www.matw.com | Nasdaq: MATW Second Quarter Fiscal 2024 Earnings Review May 3, 2024 Joseph C. Bartolacci President and Chief Executive Officer Steven F. Nicola Chief Financial Officer
© 2024 Matthews International Corporation. All Rights Reserved. DISCLAIMER 2 Any forward-looking statements contained in this presentation are included pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding the expectations, hopes, beliefs, intentions or strategies of the Company regarding the future, and may be identified by the use of words such as “expects,” “believes,” “intends,” “projects,” “anticipates,” “estimates,” “plans,” “seeks,” “forecasts,” “predicts,” “objective,” “targets,” “potential,” “outlook,” “may,” “will,” “could” or the negative of these terms, other comparable terminology and variations thereof. 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, and no assurance can be given that such expectations will prove correct. Factors that could cause the Company's results to differ materially from the results discussed in such forward-looking statements principally include changes in domestic or international economic conditions, changes in foreign currency exchange rates, changes in interest rates, changes in the cost of materials used in the manufacture of the Company's products, any impairment of goodwill or intangible assets, environmental liability and limitations on the Company’s operations due to environmental laws and regulations, disruptions to certain services, such as telecommunications, network server maintenance, cloud computing or transaction processing services, provided to the Company by third-parties, changes in mortality and cremation rates, changes in product demand or pricing as a result of consolidation in the industries in which the Company operates, or other factors such as supply chain disruptions, labor shortages or labor cost increases, changes in product demand or pricing as a result of domestic or international competitive pressures, ability to achieve cost-reduction objectives, unknown risks in connection with the Company's acquisitions and divestitures, cybersecurity concerns and costs arising with management of cybersecurity threats, effectiveness of the Company's internal controls, compliance with domestic and foreign laws and regulations, technological factors beyond the Company's control, impact of pandemics or similar outbreaks, or other disruptions to our industries, customers, or supply chains, the impact of global conflicts, such as the current war between Russia and Ukraine, and other factors described in the Company’s Annual Report on Form 10-K and other periodic filings with the U.S. Securities and Exchange Commission. Included in this report are measures of financial performance that are not defined by generally accepted accounting principles in the United States (“GAAP”). The Company uses non-GAAP financial measures to assist in comparing its performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the Company’s core operations including acquisition and divestiture costs, ERP integration costs, strategic initiative and other charges (which includes non-recurring charges related to certain commercial and operational initiatives and exit activities), stock-based compensation and the non-service portion of pension and postretirement expense. Management believes that presenting non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items that management believes do not directly reflect the Company’s core operations, (ii) permits investors to view performance using the same tools that management uses to budget, forecast, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating the Company’s results. The Company believes that the presentation of these non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provided herein, provides investors with an additional understanding of the factors and trends affecting the Company’s business that could not be obtained absent these disclosures. The Company believes that adjusted EBITDA provides relevant and useful information, which is used by the Company’s management in assessing the performance of its business. Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results. These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges. Adjusted EBITDA provides the Company with an understanding of earnings before the impact of investing and financing charges and income taxes, and the effects of certain acquisition and divestiture and ERP integration costs, and items that do not reflect the ordinary earnings of the Company’s operations. This measure may be useful to an investor in evaluating operating performance. It is also useful as a financial measure for lenders and is used by the Company’s management to measure business performance. Adjusted EBITDA is not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to net income or other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of the Company's liquidity. The Company's definition of adjusted EBITDA may not be comparable to similarly titled measures used by other companies. The Company has presented constant currency sales and constant currency adjusted EBITDA and believes these measures provide relevant and useful information, which is used by the Company's management in assessing the performance of its business on a consistent basis by removing the impact of changes due to foreign exchange translation rates. These measures allow management, as well as investors, to assess the Company’s sales and adjusted EBITDA on a constant currency basis. The Company has also presented adjusted net income and adjusted earnings per share and believes each measure provides relevant and useful information, which is widely used by analysts and investors, as well as by the Company’s management in assessing the performance of its business. Adjusted net income and adjusted earnings per share provides the Company with an understanding of the results from the primary operations of our business by excluding the effects of certain acquisition, divestiture, and system-integration costs, and items that do not reflect the ordinary earnings of our operations. These measures provide management with insight into the earning value for shareholders excluding certain costs, not related to the Company’s primary operations. Likewise, these measures may be useful to an investor in evaluating the underlying operating performance of the Company’s business overall, as well as performance trends, on a consistent basis. Lastly, the Company has presented net debt and a net debt leverage ratio and believes each measure provides relevant and useful information, which is widely used by analysts and investors as well as by our management. These measures provide management with insight on the indebtedness of the Company, net of cash and cash equivalents and relative to adjusted EBITDA. These measures allow management, as well as analysts and investors, to assess the Company’s leverage.
