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Matthews International Corp. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: November 22, 2011 02:45PM

Matthews International Corp. (MATW) filed Annual Report for the period ended 2011-09-30. Matthews International Corp. has a market cap of $940.2 million; its shares were traded at around $32.16 with a P/E ratio of 13.2 and P/S ratio of 1. The dividend yield of Matthews International Corp. stocks is 1.1%. Matthews International Corp. had an annual average earning growth of 8.7% over the past 10 years. GuruFocus rated Matthews International Corp. the business predictability rank of 2.5-star.



Highlight of Business Operations:

In the Memorialization businesses, Bronze segment sales for fiscal 2011 were $224.8 million compared to $224.2 million for fiscal 2010. The increase primarily reflected the December 2009 acquisition of United Memorial Products, Inc. (“UMP”) and the favorable impact of changes in foreign currency values against the U.S. dollar. Excluding the impact of acquisitions and currency changes, fiscal 2011 Bronze segment sales declined compared to fiscal 2010, reflecting lower sales volume of bronze memorial and architectural products and an unfavorable change in product mix. Sales for the Casket segment were $238.8 million for fiscal 2011 compared to $210.3 million for fiscal 2010. The increase resulted principally from acquisitions. Excluding the impact of acquisitions, fiscal 2011 Casket segment sales declined, principally reflecting slightly lower unit volume and an unfavorable change in product mix. Lower sales (excluding acquisitions) for both the Bronze and Casket segments reflected the impact of a decline in the estimated number of casketed deaths compared to the prior year. Based on available published data, U.S. deaths for the year ended September 30, 2011 were estimated to have increased from fiscal 2010; however, casketed deaths (non-cremation) were estimated to have declined from the prior year. Sales for the Cremation segment were $43.8 million for fiscal 2011 compared to $39.4 million a year ago. The increase principally resulted from higher sales in all of the segment s principal markets (U.S., U.K. and Europe) and the acquisition of a small manufacturer of cremation equipment in the U.K. in March 2010. In the Company s Brand Solutions businesses, sales for the Graphics Imaging segment in fiscal 2011 were $269.0 million, compared to $240.0 million a year ago. The increase resulted principally from higher sales in all markets (Europe, U.S., U.K. and Asia), the July 2011 acquisition of Kroma Pre-Press Preparation Systems Industry & Trade, Inc. (“Kroma”) and the favorable impact from changes in the values of foreign currencies against the U.S. dollar. Marking Products segment sales for the year ended September 30, 2011 were $61.9 million, compared to $51.1 million for fiscal 2010. The increase was principally due to higher sales of equipment and consumables in the U.S. and China, two small acquisitions in fiscal 2011 and the favorable impact of changes in foreign currency values. Sales for the Merchandising Solutions segment were $60.6 million for fiscal 2011, compared to $56.9 million a year ago. The improvement was attributable to an increase in project volume to several large global customers in fiscal 2011, compared to fiscal 2010.

Operating profit for fiscal 2011 was $118.5 million, compared to $116.6 million for fiscal 2010. The increase in operating profit for fiscal 2011 reflected the impact of acquisitions and a favorable impact of $1.4 million from changes in foreign currency values against the U.S. dollar. These increases were partially offset by higher commodity costs, primarily in the Bronze and Casket segments. Bronze segment operating profit for fiscal 2011 was $52.5 million, compared to $56.2 million for fiscal 2010. The decrease in fiscal 2011 operating profit compared to fiscal 2010 reflected lower sales, including an unfavorable shift in product mix, and a significant increase in bronze metal costs in fiscal 2011. Operating profit for the Casket segment for fiscal 2011 was $26.8 million, compared to $26.2 million for fiscal 2010. The increase in Casket segment operating profit for fiscal 2011 primarily reflected the benefit of acquisitions. Excluding acquisitions, Casket segment operating profit declined, primarily reflecting an unfavorable change in product mix and the impact of higher steel and fuel costs, partially offset by the benefit of recent cost structure initiatives. Cremation segment operating profit for the year ended September 30, 2011 was $5.7 million, compared to $4.9 million a year ago. Fiscal 2011 operating profit reflected higher sales and the impact of the March 2010 acquisition of a small cremation equipment manufacturer in the U.K. Graphics Imaging operating profit for fiscal 2011 was $22.4 million, compared to $21.1 million for 2010. The increase in fiscal 2011 reflected higher sales, improvements in the segment s U.S. cost structure, the acquisition of Kroma and the favorable impact of changes in foreign currency values, partially offset by higher manufacturing costs in the segment s European gravure manufacturing operations. Operating profit for the Marking Products segment for fiscal 2011 was $7.8 million, compared to $5.8 million a year ago. The increase in Marking Products segment operating profit principally reflected the impact of acquisitions and higher sales in the U.S. and China. These increases were partially offset by an increase in research and development costs. The Merchandising Solutions segment operating profit was $3.3 million for fiscal 2011, compared to $2.4 million for fiscal 2010. The increase principally reflected the impact of higher sales.

