To have you with us here live as well as the folks on the webcast so we can never forget about those folks who are joining us. A few housekeeping things I want to point out. For those of you who haven't realized yet, restrooms are just on the other side of the foyer. There's a little hallway there, and then they're to the left. There will be a break midmorning or so, and refreshments will be in the foyer area right outside this room here.
And then following our program this morning, we'll have a buffet lunch available in the same area where we had breakfast. So the food will be set up in the same area where the breakfast food was, and we'll be using that room in the corner for the tables. To get things going, Joe Bartolacci, our CEO, will introduce the rest of the management team members who are here with us today. He will also review the agenda. There's one right in the very front of your books as well as embedded within the presentation for those of you who are on the webcast.
And I do want to point out there are bios in the back of the books as well, regarding all the speakers to give you some background on them. I also ask you to hold your questions until the end of the presentation, just to keep things flowing, would appreciate that. And we'll take questions here in the room as well as on the webcast. So for those of you who are listening in on the webcast, we encourage you to submit your questions and we will, be responsive to them here in the room. So, I also want to point out, some of you I know realize, we do have display and demos in the foyer area, so I encourage you, for those of you who haven't yet, take advantage of checking those out.
I always say you get so much more out of touching and feeling product and things, and the business leaders would be happy to walk you through the nature of those things. So right outside in the foyer here, I encourage you to check those out during the breaks or during lunchtime. So finally, without further ado, let's get things started. I do want to point out that we may make some forward looking statements during the course of the presentation here this morning as well as during the Q and A. So please be aware of that, of course, and our Safe Harbor statement.
So with that, I would like to turn the floor over to Joe Bartolacci. Thank you.
Thank you, Karen. Am I on? You can hear? Okay, good. Well, good morning and welcome to our first Matthews International Investor Day.
It's an honor for me to be here and to have my team be here with you to be able to go through some of these things. You've heard from Steve and I for many, many years about what we do and how we do it and where we do it. Today, you're going to spend most of the day listening to the guys who actually do it. Not me and Steve. We're you're going to hear from the team members what they see, how they run their businesses, the opportunities and the challenges that they face.
So we're not going to spend a lot of time listening to Joe or Steve. The agenda we have is pretty full. We have the introduction that we're talking about right now. Steve and I Steve Nicola, our CFO, who is up here with me right now. We'll do a brief overview of the businesses, the financials and background of the business.
Then Gary Cole and Greg Babe will talk about our SGK Brand business and the tooling business, which is a subset of SGK Brand. We'll take a break. Then Paul Jensen, Brian Dunn will step up and talk to you about the Industrial Technologies with a lot of the great things we have going on in that business you've heard us talk about for a long time. Steve Gatkenbach and Brian Dunn again will come up and talk to you about our memorialization business where we see interesting opportunities that may be outside of what you think we do. We'll try to save all of our questions to the end, but please, if you have questions or you have to leave, don't hesitate to ask on the subject matter that is up at that time.
Otherwise, you may not get an opportunity for the rest of the group to hear your question and get the response. Let me introduce a couple of folks that you're not going to hear from today. David Schacht. You all may know the name. Schacht is, the company that we purchased five years ago.
David is one of the founders with his father of that business. We have our treasurer, Rob Marsh, sitting in the back. You won't hear from Rob, but he's here. And Bill Wilson, one of our strategic analysts that works with us in a number of matters that helped put a lot of this deck together. So thank you, guys.
So let's move on. Who we are? We are market leading global companies serving the consumer products, memorialization and industrial technology segment. We've been around since 1850. For many of you, this is old news.
You've been around and heard us from many, many years. But I'm going to go through this to give you a sense of the longevity of this business and how we've evolved to become who we are today. We have a market capitalization of about $1,200,000,000 We have about 32,000,000 shares outstanding and most of those shares are owned by institutions like you all. Here's our history. Matthews International started as a business in 1850 by a man by the name of John D.
Matthews. Mr. Matthews immigrated from Sheffield, England as a hand stamp and branding iron manufacturer. He was an engraver. From 1850 until the early nineteen hundred, that was the principal business that he had.
But then in the early nineteen hundreds, as you can see from this storefront in Downtown Pittsburgh from the early nineteen hundreds, we had expanded our product line to include things like architectural signage and bronze, marking products, which is a product which was the roots of the contact and indenting and marking business that we have today, and the bronze plaques and printing plates that form the businesses that we have. We went public in 1994. Prior to 1994, we were an employee owned business. Those are the three businesses we went public with in '94, marketing products, printing plates and bronze plaques. The evolution of those businesses stemmed from the idea of we were an identification products business.
We identified people, places, things and event. Those are the same businesses we're in today. A lot more sophisticated, a lot more evolved, but essentially, as you move across it today, marketing products has become our industrial technologies business. It has the remnants of what was our hand stamp and branding iron business all those years ago. Printing place where we used to put a mark that said this end up, which way to, who made this, and what are the logistical marks associated with that, has become our SGK brand business where we put a package on the shelf with multiple colors and a lot of messaging around it.
And our bronze plaques business, for many of you, this is who we were, especially in 1994. Most people in 2394 bought our stock because of this business. This business today has grown to include everything in memorialization. We are the largest provider of memorialization products in North America and in many other smaller countries around the world. Here Here is our history.
This is something we're extremely proud of. Since going public in 1994, at about $160,000,000 we closed last year at 1,600,000,000.0. We've done that on the backs of those three simple businesses that we've had. At the same time, we've returned shareholder, and I've got a shareholder here we've mentioned this morning about what we've done from a dividend standpoint from the time we went public to now, it's grown almost 30 fold. I could show you the same kinds of slides as it relates to EBITDA.
I can show you the same kind of slides as it relates to EPS. I can show you the same kind of slide for a number of different facets of our business. But the fact of the matter is, I can't. I can't reconcile back to 1994. But we know we've grown everything, eight, nine, 10 times consistent with what we've done over the last twenty five years.
Today, we offer global products and services in a diverse group of businesses around the world. Better than a third of our revenues are derived from outside The United States. That has been one of our more recent challenges as we face stronger currency out of the US dollar all around. We don't call that out. We just tell you that it's going to be coming, and we've had that in kind of an impact.
We have 11,000 employees around the world. When we started, I think we had about 1,500. We operate in 26 countries and six continents today. That is part of our strength.
So who is Matthews today? So Joe talked about the businesses that we're in, what we've evolved from, who we are, what we've evolved to today. But I think these key points about who we are today are critical and I think they set the base for the discussion today. And that is that we are primarily the market leader, either one or two, in the largest markets that we serve. These markets are stable.
The other thing I think you're going to hear as we drill down into our businesses today is how stable these businesses are. I think the easiest one to understand is when you think of the memorialization business and you think of death rates and you think of the projected growth in total deaths with the baby boomer trends, I think that's easy to understand. But I think you're also going to hear from Gary about the stable markets and high customer retention rates in our brand businesses, which are important. New product development. You're going to hear from Brian and Paul about the exciting new product development we have going on and the continued innovation in that business.
And you're going to hear from Greg about some of the innovations that we have going on in our tooling business. So again, you're going to hear about stable businesses, but opportunities in each of those businesses. This is important and this has been a fundamental of Matthews for as long as I've been with the company and prior. We've been a strong cash flow business, a strong cash flow generator. And I'll show you a slide on that in a minute.
But I think it's important to understand that coupling a strong cash flow business with the stable markets that we're in speaks to the longevity of the company to date and the longevity of the company going forward. And with respect to how we deploy that cash, the investments that we make, we target a 14% return on invested capital. So again, staying on the theme of stable performance from the top line, Joe showed you an earlier chart that showed how our sales have grown since 1994, the last three years. Again, consistently, you see consistent growth in that sales. And hopefully you hear today the elements that provide that longer term consistent average growth.
From an earnings per share perspective and an adjusted EBITDA perspective and also net income, again, you see the base elements of growth that have been a consistent part of Matthews for many years. And again, we expect that same growth on average going forward. So again, let's talk about our consistent cash generation. For the last three years, the company has generated operating cash flow of $140,000,000 or better, approaching $150,000,000 But if you think about what we return to shareholders in dividends, our dividend commitments and our capital expenditures on an annual basis, you see the company has a significant amount of operating cash flow in excess of those amounts to be able to either reinvest in the businesses or deploy in other places. And I'll talk about capital allocation in the next slide.
But again, when we think about the ability not only to continue to reinvest in the businesses through capital expenditures and continue our dividends, and we've been a company that's increased our dividends annually, You see the cash flow that that's founded on. Our segment contributions, how our segments break out. Our SGK brand business, our largest segment, They account for about half of our revenue in 2018. Our memorialization business, about 40% of our revenue, and our industrial technologies, 10%. From an adjusted EBITDA basis, you see last year SGK brand contributed $150,000,000 of our adjusted EBITDA.
Memorialization, a little over 145,000,000 And Industrial Technologies, just about $26,000,000 And our corporate and other, that generally has been approximating about 4% of the company's revenue.
Okay. So let's take a second and talk about the businesses. I'm not going to get into this very, very deeply. This is for my team to be able to do. I think they'll do that well.
But I want to give you just an overview of the various businesses that we have. The first one up is our SGK Brand Solutions. As I said earlier, this is what used to be our printing plate We've gone from this end up, ship to, made by on a corrugated box, to your package of Wheaties, to your package of Cheerios, to Procter and Gamble's, and the Colgate's, and everybody else associated with CPG standpoint. We do packaging execution for some of the largest brands in the world. So, what do we do?
From creative design to artwork, a word that you all may not be familiar with. Yeah. Artwork's a pretty familiar word, but how we use it is very different. The term that you all may be familiar with is called reprographic services. Reprographic services is something that people think about and say, it's going to be digitized.
There's not a whole lot we can do. We know. That's why we call it artwork. We do far more than artwork. Artwork consists of a number of different facets that Gary's going to talk to you about and explain in a lot more detail than I'm going to do right now.
Tooling. We do almost €250,000,000, dollars, whatever it may be at this point in time, in a space that no one really knows we do that kind of volume in. Greg will talk to you about that. And merchandising. You all know that we have done Samsung in store concepts to Nike, to Apple.
We do some of the most leading brands in the world for in store displays and experiential marketing that you would ever want to see. Our results last year were about $800,000,000 in revenue and almost 19% EBITDA margins. We have 7,000 employees and we service leading global brands around the world as the number one provider in this space in just about every market we operate. So we have some of the most desirable brands in the world. Our customers read like a who's who, the Fortune 50 and Fortune 100.
They're brands that have consistently been around. We've done this work for them as a strategic partner for decades. Not for years, not for months, not on a not on an event basis. Relationships are literally literally measured in decades. And that is one of the things you see in our P and L.
When you see the amortization that shows up, is the amortization of customer lists because of the longevity of the clients that we have. We are strategic partners for all these kinds of customers because we are mission critical. They can't get their package to shelf consistently around the world without us. They can hire everybody. They can create all the details they want.
They can manage this whole thing. They don't. We've done this for many, many years and we don't think that's going to change. The differentiators, trends and strategies, I'm going leave to Gary to spend a lot more time on. He'll talk to you about it.
But suffice it to say, our global footprint is a significant barrier to entry to this market by any other competitor. There is nobody else with our footprint, and that is a significant advantage and a barrier to entry to this market. But we're also playing in the spaces you're going to hear about from Gary that people might not understand that's going on. In The United States, the penetration of private label retail store brands is still relatively small relative to the rest of the world. We are the number one provider of private label brands in The United States, in The UK and with clients that go around the world.
Our memorialization business. As I said to you, if I had talked to you twenty five years ago when I first started working here twenty three years ago, this is where we'd spend the entire day. All we talk about is our bronze cemetery markers and how wonderful it is. Guess what? Still is wonderful.
Nothing's changed. It also we know our roots. This is where this came from. So we're not suggesting to you that we're moving away from it. This is the core of who we are and it will always be that.
