Research Update: Matthews International Corp. Ratings Affirmed On Cash Flow And Debt Reduction; Outlook Negative

Matthews International Corp., a global provider of brand solutions (about 46% of 2020 revenues), funeral products (about 44%), and industrial technologies (about 10%), reported consecutive quarters of revenue improvements, strong cash flow, and significant debt reduction over the past 12 months despite weaker profitability and higher leverage than projected in 2020. We expect the company to continue prioritizing debt reduction, maintain a conservative financial policy, and reduce adjusted leverage below 4.5x within a year, helped by revenue growth across all segments, improving EBITDA margins, and additional debt reduction. We expect leverage of about 4.5x by fiscal year end September 2021, improving to about 4.0x in 2022. We are affirming our 'BB' issuer credit rating. At the same time, we are

...- Matthews International Corp., a global provider of brand solutions (about 46% of 2020 revenues), funeral products (about 44%), and industrial technologies (about 10%), reported consecutive quarters of revenue improvements, strong cash flow, and significant debt reduction over the past 12 months despite weaker profitability and higher leverage than projected in 2020. - We expect the company to continue prioritizing debt reduction, maintain a conservative financial policy, and reduce adjusted leverage below 4.5x within a year, helped by revenue growth across all segments, improving EBITDA margins, and additional debt reduction. We expect leverage of about 4.5x by fiscal year end September 2021, improving to about 4.0x in 2022. - We are affirming our '##' issuer credit rating. At the same time, we are affirming the 'B+' issue-level rating on the company's $300 million in senior unsecured notes. The '6' recovery rating, indicating expectations for negligible (0%-10%; rounded estimate: 5%)...

Research Update