BUSINESS OVERVIEW
© 2024 Matthews International Corporation. All Rights Reserved. 4 SGK BRAND SOLUTIONS MEMORIALIZATION INDUSTRIAL TECHNOLOGIES • Benefited from recent acquisitions and improved price realization • Return to normalized death rates; current sales and adjusted EBITDA run-rates remain well ahead of pre-COVID levels • Improved pricing and realized benefits from recent cost reduction actions • Strategy to extend to digital services • Warehouse automation impacted by market conditions • Progress on new printhead solution • Timing of energy projects impacted current quarter sales BUSINESS UPDATE
© 2024 Matthews International Corporation. All Rights Reserved. Key Drivers • Projected adjusted EBITDA to approximate $220 million • Customer interest in the energy storage solutions business remains strong • Further reductions in working capital expected in latter half of fiscal 2024 • Projected further reductions in outstanding debt and leverage ratio by the end of the fiscal year OUTLOOK FOR FISCAL 2024 5
FINANCIAL OVERVIEW
© 2024 Matthews International Corporation. All Rights Reserved. Q2 2024 SUMMARY 7 Q2 2023 Q2 2024 Sales $ 479.6 $ 471.2 Diluted EPS $ 0.29 $ 0.29 Non-GAAP Adjusted EPS* $ 0.65 $ 0.69 Net Income Attributable to Matthews $ 9.1 $ 9.0 Adjusted EBITDA* $ 58.4 $ 56.8 ($ in millions except per-share amounts) Q2 YTD YTD 2023 YTD 2024 Sales $ 928.8 $ 921.2 Diluted EPS $ 0.41 $ 0.22 Non-GAAP Adjusted EPS* $ 1.18 $ 1.06 Net Income Attributable to Matthews $ 12.8 $ 6.7 Adjusted EBITDA* $ 107.7 $ 102.3 2nd Quarter ("Q2") Highlights Sales • SGK Brand Solutions segment current quarter sales higher than a year ago • Energy storage sales also higher than last year GAAP EPS • Consistent with the prior year Adjusted EBITDA • Lower adjusted EBITDA in the Memorialization and Industrial Technologies segments, partially offset by higher adjusted EBITDA in the SGK Brand Solutions segment and lower corporate and non-operating costs Adjusted EPS • Income tax benefits generally offset the impacts of slightly lower adjusted EBITDA and higher interest expense Year-to-Date ("YTD") Highlights • Consolidated sales were relatively consistent with a year ago, decreasing 0.8% • Higher adjusted EBITDA for the SGK Brand Solutions segment * See supplemental slides for Adjusted EPS and Adjusted EBITDA reconciliations and other important disclaimers regarding Matthews’ use of Non-GAAP measures
© 2024 Matthews International Corporation. All Rights Reserved. MEMORIALIZATION 8 23.0% 21.1% $222.9 $222.2 Q2 FY2023 Q2 FY2024 $429.4 $430.2 FY2023 FY2024 $48.0 $46.6 Q2 FY2023 Q2 FY2024 $87.2 $83.3 FY2023 FY2024 21.5% 21.0% 20.3% 19.4% ($ in millions) Q2 Sales Q2 Adjusted EBITDA & Margin* YTD Sales YTD Adjusted EBITDA & Margin* Sales • Benefits from recent acquisitions and improved price realization • U.S. death rates have normalized from higher pandemic levels, impacting unit volumes for caskets and memorials Adjusted EBITDA • Higher material and labor costs • Improved price realization and productivity initiatives * See supplemental slide for Adjusted EBITDA reconciliation and other important disclaimers regarding Matthews’ use of Non-GAAP measures
© 2024 Matthews International Corporation. All Rights Reserved. INDUSTRIAL TECHNOLOGIES 9 15.5% 12.4% 15.6%10.3% ($ in millions) $125.5 $116.1 Q2 FY2023 Q2 FY2024 $234.7 $227.5 FY2023 FY2024 $15.6 $10.0 Q2 FY2023 Q2 FY2024 $27.8 $19.7 FY2023 FY2024 12.4% 8.6% 11.8% 8.6% Q2 Sales Q2 Adjusted EBITDA & Margin* YTD Sales YTD Adjusted EBITDA & Margin* Sales • Continued growth of energy business, offset by lower warehouse automation sales • YTD sales growth for product identification and surfaces businesses Adjusted EBITDA • Lower warehouse automation sales, higher labor costs and lower margins on engineered products • Higher margins and improved pricing for the product identification business * See supplemental slide for Adjusted EBITDA reconciliation and other important disclaimers regarding Matthews’ use of Non-GAAP measures
