Financial Data and Key Metrics Changes - The company's revenue for Q1 2025 was $40 million, down from $45.5 million a year ago, primarily due to a decline in the industrial technology segment [9] - Adjusted EBITDA for the memorialization and brand solution segments remained relatively steady compared to last year [10] - Cash flow utilized in operating activities for Q1 2025 was $25 million, compared to $27.3 million a year ago [20] - Outstanding debt increased to $809 million at the end of Q1 2025, up from $776 million at the end of September [21] Business Line Data and Key Metrics Changes - Memorialization segment sales decreased to $190.5 million from $208.1 million year-over-year, primarily due to lower Granite Memorial sales and casket unit volumes [11] - Industrial technology segment sales fell to $80.5 million from $111.4 million, significantly impacted by a slowdown in the Tesla project and litigation effects [14] - SGK Brand Solutions segment reported sales of $130.8 million, a slight increase from $130.5 million a year ago, driven by improved pricing and higher sales in private label and European cylinder businesses [17] Market Data and Key Metrics Changes - The decline in memorialization sales was affected by the disposal of unprofitable European cremation operations [12] - The industrial technology segment's decline was primarily due to the energy business, with modest contributions from warehouse automation and product identification businesses [52] Company Strategy and Development Direction - The company is focused on debt reduction, with plans to apply proceeds from the SGK transaction to reduce debt significantly [22] - Cost reduction programs are expected to yield annual savings of up to $50 million, with significant portions coming from engineering and tooling operations in Europe [24] - The recent arbitration ruling against Tesla has clarified the company's rights to market and sell its advanced dry battery electrode technology, potentially opening new opportunities [7] Management's Comments on Operating Environment and Future Outlook - Management expects cash flow and net leverage ratio to improve over the remainder of the fiscal year, with a target net leverage ratio of three or less [22][117] - The company anticipates a slow ramp-up in sales growth for its DBE technology due to the nature of automotive EV production development [35] - Management expressed optimism about the recovery in warehouse automation and product identification businesses, expecting a strong year ahead [76] Other Important Information - The board declared a quarterly dividend of $0.25 per share, payable on February 24, 2025 [25] - The company purchased approximately 171,000 shares under its stock repurchase program, primarily related to withholding tax on equity compensation vesting [22] Q&A Session Summary Question: Can you provide insight on reestablishing momentum in DBE technology sales post-lawsuit? - Management indicated that the marketing efforts were significantly slowed due to the ongoing dispute, but they expect to ramp up sales as they expand their customer portfolio [35][38] Question: What was the impact of exiting the European cremation business on Granite sales? - The decline in revenues was more weighted towards granite volume, with the exit from the European business being a significant contributor [48][50] Question: How much of the decline in industrial technology sales relates to energy storage? - The majority of the decline was attributed to the energy business, with expectations for recovery in warehouse automation [52][54] Question: What are the next steps following the arbitration ruling against Tesla? - Management stated they have a definitive ruling in their favor, allowing them to market their proprietary solutions, but the next steps from Tesla are uncertain [57][60] Question: What is the expected timeline for achieving the $50 million cost savings? - Management expects to reach a run rate of $25 million to $30 million by the end of the current fiscal year, with the remainder achieved by the end of the next fiscal year [62] Question: How will the SGK transaction proceeds be used? - The expectation is to apply a substantial portion of the proceeds to reduce revolver debt, with a focus on improving the capital structure [108][111]

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 or strategies of the Company regarding the future, including statements regarding the anticipated timing and benefits of the proposed joint venture transaction, and may be i ...