But we've expanded on that business. Today, we are the number one provider of bronze as we have always been. We're now the number one provider of granite up granite upright tombstones. Had to get that out. Sorry.
We're also the number two provider of caskets with about a 30% market share. The difference between us and number one, one customer. That's all it is. Whoever has that customer makes a difference of who's number one and who's number two. Cremation equipment and some other things that Brian Dunn's going to talk to you about has also grown.
Today, are the number one provider of cremation equipment around the world. We sell better than 130 units every year from places down into Costa Rica off to Australia, into into The UK, into wherever it may be. We sell these products literally, globally, and we get looked to as that provider. The results in this business, $630,000,000 in sales last year, wonderful margins. For those of you that talked to me for many, many years, you know how many times we've been compared to our largest competitor on the casket side.
We beat them last quarter. We beat them the last five quarters. Our performance continues to improve and we continue to be far more competitive. We have 3,300 employees in The US, in Mexico, in Australia and in Italy, where we are number one in Italy and number one in Australia as well. Differentiators again, you know, are things I'm going leave to Steve Gackobach to speak to you about and Brian Dundell, talk to you.
These are the two very two leaders of different segments of that business. But the differentiator that I look at is, again, from a barriers to entry standpoint. We are around The United States, anywhere you need to be within hours. That distribution network is a very difficult thing to replicate. That is a huge barrier to entry.
Anybody can make a casket. Anybody can make a cremator. But the fact of the matter is we can be anywhere in The U. S. Within four hours.
Huge barrier to entry. The breadth of our product offering is another differentiator. As you look at what we do, it is a very concentrated group of customers that all use the exact same things. Many of the funeral directors also own cemeteries. Many of the funeral directors and cemetery operators also own cremators.
We're the only person that's able to leverage all three product lines to that customer anywhere. The trends. Look, folks, you know the trends as well as I do. We've never been with our head in the sand as it relates to the trends. I hear nothing but cremation's gonna destroy this business.
This is gonna go away. I've been here for twenty three years. In that twenty three years, cremation has gone from about 5% to over 50%. At over 50%, during that twenty five years, we've grown tenfold. That's not going to change.
That's who we are. That's what we will continue to do. Strategies I'll leave to Steve to talk about. You'll be able to get a better feel for that. Industrial technologies.
This is the evolution of the hand stamp and branding iron, where we went literally from a hand stamp and branding iron, putting a mark on a crate, on an animal, on a box, to where today we're doing it with lasers, ink jets, drop on demand technologies, but we added that. This is a pretty smart, innovative group of guys that you're going to hear some of them speak about today. This group said, look, our product sits at the end of that production line. How do we extend beyond just that packaging print marker? And what we did is provided some opportunity for that team to invest.
And today, we are a leading provider of warehouse automation software and technologies in The United States from nowhere just five years ago. We weren't even in the business. And applied technologies, here are some pretty neat things we're doing in that space as well. Last year, we did a $165,000,000 in revenue and about 16% of EBITDA margins. A misnomer.
We spent about $8,000,000 on the new product you guys all got to see outside here. That new product has not been adjusted out of those EBITDA margins. When you put that back in, this business is producing almost 20% EBITDA margin like the rest of our businesses. It's something we take pride in, which is to get all of our businesses, not as quickly as some people may like, but to operating margins where we think we can remain competitive and continue to grow, and we've done that. We have about 500 employees around the world, and we continue to have opportunities to grow this business.
We will hear a little bit more about that. Again, the differentiators I'll leave to these guys. We operate in some of the fastest growing spaces in The United States. Our focus on the warehouse automation side is on the e commerce side. We're not moving parts for GM or Ford or anything like that.
We're moving packages to your doorstep. And we literally have technology that goes from that ERP system where they go pick that product off the shelf and deliver it to your door. On the new product development side, this is something we're very excited about. I can't wait for the guys to be able to talk to a little bit more. You got you saw a little bit what you saw outside for those who had the opportunity.
If you have not, I would strongly suggest you speak to Paul and Brian outside here, the two funny looking things out there that are little bit robotic. That's our new printer. We spent a lot of money to get there, and we think it's a $1,800,000,000 opportunity over time will allow us to go from one hundred and sixty nine years to three hundred years of experience.
Steve? Okay. Many of you have seen this chart before. This chart in different forms has been a part of our investor deck for years. But this is really how the company has created value over such a long time.
And we look at it as the model on how we're going to grow value in the future. And the principal elements you see, organic growth, acquisition growth and our share repurchase program. With respect to organic growth, you're going to hear today about the opportunities in each of the businesses where we see opportunities for growth, whether it's new products, whether it's expansion into new geographies, extensions of what we do. That's where our organic growth comes from in addition to the continued emphasis in the company on cost management, including the synergies with respect to the acquisitions that we've done. We have been an acquisitive company over the years.
Our largest acquisitions, SGK in 2014, Aurora in 2015. Those acquisitions were in our significant businesses, the number one player in the brand business and the number three player in the casket businesses. Good opportunities for us. But as most of you know, those acquisitions did change our leverage profile. So I'm going to talk about that in a minute as well.
But again, opportunities for us to expand in the businesses that we are. They have to be part of our base strategies within our businesses. And they have to achieve minimum financial goals. And we look to a 14% return on invested capital objective for those businesses. And historically, where we haven't seen opportunities with respect to investments and acquisitions where we have excess cash, we have a share repurchase program.
It's not a repurchase program where our Board of Directors has identified a specific number of shares within a specific period of time. It's a program years ago where they identified a specific number of shares. But they look to us to be opportunistic where we see opportunities where we don't have the investment opportunities in periods of excess cash flow. That's changed a little bit recently due to the leverage profile. And again, I'll talk about that in a minute.
But again, these are the basic elements of our growth. One thing I think it's important to point out, especially with respect to the chart that Joe showed you on sales a few minutes ago, We're a company that's been around for a long time, and our plan is to be around a long time in the future. So we look for our actions and strategies to drive that long term growth on average. So there may be years where we can't control what happens in death rates, for example, a mild flu season, or we can't control currency rates and and their impact on our top lines. But on average, going forward, these are the elements that we see driving growth as they have in the past.
So what are our capital allocation priorities? I talked about our leverage profile a few minutes ago. So debt is a priority for us. We recognize where our leverage ratio is today. It sits about 3.8 based on the trailing twelve months as of March 31.
So we'd like to see that we'd like to work on that and see that decline. So that's an emphasis for us. Now from a cash flow perspective, most of you know that our seasonality, we drive more cash flow in the back half of the year, particularly in our fourth quarter. So if I just take you to a year ago as an example, in our third and fourth quarters, we were able to take our operating cash flow and reduce our debt by $80,000,000 during those two quarters. So I do expect by the time we reach the end of the year that we'll be looking at some debt decline between now and the September.
Our annual cash dividend, which has been as long as I've been with the company, the company has paid a dividend and the company has been increasing its dividend annually. Today, it sits around 80 it sits at $0.80 a share on an annual basis. I talked about our capital expenditures. Our capital expenditures are currently at around a rate of 2.8, average for the last three years. We often get the question about maintenance CapEx versus a CapEx that drives growth.
This is the percentage of total capital expenditures. But that does include maintenance as well as what drives growth. So that's all in. Acquisitions. Again, we're not out of the market where we see the right investment opportunity and the right thing to do not only for our specific business and their strategy, but something that is important to continue to drive that long term stability and growth.
That's important. And then finally, talked about the share repurchase program. So just summarize quickly, we are in leading market positions, particularly in our strongest and our largest businesses. We're a company that generates strong cash flow. And our end markets are stable, and hopefully you hear about that today.
And we've had a good track record of successful acquisition integrations. And with that, turn it over to Gary
Thanks, Steve. Good morning, everybody.
I'm Gary Colt, President of SGK. I'm thrilled to be with you today and get a chance to tell you a little bit more about our business. First, a little background on myself. I've been with Matthews for about three and a half years now and have spent the majority of my career in the graphic arts and printing space. So a good background.
I feel like I've been in this business and exposed to this business for the better part of twenty years. I'll start with a just a broad overview and then we'll work into a little bit more detail we proceed through the presentation. As Joe mentioned, SGK is the number one packaging graphics provider in the world today. And with over $800,000,000 in revenue last year, we built the premier platform in the industry. Through a combination of acquisition and organic expansion, we now have locations in over 25 countries comprised of 69 different production and studio sites.
This large geographic footprint is advantageous on many levels. For example, having production locations in most major cities around the world provides proximity to the headquarters and regional offices of many of our Fortune 500 clients. And that allows us to capture and onboard new work very, very quickly. In fact, almost 7% of our 7,000 employees actually work on-site at our clients' offices. And that provides me a very, very sticky relationship, one that often results in the identification of new opportunities and increased revenue for those clients.
This geographic footprint also includes our low cost production centers located in India, Malaysia and China. Now it's a very, very key point that we're going to come to over and over again as we talk today. Because our ability to transfer work around our platform to these low cost sites allows us to optimize our wage rates globally, balance our workload between sites, and to develop production expertise in specific regions for certain types of work. As you'll learn this morning, having this robust global platform means we're able to provide far more than packaging graphic services. Now let me give you a better understanding of what it is we actually do.
But first, a question. Why are global companies like Coca Cola instantly recognizable the world over? The answer is because of the common and consistent way in which their brand shows up in the marketplace. Whether you purchase a can of Coke here in New York, in Tokyo, in Sydney, or Russia, the specific shade of red they use across every variant of the Coke product is exactly the same. In fact, the formula they use to get that particular red is what they call their second secret formula.
When you see this red along with a distinctive script used to spell out Coca Cola, you'll know that you have the real thing. These facets, logo, color, and consistency represent Coca Cola I'm sure this sounds like a simple concept, but imagine the complexity of creating and managing that consistency on a global level. The path a can of Coke and all its various brand extensions go through to get from a concept or idea to a finished package on a store shelf is extremely complex. SGK can simplify this process dramatically by offering a set of services that can take a client from creative all the way through to print support.
We often start with the core creative and design process, either building on an approved set of brand guidelines and standards already in place, like we do for Coke, or setting a fundamentally new strategy for a sub brand or new brand extension, such as Diet Coke. We then move into the artwork production process, where all of the individual pieces of packaging elements are put together in the correct manner. These elements can include any number of additional pieces of content that must appear on the package once it's on the shelf. Think about serving size. Think about ingredients.
Think about UPC codes. Things of that nature. Once these components are assembled, we have what we refer to as a master artwork file, which must be absolutely correct in all respects. In fact, we're using artificial intelligence in some of our proofing software to ensure that we catch errors on ingredient lists, for example, even if those errors originate on the client side. Once we have the master artwork files for all the individual pieces of packaging, we have experts who manipulate the underlying properties within those files into a print ready form.
This step of the process is particularly complex, because the file must be created to meet the technical requirements of not only the specific printer who will produce the physical printed package, but also to the exact press within that particular printing facility. Variables such as which type of printing process will be used, the type of ink for that printing process, and the material that the package will be printed on must all be taken into account in order to produce the consistency required for instant customer recognition. What you may not know is that the same exact ink color can show dramatic variations depending on what type of material or label the package will be printed on and can further be affected by the brand of ink being used or again, the type of printing process. Correcting for these variables so that the Coke Red is identical on every can, box, poster, point of sale display, etcetera, takes enormous technical knowledge and expertise. Now we manage this for thousands of printers across the globe, and we've built a proprietary database that includes the file requirements for the majority of packaging printers and their presses worldwide, something that we firmly believe can be monetized in the future.
In many instances, we extend this value chain by creating the plates and cylinders that are shipped to the printers and used to make the graphic impressions packaging material. In fact, SGK is one of the largest cylinder and flexographic plate providers in the world, managing this part of the process for clients who want an even greater degree of simplicity and accountability, while also managing this for printers who do not have the resources or the desire to build this capability themselves. The Grevere printing process uses a large cylinder with a desired image engraved onto its surface. This engraved image will hold the ink once it's mounted on a press and will transfer that image to the paper as the press is running. This printing method provides consistency, density of color, and speed, and it's generally used for print runs that are very, very long.
