Matthews International (NASDAQ:MATW) Management Interview


matwint_primaryBartolacci

Matthews International
(NASDAQ:MATW)
CEO: Joseph Bartolacci
CFO: Steven Nicola

 

This interview contains information concerning a pending transaction between Matthews and Schawk. Investors and security holders of Schawk are urged to read the registration statement, proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC carefully and in their entirety when they become available because they will contain important information about the proposed merger  and other matters. Investors and security holders will be able to obtain free copies of the registration statement, the proxy statement/prospectus (when available) and other relevant documents filed or that will be filed by Matthews or SGK with the SEC through the website maintained by the SEC at www.sec.gov. Copies of the registration statement, proxy statement/prospectus and other relevant documents filed by Matthews with the SEC may be obtained free of charge by going to Matthews’ Investor page on its corporate website at www.matw.com, or by going to SGK’s Relations page on its corporate website at www.sgkinc.com

INTERVIEW TRANSCRIPTS:

WSA: Good day from Wall Street this is Juan Costello with the Wall Street Analyst joining us today are Joseph Bartolacci the CEO from Matthews International along with the company’s Chief Financial Officer Steven Nicola.  The company trades on NASDAQ and their ticker symbol is MATW.  Thanks for joining us today gentlemen.

Joseph Bartolacci:  Thank you.

Steve Nicola:  You’re welcome.

WSA: Great now starting off please give us a brief history and overview of the company for some of our listeners that may be new to the story.

Joseph Bartolacci:  Oh well thank you Juan let me give you a little bit of the background this is Joe Bartolacci we are a 164 year old company established in Pittsburg in 1850 as a contact and indenting kind of business we were a branding iron business established by Mr. Matthews here in Pittsburg.  We evolved over the next hundred years or so to included a couple of other businesses one of those businesses is our graphics imaging which is our packaging business which we’ll talk about related to our Shock acquisition.  Are cemetery products business which is our bronze foundry which you will see if you walked into most cemetery’s you’ll see a bronze marker somewhere on the ground that would most likely be ours.  As well as our marking and fulfillment business today which is a continuation of what we were in 1850 it is an industrial inline marking equipment business that includes some fulfillment of businesses that we acquired over the last several years.

WSA: Yeah well in terms of that can you talk about your upcoming acquisition of Schawk.

Joseph Bartolacci:  Sure the Schawk business is extremely complimentary to what we do if you understand our packaging business what we do is from design to reprographic services we manage the packaging business for CPG’s around the world.  CPG’s being Consumer Product Goods companies, companies that you would see on a retail store shelf with a lot of familiar brands and names that you’d know every day in your home.  We are the dominant player the leading player that is in the European market and Shock is the leading player in the United States.  Together we would be the number one by a long distance number one provider of reprographics services and design services to the packaging industry globally.

WSA: And so what are some of the current trends that you guys have been seeing in the sector and how are you positioning the company to capitalize?

Joseph Bartolacci:  Well from a consumer products company package innovation is critical when you see a product on a store shelf that’s the decision moment for a lot of people trying to decided whether they’re going to pick this product or that product often times it’s determined by how much the package pops off the shelf and allows you to make that decision versus another product.  So packaging as a whole continues to grow in important and in complexity which are all drivers of our top line revenue around the world.  As for third world countries and lesser-developed countries begin to develop consumer economies this will be critical for global expansion for all CPG’s.

WSA: Certainly and what are some of the factors that you feel make the company unique from some of the other players in the sector?

Joseph Bartolacci:  As it relates to Schawk specifically?

WSA: As it relates to the plaque business.

Joseph Bartolacci:  Okay so how the Schawk business what is unique about them is the continuity of the product development that they have they start from strategic design and research that occurs at the retail store through for demographic studies for the individual products they’re trying to support all the way down to the package design, to the pre-media reprographic services that allow the products to go to print anywhere on a global basis.  So their continuity of service is a wonderful expansion for us we do not provide all those services today so the opportunities presented from our business stand point is to expand our business to include that continuity of service that spectrum of services related to packaging that we don’t have today.  From there stand point we are probably number one supplier of tooling necessary so tooling in our cases would be gravure cylinders and photo palmer printing plates that are used in the printing industry we think that are ability to add those technical services that product line to the Shock product line to continue that spectrum of products services we think is a great opportunity for both of our businesses.

