Core Viewpoint - Matthews International Corporation has received a favorable arbitration decision affirming its right to develop, produce, market, and sell proprietary dry battery electrode (DBE) solutions to third parties, particularly in its litigation with Tesla [1] Group 1: Arbitration Decision - An arbitrator issued an interim decision on February 13, 2026, clarifying Matthews' ownership and rights to DBE technology developed over the past two decades [1] - The arbitrator denied Tesla's request for broad injunctive relief and rejected attempts to prohibit Matthews from selling its proprietary DBE technology and equipment [1] - A narrow injunction was placed on Matthews, preventing the use of certain parts in dry battery electrode machines, but the company has replacement parts ready, minimizing operational impact [1] Group 2: Business Operations and Future Outlook - With the arbitration ruling, Matthews will continue to sell DBE equipment and offer advanced technology, including a next-generation multi-roll calendering machine [1] - The company holds multiple foundational patents protecting its intellectual property related to DBE solutions, preventing other companies from claiming these technologies [1] - Matthews aims to advance the battery manufacturing industry and support customers in their electrification efforts [1] Group 3: Company Overview - Matthews International operates through two main segments: Industrial Technologies and Memorialization, focusing on operational efficiency and long-term growth through innovation [1] - The Industrial Technologies segment has evolved from a marking business into a leading global innovator in precision technologies [1] - The Memorialization segment provides memorial products and services to cemetery and funeral home customers [1]

Group 1 - The company Matthews International (MATW) reported a decent quarter, with a focus on net debt figures related to the proceeds from the SGK sale and the European packaging business [2] - The Valkyrie Trading Society is a team of analysts that share high conviction and obscure developed market ideas, aiming for downside-limited investments that can generate non-correlated and outsized returns in the current economic environment [2] - The Value Lab offers members a portfolio with real-time updates, 24/7 chat support, regular global market news reports, feedback on member stock ideas, new trades monthly, quarterly earnings write-ups, and daily macro opinions [2]

Financial Performance - Consolidated sales for the three months ended December 31, 2025, were $284.8 million, a decrease of $117.1 million compared to $401.8 million for the same period in 2024[115]. - Net income for the three months ended December 31, 2025, was $43.6 million, compared to a net loss of $3.5 million for the same period in 2024[114]. - Adjusted EBITDA for the three months ended December 31, 2025, was $35.2 million, down from $40.0 million in 2024[115]. - Gross profit for the three months ended December 31, 2025, was $99.7 million, a decrease of $26.0 million from $125.7 million in the prior year, impacted by higher material and labor costs[117]. - Selling and administrative expenses increased to $112.4 million, representing 39.5% of sales, compared to 27.7% in the same period last year[118]. Segment Performance - The Memorialization segment reported sales of $204.2 million for the first three months of fiscal 2026, up from $190.5 million in fiscal 2025, driven by inflationary price realization and the acquisition of The Dodge Company[116]. - The Industrial Technologies segment experienced a decline in sales to $69.0 million from $80.5 million, attributed to lower sales of engineered products and the divestiture of the tooling business[116]. - The Brand Solutions segment's sales plummeted to $11.6 million from $130.8 million, primarily due to the divestiture of the SGK Business on May 1, 2025[116]. - The Memorialization segment's adjusted EBITDA increased to $38.9 million in Q1 fiscal 2026 from $36.6 million in Q1 fiscal 2025, driven by improved price realization and productivity initiatives[120]. - The Industrial Technologies segment reported an adjusted EBITDA loss of $4.5 million for Q1 fiscal 2026, compared to a profit of $1.8 million in Q1 fiscal 2025, primarily due to lower sales and margins[120]. - The Brand Solutions segment's adjusted EBITDA was $12.7 million for Q1 fiscal 2026, slightly up from $12.3 million in the same period last year, despite a significant divestiture impact[120]. Cash Flow and Financing - Net cash used in operating activities was $52.0 million for Q1 fiscal 2026, compared to $25.0 million for Q1 fiscal 2025, indicating increased cash outflow[131]. - Cash provided by investing activities surged to $237.4 million in Q1 fiscal 2026 from $1.4 million in Q1 fiscal 2025, primarily due to proceeds from divestitures[132]. - Cash used in financing activities was $186.6 million in Q1 fiscal 2026, mainly for long-term debt repayments of $172.0 million[134]. - The Company has a $700.0 million senior secured revolving credit facility maturing in January 2029, with a leverage ratio-based interest rate ranging from 1.00% to 2.00%[135]. - Outstanding U.S. dollar borrowings under the revolving credit facility were $214.0 million as of December 31, 2025, down from $384.2 million at September 30, 2025, with a weighted-average interest rate of 3.68%[136]. Divestitures and Acquisitions - The Company recognized $113.2 million of net pre-tax gains on divestitures during the first quarter of fiscal 2026[119]. - The Company completed divestitures of its warehouse automation and European roto-gravure packaging businesses during the first quarter of fiscal 2026[161]. - The Company holds a 40% ownership interest in Propelis following the contribution of its Brand Solutions segment on May 1, 2025[111]. Strategic Initiatives - The Company expects organic growth to be influenced by economic conditions, new product development, and the electric vehicle trend, particularly in the Industrial Technologies segment[160]. - The Company has initiated cost reduction programs focused on engineering and tooling operations in Europe, as well as general and administrative functions, with further actions under review for fiscal 2026[161]. - The Company is pursuing strategic alternatives for its entire portfolio of businesses to enhance shareholder value, as announced in November 2024[161]. Shareholder Actions - The Company has a stock repurchase program with 4,837,444 shares remaining available for repurchase as of December 31, 2025, following an increase in authorization by 5,000,000 shares[149]. - In November 2025, the company repurchased 184,323 shares at a weighted average price of $25.04 per share[181]. - In December 2025, the company repurchased an additional 21,800 shares at a weighted average price of $25.10 per share[181]. - The total number of shares repurchased in the first quarter of fiscal 2026 amounted to 206,123 shares[181]. - As of the end of December 2025, the maximum number of shares that may yet be purchased under the repurchase plan is 4,837,444 shares[181]. Legal and Tax Matters - The Company is involved in ongoing legal proceedings with Tesla, including claims of trade secret misappropriation and breach of contract, which are currently in arbitration[172][173]. - Unrecognized tax benefits as of December 31, 2025, amount to approximately $2.9 million, with the timing of potential future payments currently indeterminable[154]. - The consolidated income tax expense for Q1 fiscal 2026 was $40.8 million, compared to a benefit of $2.4 million in Q1 fiscal 2025, due to a shift from a pre-tax loss to pre-tax income[122].

