[Fiscal 2025 Third Quarter Overview](index=1&type=section&id=Fiscal%202025%20Third%20Quarter%20Overview) [Fiscal 2025 Third Quarter Financial Highlights](index=1&type=section&id=1.1%20Fiscal%202025%20Third%20Quarter%20Financial%20Highlights) Matthews International Corporation reported a significant increase in GAAP EPS for Q3 FY2025, driven by the SGK divestiture gain. Both Memorialization and Industrial Technologies segments showed higher adjusted EBITDA, while the company successfully reduced outstanding debt and corporate costs - GAAP Earnings per share increased to **$0.49** from **$0.06** a year ago[3](index=3&type=chunk)[6](index=6&type=chunk) - Memorialization and Industrial Technologies segments reported higher adjusted EBITDA[3](index=3&type=chunk)[6](index=6&type=chunk) - Outstanding debt was reduced by **$120 million**[6](index=6&type=chunk)[9](index=9&type=chunk) - The company is realizing benefits from cost reduction actions, including an **11.4% ($4.9 million)** year-to-date reduction in corporate and non-operating costs[4](index=4&type=chunk)[6](index=6&type=chunk) - Strategic alternatives evaluation is progressing well, with an update expected in the coming months[6](index=6&type=chunk)[11](index=11&type=chunk) - The company maintains its fiscal 2025 outlook for adjusted EBITDA of at least **$190 million**[6](index=6&type=chunk)[12](index=12&type=chunk) [President and CEO Commentary](index=1&type=section&id=1.2%20President%20and%20CEO%20Commentary) Joseph C. Bartolacci, President and CEO, expressed satisfaction with Q3 FY2025 operating results, highlighting the positive impact of the SGK divestiture and cost reduction initiatives. He noted segment-specific performance, including the Memorialization segment's growth from the Dodge Company acquisition and the Industrial Technologies segment's recovery in warehouse automation despite the Tesla dispute. He also emphasized significant debt reduction and the progress of strategic alternatives - GAAP EPS of **$0.49** for Q3 FY2025, up from **$0.06** a year ago, significantly influenced by the SGK divestiture gain[3](index=3&type=chunk) - Cost reduction actions initiated last year were a key contributor to year-over-year improvement in the Industrial Technologies segment and a reduction in corporate and non-operating costs[4](index=4&type=chunk) - Memorialization segment sales were higher due to the acquisition of The Dodge Company, which is expected to be accretive to earnings[5](index=5&type=chunk) - Industrial Technologies segment saw a modest sales decline due to the Tesla dispute, but outstanding quotes are now over **$150 million** post-favorable ruling, with warehouse automation sales improving[8](index=8&type=chunk) - Consolidated outstanding debt was reduced by **$120 million** in Q3 FY2025, primarily from SGK divestiture proceeds[9](index=9&type=chunk) - Propelis Group (formed from SGK merger) has shown solid operating results and increased projected cost synergy estimates to approximately **$60 million**[10](index=10&type=chunk) - The Board, with J.P. Morgan, is evaluating strategic alternatives to improve shareholder value, with an update expected in several months[11](index=11&type=chunk) - The company maintains its fiscal 2025 adjusted EBITDA guidance of at least **$190 million**, including its estimated **40%** share of Propelis adjusted EBITDA[12](index=12&type=chunk) [Consolidated Financial Performance](index=2&type=section&id=Consolidated%20Financial%20Performance) [Third Quarter Fiscal 2025 Consolidated Results](index=2&type=section&id=2.1%20Third%20Quarter%20Fiscal%202025%20Consolidated%20Results) Consolidated sales for Q3 FY2025 decreased significantly due to the SGK divestiture, but net income attributable to Matthews saw a substantial increase, primarily driven by the gain on the SGK sale. Adjusted EBITDA remained relatively consistent year-over-year, though non-GAAP adjusted EPS declined | ($ in millions, except per share data) | Q3 FY2025 | Q3 FY2024 | Change | % Change | | :----------------------------------- | :-------- | :-------- | :----- | :------- | | Sales | $349.4 | $427.8 | $(78.4) | (18.3)% | | Net income attributable to Matthews | $15.4 | $1.8 | $13.6 | NM | | Diluted earnings per share | $0.49 | $0.06 | $0.43 | NM | | Non-GAAP adjusted net income | $9.2 | $17.3 | $(8.1) | (46.9)% | | Non-GAAP adjusted EPS | $0.28 | $0.56 | $(0.28)| (50.0)% | | Adjusted EBITDA | $44.6 | $44.7 | $(0.2) | (0.4)% | - Consolidated sales decreased by **$78.4 million (18.3%)** to **$349.4 million**, primarily due to the **$80.2 million** impact of the SGK divestiture[12](index=12&type=chunk)[14](index=14&type=chunk) - Net income attributable to the Company increased to **$15.4 million ($0.49 per share)** from **$1.8 million ($0.06 per share)** in the prior year, largely due to the gain on the SGK divestiture[12](index=12&type=chunk)[15](index=15&type=chunk) - Non-GAAP adjusted earnings per share decreased to **$0.28** from **$0.56** a year ago[12](index=12&type=chunk)[15](index=15&type=chunk) - Adjusted EBITDA was relatively consistent at **$44.6 million**, but would be **$51.3 million (up 14.6%)** including the **40%** interest in Propelis's estimated adjusted EBITDA for May and June 2025[12](index=12&type=chunk)[15](index=15&type=chunk)[18](index=18&type=chunk) [Fiscal 2025 Year-to-Date Consolidated Results](index=3&type=section&id=2.2%20Fiscal%202025%20Year-to-Date%20Consolidated%20Results) For the first nine months of fiscal 2025, consolidated sales declined, mainly due to the SGK divestiture and lower Industrial Technologies sales. Net income and non-GAAP adjusted EPS also decreased significantly year-over-year, as did adjusted EBITDA | ($ in millions, except per share data) | YTD FY2025 | YTD FY2024 | Change | % Change | | :----------------------------------- | :--------- | :--------- | :----- | :------- | | Sales | $1,178.8 | $1,349.0 | $(170.2)| (12.6)% |\n| Net income attributable to Matthews | $3.0 | $8.5 | $(5.5) | (64.7)% |\n| Diluted earnings per share | $0.10 | $0.27 | $(0.17)| (63.0)% |\n| Non-GAAP adjusted net income | $24.0 | $50.5 | $(26.5)| (52.5)% |\n| Non-GAAP adjusted EPS | $0.76 | $1.62 | $(0.86)| (53.1)% |\n| Adjusted EBITDA | $136.0 | $147.0 | $(11.0)| (7.5)% | - Consolidated sales for the nine months ended June 30, 2025, were **$1.18 billion**, a decrease of **$170.2 million (12.6%)** from **$1.35 billion** a year ago, primarily due to the SGK divestiture (**$80.2 million** impact) and lower Industrial Technologies sales[19](index=19&type=chunk)[22](index=22&type=chunk) - Net income attributable to the Company for the nine months decreased to **$3.0 million ($0.10 per share)** from **$8.5 million ($0.27 per share)** in the prior year[19](index=19&type=chunk)[23](index=23&type=chunk) - Non-GAAP adjusted earnings per share for the nine months decreased to **$0.76** from **$1.62** a year ago[19](index=19&type=chunk)[23](index=23&type=chunk) - Adjusted EBITDA for the first nine months of fiscal 2025 was **$136.0 million**, down from **$147.0 million** a year ago[19](index=19&type=chunk)[23](index=23&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Performance) [Memorialization Segment Performance](index=1&type=section&id=3.1%20Memorialization%20Segment%20Performance) The Memorialization segment reported higher sales in Q3 FY2025, primarily due to the acquisition of The Dodge Company, which is expected to be accretive to earnings. Despite modestly lower sales volumes for caskets and cemetery memorials, improved operating margins were achieved through inflationary price realization and productivity initiatives. Year-to-date sales were lower - Q3 FY2025 sales were higher than a year ago, primarily reflecting the acquisition of The Dodge Company, which is expected to be nicely accretive to earnings[5](index=5&type=chunk) - Sales volumes for caskets and cemetery memorials were modestly lower due to lower U.S. casketed deaths and prior year granite backlog reductions[5](index=5&type=chunk) - Earnings impact of declines was offset by inflationary price realization and significant productivity initiatives, leading to improved operating margins[7](index=7&type=chunk) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Sales | $203,728 | $202,664 | $599,834 | $632,891 | | Adjusted EBITDA| $42,801 | $38,737 | $124,451 | $122,051 | [Industrial Technologies Segment Performance](index=1&type=section&id=3.2%20Industrial%20Technologies%20Segment%20Performance) The Industrial Technologies segment experienced a modest sales decline in Q3 FY2025, mainly due to the ongoing Tesla dispute impacting engineering sales. However, post-favorable ruling, outstanding quotes have grown significantly, and warehouse automation business sales were higher with improving order rates and backlog. Adjusted EBITDA for the quarter increased substantially - Reported a modest decline in sales for Q3 FY2025, primarily from lower engineering sales due to the Tesla dispute[8](index=8&type=chunk) - Following a favorable ruling in February 2025, outstanding quotes are over **$150 million** and converting to orders, with further increases expected[8](index=8&type=chunk) - Sales for the warehouse automation business were higher, reflecting ongoing market recovery and improved order rates/backlog[8](index=8&type=chunk) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Sales | $87,901 | $91,731 | $249,269 | $319,241 | | Adjusted EBITDA| $9,047 | $4,196 | $16,921 | $23,846 | [Brand Solutions Segment Performance (SGK/Propelis)](index=2&type=section&id=3.3%20Brand%20Solutions%20Segment%20Performance%20(SGK%2FPropelis)) The Brand Solutions segment, which included SGK prior to its divestiture on May 1, 2025, showed sales growth before the transaction. Post-divestiture, SGK was contributed to Propelis Group, in which Matthews holds a 40% equity interest. Propelis has reported solid operating results and increased its projected cost synergy estimates to $60 million - SGK reported sales growth for Q3 FY2025 prior to its divestiture on May 1, 2025[14](index=14&type=chunk) - The SGK business was contributed to Propelis Group, with Matthews receiving **40% common equity**, **$50 million preferred equity**, and **$250 million cash proceeds ($228 million net)**[16](index=16&type=chunk) - Propelis Group has indicated solid operating results since the May 1, 2025 closing date and recently increased its projected cost synergy estimates to approximately **$60 million**[10](index=10&type=chunk) - Matthews' **40%** portion of Propelis's estimated adjusted EBITDA for May and June 2025 was **$6.7 million**[18](index=18&type=chunk) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Sales | $57,748 | $133,438 | $329,745 | $396,910 | | Adjusted EBITDA| $5,004 | $16,054 | $32,892 | $44,317 | [Strategic Developments and Financial Position](index=2&type=section&id=Strategic%20Developments%20and%20Financial%20Position) [Divestiture of the SGK Business](index=3&type=section&id=4.1%20Divestiture%20of%20the%20SGK%20Business) On May 1, 2025, Matthews International contributed its SGK business to a new entity, Propelis, in exchange for a 40% equity stake, a preferred equity investment, and significant cash proceeds. This divestiture was a major factor in the company's Q3 financial results and debt reduction - On May 1, 2025, the SGK business was contributed to Propelis in exchange for **40% common equity**, a **$50 million preferred equity investment**, and **$250 million in cash proceeds ($228 million net)**[16](index=16&type=chunk) - The consolidated financial information in the release reflects SGK's results only through the closing date, with Matthews' **40%** interest in Propelis's results to be reported on a one-quarter lag[17](index=17&type=chunk) - The gain on the divestiture of SGK was the most significant factor in the increase in net income attributable to the Company for Q3 FY2025[15](index=15&type=chunk) - The