© 2024 Matthews International Corporation. All Rights Reserved. SGK BRAND SOLUTIONS ($ in millions) 10 15.4% 12.9% $131.2 $132.9 Q2 FY2023 Q2 FY2024 $264.8 $263.5 FY2023 FY2024 $11.0 $15.4 Q2 FY2023 Q2 FY2024 $23.3 $28.3 FY2023 FY2024 11.6%8.4% 8.8% 10.7% Q2 Sales Q2 Adjusted EBITDA & Margin* YTD Sales YTD Adjusted EBITDA & Margin* Sales • Q2 sales growth, primarily reflecting higher sales in the U.S. brand market and European packaging and private-label businesses • Unfavorable currency impacts of $1.3 million for Q2 and $0.3 million YTD Adjusted EBITDA • Higher adjusted EBITDA in both periods • Improved pricing and favorable impacts of cost reduction initiatives * See supplemental slide for Adjusted EBITDA reconciliation and other important disclaimers regarding Matthews’ use of Non-GAAP measures
© 2024 Matthews International Corporation. All Rights Reserved. • Operating cash flow for prior period reflected final payouts for the settlement of the Company’s supplemental retirement plan obligations and prior year swap settlement (favorable) • Net Debt Leverage Ratio* 3.6 as of March 31, 2024 • Quarterly dividend of $0.24/share, payable 5/20/24 CAPITALIZATION AND CASH FLOWS 11 * See supplemental slide for Net Debt and Net Debt Leverage Ratio reconciliation and other important disclaimers regarding Matthews’ use of Non-GAAP measures Note: Dark gray shades on the left represent Total Debt. Total Debt and Net Debt* $790.2 $842.8 $748.1 $797.3 09/30/23 03/31/24 ($ in millions) Cash $42.1 $45.5 9/30/23 03/31/24 Operating Cash Flow $44.7 $29.8 YTD FY2023 YTD FY2024
SUPPLEMENTAL INFORMATION
© 2024 Matthews International Corporation. All Rights Reserved. 13 Included in this report are measures of financial performance that are not defined by GAAP, including, without limitation, adjusted EBITDA, adjusted net income and EPS, constant currency sales, constant currency adjusted EBITDA, and net debt and net debt leverage ratio. The Company defines net debt leverage ratio as outstanding debt (net of cash) relative to adjusted EBITDA. The Company uses non-GAAP financial measures to assist in comparing its performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the Company’s core operations including acquisition and divestiture costs, ERP integration costs, strategic initiative and other charges (which includes non-recurring charges related to certain commercial and operational initiatives and exit activities), stock-based compensation and the non-service portion of pension and postretirement expense. Constant currency sales and constant currency adjusted EBITDA removes the impact of changes due to foreign exchange translation rates. To calculate sales and adjusted EBITDA on a constant currency basis, amounts for periods in the current fiscal year are translated into U.S. dollars using exchange rates applicable to the comparable periods of the prior fiscal year. Management believes that presenting non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items that management believes do not directly reflect the Company's core operations, (ii) permits investors to view performance using the same tools that management uses to budget, forecast, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating the Company’s results. The Company's calculations of its non-GAAP financial measures, however, may not be comparable to similarly titled measures reported by other companies. The Company believes that the presentation of these non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provided herein, provide investors with an additional understanding of the factors and trends affecting the Company’s business that could not be obtained absent these disclosures. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
© 2024 Matthews International Corporation. All Rights Reserved. * See Disclaimer (page 2) for Management’s assessment of supplemental information related to adjusted EBITDA. 14 Three Months Ended March 31, Six Months Ended March 31, 2024 2023 2024 2023 Net income $ 9,027 $ 9,125 $ 6,724 $ 12,772 Income tax (benefit) provision (1,122) 3,382 (1,848) 4,694 Income before income taxes $ 7,905 $ 12,507 $ 4,876 $ 17,466 Net loss attributable to noncontrolling interests — 2 — 58 Interest expense, including RPA and factoring financing fees (1) 13,783 13,137 26,534 23,808 Depreciation and amortization * 23,261 24,148 46,784 47,877 Acquisition and divestiture related items (2)** 2,062 2,852 3,299 4,137 Strategic initiatives and other charges (3)** 4,962 1,280 10,882 3,061 Highly inflationary accounting losses (primarily non-cash) (4) 390 160 710 1,248 Stock-based compensation 4,327 4,278 8,978 8,612 Non-service pension and