Core Viewpoint - Matthews International is undergoing a strategic pivot focused on divestitures, debt reduction, and enhancing its core business in memorialization and high-value intellectual property, with significant gains from recent asset sales [3][4][6]. Financial Performance - For Q1 of fiscal 2026, Matthews reported a net income of $43.6 million, a turnaround from a net loss of $3.5 million in the previous year, primarily due to gains from divestitures [4][9]. - Consolidated sales decreased to $285 million from $402 million a year ago, with divestitures accounting for approximately $120 million of the decline [11]. - Adjusted EBITDA for the quarter was $35.2 million, down from $40.0 million, reflecting lower performance in the engineering business [11]. Debt Management - Remaining pension liabilities have significantly decreased to below $10 million from over $300 million a few years ago [1]. - Net debt as of December 31, 2025, was reported at $506 million, a reduction of $173 million in the quarter, aided by divestiture proceeds [1][6]. - The company executed early redemption of $300 million of 8.625% senior secured notes, which is expected to save about $12 million annually in interest expenses [6]. Divestitures and Strategic Focus - Matthews completed the sale of its warehouse automation business for $225 million, achieving a 15x adjusted EBITDA multiple [2]. - The sale of Saueressig, a European packaging business, for $41 million helped the company avoid significant restructuring costs and further reduce pension liabilities [2]. - The strategic pivot includes a focus on memorialization, which saw segment sales increase to $204.2 million from $190.5 million, supported by the Dodge acquisition [12]. Future Outlook - The company anticipates adjusted EBITDA guidance of at least $180 million for fiscal 2026, factoring in contributions from the Dodge acquisition and additional cost actions in the engineering business [19]. - Management expects to exit its 40% equity position in Propelis within 18 to 24 months, with anticipated synergies exceeding $60 million [5][8]. - Capital spending for fiscal 2026 is projected to be around $25 million, with a quarterly dividend of $0.255 per share declared [19].