SGK divestiture contributed to a **$120 million** reduction in consolidated outstanding debt during Q3 FY2025[9](index=9&type=chunk) [Strategic Alternatives Evaluation](index=2&type=section&id=4.2%20Strategic%20Alternatives%20Evaluation) Matthews International is actively evaluating strategic alternatives with the support of J.P. Morgan to enhance shareholder value and better align with the organization's underlying value. This evaluation is expected to conclude within the next several months - The strategic alternatives evaluation is progressing well, with the Board and J.P. Morgan identifying several options for further consideration[11](index=11&type=chunk) - The goal of the evaluation is to improve shareholder value and achieve better alignment with the underlying value of the organization[11](index=11&type=chunk) - The company expects to complete this evaluation over the next several months and will provide an update to shareholders[11](index=11&type=chunk) [Debt Reduction and Financial Management](index=2&type=section&id=4.3%20Debt%20Reduction%20and%20Financial%20Management) Matthews International significantly reduced its consolidated outstanding debt by $120 million in Q3 FY2025, primarily utilizing proceeds from the SGK divestiture. The company anticipates further debt reduction in Q4 FY2025 based on operating cash flow projections and the potential sale of its European packaging business, leading to an improved Net Debt Leverage Ratio - Consolidated outstanding debt was reduced by **$120 million** during Q3 FY2025, mainly from SGK divestiture proceeds, partially offset by the Dodge Company acquisition and other transaction costs[9](index=9&type=chunk) - Further debt reduction is expected in Q4 FY2025, driven by current operating cash flow projections and the potential sale of the European packaging business[9](index=9&type=chunk) | (Dollars in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | | :--------------------- | :------------ | :------------- | :---------------- | :----------------- | | Total debt | $702,499 | $822,180 | $809,211 | $776,467 | | Less: Cash and cash equivalents | $(20,383) | $(40,246) | $(33,513) | $(40,816) | | Net Debt | $682,116 | $781,934 | $775,698 | $735,651 | | Adjusted EBITDA (trailing 12 months) | $194,116 | $194,312 | $199,698 | $205,157 | | Net Debt Leverage Ratio| 3.5 | 4.0 | 3.9 | 3.6 | [Company Information and Outlook](index=2&type=section&id=Company%20Information%20and%20Outlook) [About Matthews International Corporation](index=4&type=section&id=5.1%20About%20Matthews%20International%20Corporation) Matthews International Corporation is a global provider operating through two core businesses: Industrial Technologies and Memorialization, both focused on efficiency, growth, and innovation. The company also holds a significant investment in Propelis, a brand solutions business, and employs over 5,400 people across 19 countries - Matthews International operates through two core global businesses: Industrial Technologies (precision technologies and intelligent processes) and Memorialization (memorials, caskets, cremation/incineration equipment)[25](index=25&type=chunk) - The company has a significant investment in Propelis, a brand solutions business formed from the merger of SGK and SGS & Co., offering integrated solutions[25](index=25&type=chunk) - Matthews International has over **5,400 employees** in **19 countries** on four continents[25](index=25&type=chunk) [Fiscal 2025 Outlook](index=2&type=section&id=5.2%20Fiscal%202025%20Outlook) Based on results through June 30, 2025, and fourth-quarter projections, Matthews International is maintaining its previous earnings guidance for fiscal 2025, expecting adjusted EBITDA of at least $190 million, which includes its estimated 40% share of Propelis's adjusted EBITDA - The company is maintaining its previous earnings guidance for fiscal 2025[12](index=12&type=chunk) - Adjusted EBITDA is projected to be at least **$190 million** for fiscal 2025[12](index=12&type=chunk) - The adjusted EBITDA guidance includes the estimated **40%** share of Propelis adjusted EBITDA from May 1, 2025, through September 30, 2025[12](index=12&type=chunk) [Webcast Details](index=4&type=section&id=5.3%20Webcast%20Details) Matthews International hosted a conference call and webcast on Wednesday, August 6, 2025, to discuss its financial and operating results, corporate strategies, and outlook, followed by a Q&A session - A conference call and webcast were held on Wednesday, August 6, 2025, at **9:00 a.m. Eastern Time**[24](index=24&type=chunk) - The webcast reviewed financial and operating results, corporate strategies, and outlook, including a question-and-answer session[24](index=24&type=chunk) - Access was available via phone at (201) 689-8471 and audio webcast at www.matw.com, with a transcript to be posted on the Investor Relations section of the website[24](index=24&type=chunk) [Forward-looking Information](index=5&type=section&id=5.4%20Forward-looking%20Information) This section contains forward-looking statements subject to the 'safe harbor' provisions of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks and uncertainties that could cause actual results to differ materially from expectations, including economic conditions, currency fluctuations, material costs, and the ability to achieve anticipated benefits from strategic transactions - Forward-looking statements are included under the 'safe harbor' provisions of the Private Securities Litigation Reform Act of **1995**[26](index=26&type=chunk) - Such statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from management's expectations[26](index=26&type=chunk) - Key risk factors include changes in economic conditions, foreign currency exchange rates, interest rates, material costs, goodwill impairment, environmental liabilities, service disruptions, changes in mortality/cremation rates, competitive pressures, ability to achieve