In the Memorialization businesses, Bronze segment sales for fiscal 2010 were $224.2 million compared to $215.9 million for fiscal 2009. The increase primarily reflected the acquisition of UMP. The increase was partially offset by a decline in bronze memorial unit volume. Sales for the Casket segment were $210.3 million for fiscal 2010 compared to $203.2 million for fiscal 2009. The increase resulted principally from the acquisition of several casket businesses, partially offset by lower unit volume. The decline in sales (excluding acquisitions) for both the Bronze and Casket segments reflected the impact of a decline in the estimated number of casketed deaths compared to the prior year. Based on available published data, U.S. deaths for the year ended September 30, 2010 were estimated to have declined. Casketed deaths (non-cremation) were also estimated to have declined from fiscal 2009. Sales for the Cremation segment were $39.4 million for fiscal 2010 compared to $30.9 million in fiscal 2009. The increase principally resulted from the acquisition of a small manufacturer of cremation equipment in the U.K. and higher sales in the U.S. and European markets. In the Company s Brand Solutions businesses, sales for the Graphics Imaging segment in fiscal 2010 were $240.0 million, compared to $235.0 million in the prior year. The increase resulted principally from higher sales by Saueressig and the impact of the acquisition of a small graphics operation headquartered in Hong Kong in the fourth quarter of fiscal 2009, partially offset by lower sales in the U.S. and U.K. markets. Marking Products segment sales for the year ended September 30, 2010 were $51.1 million, compared to $42.4 million for fiscal 2009. The increase was principally due to higher unit volume and the acquisition of a small European distributor. Sales for the Merchandising Solutions segment were $56.9 million for fiscal 2010, compared to $53.5 million in fiscal 2009. The increase was attributable to an increase in project volume in the last six months of fiscal 2010.

Selling and administrative expenses for the year ended September 30, 2010 were $206.8 million, compared to $193.8 million for fiscal 2009. Consolidated selling and administrative expenses as a percent of sales were 25.2% for the year ended September 30, 2010, compared to 24.8% in the prior year. The increases in costs and percentage of sales primarily resulted from higher pension expense and the impact of acquisitions. The increase in pension cost primarily reflected unfavorable changes in the values of plan assets and a reduction in the actuarial discount rate. Unusual charges included in selling and administrative expenses totaled $7.5 million for fiscal 2009, and consisted primarily of Saueressig integration costs, increased bad debt expense, termination-related expenses, and costs related to operational and systems improvements. These unusual charges included consulting fees incurred for assistance in the operational and financial integration of Saueressig into Matthews. Bad debt expense, particularly in the Casket segment, was significantly higher in fiscal 2009, reflecting economic conditions. The increase resulted from the deterioration in the aging of outstanding accounts receivable. Employee termination-related and the other costs in connection with operational and systems improvements primarily reflected the Company s initiatives as a result of the recession. The principal objectives of these initiatives were to better align the cost structures of the Company s businesses with their respective revenue run rates.

Operating profit for fiscal 2010 was $116.6 million, compared to $101.0 million for fiscal 2009. Operating profit for fiscal 2010 included an increase of approximately $5.2 million in pension cost. Operating profit for fiscal 2009 included unusual charges of approximately $16.5 million. Bronze segment operating profit for fiscal 2010 was $56.2 million, compared to $57.6 million for fiscal 2009. Bronze segment operating profit for fiscal 2009 included unusual charges of approximately $7.2 million, principally relating to facility consolidations. The decrease in fiscal 2010 operating profit compared to fiscal 2009 reflected lower sales volume (excluding the UMP acquisition) and higher pension cost. Operating profit for the Casket segment for fiscal 2010 was $26.2 million, compared to $17.7 million for fiscal 2009. Fiscal 2009 Casket segment operating profit included unusual charges of approximately $2.7 million. Excluding the impact of the unusual charges in fiscal 2009, Casket segment operating profit for fiscal 2010 increased by $5.8 million, reflecting the benefit of cost structure changes initiated in fiscal 2009 and the impact of acquisitions. Cremation segment operating profit for the year ended September 30, 2010 was $4.9 million, compared to $5.0 million in fiscal 2009. Fiscal 2010 operating profit reflected higher sales and the impact of the March 2010 acquisition of a small cremation equipment manufacturer in the U.K., offset by the impact of an unfavorable change in product mix and higher pension cost. The Graphics Imaging segment operating profit for fiscal 2010 was $21.1 million, compared to $19.2 million for 2009. Operating profit in fiscal 2009 included unusual charges of approximately $3.1 million. Excluding the effect of the unusual charges, operating profit decreased approximately $1.2 million in fiscal 2010 compared to fiscal 2009. A decline in operating profit in the U.S. graphics operations offset higher operating profit from Saueressig and the impact of the acquisition of a small graphics business headquartered in Hong Kong. Operating profit for the Marking Products segment for fiscal 2010 was $5.8 million, compared to $1.5 million in fiscal 2009. Marking Products operating profit for fiscal 2009 included unusual charges of approximately $1.9 million. The increase in year-over-year operating profit, excluding the unusual charges, primarily reflected higher sales and the favorable impact of fiscal 2009 cost structure initiatives. The Merchandising Solutions segment operating profit was $2.4 million for fiscal 2010, compared to an operating loss of $56,000 for fiscal 2009. The increase principally reflected the impact of higher sales and fiscal 2009 unusual charges of approximately $1.3 million.

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