Flexographic printing is the second type of common printing process used in packaging due to its ability to print images on flexible materials. Investigator produces almost 3,000,000 square feet of these types of plates that are shipped to printers across The U. S, The U. K. And Europe.
Finally, the files we created, along with any plates or cylinders we provided, allow the printer to complete the packaging execution and the brand owner to finally get the product on shelf. While the creative and production steps I've described here are extremely complex, our experience, the technology we use to manage the process, and the vast production platform you saw previously allow us to provide this service not only at advantageous prices, but at a speed that most competitors can't match. While brand consistency remains foundational, speed to market is paramount and is enabled by the scale our platform provides. Now remember, I talked about the platform and what it enables us to do beyond packages earlier. The process I just described of bringing brands to market in the form of packaging on shelf, again, is the core business upon which we were built.
But many of those same steps are required to bring those brands to life across other media channels as well. For many global brands, the content contained on the physical package is what they refer to as single source of truth. Much of the imagery and content that we use to create the package, and which has already been approved at all levels within a client's chain of command, like legal and finance and marketing, can now be used for new marketing initiatives. The workflows and processes that go into social media campaigns, store merchandise displays, printed circulars, magazine ads, coupons, direct mail, they can all easily be managed across our platform with many of the same resources and workflows that we use for packaging. The production expertise we have built within our low cost facilities in India, for example, can also be used to produce files for printed collateral of any type.
This can include three d rendering of those images for use in online campaigns and even digital advertising, including things like website development. Now that you have a better understanding of what we do, let's review how we do it. The physical production platform I showed you earlier can be further defined by the end to end set of capabilities that SGK brings to the market. Our six sub brands fall into three broad buckets of services. First, the creative agency and design services second, our artwork production and reprographic capabilities and finally, our tooling services.
Now fully 80% of our client base utilizes services across at least two of these service bundles. And almost 50% are buying across all three. I'd like to review our creative and design services first, which are largely managed by the Brand Image and Anthem businesses, who serve as points of entry to our primary production revenue funnel. While agencies like Omnicom and Publicis compete to develop original global brand identity, like the logo in the Coke example we reviewed earlier, our approach is to develop and manage the brand extension work. While still requiring creative expertise, this type of work is much more production related in that it is simpler and easily shared across the platform, just like our artwork production business.
Beyond packaging design, our creative capabilities have allowed us to capture spend across other areas of the marketing budgets within our traditional client base. This can include things like their social media campaigns, digital design for online campaigns and even photography and video production. But an even larger growth opportunity is to take those capabilities and use them to move into nontraditional client verticals. The need for creatively developed brand extensions is universal for many companies, not just those that are putting the product on shelf. Companies like Facebook, Sky and Comcast all represent examples of clients we work with who value our unique approach to the development and delivery of creative services.
Our ability to leverage our global platform allows us to move many of the tasks associated with this type of work to our low cost production sites offshore. This ability, combined with our experience managing employees on-site at our clients' locations, results in tremendous cost savings compared to traditional full service advertising agencies. It also gives us the ability to shrink our clients' typical project schedules dramatically. With the time difference between our Asia operations and the rest of the world, we can send work to India at the end of the day in New York City and have it back here for review first thing the following morning. Furthermore, this type of arrangement places us squarely in the outsourced service space, and we're having increasing success taking over in house client teams that sometimes manage this creative work today.
Our primary artwork production and reprographic capabilities are offered through the next three brands, which include IDL, Equator and Shock. These brands drive the largest portion of revenue in our business. This part of our services bundle is really driven by scale and efficiency. Our ability to coordinate and process over 1,000,000 unique elements is something that our clients, as Joe said earlier, can't do by themselves. The high investment required in manpower, the ability to develop the underlying IT infrastructure that enables the work to be managed and produced in multiple locations, and the sheer complexity make it cost prohibitive for even large CPGs and retailers to develop this capability themselves.
These same factors also combine to create a high barrier to entry for new competitors to get into this space. Lastly, our tooling capabilities offered under the Sour Essig brand are extremely important, most notably for large global tobacco brands. Tobacco is a good example of the type of client that prints hundreds of thousands of the same package to put on shelf, whether we're referring to traditional tobacco products or e cigarettes and the future of this industry. That type of volume generally requires the use of the Grevere printing process, which, as I mentioned earlier, uses engraved cylinders to get the image onto the packaging material. Now what's interesting about this is that most major Grebier printers don't make their own cylinders.
And as such, they rely on companies like SGK to provide them. Since it's cost prohibitive to ship cylinders long distances due to their weight and size, we have 10 network facilities around the world to manage this part of the business, enabling us to be the industry leader from a market share perspective. The entire set of global capabilities I've described so far are networked and interconnected by a set of proprietary IT tools. The seemingly simple process of sending files back and forth to a client is not so simple when you realize that the size of the typical file that we're using is over two gigs or roughly the size of a 700,000 page word document. Our software allows compression of the files to make them transferable and usable no matter where they need
to be
sent. This software, with SAP as our foundation, allows us to interact with clients in a user friendly manner by giving them an online portal, which provides tremendous value and differentiation to our capabilities. For example, the portal allows clients to see the real time status of a particular project, or see the history of their packaging components over time, or even to approve artwork and content for work in progress. This online accessible tool provides a measure of self-service to parts of our production, which enables us to redirect employee resources to higher value parts of our client relationships. The fact that these proprietary tools are also built on SAP means they're scalable and well positioned for future development.
Our goal is to automate the entire process, and the combination of these tools gives us the ability continue to move upstream and integrate directly into our clients' merchandising and marketing systems. The possibilities for this are endless and make us an even more entrenched and necessary partner to our customer base. Now I'd like to talk a little bit about the markets and clients we serve and give a few case studies that I hope will bring the previous slides to life. Probably the slide that we're most proud of, as you can see, we enjoy proud I'll just spend a little time in each of the verticals. The global brands in the consumer package group use SGK because of our ability to get their packaging changes and new brands to market simultaneously across the world.
And we use a common process for all of their regions that is generally managed centrally. For example, we produce an average of 25,000 packaging changes or new designs for Procter and Gamble every year. And we're the sole provider of this service globally for five of their eight largest brand families. We've been doing business with Procter and Gamble for almost twenty five years at this point, so it's a fantastic relationship for us.
The
next vertical, the health care vertical, represents a growing segment for us. The global regulatory environment for pharmaceutical packaging results in different label and packaging requirements in every country. Again, our global platform allows clients like J and J to manage this process centrally, but we're also able to develop relationships with our regional teams to ensure that the local requirements are taken into account for the way in which the package and labels must be displayed. As many of you are aware, retailers are increasingly offering their own brands to consumers that they place on the store shelf right alongside the global brands offered by the CPGs. Key to success for these private brands is the ability to bring them to market at a lower price point and with a distinctive look and feel that enables a competitive edge over national brands.
To get products to shelf quickly and take advantage of regional and local consumer preferences, private label brand owners want to work with a provider who can manage all aspects of the process and quickly. Our Equator team specializes in this market, which, as Joe mentioned earlier, has exploded in Europe and The United Kingdom, with brands like Lidl and Aldi, and is certainly growing here in The States as well. The production model for this segment is turnkey, with our creative design and production teams sitting in the same location to allow for extremely compressed schedules and efficiency. We also participate in the tech vertical, doing business for the likes of Apple, Samsung and Microsoft. These clients price speed to market and security above almost everything else.
We spearhead this business out of our San Francisco office, where over 75 employees manage creative and production activities that are pushed across our platform to enable very fast turnaround of projects. The technology we use has been certified by these clients as meeting their extremely strict standards around privacy and security. Apple clearly does not want their next product release to be leaked prior to their chosen date. Lastly, we do direct business with the world's largest printers. Amcor, for example, is a $9,000,000,000 company with 35,000 employees, yet they still rely on us for a very large portion of their Gervier cylinder and flexographic plating needs.
With our continuing expansion in this part of our business, as highlighted by our greenfield operation in Indonesia, which is set to open later this year, we expect solid growth in this particular vertical. Now let's walk through a few case studies. Creating an extension of the KitKat brand. Having deep experience in manipulating some of the biggest brands in the world also gives us the ability to provide services beyond brand extension. In this case, our brand Image Paris office leveraged our strategy and design talent globally to help a premier hospitality brand, Core Hotels, approach the market with a refreshed look and feel.
We then designed a new loyalty program that keys into the consumer desire for unique experiences and shareable moments. Speaking of experience and shareable moments, our team at IDL collaborates with both brands and retailers to create unique consumer experiences within retail outlets and even events that extend retail outlets beyond brick and mortar. In this example for the North Face, we reimagined the traditional clothing rack by creating a store in store environment within DICK'S Sporting Goods. Brand engaging content conveyed on fixtures and display signage motivated consumers to share their buying experience on social media. This extends the reach of both DICK'S Sporting Goods and The North Face.
Now that we've talked about how we can step outside simply enabling brands to get their package on shelf, let's take a look back at our core business and our unique ability to deliver speed and scale. In this example, Colgate wanted to refresh the look and feel of one of their premier brands in a consistent and appealing way worldwide. Within one year, we created and adapted our work for over 6,000 SKUs and deployed them in over 100 countries. That unique ability to create instant recognition, support regulatory needs, and drive speed and efficiency through complexity is what makes SGK the leader in the industry today. As you're all aware, the retail market has become very competitive, driven by the proliferation of online shopping and the pricing power of the big box stores.
Many retailers combat this effect by creating their own brand, or what is often referred to as private label brands. The products are distinct and unique to each retailer. No longer satisfied with generics, consumers seek out the exclusive or the artisanal, and the packaging must reflect higher quality, better value and pride in the cart. Our Equator team provides just this type of bespoke experience in an end to end fashion. Starting with actual illustrations, custom photography, and artwork, along with strategic thinking, we helped Aldi launch one of the highest selling private brands in their history.
We've covered a lot of ground so far. I'm sure one of the questions you're asking is how do we take this business even further? We're managing global product refreshes, helping get the package to shelf, extending the life of that physical package to the digital world, helping brands launch special programs and updating their identities, creating fun, engaging experiences for shoppers with opportunities for shareable moments that create buzz around brands, and even creating new brands from scratch. All these things drive a competitive edge. The next step in our evolution is to bring that competitive edge directly to the client's facility by setting up dedicated teams within their own walls so that we almost literally become a team of their employees, ready to help them dream up and execute whatever's next.
For Sky UK, a telecommunications company, this meant that we installed an on-site team and developed customized workflows specifically engineered to drive speed efficiency. This allowed them to focus on their business needs while we focused on getting their products and services to market. Being on-site provides the quick communication, faster solutioning and problem solving to meet the needs of modern, fast paced markets. As you saw on Slide eight, the tooling segment of our business is significant, so much so that Greg Babe, our CTO, will be walking you through that part of SGK immediately after my presentation. So I'll wrap up with an overview of what we're seeing out in the marketplace and to reiterate our plans to capitalize on our position as the market leader.
The zero based budgeting approach to marketing departments generally began six years ago and became somewhat fashionable with three gs's acquisition of Heinz and their subsequent addition of Kraft. Making marketers rejustify every dollar in their budget from dollar 1 has caused a significant upheaval across the entire spectrum of marketing spend. So while marketing budgets are arguably getting more scrutiny than ever before, the efficiency with which we can provide broad consumer exposure to brands on shelf vis a vis their packaging will continue to make this an attractive channel in terms of ROI. It's a very cost efficient way to reach a very large audience. Another trend we're seeing these days is a push toward regionalization of marketing budgets versus a completely centralized approach.