WSA: Excellent so perhaps you guys can walk us through your background experience and talk a little bit about the key management.

Joseph Bartolacci:  So I’m going to turn this over to Steve let him tell you about himself first then I’ll come back to me.

Steve Nicola:  Sounds good Joe thanks yes I’m the company’s Chief Financial Officer I’ve been with Matthews since 1992 I joined the company as an accounting and tax manager and formerly of Coopers and Lybrand which is the one of the predecessors to PricewaterhouseCoopers today.  Since joining the company in 1992 I was controller prior to being appointed Chief Financial Officer in 2003.

Joseph Bartolacci:  Joe Bartolacci again my background is very similar to Steve we both started off in public accounting I worked for what was then Touche Ross became Deloitte and Touche worked for a couple of years gained my CPA status went back to law school at the University of Pittsburg worked for a law firm for about five years became a general council of a retail drug pharmacy business here in the Pittsburg area for about five years and joined Matthews in 1997 so this is my 18th year.  I’ve worked my way from being the general council at Matthews to running our European businesses to coming back to run one of our other divisions ultimately to become the President and COO in 2005 and the CEO in 2006.

WSA: Great and what are some of the goals and milestones that you guys are hoping to accomplish over the course of next year?

Steve Nicola:  Well I think over the next 12 months I would put that in two categories the first obviously is closing the deal we have some approval processes to go through regulatory approvals as well as shareholder approvals from the Schawk shareholders and so we expect that the likely target for closing on this transaction is sometime in our fiscal fourth quarter which is July, August, September and then I would say the critical milestone from that point is the designing the strategy and the road map toward gaining the synergies that we believe exist and that’s going to be high priority from day one.  We have estimated a total of 35 to 45 million dollars in costs saving synergies alone with this deal and we expect to go to work on those right away in the planning stages right now and then the execution stages immediately upon closing.

WSA: Well good so when it comes to investors and the financial community do you guys believe that the company story and your message and Matthews’ upside are completely understood and appreciated, and if not what do you wish investors better understood about the company?

Joseph Bartolacci:  Well this acquisition kind of continues down the line of one of our long-term strategies, which is to be a leading player in the mixed businesses in which we operate.  If you look at the various businesses that we operate in their relatively small industries with very few players and we are often either a number one or a number two position in that market place.  This particular acquisition makes us a strong number one in the industry we operate very defensible position but more importantly like a lot of our other businesses post acquisition this business will continue to generate a lot of long term stable cash flow.  The types of cash flow that would attract a lot of value investors and we think that story will get communicated pretty clearly over the next 12 or 24 months.

WSA: Great and so once again joining us today are Joseph Bartolacci the CEO for Matthews International along with Steve Nicola the company’s CFO which Matthews trades on NASDAQ ticker symbol MATW currently trading at 4054 share market cap north of 1.1 billion and before we conclude here gentlemen to recap some of your key points, why do you believe investors should consider the company as a good investment opportunity today.

Joseph Bartolacci:  Well some of the key points that we think it’s a great opportunity to look at us if you look at one side of our business which is memorization we think there’s long term demographic trends are going to support growth from a long term stand point.  What we’ve done with the recent acquisition of Schawk is solidify the other portion of our business, which is our brand solutions business.  Schawk adds a tremendous geographic footprint and a skill set that we do not have so we think what we’ve done with this acquisition is position our stock for today and the future with great cash flows and great opportunities for growth.

WSA: Well we certainly look forward to continuing to track the company’s growth and report on your upcoming progress, and I would like to thank you both for taking the time to join us today update our investor audience on Matthews International MATW.

Steve Nicola:  Your welcome, thank you for hosting us.

Joseph Bartolacci:  Thank you.

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