cost-reduction objectives, and risks related to acquisitions, divestitures, and cybersecurity[26](index=26&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) [Statements of Income](index=6&type=section&id=6.1%20Statements%20of%20Income) The condensed consolidated statements of income show a significant increase in net income and diluted EPS for Q3 FY2025 compared to the prior year, primarily driven by a substantial gain on the sale of the SGK Business. However, year-to-date net income and EPS declined | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Sales | $349,377 | $427,833 | $1,178,848 | $1,349,042 | | Gross profit | $121,956 | $131,837 | $391,760 | $412,372 | | Operating profit | $75,191 | $6,702 | $86,813 | $37,457 | | Net income attributable to Matthews | $15,387 | $1,777 | $2,999 | $8,501 | | Diluted earnings per share | $0.49 | $0.06 | $0.10 | $0.27 | | Non-GAAP earnings per share | $0.28 | $0.56 | $0.76 | $1.62 | - Sales decreased by **18.3%** for the three months and **12.6%** for the nine months ended June 30, 2025, primarily due to the SGK divestiture[27](index=27&type=chunk) - Operating profit significantly increased for both the three-month (NM) and nine-month (**131.8%**) periods, largely due to a **$57,103 thousand** gain on the sale of the SGK Business[27](index=27&type=chunk) - Net income attributable to Matthews increased substantially for the three months (NM) but decreased by **64.7%** for the nine months ended June 30, 2025[27](index=27&type=chunk) [Balance Sheet Information](index=7&type=section&id=6.2%20Balance%20Sheet%20Information) The condensed consolidated balance sheet shows a decrease in total assets from September 30, 2024, to June 30, 2025, primarily driven by reductions in goodwill, other intangible assets, and current assets. Total liabilities also decreased, while total shareholders' equity increased | (In thousands) | June 30, 2025 | September 30, 2024 | | :------------- | :------------ | :----------------- | | Total current assets | $516,279 | $632,543 | | Goodwill | $516,050 | $697,123 | | Other intangible assets, net | $83,840 | $126,026 | | Total assets | $1,705,965 | $1,834,890 | | Total current liabilities | $310,750 | $434,775 | | Long-term debt | $696,120 | $769,614 | | Total liabilities | $1,192,133 | $1,397,684 | | Total shareholders' equity | $513,832 | $437,206 | - Total assets decreased from **$1,834,890 thousand** at September 30, 2024, to **$1,705,965 thousand** at June 30, 2025[31](index=31&type=chunk) - Goodwill decreased by **$181,073 thousand** and other intangible assets, net, decreased by **$42,186 thousand**[31](index=31&type=chunk) - Total liabilities decreased from **$1,397,684 thousand** to **$1,192,133 thousand**, including a reduction in long-term debt[31](index=31&type=chunk) - Total shareholders' equity increased from **$437,206 thousand** to **$513,832 thousand**[31](index=31&type=chunk) [Cash Flows Information](index=9&type=section&id=6.3%20Cash%20Flows%20Information) For the nine months ended June 30, 2025, cash flows from operating activities turned negative, while investing activities generated a significant net cash inflow, primarily due to proceeds from the SGK Business sale. Financing activities resulted in a substantial net cash outflow, leading to an overall net decrease in cash and cash equivalents | (In thousands) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------ | :------------------------------ | | Net cash (used in) provided by operating activities | $(33,881) | $43,336 | | Net cash provided by (used in) investing activities | $153,249 | $(38,631) | | Net cash used in financing activities | $(139,440) | $(4,096) | | Net change in cash and cash equivalents | $(20,433) | $644 | - Net cash used in operating activities was **$33,881 thousand** for the nine months ended June 30, 2025, compared to net cash provided of **$43,336 thousand** in the prior year[32](index=32&type=chunk) - Net cash provided by investing activities was **$153,249 thousand**, primarily driven by **$228,004 thousand** in proceeds from the sale of the SGK Business[32](index=32&type=chunk) - Net cash used in financing activities significantly increased to **$139,440 thousand**, mainly due to net proceeds from long-term debt, purchases of treasury stock, and dividends[32](index=32&type=chunk) - Overall, there was a net decrease of **$20,433 thousand** in cash and cash equivalents for the nine months ended June 30, 2025[32](index=32&type=chunk) [Reconciliations of Non-GAAP Financial Measures](index=10&type=section&id=Reconciliations%20of%20Non-GAAP%20Financial%20Measures) [Adjusted EBITDA Reconciliation](index=11&type=section&id=7.1%20Adjusted%20EBITDA%20Reconciliation) The Adjusted EBITDA reconciliation provides a detailed breakdown of adjustments made to net income to arrive at Adjusted EBITDA, including income tax, interest expense, depreciation and amortization, acquisition/divestiture items, strategic initiatives, gain on SGK sale, and stock-based compensation. For Q3 FY2025, Adjusted EBITDA was $44.55 million, with an Adjusted EBITDA margin of 12.8% - Adjusted EBITDA for the three months ended June 30, 2025, was **$44,550 thousand**, with an Adjusted EBITDA margin of **12.8%**[35](index=35&type=chunk) - Adjustments include a significant gain on the sale of the SGK Business (**$57,103 thousand**) and costs related to strategic initiatives and the Tesla dispute (**$10,315 thousand** for Q3 FY2025)[35](index=35&type=chunk) - For the nine months ended June 30, 2025, Adjusted EBITDA was **$135,987 thousand**, with an Adjusted EBITDA margin of **11.5%**[35](index=35&type=chunk) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income | $15,387 | $1,777 | $2,999 | $8,501 | | Income tax provision (benefit) | $43,477 | $(8,829) | $38,391 | $(10,677) | | Interest expense | $16,804 | $14,005 | $50,668 | $40,539 | | Depreciation and amortization | $15,836 | $23,657 | $56,571 | $70,441 | | Gain on sale of SGK Business | $(57,103) | — | $(57,103) | — | | Total Adjusted EBITDA | $44,550 | $44,746 | $135,987 | $147,028 | [Adjusted Net Income and EPS Reconciliation](index=12&type=section&id=7.2%20Adjusted%20Net%20Income%20and%20EPS%20Reconciliation) The reconciliation of Adjusted Net Income and EPS details the non-GAAP adjustments made to GAAP net income, including acquisition/divestiture costs, strategic initiatives, the gain on SGK sale, and amortization. For Q3 FY2025, Adjusted Net Income was $9.189 million, resulting in an Adjusted EPS of $0.28, a decrease from the prior year - Adjusted net income for the three months ended June 30, 2025, was **$9,189 thousand**, resulting in an Adjusted EPS of **$0.28**, compared to **$0.56** in the prior year[38](index=38&type=chunk) - Key adjustments include a **$14,155 thousand** after-tax gain on the sale of the SGK Business and **$10,615 thousand** for strategic initiatives and other charges for Q3 FY2025[38](index=38&type=chunk) - For the nine months ended June 30, 2025, Adjusted net income was **$23,986 thousand**, with an Adjusted EPS of **$0.76**, down from **$1.62** a year ago[38](index=38&type=chunk) | (In thousands, except per share data) | Three Months Ended June 30, 2025 (per share) | Three Months Ended June 30, 2024 (per share) | Nine Months Ended June 30, 2025 (per share) | Nine Months Ended June 30, 2024 (per share) | | :------------------------------------ | :------------------------------------------- | :------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net income attributable to Matthews | $15,387 ($0.49) | $1,777 ($0.06) | $2,999 ($0.10) | $8,501 ($0.27) | | Acquisition and divestiture costs | $(6,901) ($(0.22)) | $1,626 ($0.05) | $5,807 ($0.19) | $4,036 ($0.13) | | Strategic initiatives and other charges | $10,615 ($0.33) | $6,715 ($0.22) | $14,516 ($0.45) | $15,812 ($0.51) | | Gain on sale of SGK Business | $(14,155) ($(0.45)) | — (—) | $(14,155) ($(0.45)) | — (—) | | Amortization | $2,605 ($0.08) | $6,777 ($0.22) | $12,271 ($0.39) | $20,843 ($0.67) | | Adjusted net income | $9,189 ($0.28) | $17,298 ($0.56) | $23,986 ($0.76) | $50,469 ($1.62) | [Constant Currency Sales and Adjusted EBITDA Reconciliation](index=13&type=section&id=7.3%20Constant%20Currency%20Sales%20and%20Adjusted%20EBITDA%20Reconciliation) This reconciliation adjusts reported sales and Adjusted EBITDA for the impact of foreign exchange translation rates to provide a clearer view of underlying business performance. For Q3 FY2025, constant currency sales were slightly lower than reported, while constant currency Adjusted EBITDA also saw a minor adjustment - Constant currency sales for the quarter ended June 30, 2025, were **$344,806 thousand**, compared to reported sales of **$349,377 thousand**, reflecting a negative impact from foreign exchange rates[42](index=42&type=chunk) - Constant currency adjusted EBITDA for the quarter ended June 30, 2025, was **$44,101 thousand**, slightly lower than the reported **$44,550 thousand**[42](index=42&type=chunk) | (In thousands) | Reported Sales Q3 FY2025 | Changes in FX Rates Q3 FY2025 | Constant Currency Sales Q3 FY2025 | | :------------- | :----------------------- | :---------------------------- | :-------------------------------- | | Memorialization| $203,728 | $(222) | $203,506 | | Industrial Technologies | $87,901 | $(2,944) | $84,957 | | Brand Solutions| $57,748 | $(1,405) | $56,343 | | Consolidated | $349,377 | $(4,571) | $344,806 | | (In thousands) | Reported Adjusted EBITDA Q3 FY2025 | Changes in FX Rates Q3 FY2025 | Constant Currency Adjusted EBITDA Q3 FY2025 | | :------------- | :-------------------------------- | :---------------------------- | :------------------------------------------ | | Memorialization| $42,801 | $4 | $42,805 | | Industrial Technologies | $9,047 | $(150) | $8,897 | | Brand Solutions| $5,004 | $(384) | $4,620 | | Corporate and Non-Operating | $(12,302) | $81 | $(12,221) | | Consolidated | $44,550 | $(449) | $44,101 | [Net Debt and Net Debt Leverage Ratio Reconciliation](index=14&type=section&id=7.4%20Net%20Debt%20and%20Net%20Debt%20Leverage%20Ratio%20Reconciliation) This reconciliation presents the company's net debt and net debt leverage ratio, which is calculated as outstanding debt (net of cash) relative to adjusted EBITDA. As of June 30, 2025, net debt significantly decreased, leading to an improved net debt leverage ratio of 3.5, down from 4.0 at March 31, 2025 - Net Debt as of June 30, 2025, was **$682,116 thousand**, a decrease from **$781,934 thousand** at March 31, 2025[43](index=43&type=chunk) - The Net Debt Leverage Ratio improved to **3.5** at June 30, 2025, from **4.0** at March 31, 2025[43](index=43&type=chunk) | (Dollars in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | | :--------------------- | :------------ | :------------- | :---------------- | :----------------- | | Total debt | $702,499 | $822,180 | $809,211 | $776,467 | | Less: Cash and cash equivalents | $(20,383) | $(40,246) | $(33,513) | $(40,816) | | Net Debt | $682,116 | $781,934 | $775,698 | $735,651 | | Adjusted EBITDA (trailing 12 months) | $194,116 | $194,312 | $199,698 | $205,157 | | Net Debt Leverage Ratio| 3.5 | 4.0 | 3.9 | 3.6 |