I referenced Procter and Gamble earlier, and they're a good example of a company that's starting to give their primary regions a bit more autonomy in how they spend their budgets for packaging. The ability for us to assist them in this regionalization is directly a result of the number of sites and locations we have throughout the world. We can continue to manage the global relationship with P and G out of our production site in Cincinnati, but have also built relationships with the regional headquarters sites in Singapore, Geneva and Sao Paulo so that we can interact with those groups decision rights. The standard process and reporting that SGK provides remains important to both the regions as well as the global function. There's no question also that marketing budgets have been increasingly fragmented over the past five years with the explosion in the number of ways a brand can reach their audience.
As you saw with the KitKat example, our ability to offer many types of digital creative services, which are built on our existing production and geographic platform, allows us to participate in this diversification. These capabilities not only enhance the packaging media channel, but also extend into other online channels as well. Along these lines, the need for content of all types is continuing to grow. Brands must speak to their consumers across many, many channels, and they require fresh content to keep their consumers engaged. The digital creative capabilities we reviewed earlier have allowed us to provide much of this content.
And as I described with the Sky case study, we're now building some of these teams directly within our clients' workspace. With that, I'd like to thank you very much for your time today. It's my hope that over the next couple of days, if you grab a Kit Kat bar or a Coca Cola, you have a better appreciation for what you have in your hand. And I hope I gave you a good sense of the potential that SGK has going forward. Thank you.
Okay, mic on? All right. So thank you, Gary. Good morning, everyone. My name is Greg Babe.
I'm the Chief Technology Officer and also a member of the Board of Directors for Matthews. I joined the board in 2010, whenever I was at the end of a three decade plus career with Bayer, whichever way you like to pronounce it. And then in 2014, with the acquisition of Schock and Aurora coming back to back, I stepped into management to assist with the integration and the transition to a single global SAP instance, and have been there since. Still on the board, but of course, I no longer have my independence. Being trained as a mechanical engineer, I am always anxious to get into the nuts and bolts of things and that's what I'd like to do for the next ten minutes.
I want to take you from this world of creative and artwork that Gary just described to us and take you deeper into the world of tooling, where we take brand owners' ideas and turn them into finished packaging or into finished products. One of our key competencies is transforming metal cylinders into high-tech rotary tools used for printing or for embossing or for cutting and creasing or also for highly accurate high-tech calendars and lamination equipment for packaging and other substrates. And we do that with a very high quality that creates a barrier for entry for newcomers coming into this space. We've leveraged that competency that I just described to grow a $280,000,000 per year tooling business. In that business, we offer end to end solutions for printers and converters, and we've extended this expertise into other growing rotary tool applications that I'll share with you.
The focus is really on providing solutions for our customers, solutions that maximize the impact of their marketing spend, that enhance their productivity of their own operations, and help to solve problems with packaging. And from a productivity perspective, we also practice what we preach. We process 190,000 cylinders per year in 10 plants that look a lot like the one that you see here. These are highly automated, manpower light, high-tech manufacturing processes that leverage our own Matthews Manufacturing System, MMS for short, that emphasizes lean principles and also continuous improvement. Our lean program is already rolling out at various stages of deployment at every one of our plants around the world.
Our core business is developing tools for our brand owners and printing and converting clients. 94% of the tools, of the 190,000 that we process are tied to traditional packaging applications that Gary highlighted in his remarks. And as an example, I've selected tobacco packaging to demonstrate our capabilities. Globally, tobacco represents roughly 50% of our total tooling business and includes clients, as you saw, such as Philip Morris International, Amcor, and JTI. For a typical tobacco package, there's much more than meets the eye.
From the basic design to the rotogravura printing of brand features and statutory labels to embossing elements and even tipping, our tooling touches every element of the product presentation and the packaging. We support the printing and converting of 30,000,000,000 flip top packages globally per year. Especially complex requirements are the desired security features that are deployed to curtail counterfeiting and black market activities and to enhance tax collection for authorities. Brands typically require one or more independent features that comprise a security solution. Our tools deliver a complete solution.
And our confidence in this area is further demonstrated by our selection as a provider of tooling to print components of 70, seven-zero, different currencies around the globe. Once the packaging material is printed, embossing of the package provides highlighting of marketing features. Once again, in line rotary tools from Matthews deliver the design effect. Vivid detail, crisp lines, and haptic impressions are built into the package. With the recent addition of Frost Converting Systems into our portfolio, we now complete the end to end solution for the printer and converter by delivering inline rotary creasing and cutting tools.
This is an example of a chewing gum package after the embossing, creasing and cutting step. Our capabilities here in the cutting and creasing area cover a broad spectrum of products, including liquid containers, general folding cartons, quick serve restaurant materials like french fry scoops, and many other specialty products in addition, of course, to our tobacco applications. Of course, much of the printed packaging is produced with the flexographic printing process that Gary described earlier annually. Once again, we consume 3,000,000 square feet of photopolymer. That's more than enough to cover 60 football fields.
And that photopolymer is then converted into printing plates for flexible packaging, corrugated containers, etcetera, like the examples that you see here on this chart. Our extensive knowledge of the substrate ink interactions and our enormous database of printing press details and specifications enable us to provide printing plates that deliver the desired packaging color, the look and the feel everywhere in the world so that a brand owner can be confident in their package appeal and their data accuracy. Our tooling experience extends well beyond our core traditional packaging. We refer to these businesses collectively as our surfaces business, comprising $60,000,000 per year in annual design and tooling sales. Although many of you know us as a packaging company, the genesis of our tooling business was actually in this particular space.
These applications literally touch your lives in dozens of ways each day. Here again, we begin with the creative design and the end product and deliver the rotary tool that takes these ideas to completed and finished product. One of the fastest growing applications is in the nonwoven space. This begins with our unique capability to manufacture and refinish what we call XXL, or literally extra extra large rollers that are used to produce the base nonwoven material. These rollers are up to 35 feet long, over six feet in diameter, and weigh 25 tons or 50,000 pounds.
We can then provide the design and the tooling support for the brand owner or the converter to produce a plethora of consumer products that offer both form and function. This background image that you see here is a close-up of a tool that's used to produce products such as diapers, medical apparel, and Velcro fasteners, for instance. Our customers here include Procter and Gamble and RKW, among many other well known companies. Another prominent application of our tooling is for tissue and paper applications, including paper towels, toilet paper, napkins and more for customers like Essity and Tranchetti. And this, for developing countries, has presented significant growth opportunities for us.
In the decor area, we offer design and tooling for flooring, furniture, wallpaper, and more. Our creative professionals work with clients like IVC, Big Flooring, and Tarquette to create unique designs starting literally with thousands of actual wood samples and then turning those into a design for a flooring design and a rotary tool like the one that you see here for printing and embossing finished products. On your commute, you'll find the results of our handiwork in automobile interiors as we design and produce tooling for leather, artificial leather, and other modern materials that go into seating, for instance. The same technology is applied to fashion products such as purses as well. One final example is in the energy industry.
This is a recent development to support the growing fuel cell industry for mobility applications. We're working with bipolar plate manufacturers to increase their production throughput by applying rotary embossing and cutting tools in line. The close-up of the tool that you see on the right is used to produce the bipolar plate on the left. This particular plate is used for powering buses. The final business in our tooling portfolio, is our purpose built engineering unit, roughly a $25,000,000 turnover business and growing.
Leveraging our cylinder and rotary tooling expertise, we've built a very successful calendaring and laminating business across many technical areas. The example shown here is a hot foil embossing calendar for a polymer that is laminated between panes of glass for security, multi pane security, or architectural glazing applications, for instance. And I love this photo because it shows you the size of the equipment which we are designing and producing.
You say calendar, do you mean
like a calendar on the wall,
you mean some other kind of
No, mean calendaring, which are very, very good point. They're high-tech, very accurate rollers that allow you to control the reaction of a substrate so that you can make it a consistent width or consistency or density across a large web. So calendaring, not like on the wall, but a unit like this where you see we have large rollers that provide the ability to change the surface and the structure of a polymer on a high speed roll to roll basis. Great question. Thanks for the chance to clarify.
And another example that I'd like to focus on here is in the very fast growing lithium ion battery space. This is a photo of a battery cell calendar once again, how we make the cells that we designed and built for an operating production line. We built similar lines for Maxwell Technologies, recently acquired by Tesla, which produced cells for their ultracapacitor production. That's the business that today or prior to the acquisition they were best known for. This same technology that you see as an example here has been applied to lithium by us to lithium ion battery cell production for Volkswagen, for VARTA, for the UK Business Innovation or Battery Innovation Centre or BIC and for Tesla, among others.
We've delivered over $30,000,000 of equipment into this space since we stepped into it and it continues to be very, very hot. The growth potential in this application is very exciting for us, driven by, for example, the electrification of the cities in Europe where internal combustion engines will no longer be permitted, by the transition of all fleets to an electrified fleet, as well as the expansion of renewable, energy production, which demands more and better lithium ion batteries for all of those. We've played a role in the evolution of the manufacturing processes over the last ten years for lithium ion battery production and we expect to continue to play a key role as we go forward. So just a couple of comments to our global footprint and our growth opportunities. I mentioned that we have 10 sites globally.
We also have a partner and a partial ownership of a plant in Nigeria. And we just started planning a new site for, in Indonesia, a fast growing tobacco market. Clearly, we are Euro centric at the moment, which actually represents our growth opportunity. We view The Americas and Asia, specifically Indonesia, as growth markets due to our limited presence in those regions. Our strategy focus is closing those gaps through an effective blend of greenfield or brownfield construction and or targeted acquisitions.
Finally, a quick comment on innovation. Tooling has been a quietly innovative business for us. From unique services to innovation in our own production to the development of new technologies for our customers and for our clients, continuous innovation has been and will continue to be the hallmark of our high-tech tooling business. With $280,000,000 of turnover, the tooling business is a formidable chunk of our SGK business. So I hope in the last ten minutes I've successfully provided some insight into our capabilities and our expertise in this space and perhaps even provided some perspectives of our future growth opportunities.
Thank you.
Long way from a corrugated box printing plate manufacturer, I think. You'd agree with me on that. So why don't we take a ten minute break at this point in time, come back and pick up with the rest of the businesses. If you have any questions, we'll be around. We'd glad to talk to about it while you can.
Okay. We've had an opportunity to listen to our SGK brand folks. I think they did a great job. I hope you would agree. We're going to move on to some of the other businesses we have at this point in time.
Particularly, we're going to deal with Paul Jensen and Brian Dunn, who are going to talk to you about the opportunities and a little more understanding of what we do on the Industrial Technologies. Brian?
All right. Very happy to be here today. Glad to see everybody made it back from the break. So we're into round two, see how this goes. My name is Brian Dunn.
I'm an Executive Vice President with the corporation, and I also fulfill the role of Group President for the Industrial Technologies segment. This segment is, as Joe and Steve communicated, about $165,000,000 business back in 2018 and has been growing considerably over the years. It's comprised of three operating elements. One is warehouse automation. This is comprised of software and control solutions for retail and distribution centers.
Certainly, as you've heard, there's a focus on e commerce as a part of this. This is where a lot of our growth has come over the last few years and is forecasted to continue to do so as this is a macroeconomic opportunity that we continue to leverage. The second element is product identification. This is where we've provided marketing coding solutions for product identification, branding and traceability. Now as you've heard Joe talk about, this was the origin of Matthews.
This goes back to 1850 with branding irons and hand stamps. All hand applied, all manual, very rote technology. Up through 1994, we really had not evolved that much. I came into the company a little after that, after we came public, unfortunately, be that as it may, at that point, we were a $27,000,000 business called marking products, not contributing margin to the corporation. Today, we're pushing up towards 200,000,000 And as you heard Steve say, it's pushing 20% on an adjusted basis on a contribution.
So you can see that probably nowhere in the corporation has there been a greater transformation than that business, which is our oldest business. So when you think about how does a company that started in 1850 continue to evolve, well, this is a great example. The products that we bring to bear now are all automatic. They're not manually applied. They are digital inkjet.
They're laser. You've seen examples out here. They're an evolved technology. What you saw out there in no way resembles a branding iron or a hand stamp. I think you would agree with that.
