it being difficult to fully staff and open locations by retailers. Sales declined by 10% or so but the EBITDA declines were around 33%. SG&A related to this segment grew too, with labor pressure affecting the business as well as a resumption in travel and entertainment expenses as the segment leaders try to build business again the old-fashioned way. But the big killer here was a shortfall in the in-store marketing business.

Aug 29

Matthews International: Perennial Dividend Raiser To Benefit From EV And E-Commerce Growth

Summary MATW is a small-cap dividend growth stock that is easily overlooked for its small size and lack of simplicity. The company is a conglomerate with multiple irons in different fires, from funeral home products to warehouse robots to lithium battery manufacturing machines. MATW is suffering from a perfect storm of headwinds right now, primarily inflation and euro currency headwinds. The 3.4%-yielding dividend remains safely covered and likely to continue its 28-year growth streak in the years to come.

Jul 31
Matthews International (NASDAQ:MATW) Will Pay A Dividend Of $0.22

Matthews International (NASDAQ:MATW) Will Pay A Dividend Of $0.22

The board of Matthews International Corporation ( NASDAQ:MATW ) has announced that it will pay a dividend on the 22nd...

Shareholder Returns

MATWUS Commercial ServicesUS Market
7D-5.1%-3.6%-5.2%
1Y-32.9%-9.7%-23.0%

Return vs Industry: MATW underperformed the US Commercial Services industry which returned -9.7% over the past year.

Return vs Market: MATW underperformed the US Market which returned -23% over the past year.

Price Volatility

Is MATW's price volatile compared to industry and market?
MATW volatility
MATW Average Weekly Movement3.7%
Commercial Services Industry Average Movement6.8%
Market Average Movement6.9%
10% most volatile stocks in US Market15.8%
10% least volatile stocks in US Market2.8%

Stable Share Price: MATW is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: MATW's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
185011,000Joe Bartolaccihttps://www.matw.com

Matthews International Corporation provides brand solutions, memorialization products, and industrial technologies worldwide. It operates through three segments: SGK Brand Solutions, Memorialization, and Industrial Technologies. The SGK Brand solutions segment provides brand management, pre-media services, printing plates and cylinders, engineered products, imaging services, digital asset management, merchandising display systems, and marketing and design services for the consumer goods and retail industries.

Matthews International Corporation Fundamentals Summary

How do Matthews International's earnings and revenue compare to its market cap?
MATW fundamental statistics
Market CapUS$708.82m
Earnings (TTM)-US$22.49m
Revenue (TTM)US$1.74b

0.4x

P/S Ratio

-31.5x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
MATW income statement (TTM)
RevenueUS$1.74b
Cost of RevenueUS$1.21b
Gross ProfitUS$534.87m
Other ExpensesUS$557.36m
Earnings-US$22.49m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-0.73
Gross Margin30.67%
Net Profit Margin-1.29%
Debt/Equity Ratio130.3%

How did MATW perform over the long term?

See historical performance and comparison

Dividends

3.8%

Current Dividend Yield

-124%

Payout Ratio