Core Viewpoint - Matthews International (MATW) reported quarterly earnings of $0.28 per share, missing the Zacks Consensus Estimate of $0.33 per share, and down from $0.56 per share a year ago [1][2] Financial Performance - The earnings surprise for the quarter was -15.15%, with the company previously expected to post earnings of $0.36 per share but actually reporting $0.34 per share, resulting in a -5.56% surprise [2] - Revenues for the quarter ended June 2025 were $349.38 million, exceeding the Zacks Consensus Estimate by 7.73%, but down from $427.83 million year-over-year [3] - Over the last four quarters, the company has surpassed consensus revenue estimates two times [3] Stock Performance - Matthews International shares have declined approximately 16.3% since the beginning of the year, contrasting with the S&P 500's gain of 7.6% [4] - The current Zacks Rank for the stock is 3 (Hold), indicating expected performance in line with the market in the near future [7] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.42 on revenues of $290 million, and for the current fiscal year, it is $1.22 on revenues of $1.44 billion [8] - The outlook for the Funeral Services industry, where Matthews operates, is currently in the top 16% of over 250 Zacks industries, suggesting a favorable environment for performance [9] Competitor Insights - Carriage Services (CSV), another company in the Funeral Services industry, is expected to report quarterly earnings of $0.72 per share, reflecting a year-over-year increase of +14.3% [10] - Carriage Services' anticipated revenues are $100.47 million, which is a decrease of 1.8% from the previous year [11]

Core Insights - Matthews International Corporation reported a significant increase in GAAP earnings per share to $0.49 for Q3 FY2025, up from $0.06 in the same quarter last year, largely due to a gain from the divestiture of the SGK business [2][12][8] - The company achieved a reduction in corporate and non-operating costs by 11.4%, amounting to $4.9 million year-over-year, contributing to improved operating results [3][8] - The Memorialization segment saw higher adjusted EBITDA, driven by the acquisition of The Dodge Company, despite a modest decline in sales volumes for caskets and cemetery memorials [4][27] - The Industrial Technologies segment experienced a slight decline in sales, primarily due to the ongoing litigation with Tesla, but has seen a positive trend in outstanding quotes exceeding $150 million [5][8] - Consolidated sales for Q3 FY2025 were $349.4 million, down 18.3% from $427.8 million in Q3 FY2024, primarily due to the impact of the SGK divestiture [10][11] - The company reduced its outstanding debt by $120 million during the quarter, reflecting proceeds from the SGK divestiture [6][8] Financial Performance - Net income attributable to Matthews for Q3 FY2025 was $15.4 million, compared to $1.8 million in the prior year, with a notable gain from the SGK divestiture [12][10] - Non-GAAP adjusted earnings per share decreased to $0.28 from $0.56 year-over-year, reflecting the impact of the divestiture and other factors [10][12] - Adjusted EBITDA for Q3 FY2025 was $44.6 million, slightly down from $44.7 million in the same quarter last year [10][27] Segment Performance - The Memorialization segment reported sales of $203.7 million, a slight increase from $202.7 million year-over-year, benefiting from the recent acquisition [27] - The Industrial Technologies segment's sales were $87.9 million, down from $91.7 million, impacted by the Tesla litigation but showing recovery in warehouse automation [27][5] - Brand Solutions segment sales dropped significantly to $57.7 million from $133.4 million, reflecting the divestiture of SGK [27] Strategic Developments - The integration of the SGK business into the newly formed Propelis Group is progressing well, with projected cost synergies now estimated at approximately $60 million [7][8] - The company is actively evaluating strategic alternatives to enhance shareholder value, with support from J.P. Morgan [9][8] - The company maintains its earnings guidance for fiscal 2025, projecting adjusted EBITDA of at least $190 million [9][8]

Core Viewpoint - Matthews International Corporation is set to release its third quarter fiscal year 2025 earnings results on August 5, 2025, after market close [1] Financial Results Announcement - The company will host a conference call and webcast on August 6, 2025, at 9:00 a.m. Eastern Time to review financial and operating results and discuss future outlook [2][3] - Key participants in the call will include Joseph C. Bartolacci, President and CEO, and Steven F. Nicola, Chief Financial Officer and Treasurer [2] Company Overview - Matthews International Corporation operates through two main segments: Industrial Technologies and Memorialization, focusing on operational efficiency and long-term growth through innovation and strategic expansion [4] - The Industrial Technologies segment is a global innovator in precision technologies and intelligent processes, while the Memorialization segment provides products such as memorials, caskets, and cremation equipment to cemetery and funeral home customers [4] - The company employs over 5,400 individuals across 19 countries on four continents, dedicated to delivering high-quality products and services [4]

Group 1 - Investors in Matthews International Corporation (MATW) should monitor the stock due to high implied volatility in the options market, particularly the Dec 19, 2025 $12.50 Call option [1] - Implied volatility indicates market expectations for significant price movement, suggesting potential upcoming events that could lead to a rally or sell-off [2] - Matthews International currently holds a Zacks Rank 4 (Sell) in the Funeral Services industry, which is in the bottom 10% of the Zacks Industry Rank [3] Group 2 - No analysts have increased earnings estimates for Matthews International in the last 30 days, with one analyst revising the estimate downward, reducing the Zacks Consensus Estimate from 41 cents to 33 cents per share [3] - The high implied volatility may indicate a developing trade opportunity, as options traders often seek to sell premium on such options to capture decay [4]