The third element of our business is Applied Technologies. This is where we deploy technologies that advance the productivity in targeted industrial applications. This includes robotics, which we manufacture in The UK and a software company that I'll talk about in Seattle. Of Of course, it's in Seattle, right? Software.
And this is true both internally where we take some of these technologies and apply them. For example, robotics, we are now applying through our warehouse automation group as well as externally for key markets and customers. Now let's talk about warehouse automation. Our customer base is a list of coveted brands that you would see much like SGK brands, what our customer list looks like there: Macy's, Victoria's Secrets, Target, Skechers are all customers where we provide warehouse automation solutions, not just from warehouses to distribution centers to their brick and mortar stores, but also from their e commerce warehouses to end consumers, okay? FedEx and USPS are customers where we provide the connection to that last mile.
That's the delivery to the end user irrespective of where the origin originated, okay? Victoria's Secrets. We took our Board there, what was it, one years point ago. You have to see and experience a warehouse like that to truly get an understanding of the breadth and size. And I'll show you a marketing video here shortly that which depicts that.
But the focus of this is it's a million square foot facility of Victoria's Secrets just to facilitate e commerce orders, just e commerce orders, million square feet. Between Black Friday, Friday after Thanksgiving to Christmas Eve, how many packages a day do you suppose an enterprise like that could ship? Simple little warehouse. It's 1,000,000 packages a day. It's an incredible volume and velocity, both in SKUs and in velocity.
So it's an amazing set of automation. And when we get to where we're talking about the robotics, you'll also see that it also creates a great challenge, which is how do you take a labor content that's down here and then takes a giant seasonal spike, how do you populate that? And the labor market is going to continue to get tighter, robotics become a great opportunity to obviate that. All right. E commerce.
So certainly, that's a focus for us. How does that happen today? Today, you take an online order, entered into an ERP, and it goes into a warehouse management system. That's where that order is packaged with other like orders and sent down to, I'll call it, the warehouse. It could be an SAP module, an Oracle module or a Manhattan solution that is providing that packaging of the orders.
From there, we take that and we execute bundling that order, moving it through the warehouse, getting it organized on the loading dock, providing shipping labels, manifests, everything else and ready to go on out the door. We do that through execution systems and control systems. We start with a picking system through our Lightning Pick brand. We are, in The U. S, the leading manufacturer of picking systems.
We'll pick the order. It's then sorted and packed. Generally, we do this through our Pyramid branded business. More packing and then shipping, we do through our Compass business, okay? So we have different businesses focused on different aspects of it.
But at the end of the day, what we execute is connecting your inventory as a brand to the end user through whatever supply chain that might take, whether it's internal or not, okay? So that's where our value comes from, and it's in a varied client base. What are our opportunities for innovation within this space? One of them is character recognition. I made a comment about a software company in Seattle.
This is RAF. RAF software sorts mails throughout the world. In fact, about 40% of the world's mail runs through our software RAF software. How would you recognize that? Not an easy thing to do.
It's kind of a theory ethereal, you know. But if you look at a letter, you see machine code across the bottom of that, okay? That machine code is the byproduct of our software. That machine code represents the supply chain that, that letter is going to take all the way through from where it was picked up to where it's delivered. The same is now going to be true for parcels, and we're working on that same solution set.
So that's part of the opportunity there. As we expand that, the U. S. Government has provided us with orders for what's called dangerous mail. What could that be?
Well, there's certainly things that are going through the mail to your local senator and other places that maybe shouldn't be in the mail. We image and digitize everything that goes through the supply chain, put it into this massive relational database and we can access everything about that image within seconds. So if something has to be identified, we can go in, identify and communicate that to the various government agencies. It's an interesting competency that is, again, not something you would expect from a company like us. We expect to leverage that in our warehouse solutions.
Autonomous robots. The market looks to Matthews as a trailblazer the deployment of robots into this marketplace. Why would that be? Our competitors in this space, and I'll show this to you in a moment, are large integrated companies, meaning that they provide a large integrated solution with a focus on the mechanical piece of it. A lot of that mechanical piece is conveyor bed.
We made a conscious decision when we moved into warehouse automation that we did not want to be a machine builder of that type. There's it's capital intensive. It's not got a lot of margin in it and just wasn't that interesting, especially when you're in a market that is cyclical. So we elected to stay on the control and software side, been very good for us. You're going to see in a moment in the slide how we stack up to our competitors there.
But how do you obviate some of your dependencies? Not sure what to do about that. Well, at least I'm not getting the hook. Okay. For those of you that are on the broadcast, we have a fire alarm going off, and this will and it just stopped.
So appreciate your patience. That's what that noise was in the background. All right. Now robotics. So we didn't want to be in conveyor bed.
So how do we obviate our dependency on that? One is how we go to marketplace. We have a number of partners, which I'll also talk about, which are included in that. But we bring robots in because that provides the flexibility that we need to continue moving forward.
Okay?
I have your attention, please? This is the fire station director speaking. We are conducting a test of this building for our long distance. We are
Yeah. It's a bit of an Here is a marketing video.
The stakes are higher and the race even faster in the exploding e commerce and omni channel marketplace. The stakes are higher. It's the next frontier in supply chain challenges for leading brands worldwide. To remain competitive, companies need game changing order fulfillment innovation. Matthews Automation Solutions, not only recognized for its best in class warehouse automation brands to drive efficiency, accuracy
It's a first choice by high volume order fulfillment and distribution centers around the world. Facilities utilizing Matthews warehouse execution software can synchronize automated systems into a centralized stream. The result, balanced work throughout the fulfillment process for optimum material flow, throughput and real time visibility. By choosing to implement best in class software and controls to maximize efficiency for new and existing materials handling companies stay ready for change and better decisions are made faster with Matthew's Pick to Light system unmatched in North America. Combined with emerging collaborative robotic technologies, Matthews visionary systems not only meet the process challenges of today, it's pushing the frontier of fulfillment forward.
Deliver on a promise with game changing expertise and innovation. Get the Matthews Automation Solutions advantage.
Hopefully, that gives you a flavor of what one of those warehouses looks like. Think of 1,000,000 square feet of conveyor and product flying everywhere. It's pretty amazing to watch it being choreographed. When we think about the autonomous bots, it can be used for automated order fulfillment, both in the manufacturing site as well as a warehouse. So there's multiple deployments that are that it provides opportunities for.
Our first order actually came in a manufacturing site with Emerson Electric, where they're picking components going into orders. But if you think about what it enables, what this technology enables is it will navigate off natural features in environment, so it's very flexible. It's customizable for material handling requirements, different applications again, and synchronize with the operator and pick put systems. That enables you to not run into it. It's kind of a handy thing in a warehouse or a manufacturing site.
So it enhances efficiency and it's very applicable in the e commerce warehouse as well as a manufacturing site. And it's tied to the number of SKUs you have, the change in the number of SKUs and the velocity of the SKUs, okay? Now let's talk about what that market space looks like. When I made the comment that we focus on the control and software because we were not that interested in the low margin conveyor bit piece, it makes you look at the business a little differently. We compete with Daifuku, Kian, Toyota and Honeywell, and those are names that you would generally hear in The States as Dematic, Intelligrated and others.
They feel like they're much bigger, but they're much bigger from that sense because of all the mechanical content. When we strip it down to the software controls where we play, you can see that we're very comparable. In addition to that, when we do need the mechanics, the conveyor bed and whatever else, we have local partners. We have a family of integrators across the country that we work with. The combination of those, the consolidation of them, ends up giving us a bigger platform than any of our competitors.
So we have a broader structure to work with. No better place is that exemplified than Costco. Probably everyone here is familiar with the Costco, maybe even have shopped there. Costco has just now moved into the e warehouse solution set. They picked Matthews to provide the solution set.
Not viewed as the biggest, we are considered one of the best, if not the best. We specified all the mechanics and provided the software and the control systems. First system is up and running, second one is in flight, four more coming. First two were about $10,000,000 each, major centers, DCs. The next four are regionals, they're smaller, they're about $5,000,000 per.
So it's a nice body of business. But at the end of the day, it's a great showcase as to why you would select Matthews. And with that, I'm going to turn it over to Paul Jensen, our Division President, and he's going to talk about product identification.
Thank you, Brian. Move to the first set of logos. As both Joe and Brian have said, this business has evolved even way past handstands and branding irons. Today, it's we use all the advanced inkjet technologies. We've built a suite of software that allows us to integrate with production lines, control our printers, competitors' printers, other equipment that we interface with.
And it really is a very different business even from the ten years ago that when I started in this role as President of the division. These customers were selected to represent the diversity of our customer set, National Gypsum and the Georgia Pacific as industrial building products customers where we have a very strong presence, Pirelli for tire marking and then Jim Beam and Ross to represent retail customers as well as CPG. I'd like to talk for a moment about what we did for Ross, which is a very interesting application. They have to label boxes that have things like lithium batteries special or if it's fragile, they have to put the fragile on. They were doing it with a bunch of label applicators, and we now do it on demand.
They download the orders to us. They tell us if it's got batteries in it or if it's fragile or any other thing that needs required marking. And we adapt on every single box to put the mark on it for that shipment. When you look at National Gypsum, we mark on a large quantity of the gypsum board in the world. So when you walk into a Lowe's or a Home Depot and you see the nail marks and the branding marks and all of that stuff, think of us because it was most likely our product that did it.
Our market, we talk about in kind of three different ways from the type of technology. And we get the non inkjet technologies, which are like print and apply labels and laser marking. We do have a limited offering in those products, not strong, but we do have a presence. We get up into drop in demand, which is a variety of technologies where you can control individual drops, whether they're on or off. The technology that you would most be familiar with is your HP DeskJet cartridge.
That's a drop on demand technology. We use it in industrial applications and packaging applications. And continuous inkjet, which we're going to spend quite a bit of time talking about here for the next few minutes, it's a complex technology that is used most often for printing date codes on products. And it's used because you can print at high speeds, you can print from quite a ways away from the object itself. So when you think about a bottling light in the neck of the bottle, you can't get that close to it.
You need to be back a little ways. It has fast dry inks, so you can print on things like glass and metal and the ink will dry quickly. That technology also is the core for the three major competitors in this market. There are three companies that dominate the $3,800,000,000 market, the largest being Danaher's Videojet brand. The second largest is a company called Markham Amaj, which is owned by the Dover Group and the third largest is Domino, which is a British company that is owned by Brother Industries out of Japan.
All of them rely heavily on the continuous inkjet market as their core products and they have a wide full product offering within the other areas. When we get to continuous inkjet though, because the technology is very complex, it comes with challenges. There's complex ink pumping systems, which have to be completely rebuilt every one or two years depending on your volume, costs $2,500 to do that. They tend to also break down when to have a breakdown. If you look at the bottom of a Coke can, most of the time you will see two prints that are exactly identical.
And that's because they are running two printers all the time. So when one fails, not if, but when, they are still in production. I also like to tell the story we were doing market research and our market research firm talked to a gentleman at Miller Coors. And they asked him if he had continuous inkjet printers. And his response was, I have three seventy two of the damn things.
And that's because they take so much of his time and effort to keep him up and running. So we're going to talk here now about how we're going to address this opportunity using a new drop on demand technology to do the application that until now required a continuous inkjet. This picture on the left is a continuous inkjet printhead, lots of little moving parts. It has ink flowing through that open area. So ink gets everywhere.
It just does. We've all experienced even a little HP cartridge, if you handle it wrong, you get powder on your hands. Well, these get messy. They require cleaning. You have to take it off the line, use a squirt bottle with a solvent that probably has volatile organic compounds in it.
So you have to wear respirators and you have sometimes as often as every day you have to clean this thing. Our answer to that is in this little module right there, you get to where your printer isn't printing the way you want it to, it's getting dirty, nozzles aren't printing right, you slide the sleeve off, pop the jetting assembly off, throw it away, pop in a new one. And we can show you what that looks like just right out here on the table. The other piece of that, because this is just a drop on demand, a simple ink delivery system, all the complexity goes away. So we've created a product that's more reliable, less we've turned downtime into minutes instead of hours.