Financial Data and Key Metrics Changes - The company reported net income of $43.6 million, or $1.39 per share, compared to a net loss of $3.5 million, or $0.11 per share a year ago, primarily due to a significant gain from the divestiture of the warehouse automation business [23][24] - Consolidated sales for the first quarter of fiscal 2026 were $285 million, down from $402 million a year ago, reflecting divestitures of the SGK business and European packaging and tooling businesses [24][25] - Adjusted EBITDA for the first quarter was $35.2 million, compared to $40 million in the prior year, primarily due to lower operating performance in the industrial technology segment [25] Business Line Data and Key Metrics Changes - Memorialization segment sales increased to $204.2 million from $190.5 million year-over-year, driven by higher casket volumes and inflationary pricing [26][27] - Industrial technology segment sales decreased to $69 million from $80.5 million, primarily due to lower sales in the engineering business and the divestiture of the tooling business [27][28] - Brand Solutions segment sales were $11.6 million, down from $130.8 million, impacted by the divestiture of the SGK business [30] Market Data and Key Metrics Changes - The company noted strong demand for mausoleum construction, which is expected to positively impact the Gibraltar Construction business [10] - The energy solutions business faced challenges, but there is a strong interest in dry battery electrode technology, with over $100 million in the lead pipeline [16][18] Company Strategy and Development Direction - The company has successfully reduced its leverage ratio below 3x and improved its balance sheet through strategic divestitures [4][6] - Future cash flow will be supported by a 40% interest in Propelis, with expected synergies exceeding $60 million [8] - The company is exploring strategic partnerships to enhance its intellectual property value and is focused on organic growth opportunities [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the memorialization segment's growth, anticipating a full-year contribution from the Dodge acquisition [19] - The company remains cautious about the timing of orders in the energy business due to slowed demand in North America and Europe [20] - Management highlighted the importance of strategic partnerships and investments to expand adoption of their technologies without heavy capital expenditure [18] Other Important Information - The company declared a quarterly dividend of $0.255 per share, payable on February 23, 2026 [33] - Cash flow used in operating activities for the first quarter was $52 million, reflecting typical seasonal lower earnings [31] Q&A Session Summary Question: Can you talk about the potential customers for ultracapacitors and batteries in North America and Asia? - Management indicated ongoing conversations with OEMs and battery manufacturers in North America and Europe, emphasizing the shift towards dry battery electrode technology [36][37] Question: Are there any potential M&A opportunities in the energy sector? - Management noted a focus on joint development opportunities rather than acquisitions, highlighting partnerships as a key strategy [39][40] Question: What are the expectations for the memorialization market in 2026? - Management expects continued growth in the memorialization segment, driven by the integration of the Dodge acquisition and inflationary pricing [48][50] Question: What is the expected revenue from energy storage in fiscal 2026? - Management projected revenue from energy storage to be in the range of $30-35 million [61] Question: What are the expectations for CapEx and free cash flow in fiscal 2026? - Management indicated CapEx should be around $25 million, with expectations for positive cash generation in the latter part of the fiscal year [62]

Financial Data and Key Metrics Changes - The company reported net income of $43.6 million, or $1.39 per share, compared to a net loss of $3.5 million, or -$0.11 per share a year ago, primarily due to a significant gain from the divestiture of the warehouse automation business [23] - Consolidated sales for the first quarter were $285 million, down from $402 million a year ago, reflecting divestitures of the SGK business and European packaging and tooling businesses [24] - Consolidated Adjusted EBITDA for the first quarter was $35.2 million, compared to $40 million a year ago, primarily due to lower operating performance in the engineering business [25] Business Line Data and Key Metrics Changes - The memorialization segment reported sales of $204.2 million, up from $190.5 million a year ago, with a 7% year-over-year increase driven by higher casket volumes and inflationary pricing [26] - The industrial technology segment's sales were $69 million, down from $80.5 million a year ago, primarily due to lower sales in the engineering business and the divestiture of the tooling business [27] - The brand solutions segment reported sales of $11.6 million, significantly down from $130.8 million a year ago, due to the divestiture of the SGK business [30] Market Data and Key Metrics Changes - The company noted strong demand for mausoleum construction, which is expected to positively impact the Gibraltar Construction business [10] - The energy solutions business faced challenges in the European market and U.S. battery space, but interest in their solutions remains strong, with over $100 million in the lead pipeline [16] Company Strategy and Development Direction - The company successfully executed a strategic pivot to reduce its leverage ratio below 3x, achieving this through the sale of its warehouse automation and Saueressig businesses [4][5] - Future cash realization is expected to be driven by a 40% interest in Propelis, with anticipated synergies exceeding $60 million [8] - The company is exploring strategic partnerships to enhance the adoption of its technologies without heavy capital expenditure [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the memorialization segment's growth, expecting a full year contribution from the Dodge acquisition to drive sales [19] - The company remains cautious about the timing of orders in the energy business due to slowed demand in North America and Europe [20] - Management highlighted the importance of patience in realizing the full value of their assets and maintaining a focus on shareholder returns [21] Other Important Information - The company reported cash flow used in operating activities of $52 million for the first quarter, reflecting typical seasonal lower earnings [31] - Outstanding debt at the end of the quarter was $537 million, with net debt declining by $173 million due to cash proceeds from divestitures [32] - The board declared a quarterly dividend of $0.255 per share, payable on February 23, 2026 [33] Q&A Session Summary Question: Can you discuss the potential customers for ultracapacitors and batteries in North America and Asia? - Management indicated ongoing conversations with OEMs and battery manufacturers in North America, emphasizing the shift towards dry battery electrode technology [36][37] Question: Are there any potential M&A opportunities in the energy sector? - Management noted a focus on joint development opportunities rather than acquisitions, as partnerships may provide necessary capital investments [39][40] Question: What are the expectations for the memorialization market in 2026? - Management expects continued growth in the memorialization segment, driven by the integration of the Dodge acquisition and inflationary pricing [48][50] Question: What is the anticipated revenue from energy storage in fiscal 2026? - Management projected revenue from energy storage to be in the range of $30-35 million [61] Question: What are the expectations for CapEx and free cash flow in fiscal 2026? - Management indicated CapEx should be around $25 million, with expectations for positive cash generation in the latter part of the fiscal year [62]