Company Overview - Matthews Memorialization, a division of Matthews International Corporation, has acquired The Dodge Company for $57 million, enhancing its product offerings in the death care industry [1] - The Dodge Company is recognized as the largest supplier of embalming chemicals and cosmetics in North America, providing a wide range of products for funeral service providers since its founding in 1893 [5] Strategic Implications - The acquisition aligns with Matthews' strategy to offer a comprehensive range of products and solutions to funeral homes and cemeteries, thereby strengthening its market position [1][2] - Dodge's established customer relationships and reputation for quality in embalming solutions are expected to complement Matthews' existing offerings and enhance customer service continuity [2] Operational Continuity - Post-acquisition, Dodge customers will experience no changes in their purchasing processes, maintaining their relationships with existing sales and customer service representatives [2][3] - Tim Collison, the CEO of Dodge, will continue to lead the company as part of Matthews, ensuring stability and continuity in operations [2] Corporate Structure - Matthews International operates through two main segments: Industrial Technologies and Memorialization, focusing on operational efficiency and long-term growth through innovation and strategic expansion [4] - The Memorialization segment is a leading provider of memorialization products, including caskets and cremation equipment, primarily serving cemetery and funeral home customers [4]

Group 1 - Matthews International (NASDAQ: MATW) has reported earnings and is planning a substantial stock buyback [2] - The company's enterprise value (EV) is approximately $1.4 billion, following the sale of SGK [2] - The Value Lab offers a portfolio with real-time updates, 24/7 chat support, global market news, feedback on stock ideas, and monthly new trades [2] Group 2 - The Valkyrie Trading Society consists of analysts focusing on high conviction and obscure developed market ideas that are expected to yield non-correlated and outsized returns [3]

Core Insights - Matthews International Corporation successfully closed the sale of its SGK Brand Solutions business to a new entity formed by affiliates of SGS & Co, creating a leading global provider of brand solutions [1][2] - The transaction provided Matthews with $350 million in upfront consideration, including $250 million in cash, $50 million in preferred equity, and retention of approximately $50 million in trade receivables [2] - Matthews retains a 40% common equity interest in the new company, which is expected to achieve over $50 million in annual cost synergies and growth opportunities within the next 30 months [2][3] Financial Impact - The cash proceeds from the sale will be utilized to significantly reduce Matthews' outstanding debt, thereby strengthening its balance sheet and enhancing financial flexibility for future strategic initiatives [3] - The new entity is projected to enhance the value of Matthews' ongoing ownership stake through combined services and client portfolios [3] Leadership and Strategic Focus - Gary R. Kohl has been appointed as the CEO of the new entity, with Matthew T. Gresge as Executive Chairman, both expected to drive growth and innovation [3][4] - The sale allows Matthews to concentrate on its core businesses, improving its strategic focus while benefiting from the future growth of the new entity through its minority interest [4][5] Company Overview - Matthews International operates through two main segments: Industrial Technologies and Memorialization, focusing on operational efficiency and long-term growth through innovation and strategic expansion [6] - The Industrial Technologies segment is recognized as a global innovator, while the Memorialization segment provides essential products to cemetery and funeral home customers [6]

Financial Data and Key Metrics Changes - The company reported a net loss of $8.9 million or $0.29 per share for the second quarter of fiscal 2025, compared to a net income of $9 million or $0.29 per share a year ago [21] - Consolidated sales for the second quarter were $427.6 million, down from $471.2 million in the same quarter last year [22] - Adjusted EBITDA for the second quarter was $51.4 million, compared to $56.8 million a year ago, reflecting declines in industrial technologies and memorialization segments [23] Business Line Data and Key Metrics Changes - Memorialization segment sales decreased to $205.6 million from $222.2 million year-over-year, primarily due to lower unit volumes and casketed deaths [24] - Industrial Technology segment sales fell to $80.8 million from $116.1 million, driven by lower engineering sales and warehouse automation sales [27] - SGK Brand Solutions segment sales increased to $141.2 million from $132.9 million, reflecting higher merchandising sales in the US and Asia Pacific [28] Market Data and Key Metrics Changes - The company has a backlog of approximately $70 million in equipment for energy solutions, with significant interest from battery manufacturers in South Korea, Europe, and North America [14] - The estimated US casketed deaths declined compared to the same quarter last year, impacting memorialization revenues [16] Company Strategy and Development Direction - The company is focusing on expanding its energy solutions business, particularly in dry battery electrode technology, and has reengaged with multiple battery manufacturers [6][7] - A partnership with Teradyne for warehouse automation aims to enhance cost and efficiency through autonomous robotic solutions [11] - The company is committed to unlocking shareholder value and is considering various strategic initiatives despite current market turbulence [19] Management's Comments on Operating Environment and Future Outlook - Management noted that the sales lead time in the energy solutions industry is long, but demand for innovative engineering solutions for EV batteries is significant [8] - The company expects stable results from the memorialization business and improved performance in warehouse automation in the second half of the fiscal year [18] - Cost reduction initiatives are on track to exceed initial projections of $50 million in savings [32] Other Important Information - The company expects to close the SGK transaction soon, which will provide $350 million in upfront consideration, primarily