And we've run a bunch of models on cost of ownership for the maintenance and the consumables, your ink and the cost of the printers. And depending upon your volume, you can get up to a 75% lower cost of ownership. We think that's really powerful. We were showing the technology to a small user a few months back. He had just bought a CIJ printer from one of the big three.
And he was actually upset after we talked to him. And the reason is that printer cost him $8,000 But the company he bought it from has a policy, if you don't have a service contract, you may not get service when you need it. They'll service you when they become available. So the contract is $2,500 a year. Then they told him what most customers do is they buy a second printer as backup dollars.
So he's into this almost $20,000 We showed him one of the products out here we have today and told him it was $3,000 and, oh, the repair is throw that away and put a new one in for a few $100. That's it. He was needless to say, when he needs a new printer, we know where he's going to get it. This technology is kind of interesting in that it began as a concept, Brian and a couple of guys sitting around and going, we're drop on demand people. So how would we what would we do with drop on demand?
Came up with this concept. We went through some universities. We also found a group actually out in Corvallis, Oregon, small little company that turned out they were the team that invented the HP DeskJet printer. So they had to form their own little business. We engaged with them for a while.
We about 2015, it became clear that we actually were going to be able to do this. We bought the that little company, took all their products away from them and focused them only on this. With the support of Joe and the Board, we were given the green light to plow forward and to make this thing happen. It was twelve years ago when this was conceptualized. It was 2015 when we started going full speed.
And today, where we're at is on the we have a proven technology. We know it works. We're working through some production manufacturing processes to get consistent yield and consistent performance out of the device so that we can roll that out. We believe we are be done with that before the end of this calendar year. And in 2020, we will be going to the market full force with the products that we're going to show out here.
So core to our growth strategy, our industry has been growing low single digits every year. We have been meeting and some years exceeding the market growth. We also continue to look at acquisitions in those areas where we have a limited offering, the non inkjet. We'll be looking at acquisitions in that area and also areas that expand our channel offering both geographically and market segment. We put that together with our new technology, up that 1,800,000,000 segment to us.
And we believe this business can grow multiples over the next coming years, five, eight, ten years, and will do so while generating high teens and maybe even low 20s on EBITDA margin. With that, we also believe this technology can be used in other applications other than just marking and coding industry. We've had conversations with people and companies in each one of these segments about whether the application of our technology work for them. And we will continue to have those discussions. The goal of maybe licensing the technology to generate additional revenue to help offset the investment we've made over the multiple years.
With that, I'd like to turn over to Steve Gackenbach. Just
wanted to before we jump ahead, thank you very much. Between product ID, warehouse automation and then the subset of new printing solution, where are we today in terms of razor razor blades, so kind of equipment versus recurring revenue? Where might that be three to five years from now? And what's the margin breakdown? A multi part question.
Go
for it, if you want.
So the question is where do we stand on the razor razor blade solution? We've talked often, as we spoke to many of our investors, about when the business model and the business model actually just gets more successful for us. Because as we move forward into this new technologies, we're still at the nascent part of it. We've not sold many, only a couple at this point in time. But we added another component, which is a consumable, that print head.
That print head is linked print engine, thank you. All right. See what else? Put a lawyer in front of you guys, and this is what happens. That print engine is a consumable.
That was not the case in the past. So we've added that component to it. We've also marked the equipment that is used to deliver the ink, the ink cartridge itself, which locks only to our system. So that becomes a continuing stream of razor, razor blade, buy the equipment because it's the right reason to buy the equipment, buy everything else from us because you have to. So that's we're only at the beginning, and we think those margins can get significantly better.
Paul said low teens. As you all may or may not know, the consumables we generally operate in, in the print industry are closer to 40 points on the ink side. And as much as he's told you a little bit about pricing, we haven't had that final discussion on what price needs to be. It's going to be the right price to sell those print engines and continue to generate margins that make sense for us. We think we've got a tiger by the tail that is proprietary, and we're going to capitalize that over time.
And the consumables become 15% of revenue?
No, become more than that.
More like 40.
40% of revenue.
Eric?
Can you come talk to my Board? Fact of the matter is we ramped that. So we have been spending money on this space for a while. And it was only in two years ago, was it? Two years ago that we really ramped up the spend because that's when we became convinced the solution worked.
We could ramp up more. You all would probably complain about our margins and what happens to our P and Ls. But the fact of the matter is we're going to continue to ramp slowly because one of the reasons I think that it's important to understand, this product is going to take time to get credibility. If you are a buyer of a video jet or a domino kind of solution, you're going to feel a little uncomfortable day one to think that there's not 1,000 people around the world who are able to service you in twenty four hours. So it's going to be a slower ramp than we would all like it to be.
But we think once it starts to ramp and there's credibility around it, it will be quick. So it's a good question. I'd love to spend a lot more money with these guys. We just had a conversation last night about curtailing some of the spend, but it's not going to go to zero anytime soon. It will go to zero at some point in time.
But if it doesn't go to zero, you saw the other opportunities that Paul showed you from three d we've had conversations with some of the largest suppliers in the industry. They have not been able to prove this technology. Our patent is becoming aware, and people are starting to
talk. Okay?
Good morning. I'm Steve Gackenbach. I'm Group President for our Memorialization business, and I've served in this role since 2011. I'm delighted to be here this morning to talk to you about our Memorialization business. Matthews is a leader in memorialization.
We're the largest and most profitable supplier of memorialization products with revenue of $630,000,000 and EBITDA of $145,000,000 We're a full service provider, serving both funeral homes, cemeteries and crematories. As Joe mentioned, our start in this business was back in the 1920s, serving cemeteries with bronze memorials. But now you can see from the chart, as I turn to the next page, that our largest product segment is our funeral home products business, and we also operate within the crematory equipment space. Our business is primarily in North America with about 90% of our sales in The U. S.
And Canada. Financially, I think the most important thing to remember is that we're a strong and steady cash flow generator. Strong, as I mentioned, with $145,000,000 of EBITDA, that's a 23% margin, but also steady. The old joke is there's nothing certain besides death and taxes. And again, in our business, joking aside, the certainty of people dying means that we're less impacted in an economic slowdown.
So let me turn to our product offerings. We offer a broad set of products serving both funeral homes and cemeteries. And what's important to note is that we're in the number one or two position in all of the products that we offer. I'll start with our cemetery products business. Our largest product line remains our bronze memorial business.
We're the clear market leader in this space. We have more market share than all of our competitors combined. And I should note, while this is not a core product of ours, the Investor Day medallions that are in front of you were produced at our bronze facilities. We, about ten years ago, entered the adjacent segment of Granite Memorials. This is a complementary business in that the customers are the same and really the overall dynamics of the business are the same and that it's really just memorialization in a different medium.
Through three acquisitions and significant organic growth, we've built this business to be the number one player within the granite tombstone business. We also offer cremation products serving cremation families such as glass front niches and cremation gardens. And also, we operate two international subsidiaries, one in Italy and one in Australia, and they're both the number one players in bronze memorialization in those markets. Turning to our Funeral Home Products business. The core product there is caskets.
And in the casket business in The U. S, we're the number two player, but I would say a strong number two player. The market leader is Hillenbrand's Batesville division, and they have about 40% market share. We have just under 30 market share, but it's a long way back to number three in the mid single digits in terms of market share. We offer a full product line to funeral homes, including cremation products such as urns and memorialization jewelry.
Our last business segment is cremation equipment, and we're the market leader on a global basis. We serve segments that are large and relatively stable. I'm going talk first about growth. And the underlying growth in this business is influenced by two fundamental megatrends. The first of those is increased deaths, really driven by the aging of the baby boomer generation.
And if you see from the chart here on the left, deaths currently are about two point eight million in The U. S, and we project that to grow to over three point five million. The other fundamental trend is a shift from burial to cremation. And this is a predictable long term trend. As a matter of fact, this is a trend that's been going the entire time since we've been a public company.
But during that time, our memorialization business has grown from under $100,000,000 in sales to over $600,000,000 in sales, as I mentioned. So this is not a new phenomenon for us, and it's a phenomenon that we certainly succeeded within. Let me just walk you through a little bit of the math of the growth dynamics. So deaths are increasing at about one percent to one point five percent a year. The cremation rate is growing by about 100 to 150 basis points a year.
And if you do that math then relative to what that means for casketed demand, that means that it's declining on average about 1% to 2% a year. Within this environment, we expect that we can still deliver modest top line revenue growth in the business through additional growth opportunities, including pricing, growth of cremation products as well as other growth opportunities such as preneed offerings. The market we serve is relatively large, about $2,000,000,000 in The U. S. And if you look at the chart on the right, we show the breakdown of that by products.
And it's important to note that we're number one or two within each of those different product segments. If you think about the market segmentation by customer, about 30% of the market is controlled by national major consolidators that have bought up local funeral homes. But the majority of the market is still independent, locally owned funeral homes and cemeteries. We compete very effectively in both of those segments. The national major players like our scale and sophistication.
And I'll talk in more detail, but we have a vast array of service offerings that are designed to support the local independents. Our business has significant competitive advantages and barriers to entry. One of the most critical things is we made a strategic choice to be a full service provider. And we're again, we're really the only major player in the industry that serves both funeral homes and cemeteries. And this is a distinct advantage.
Essentially, all of the big customers operate both funeral homes and cemeteries. So as we're servicing them, we can leverage our relationships across that customer and cross sell products. Also, it allows us to understand and help partner with them around supporting their overall business. Commercially, we have significant strengths that allow us to protect and grow our market share. Significantly, we're viewed as a market leader.
We've been in the business for over one hundred years, and we have a very strong brand reputation. We're known for providing superior product quality with excellent service. We also have deep customer relationships and most times dating decades long, and that's supported by very strong sales capabilities. We have more than 100 salespeople that have deep customer relationships, but also we train them to take a consultative approach and to partner with our customers to help them grow their business. And to support them in terms of serving our customers, our strategy is to not just provide products but to provide a broad array of services and solutions that allow us to help them grow their business.
In addition to our commercial strengths, we also have key operational strengths. We run a world class manufacturing network. We have 10 major manufacturing facilities. We run a lean manufacturing program, and I'll talk more about that. But our plants are really a combination of craftsmanship.
In some instances, we have sons fathers that worked at the facility for thirty years, and they've learned craft skills and expertise and craftsmanship, but combined with sophisticated lean manufacturing principles and smart automation investment. Joe mentioned one of our advantages of barriers to entry is our national casket distribution network. We operate just under 90 service centers nationally. And that's important because the vast majority of casket orders are either fulfilled the same day or the next day. So being close to customers is critical.
And then lastly, the foundation is superior product quality and service. And that's really a key focus for us in more than just lip service. We have significant internal business processes with internal tracking and customer surveys that allow us to monitor our performance and address issues and drive continuous improvement. So again, all of those competitive advantages and barriers to entry are really critical to helping us drive those strong profit margins. I want to talk a little bit more about our advantaged go to market capabilities and how we compete effectively in the marketplace.
As I mentioned, our value proposition is not just to be a product supplier, but our proposition is to be a partner in helping our customers grow their business with a full range of value added services and solutions. Our goal is to differentiate ourselves in the marketplace and to create sticky customer relationships. So let me just walk through some of our capabilities. At the top of the wheel, I've already talked to our full service capabilities and the importance of having superior product quality. But in addition, we provide consultative support for our customers.
So our sales team is trained to help our customers with merchandising, pricing, product selection. As a matter of fact, sales isn't in their title. Their title is funeral service consultant. We also have innovated significantly over the last number of years with technology tools. And certainly, we have tools to facilitate our interaction with our customers, e commerce tools, online ordering.
But the bulk of our tools and solutions really are designed to help our customers interact with the families that they serve. Most of our customers, again, are small businesses that don't have the resources to develop those sorts of technology solutions. So the types of tools I'm talking about are online memorial design tools that allow a cemetery to sit with a family and design exactly the memorial for their mom or dad. We have digital merchandising tools to help people pick out the right casket. We have tools that a family portal that a funeral home, when they get the call in the middle of the night that mom has passed away and the funeral home doesn't want the family looking on the Internet for other supply options, provide a password protected portal that has the information about that funeral home and allows the family in a protected way to provide information that helps the funeral home with the arrangement process the next day.