postretirement expense (5) 110 83 219 1,471 Total Adjusted EBITDA $ 56,800 $ 58,447 $ 102,282 $ 107,738 Adjusted EBITDA margin 12.1 % 12.2 % 11.1 % 11.6 % (1) Includes fees for receivables sold under the RPA and factoring arrangements totaling $1,238 and $1,090 for the three months ended March 31, 2024 and 2023, respectively, and $2,413 and $1,546 for the six months ended March 31, 2024 and 2023, respectively. (2) Includes certain non-recurring items associated with recent acquisition and divestiture activities. (3) Includes certain non-recurring costs associated with commercial, operational and cost-reduction initiatives, and costs associated with global ERP system integration efforts. Fiscal 2024 also includes costs related to an ongoing contractual dispute which totaled $4,972 for the six months ended March 31, 2024. Fiscal 2023 includes loss recoveries totaling $2,154 for the six months ended March 31, 2023, which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015. (4) Represents exchange losses associated with highly inflationary accounting related to the Company's Turkish subsidiaries. (5) Non-service pension and postretirement expense includes interest cost, expected return on plan assets, amortization of actuarial gains and losses, curtailment gains and losses, and settlement gains and losses. These benefit cost components are excluded from adjusted EBITDA since they are primarily influenced by external market conditions that impact investment returns and interest (discount) rates. Curtailment gains and losses and settlement gains and losses are excluded from adjusted EBITDA since they generally result from certain non-recurring events, such as plan amendments to modify future benefits or settlements of plan obligations. The service cost and prior service cost components of pension and postretirement expense are included in the calculation of adjusted EBITDA, since they are considered to be a better reflection of the ongoing service-related costs of providing these benefits. Please note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans. * Depreciation and amortization was $6,914 and $5,711 for the Memorialization segment, $5,571 and $5,916 for the Industrial Technologies segment, $9,669 and $11,319 for the SGK Brand Solutions segment, and $1,107 and $1,202 for Corporate and Non-Operating, for the three months ended March 31, 2024 and 2023, respectively. Depreciation and amortization was $13,327 and $11,285 for the Memorialization segment, $11,948 and $11,769 for the Industrial Technologies segment, $19,241 and $22,379 for the SGK Brand Solutions segment, and $2,268 and $2,444 for Corporate and Non-Operating, for the six months ended March 31, 2024 and 2023, respectively. ** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $1,037 and $333 for the Memorialization segment, $4,431 and $2,437 for the Industrial Technologies segment, $358 and $2,610 for the SGK Brand Solutions segment, and $1,198 and income of $1,248 for Corporate and Non-Operating, for the three months ended March 31, 2024 and 2023, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $1,097 and $711 for the Memorialization segment, $9,799 and $3,374 for the Industrial Technologies segment, $1,221 and $3,131 for the SGK Brand Solutions segment, and $2,064 and income of $18 for Corporate and Non-Operating, for the six months ended March 31, 2024 and 2023, respectively. ADJUSTED EBITDA NON-GAAP RECONCILIATION (Unaudited) (In thousands)
© 2024 Matthews International Corporation. All Rights Reserved. ADJUSTED NET INCOME AND EARNINGS PER SHARE NON-GAAP RECONCILIATION (Unaudited) (In thousands, except per share data) * See Disclaimer (page 2) for Management’s assessment of supplemental information related to adjusted net income and adjusted EPS. 15 Three Months Ended March 31, Six Months Ended March 31, 2024 2023 2024 2023 per share per share per share per share Net income attributable to Matthews $ 9,027 $ 0.29 $ 9,127 $ 0.29 $ 6,724 $ 0.22 $ 12,830 $ 0.41 Acquisition and divestiture costs (1) 1,511 0.05 1,953 0.07 2,410 0.08 3,015 0.10 Strategic initiatives and other charges (2) 4,093 0.12 1,153 0.03 9,097 0.28 2,940 0.09 Highly inflationary accounting losses (primarily non-cash) (3) 390 0.01 160 — 710 0.02 1,248 0.04 Non-service pension and postretirement expense (4) 83 0.01 62 0.01 164 0.01 