for debt reduction [9][10] - The board declared a quarterly dividend of $0.25 per share, payable on May 26, 2025 [33] Q&A Session Summary Question: How does the $100 million in customer quotes compare to last year? - Management indicated that the current quotes are significantly higher than the same period last year, reflecting renewed interest in their solutions, particularly from South Korea and North America [36][37] Question: What are the expectations for organic growth in the memorialization segment? - Management noted that there was a normalization in death rates compared to last year, which had higher than normal granite-related sales [40][42] Question: Can you elaborate on the cost reduction actions? - Management stated that the cost reduction actions are expected to yield $20 million this year and $30 million next year [43][45] Question: What is the status of customer engagement on the battery side? - Management confirmed that most of the $100 million in quotes is for mass production, indicating customers are beyond the testing phase [48][49] Question: How does the retrofit opportunity work? - Management explained that the retrofit process allows existing facilities to utilize their dry battery electrode technology without significant changes to their current operations [65][66] Question: What is the business case for grid storage versus EV? - Management clarified that the value propositions for both markets are similar, with dry technology offering better efficiency and cost-effectiveness [74][76]

Financial Data and Key Metrics Changes - The company reported a net loss of $8.9 million or $0.29 per share for the second quarter of fiscal 2025, compared to a net income of $9 million or $0.29 per share a year ago [19] - Consolidated sales for the second quarter were $427.6 million, down from $471.2 million in the same quarter last year, primarily due to lower sales in the industrial technology segment [20] - Adjusted EBITDA for the second quarter was $51.4 million, down from $56.8 million a year ago, reflecting declines in industrial technologies and memorialization segments [21] Business Line Data and Key Metrics Changes - Memorialization segment sales were $205.6 million, down from $222.2 million year-over-year, primarily due to lower US casketed deaths and the disposal of unprofitable operations [22] - Industrial Technology segment sales decreased to $80.8 million from $116.1 million, mainly due to lower engineering sales and the shutdown of an unprofitable automotive business [25] - SGK Brand Solutions segment sales increased to $141.2 million from $132.9 million, driven by higher merchandising sales in the US and Asia Pacific markets [26] Market Data and Key Metrics Changes - The company has reengaged with multiple battery manufacturers and auto OEMs, issuing quotes exceeding $100 million, indicating significant demand for dry battery electrode technology [6] - The backlog for energy solutions remains at approximately $70 million, with growing interest in solid-state battery development and energy grid storage [12] - Sales for the warehouse automation segment were lower year-over-year, but there are signs of recovery with strong order intake and a healthy backlog [13] Company Strategy and Development Direction - The company is focusing on expanding its energy solutions business by retrofitting existing facilities with dry battery electrode technology, which could open new market opportunities [7] - The strategic divestiture of the SGK Brand Solutions segment is expected to generate approximately $400 million in total initial consideration, which will be used to reduce debt and potentially repurchase stock [8][9] - The partnership with Teradyne for warehouse automation aims to enhance cost and efficiency through autonomous robotic solutions [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the energy solutions business, noting significant interest from battery operators in South Korea, North America, and Europe [36] - The company anticipates stable results from the memorialization business and expects improved performance in warehouse automation in the second half of the fiscal year [16] - Management highlighted ongoing cost reduction initiatives expected to generate savings exceeding $50 million, with a focus on engineering and administrative costs [30] Other Important Information - The company plans to report its 40% interest in the new SGKSGS entity on a one-quarter lag, affecting the timing of reported adjusted EBITDA [32] - A quarterly dividend of $0.25 per share was declared, payable on May 26, 2025 [32] Q&A Session Summary Question: How does the $100 million in customer quotes compare to last year? - Management indicated that the current quotes are significantly higher than the same period last year, as the company was relatively out of the market during that time [36] Question: What are the expectations for organic growth in the memorialization segment? - Management noted that there was a normalization in death rates compared to last year, which contributed to the decline, but they expect continued normalization moving forward [41] Question: Can you elaborate on the cost reduction actions? - Management stated that the cost reduction actions are expected to yield $20 million this year and $30 million next year [42] Question: What is the status of customer engagement on the battery side? - Management confirmed that most of the $100 million in quotes are for mass production, indicating customers are beyond the testing phase [47] Question: Can you discuss the strategy for warehouse automation? - Management highlighted the partnership with Teradyne to enhance warehouse automation through robotics, positioning the company uniquely in the market [54] Question: Will the share repurchase authorization be expanded post-SGK close? - Management acknowledged the possibility of expanding the share repurchase authorization following the SGK transaction [64]