We've also been aggressive in consolidating our manufacturing footprint. We've closed five facilities over the last three years, and we're in the process right now of closing a casket manufacturing facility in Indiana that's the last major consolidation as a part of our Aurora casket integration. And lastly, we're making smart investments in automation and technology to improve both our cost profile as well as our product quality. In addition to managing cost, we aggressively manage our asset structure. One of the major opportunities we're working on right now, again, is a part of our Aurora integration on the casket side of the business, but it's around finalizing and merging the product lines and rationalizing our SKUs.
And that SKU rationalization allows us to reduce inventory while still providing good on time delivery service to our customers. We're working on working capital management across all our groups, both in terms of smartly reducing inventory, bringing in receivables faster and extending payables. And lastly, would just mention, inherently, this business is a low cap investment business, generally less than 2% of revenue. Our last strategy is to integrate acquisitions and pursue tuck in opportunities. And I want to just update you on where we are on two of our more recent acquisitions.
First off, the Aurora acquisition. We acquired Aurora in August 2015. This was a transformational acquisition for the business. So prior to that, Matthews had about roughly 20% market share. Aurora had 10% market share.
And again, the combination of the two firms has made us strategically much stronger and much better positioned to challenge the market leader within this segment. Our vision for the integration was much beyond just merging the two firms together. We really wanted to take a strategy of taking the best of Matthews and the best of Aurora to catapult our business forward, and we've done that. We've really taken the best products, the best manufacturing facilities, the best people, the best marketing programs. And so this has been a real win for customers as they've seen that upgrade of capabilities, but it's also been nice from a
As I mentioned, we're just finishing up the last plant consolidation this year. But at that point in time, we'll have delivered 20,000,000 of EBITDA synergies on this acquisition. The bulk of that is through supply chain consolidation, but also in terms of eliminating duplication of SG and A. On the supply chain, Matthews had three legacy plants. Aurora had five plants.
So we started with eight plants. We'll have taken four plants out of that manufacturing network. From a service center standpoint, each company had, call it, 65 service centers. So while we're increasing the network and providing better service to our customers overall, we've still consolidated about 35 casket service centers. The next acquisition that we did was our Star acquisition.
We bought that business in February, and it was primarily a granite business, but they also operated a bronze foundry. We've now consolidated that bronze foundry, which delivers cost savings but also a better product offering in terms of quality for our customers. And we're also working on growth opportunities in the granite space. So I mentioned that private mausoleum marketing program, that's truly enabled by the STAR manufacturing capabilities that we acquired as a part
of that deal. So as
we look going forward, we've been successful at acquiring and integrating companies, and there still remain further opportunities within this space. So there's opportunities in fragmented industries to acquire companies that enhance our market leadership or also to expand into additional adjacencies. So I'm not going to make news here and cite particular targets. But again, this continues to be a part of our growth strategy. So as I wrap up, I just want to share some of the most important messages to remember about our memorialization business.
So first, as I described, we're a full service provider with industry leading positions and capabilities. And we've got significant barriers to entry and competitive advantages that allow us to earn strong margins in this business. Second, we're pursuing both commercial and operational strategies to drive EBITDA growth in a relatively stable death care market. Third, we have a strong track record of building the business and in integrating acquisitions. And probably most importantly, this business generates strong margins and cash flow.
So with that, I'm going to turn it back over to Brian Dunn, who's going to talk a little bit about our cremation equipment and incineration business.
All right.
If you
bear with me a few minutes, I'll try to bring us home in an expeditious manner. Matthews Environmental Solutions. We are the leading oh, offer cremation equipment, supplies, incineration equipment for global customers. In fact, we are the global leader for cremation equipment. And this is a wonderful complement to our position in the marketplace for our casket and bronze businesses, as you just heard.
Our base product revenues are augmented with service contracts and operating agreements. The reality is we are the only competitor, the only player in the marketplace with a professional service organization, which provides a nice lever, nice continuing revenue stream, very reliable and repeatable. It's also augmented by the only seven twenty four monitoring system in the market, which means all of our newer equipment, we can monitor its operation, we can tune it, troubleshoot it from the confines of our base operation in Florida. We operate in four sites globally, one in Florida, one in Oregon, one in Italy, and one in The UK. It was just a few years ago that this business was called Matthews Cremation Solutions.
So why would we have changed the name? Our opportunities moving forward are not necessarily just in cremation. They are in other activities such as incineration. With that, we've changed the name to Matthews Environmental Solutions because now not only are we executing incineration systems, both standalone or large integrated systems, but we're also providing abatement systems that are complementary to these solution sets. If we think about the value of each of those propositions, a standard human cremator is 50,000 to $150,000 A pet cremator, much the same.
An incinerator, standalone, much like we would sell to law enforcement, is the same again. It's in 50,000 to $150,000 But now we move into engineered systems, and I'll show you some pictures of each of these momentarily, you find that we move into the 5,000,000 to $10,000,000 per project. It's a much it's a different game. It's a step function change. And it's an opportunity that we are just now starting to capitalize on.
As I show you a few pictures, it starts with this picture of a human cremator, okay, with an autoloader. Very simple, straightforward. You now know about what the price value proposition is with that. A pet cremator is about the same. A small incinerator, about the same from a looks, feel, technological standpoint.
But on the pet side, you have a wide variety of product that you put through it. So we also manufacture a line of modular cremators. Well, what the heck is a modular cremator? Well, in this case, you have one chamber. Obviously, you're going to put one human in at a time.
On the pets, you might do multiple pets, but you want to have them private. People are very much tied to their pets anymore, right? So now you can run four, five, six chambers at one time for a much higher operating efficiency. In addition, when we go to sell the first one, we might sell a two chamber and have it permitted for a six chamber. And as their business grows at the pet crematorium, they can add chambers off the same permit.
So it's very easy for them to get into the market and then expand. I mentioned abatement systems as part of our growth opportunities. This is a standalone single chamber cremator. That's this. Everything else here is part of the abatement solution.
And with that, we can ensure that the emissions coming out of the stack out of this process are just as clean coming out the top as what we used as part of the process. This is very the European standards are very much more stringent for environmental emissions. And this is a standard solution set in Europe. We have just recently started up our first human crematorium with all this abatement equipment on it in Upstate New York. We find that that becomes an opportunity that is it transcends just the admissions requirements.
In this case, the funeral home wished to differentiate himself in the local marketplace by being green. So he paid an additional amount, and it can be two to three times the cost of the cremator to include all the abatement for him to be able to state to the marketplace that he was being a green operator. Okay? So that's a nice opportunity for us to take our technical competencies and deploy them for higher revenue and greater margins. The next picture I would like to show you is an incinerator, a bit larger scale.
This is now operational in the Isle Of Jersey off the Southern Coast Of The UK. The UK has found itself in a bit of a challenge as all their waste sites, landfills, are full. So they've been shipping product off the island. The cost of that shipping has continued to rise. With the cost of energy high in The UK and the cost of what they call tipping fees being high, they have had to find another solution for all their waste.
What they've determined is that incinerating that waste and turning it into energy provides a great solution set. The Isle Of Jersey project was our first foray into this in The UK. Up and running, we have now had over 50 investors go through that site as we have an opportunity to sell to a multitude of waste transfer station owners across The UK the solution set. And in this case, this is a specific technology called a stepped hearth furnace. This is an autoloader where the waste is coming in.
And this is all the emissions abatement equipment. And we are continuously monitoring everything going out the stack to ensure we stay within compliance. In fact, we have to report that. This was a $7,000,000 project. We have three more on the docket right now.
This provides the ability to also incinerate many other things. The opportunity right now is in The U. K. From there we will move into Central Europe. From there, we will move back into The States.
The States certainly has an opportunity, but it's different. The drivers are different. In The UK, landfills are full. They're not full here yet. In The UK, energy costs are high.
In The US, they are not. What we do have here is a problem with things of specific nature, such as plastics. How do we dispose of that? We've had a conversation, for example, with one of our industrial technologies customers who is a brand customer. All of their products are plastic based.
And they are in a dilemma as to what's going to happen with their business as this movement to move away from plastics impacts them. They've started looking at a recycling program, but they don't know what to do with the plastic when it's recycled, because not all of it can be utilized within restructuring of new products. So we've offered them the solution set of regional incinerators. And that's an ongoing conversation. That becomes the opportunity as we move forward to solve problems.
It just happens to come with a nice price tag and margin with it. The last picture I want to show you is one of a bit larger scale. And it's appropriate for this season, I guess. This is in Mecca in Saudi Arabia. This site and you can get flavor for the size.
These are people. And there's two incinerators. But we supplied all of this equipment. So this is an actual picture. This is a three d image that we created as part of the project.
We designed, manufactured, installed, started up, and are now servicing this in Mecca, Saudi Arabia during the hajj. They sacrificed thousands of animals during the Hajj, and all those animal byproducts have to go someplace. Historically, they've been trucked out into the desert and deposed of, bit of an ecological nightmare that's caught up to them. So we are now incinerating all those animal parts. It's an interesting solution, but at the end of the day, it's what we do.
We are solving problems. It just happens to be using the same technology that is scalable that we use for our base business of cremators. Hope that gives you a flavor of where our activities are, where our growth opportunities are. And with that, I will turn it back to Joe for a wrap up.
Okay. I hope you would agree. We've come a long way from branding irons and hand stamps and photopolymer plates and bronze cemetery markers. At this point in time, I'd like to open up to you all to see what questions you may have about anything we talked about today. I hope it's become a little broader for you to understand, a little easier to understand what we consider our business.
Anybody out there?
With respect to questions, if you could state your name and your company affiliation. We all know Scott. But also, I want to point out that we will be taking questions on the webcast. So anyone on the webcast as well, please feel free to type in your questions and we will address them here in the room. And we'll be passing around the mic so that everyone can hear the questions.
Scott Blumenthal with Emerald Advisers. Joe, it looks like you have what might be the CIJ killer there. And so maybe you can tell us the growth rate of the CIJ market or what you believe it might be. And also maybe what the opportunity might be once you test out your first customer? So what do we
say about forward looking statements? The reality is, as I said earlier, I tried to preface it. We think we do have the CIJ killer. It's a $1,800,000,000 market that we sell very, very little into today. My personal opinion is the ramp will be slower than what you all may like.
And I said it earlier because it's going to be credibility first, and we'll have to get that credibility. But the ramp will accelerate quickly once that credibility be established. We expect to be in market early twenty one or early twenty, excuse me. Early twenty. That'll start to give us a better sense of customer acceptance.
But the ramp from there, I think, is only upwards. And I think it'll be over the course of the next two to five years that you'll see the more significant ramp. This business has grown. Our business has grown in the mid single digits so far on the, what I would call, product identification and marketing products business. We think that can grow faster, materially faster, once we get acceptance of the
questions in the room? Yes.
Greg Hillman, First Holster. Yes, had a question about the growth rate for really all your segments, but maybe just focus on SGK. Outside of the tooling, which definitely seems to be growing strong, One of your slides, have like a CAGR of 16% for the global content marketing industry. And that seems to be like way too high for your non tooling part of SGK. And could you speak to that?
Sure.
So if you think about our business, let's use $800,000,000 as our total revenue. As we told you today, roughly half, a little less than half, is non packaging graphics. So it's tooling, it's engineering, it's point of sales, more or less within a few decimal points of that. The other 400,000,000 has been challenged by a couple of factors. Currency has been a huge headwind for us.
Since the acquisition of SGK, Steve, correct me if I'm wrong, 70 to $75,000,000 of top line and 10 to $15,000,000 of EBITDA has evaporated because of currency translation, not exchange actual profits. We just bring back less profits in Europe and elsewhere as those currencies have dropped relative to the dollar. That's one. Secondly, we've had a couple of client losses. Nothing of nothing that is traffic, but one of them was Nike.