Financial Data and Key Metrics Changes - For Q1 2026, the company reported net income of $43.6 million, or $1.39 per share, compared to a net loss of $3.5 million, or -$0.11 per share a year ago, primarily due to a significant gain from the divestiture of the warehouse automation business [23][24] - Consolidated sales for Q1 2026 were $285 million, down from $402 million a year ago, mainly reflecting the divestitures of the SGK business and European packaging and tooling businesses [24][26] - Adjusted EBITDA for Q1 2026 was $35.2 million, compared to $40 million in the prior year, reflecting lower operating performance in the industrial technology segment [25][26] Business Line Data and Key Metrics Changes - The memorialization segment reported sales of $204.2 million, up from $190.5 million a year ago, driven by higher casket volumes and inflationary pricing [26][27] - The industrial technology segment's sales decreased to $69 million from $80.5 million, primarily due to lower sales in the engineering business and the divestiture of the tooling business [27][28] - The brand solutions segment reported sales of $11.6 million, down from $130.8 million a year ago, due to the divestiture of the SGK business [28][29] Market Data and Key Metrics Changes - The company noted strong demand for mausoleum construction, which is expected to positively impact the Gibraltar Construction business [10] - The energy solutions business faced challenges in the European market and U.S. battery space, but interest in their solutions remains strong, with over $100 million in the lead pipeline [15][16] Company Strategy and Development Direction - The company successfully executed a strategic pivot, achieving a leverage ratio below 3x and improving its balance sheet through divestitures [4][6] - Future cash realization is expected to be driven by a 40% interest in Propelis, with anticipated synergies exceeding $60 million [7][8] - The company is exploring strategic partnerships to enhance shareholder value and capture the full potential of its intellectual property [20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the memorialization segment, expecting growth driven by the Dodge acquisition and inflationary pricing [18][51] - The outlook for the energy solutions business remains cautious due to slowed demand in North America and Europe, but management is confident in the value of their intellectual property [19][15] - The company anticipates Adjusted EBITDA guidance of at least $180 million for fiscal 2026, factoring in various uncertainties [18][19] Other Important Information - The company reduced its pension liabilities significantly, from over $300 million to below $10 million [6][66] - Cash flow used in operating activities for Q1 2026 was $52 million, reflecting typical seasonal lower earnings [30] - The board declared a quarterly dividend of $0.255 per share, payable on February 23, 2026 [32] Q&A Session Summary Question: Can you discuss the potential customers for ultracapacitors and batteries in North America and Asia? - Management indicated ongoing conversations with OEMs and battery manufacturers in North America and Europe, emphasizing the importance of moving towards dry battery electrode (DBE) technology [35][36] Question: Are there any potential M&A opportunities in the energy sector? - Management noted a focus on joint development opportunities rather than acquisitions, as partnerships may provide necessary capital investments [38][39] Question: What are the expectations for the memorialization market in 2026? - Management expects growth in the memorialization segment driven by the Dodge acquisition and inflationary pricing, with a positive outlook for casket and mausoleum sales [49][51] Question: What is the expected revenue from energy storage in fiscal 2026? - Management projected revenue from energy storage to be in the range of $30-35 million [62] Question: What are the expectations for CapEx and free cash flow in fiscal 2026? - CapEx is expected to be around $25 million, with anticipated cash EBITDA of approximately $130 million after accounting for various factors [64]

First Quarter Fiscal 2026 Earnings Review February 4, 2026 Joseph C. Bartolacci President and Chief Executive Officer Daniel E. Stopar Chief Financial Officer and Treasurer www.matw.com | Nasdaq: MATW DISCLAIMER Any forward-looking statements contained in this release are included pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding the expectations, hopes, beliefs, intentions ...