1,103 0.04 Amortization 6,720 0.21 7,887 0.25 14,066 0.45 15,644 0.50 Adjusted net income $ 21,824 $ 0.69 $ 20,342 $ 0.65 $ 33,171 $ 1.06 $ 36,780 $ 1.18 Note: Adjustments to net income for non-GAAP reconciling items were calculated using an income tax rate of 27.8% and 27.1% for the three and six months ended March 31, 2024, respectively, and 29.8% and 25.9% for the three and six months ended March 31, 2023, respectively. (1) Includes certain non-recurring costs associated with recent acquisition and divestiture activities. (2) Includes certain non-recurring costs associated with commercial, operational and cost-reduction initiatives, and costs associated with global ERP system integration efforts. Fiscal 2024 also includes costs related to an ongoing contractual dispute which totaled $4,325 for the six months ended March 31, 2024. Fiscal 2023 includes loss recoveries totaling $1,616 for the six months ended March 31, 2023, which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015. (3) Represents exchange losses associated with highly inflationary accounting related to the Company's Turkish subsidiaries. (4) Non-service pension and postretirement expense includes interest cost, expected return on plan assets, amortization of actuarial gains and losses, curtailment gains and losses, and settlement gains and losses. These benefit cost components are excluded from adjusted EBITDA since they are primarily influenced by external market conditions that impact investment returns and interest (discount) rates. Curtailment gains and losses and settlement gains and losses are excluded from adjusted EBITDA since they generally result from certain non-recurring events, such as plan amendments to modify future benefits or settlements of plan obligations. The service cost and prior service cost components of pension and postretirement expense are included in the calculation of adjusted EBITDA, since they are considered to be a better reflection of the ongoing service-related costs of providing these benefits. Please note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans.
© 2024 Matthews International Corporation. All Rights Reserved. * See Disclaimer (page 2) for Management’s assessment of supplemental information related to constant currency sales and constant currency adjusted EBITDA. 16 CONSTANT CURRENCY SALES AND ADJUSTED EBITDA NON-GAAP RECONCILIATION (Unaudited) (In thousands) Memorialization Industrial Technologies SGK Brand Solutions Corporate and Non- Operating Consolidated Reported sales for the quarter ended March 31, 2024 $ 222,156 $ 116,136 $ 132,931 $ — $ 471,223 Changes in foreign exchange translation rates (22) (944) 1,283 — 317 Constant currency sales for the quarter ended March 31, 2024 $ 222,134 $ 115,192 $ 134,214 $ — $ 471,540 Reported sales for the six months ended March 31, 2024 $ 430,227 $ 227,510 $ 263,472 $ — $ 921,209 Changes in foreign exchange translation rates (403) (4,675) 314 — (4,764) Constant currency sales for the six months ended March 31, 2024 $ 429,824 $ 222,835 $ 263,786 $ — $ 916,445 Reported adjusted EBITDA for the quarter ended March 31, 2024 $ 46,614 $ 10,028 $ 15,370 $ (15,212) $ 56,800 Changes in foreign exchange translation rates 63 (104) (11) 18 (34) Constant currency adjusted EBITDA for the quarter ended March 31, 2024 $ 46,677 $ 9,924 $ 15,359 $ (15,194) $ 56,766 Reported adjusted EBITDA for the six months ended March 31, 2024 $ 83,314 $ 19,650 $ 28,263 $ (28,945) $ 102,282 Changes in foreign exchange translation rates 97 (509) 131 (107) (388) Constant currency adjusted EBITDA for the six months ended March 31, 2024 $ 83,411 $ 19,141 $ 28,394 $ (29,052) $ 101,894
© 2024 Matthews International Corporation. All Rights Reserved. * See Disclaimer (page 2) for Management’s assessment of supplemental information related to net debt and net debt leverage ratio. 17 March 31, 2024 December 31, 2023 September 30, 2023 Long-term debt, current maturities $ 5,419 $ 4,948 $ 3,696 Long-term debt 837,357 857,423 786,484 Total debt 842,776 862,371 790,180 Less: Cash and cash equivalents (45,497) (37,921) (42,101) Net Debt $ 797,279 $ 824,450 $ 748,079 Adjusted EBITDA (trailing 12 months) $ 220,353 $ 222,000 $ 225,809 Net Debt Leverage Ratio 3.6 3.7 3.3 NET DEBT AND NET DEBT LEVERAGE RATIO NON-GAAP RECONCILIATION (Unaudited) (Dollars in thousands)