Nike was a huge account for us, a very profitable account. We did, if I'm not mistaken, Gary, all of their photography work, a relatively high margin successful business we had for many years. We only lost that business because a new guy can be a little more creative than we have been historically in the photography side. They still use us. We still do about 7,000,000 to $10,000,000 of what we call retouch for them, mostly, to Gary's point, offshore in our Asia operations.
So that has impacted our top line in that portion of the business. And we have suffered, frankly, from the zero based budgeting trends that have happened. One, right after we acquired SGK, customers like Procter and Gamble, who have been historical long term trends for us, dropped a third of their SKUs and sold them. Gary, you have any more to add to that? Yes.
Just to add to the question. We used that 16% growth rate around content just to illustrate the fact that content remains extremely important to all these brands. They're looking for content for their social media campaigns. They're looking for content for Internet campaigns, etcetera, etcetera. And we very much participate in that.
I'll give you a great example. We just won a piece of work with Merck, the Merck Animal Health Unit right out here in New Jersey. We are actually managing all of their email campaigns, and we're doing technical writing for that part of their business. They've outsourced that completely to us. And therefore, we are the primary provider of the content that goes into their email and some of their social media campaigns.
It's a great example of what we're talking about.
To the point of all that is that our top line in our traditional packing business has declined. It has not declined to the extent that it appears on its numbers, largely driven by the fact we had client loss and currency, but it's been low single digit decline. We think that trend turns. We think that trend turns as the brands continue to innovate. That's their only way out.
But we have segments of our business that are growing exponentially. When we talked about private label, the Equator business, we've seen double digit growth in that area. We think that'll continue to grow at those kinds of rates as that model progresses. The tooling side of the business has grown nicely as we move into other areas. So we look at the portfolio, not just that particular segment that may be packaging.
They're going to go up and down.
I might just add, Joe, you mentioned Nike. We did not lose Nike to a competitor. There are going to be a couple of clients out there that are large enough and global enough that they have the wherewithal to they built their own photo studio in house. That in source versus outsource pendulum is always going to swing. We happen to believe that photography for Nike is not necessarily their core competency, but I just want to follow-up on that as There's plenty of those out there for us.
And again, our scale will really give us a differentiator to get that business back.
Thank you. Jose Garza with Gabelli. Joe and maybe Steve, it seems that when you led the premise of cremations increasing, it seems like that's kind of an accelerating rate versus maybe some of the expectation that you have there. What about that possibility of that cremation rate jumping up eventual expectation much sooner than you think? What are the offsets in
the business and how do you think about that? One one at a time. First off, with regard to the rate of cremation change, we have twenty year twenty five years worth of data, and it has been consistent year in, year out. You may have a quarter that's a blip, but otherwise, it's been a consistent one to one and a half change. As I said, in the last twenty five years, we've gone from the low twenties to 50 some percent.
It's pretty consistent. We don't see that changing. In fact, states like California, which were already at 60, have started to migrate back. So that's that's the first thing. We don't think there's material change in what we think the future of cremation rates would be.
And our slide would reflect one and a half percent increase per year while the death rates rise at about that same rate. In terms of the offsets, if you talked to me twenty years ago, we probably spent we probably sold a couple of million dollars worth of cremation related product and services. Today, Steve, what are the products we sell in cremation?
It would be the
neighborhood of $50,000,000 So
albeit at a smaller dollar revenue per item, we get $708,109 $100 minimum for a casket. We might get $600 $607,100 dollars for a marker, and we might get $250 for an You're going get less dollars, but the volumes will continue to grow and will continue to offset that. We don't look at our memorialization business to be something that's going to be double digit growth. That's not what we're telling you. We are telling you that 145,000,000 of EBITDA is going to be relatively consistent and growing with price.
Anything else? Yes.
Just getting back to the 200 non tooling business part of SGK. If you did a graph of retail stores and how that's changing over time, how would that affect mean, you done an overlay with that? And what if that accelerates? And what percentage of your business is related to in store stuff? And how is that affected by the
closing stores? So our what we call merchandising, which is the in store display business, is less than $100,000,000 today. And it has been it has been around that rate for the last four, five years. The decline in retail stores has occurred over the last several years. Our trend that we are actually seeing is that marketing budgets for in store have not materially changed as a whole as it relates to stores.
We're seeing more spending in flagship stores, less spending in the peripheries. So, we'll see something like a Nike flagship store in New York maybe getting $5,000,000 $4,000,000 versus everybody getting a $500,000 display. They test these and we're more regionalized to be able to do that and then they decide what they're going to roll out globally. It could impact us, but out of all of the businesses, it's one of the smaller parts of that business. Yes.
Excuse me. I'm I'm bumping. I I it's an Italian thing.
Austin Nelson, AIG. Just on the additional fields of use in industrial technologies for the new technology. So you talked about you could continue to ramp up the spending. And I guess I have a two part question. Is it in these additional fields of use?
No.
No? Okay. No. Well, if we if we ramped up the spending today, it would be to complete the product lines. In other words, our focus has been a segment and will continue where Paul and Brian are for a segment of the business, we would continue to ramp up the use of our spending for that particular space.
The alternative use is we would probably think about whether we'd want to partner. For example, on three d printing, that's not our core. Our technology and our patents are ours. We'd find somebody who is actually in that space, partner with them, get paid for it, frankly.
So that was my follow-up.
Would you how do you view that And I guess the timing of doing something like that? Would it just be a patent license where you're getting a royalty stream that runs through industrial technologies? Or do you actually upfront sell the rights for a large sum to three d printing using this technology? We would probably have it'll be
on a per be on a per event decision. But the fact of the matter, we it may not look like it, but we generally stick to our knitting. We're not gonna be in that space. So whether we do a royalty license or whether we do a sale outright sale for a particular use will depend on who it is because some of the players we're talking about could swallow us up. It depends.
But right now, that's not our focus. We're just getting a lot of interest.
Thank you.
Anything else? Yes, Scott.
I guess, Mike, this question is for Gary. Can you talk a little bit of maybe about outsourcing trends in creative? Joe talked about Nike in sourcing, but there are a lot of smaller start up private packaging companies that don't have the resources or the expertise in house. And then maybe as a follow on, how do you monetize some of that print color customer type of data that you are accumulating?
You want to go, Joe? Yes,
great question, Scott. Two questions, really, right? So the on-site model that I started to describe is really interesting to us. You know, there are many corporations beyond packaging, by the way, that will have relatively small, sometimes medium sized in house creative groups and marketing groups that will manage everything from in house kind of invitations, business cards, holiday cards, Internet. They'll manage the Internet site, so on and so forth.
Again, because of our platform and because of the broad knowledge we have on that front end of our business, we can go in and take those staff take them right over. We'll rebadge them as SGK employees. We don't meet we don't need as many people as they have on-site because they've got a staff for their peak volumes, right? And we can push that work into our platform, as I described. It also makes their fixed cost variable.
Most of these corporations are looking to have fewer employees instead of more. So it's a pretty slick model and one that we're very well positioned for. The other question you asked was around the back end print portion of our business. I did make mention of the fact, you know, look, this database that we have of presses within printers globally, there's some smaller and kind of medium sized players that require packaging expertise that we bring to the table. We think we might be able to start actually brokering some print for them and allowing them to get rid of some of their purchasing departments in house and turning that type of thing over to us.
I also neglected to mention when we were speaking earlier, we have teams of quality assurance experts that actually travel the world and actually go to the printers to make sure that the color consistency that I spoke of is exact when it's coming off the press. And we get paid for that. I mean, that's significant part of our service offering that goes all the way to the back end.
Further? Question online, Yep. I
On the web. Bill's got it.
So a question from our webcast regarding the continuous inkjet inkjet print head. What is the cost to the customer and margins for Matthews? And how often will customers need to replace it? So we expect that our print head should be
able to last six months in a normal environment depending on use and depending on the environment itself. As to the we think it's going to be in the $100 to $200 range. As to price, I would tell you it's going to depend on when and whom we sell it to. I mean, I know the guys kind of made some comments about what pricing is going to be, but I would expect us to be value pricing those wherever that opportunity arises. The more penetration we get into the market, the more opportunity we think there will be value pricing to do that.
And the margins at value prices will be materially better than what we're seeing today.
Great. Any other questions on the floor or the webcast? Oh, we got another one here, Scott.
Okay, this will be my last one, and this one's for Steve. Steve G.
We know where you live. Steve,
can you give us an idea as to the degree of SKU rationalization that you need to do in the cremation I think it was the cremation products part of the business, if I'm not mistaken.
I think that was the Aurora casket.
I'm sorry. Yes. And then an idea as to how you monetize online memorialization?
You got your number here. Oh,
you go. No, you take it. There were two questions.
First off, regarding the SKU rationalization that I mentioned, and that's actually on our casket business as we're integrating the Matthews and Aurora product lines. And so we've been doing that over the last couple of years. But I would tell you, I still think that we have in the neighborhood of about 25% to 30% of our SKUs that we can reduce from our total SKU count. The second question was, again, monetizing online memorialization. And the product offering that I mentioned there was what we call our Be Remembered Life Stories.
And what we're selling is an offering that in addition to the physical memorial that we sell now, the bronze memorial or the granite memorial, we sell an add on feature that provides an online memorial that, again, allows people to up load biography, pictures, video, but then also the device that allows them in the cemetery to have that online memorial upload automatically onto their smartphone. So this is kind of a tackle on sale to the memorial. We also see this generating in the future, and this is not in market now, but further B2C revenue streams. So again, once these memorials are up and running, we can think about a variety of offerings that people can pay for to augment those online memorials. Think about flowers at your mother's grave every birthday, every anniversary, every Christmas, whatever it may be.
These are what the online connection allows us to do is to find out who's there, where they are,
and how we reach them. Next questions.
Just one final one to Brian. When you're talking about the non inkjet applications for the technology, you mentioned airflow. What was airflow?
Paul, you want to take that one? Tactile.
It's on. Okay. Airflow actually comes in a bunch of different varieties, but one specific application that we have been talking with someone about is very unique. It's using puffs of air as tactile feedback in a gaming system, as a non touch tactile feedback. But it could be simple things like just controlling airflow in maybe a medical device or even an industrial application where you need very fine air control.
At the end of the day, the print engine is a metering device. It meters how much is being delivered, whether it be air, fluids, whatever it may be. That's the application. At this price point, we think it has a lot of applications, probably beyond our capabilities. More?
Keene K. Webster from Soles Capital. Just a quick clarification on the CIJ market. Market. Is that $1,800,000,000 just inclusive of sort of the upfront product?
Or does that include the consumables?
Very good question. So $1,800,000,000 rough breakdown is going to be $6.700000000 dollars of equipment sales, dollars 500,000,000, 600,000,000 of consumables, which is today valued only as ink, does not include our print engine, And $400.500000000 dollars I think that adds up to around eight 1.8, of service. When you look at our competitors' websites, they tout a thousand people around the world as their differentiator why you want to deal with them. We're saying you don't need those thousand people. Okay?
Okay. We appreciate you all coming here. Hope you got a better understanding of who we are and where we have come from. I get a lot of questions all the time about why these businesses all exist and they exist because of our roots. This is who we have been since the early nineteen hundreds to now.
All we've done is evolve them and we will continue to evolve them from here forward. Thank you. I hope you get if you have any further questions, the team will still be here. Please join us for lunch at this point in time. For those of you on the line, I know you can reach us in a number of different ways.
I don't know who's on there, but we appreciate your time as well. Thanks again.
And I'll just add, if you didn't get a chance to check out the printer demos out here, please do, or the other product displays, we encourage you to do that. We'll have them set up. The lunch is a buffet, so don't feel a need to rush. But it will be set up similar to how breakfast was set up, and then we'll be eating in that far corner room. So thanks again.
Any follow-up questions, of course, don't hesitate to reach out. We'd be happy to follow-up with you. Thank you.