Financial Performance - Earnings per share on a GAAP basis for Q1 fiscal 2026 was $1.39, compared to a loss of $0.11 in the same quarter last year [2]. - Net income for the three months ended December 31, 2025, was $43,629,000, a significant improvement from a net loss of $3,472,000 in the same period of 2024 [17]. - Adjusted net loss for the three months ended December 31, 2025, was $(6,011,000), translating to an adjusted loss per share of $(0.19), compared to adjusted net income of $4,334,000 and $0.14 per share in 2024 [23]. - Adjusted EBITDA for the same period was $35,238,000, with an adjusted EBITDA margin of 12.4%, compared to $40,023,000 and a margin of 10.0% in 2024 [20]. Sales and Revenue - The Memorialization segment reported sales of $204.2 million, an increase from $190.5 million a year ago, driven by the acquisition of The Dodge Company and higher sales volumes [15]. - The Industrial Technologies segment experienced a decline in sales to $69.0 million from $80.5 million, primarily due to challenges in the engineering business [15]. - Reported sales for the three months ended December 31, 2025, totaled $284,763,000, while constant currency sales were $282,208,000, reflecting a decrease due to foreign exchange translation rates [25]. Cash Flow and Financing - The company experienced a net cash used in operating activities of $51,992,000 for the three months ended December 31, 2025, compared to $25,009,000 in 2024 [17]. - Cash flows from investing activities provided $237,443,000 in the three months ended December 31, 2025, primarily due to proceeds from divestitures of $240,168,000 [17]. - The company reported a net cash used in financing activities of $186,637,000 for the three months ended December 31, 2025, compared to a net cash provided of $18,437,000 in 2024 [17]. Debt and Liabilities - The company executed divestitures generating $225.4 million in cash proceeds, leading to a $174 million reduction in outstanding debt [6]. - The company redeemed $300 million of 8.625% Senior Secured Second Lien Notes due 2027, expected to significantly reduce interest expense [6]. - Total assets decreased to $1.55 billion from $1.69 billion, while total liabilities reduced to $1.01 billion from $1.21 billion [16]. Strategic Initiatives - The integration of the SGK business with SGS into Propelis Group is projected to achieve cost synergies of approximately $60 million, expected to be realized in calendar 2026 [7]. - The company maintains its earnings guidance for fiscal 2026, projecting adjusted EBITDA of at least $180 million, including an estimated 40% share of Propelis adjusted EBITDA [9]. - The company incurred acquisition and divestiture costs of $777,000 in Q4 2025, up from $355,000 in Q4 2024 [23]. - Strategic initiatives and other charges amounted to $12,569,000 in Q4 2025, compared to $704,000 in Q4 2024 [23]. - The company reported a gain on divestitures of $(72,295,000) in Q4 2025, which negatively impacted adjusted net income [23]. Profitability Metrics - Adjusted EBITDA for the total company was $35.2 million, down from $40.0 million in the prior year [15]. - The gross profit margin improved to 35.0% from 31.3% year-over-year, reflecting better operating margins in the Memorialization segment [13].

Core Viewpoint - Matthews International reported a quarterly loss of $0.19 per share, significantly missing the Zacks Consensus Estimate of $0.05, compared to earnings of $0.14 per share a year ago [1] Financial Performance - The company experienced an earnings surprise of -522.22%, having previously expected earnings of $0.22 per share but only achieving $0.05, which is a surprise of +127.27% from the prior quarter [2] - Revenues for the quarter were $284.76 million, slightly missing the Zacks Consensus Estimate by 0.08%, and down from $401.84 million year-over-year [3] Stock Performance and Outlook - Matthews International shares have increased by approximately 2% since the beginning of the year, outperforming the S&P 500's gain of 1.9% [4] - The company's earnings outlook is mixed, with current consensus EPS estimates at $0.35 for the upcoming quarter and $1.14 for the current fiscal year, with revenues expected to be $290.2 million and $1.14 billion respectively [8] Industry Context - The Funeral Services industry, to which Matthews International belongs, is currently ranked in the top 40% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [9] - Another company in the same industry, Carriage Services, is expected to report quarterly earnings of $0.80 per share, reflecting a year-over-year increase of +29% [10]