Sales Performance - Consolidated sales for the three months ended December 31, 2024, were $401.8 million, a decrease from $450.0 million in the same period of 2023, primarily due to lower sales in the Industrial Technologies and Memorialization segments[96]. - Memorialization segment sales decreased to $190.5 million in Q1 2025 from $208.1 million in Q1 2024, attributed to lower unit sales of caskets and cremation equipment due to a decline in U.S. death rates[97]. - Industrial Technologies segment sales fell to $80.5 million in Q1 2025 from $111.4 million in Q1 2024, impacted by lower sales of energy storage solutions and warehouse automation technologies[97]. - SGK Brand Solutions segment sales increased slightly to $130.8 million in Q1 2025 from $130.5 million in Q1 2024, driven by higher cylinder product sales in Europe and improved price realization[97]. Financial Metrics - Adjusted EBITDA for the three months ended December 31, 2024, was $40.0 million, down from $45.5 million in the same period of 2023, reflecting lower sales and higher labor costs[100]. - Memorialization segment adjusted EBITDA was $36.6 million in Q1 2025, compared to $36.7 million in Q1 2024, with the decrease due to lower unit sales and higher labor costs[100]. - Industrial Technologies segment adjusted EBITDA dropped to $1.8 million in Q1 2025 from $9.6 million in Q1 2024, primarily due to lower sales and margins[100]. - Selling and administrative expenses for Q1 2025 were $111.4 million, slightly down from $113.1 million in Q1 2024, with expenses as a percentage of sales increasing to 27.7% from 25.1%[99]. - Gross profit for the three months ended December 31, 2024, was $125.7 million, compared to $132.4 million in the same period a year ago, with gross profit margin improving to 31.3% from 29.4%[98]. - Interest expense for Q1 2025 increased to $15.7 million from $11.6 million in the same period last year, reflecting higher average interest rates[101]. - The Company reported a net loss of $3.472 million for the three months ended December 31, 2024, compared to a net loss of $2.303 million for the same period in 2023[107]. - Adjusted EBITDA for the three months ended December 31, 2024, was $40.023 million, down from $45.482 million in 2023, reflecting a decrease of approximately 12.8%[107]. Cash Flow and Capital Expenditures - Net cash used in operating activities was $25.0 million for the first three months of fiscal 2025, an improvement from $27.3 million in the same period of fiscal 2024[111]. - Cash provided by investing activities was $1.4 million for the three months ended December 31, 2024, compared to cash used of $14.2 million in the same period of 2023[112]. - Capital expenditures for fiscal 2025 are estimated to be in the range of approximately $50 million to $60 million, with an average of $52.4 million spent over the last three fiscal years[113]. - The Company expects to generate sufficient cash from operations to fund all anticipated capital spending projects[113]. Debt and Borrowings - The Company has a $750.0 million senior secured revolving credit facility, maturing in January 2029, with outstanding borrowings of $481.0 million as of December 31, 2024[115]. - Outstanding U.S. dollar denominated borrowings on the revolving credit facility had a weighted-average interest rate of 5.17% as of December 31, 2024[116]. - The Company had outstanding borrowings under a European credit facility totaling €3.0 million ($3.1 million) at December 31, 2024, with a weighted-average interest rate of 5.10%[122]. - Other borrowings decreased to $7.9 million at December 31, 2024, down from $15.6 million at September 30, 2024, with a weighted-average interest rate of 2.33%[123]. Working Capital and Obligations - Consolidated working capital increased to $227.6 million at December 31, 2024, compared to $197.8 million at September 30, 2024[129]. - Total contractual cash obligations amounted to $1,058.9 million as of December 31, 2024, with significant payments due in fiscal year 2025[131]. Legal and Regulatory Matters - The Company incurred legal costs related to an ongoing dispute with Tesla, totaling $6.9 million for the three months ended December 31, 2024[107]. - The Company is pursuing counterclaims against Tesla in arbitration related to trade secret misappropriation[148]. - The Company maintains that the claims made by Tesla are without merit and intends to vigorously defend itself[148]. - The interim award from the arbitrator affirmed the Company's right to sell its dry battery electrode solutions to customers other than Tesla[148]. - The Company does not expect any ongoing legal proceedings to have a material adverse effect on its financial condition or results of operations[146]. Cost Management and Market Conditions - The Company initiated cost reduction programs focused on engineering and tooling operations in Europe during the fourth quarter of fiscal 2024[135]. - Sales growth in the Industrial Technologies segment is influenced by economic conditions, new product development, and trends in electric vehicles and e-commerce[136]. - The Company expects currency fluctuations to significantly impact reported results due to its global operations, particularly in the Industrial Technologies and SGK Brand Solutions segments[136]. Stock Repurchase Program - The Company has a stock repurchase program with 440,220 shares available for repurchase as of December 31, 2024[128]. - A total of 171,101 shares were repurchased in the first quarter of fiscal 2025 at a weighted average price of $24.98 per share[151]. - As of December 31, 2024, the Company has 440,220 shares remaining available for repurchase under its stock repurchase program[150]. Disclosure and Risk Management - The Company evaluated its disclosure controls and procedures and concluded they were effective as of December 31, 2024[143]. - There have been no material changes in the Company's market risk during the three months ended December 31, 2024[141]. - The estimated fair value of the Company's SGK Brand Solutions reporting unit exceeded its carrying value by approximately 7%[139]. - Sales related to dry battery electrode solutions accounted for approximately 6% of the Company's total sales for fiscal 2024[148].

Financial Data and Key Metrics Changes - For Q1 2025, the company reported a net loss of $3.5 million or $0.11 per share, compared to a net loss of $2.3 million or $0.07 per share a year ago [19] - On a non-GAAP adjusted basis, net income attributable to the company was $4.3 million or $0.14 per share, down from $11.3 million or $0.37 per share last year, primarily due to lower adjusted EBITDA and higher interest expenses [19] - Consolidated sales for Q1 2025 were $401.8 million, down from $450 million a year ago, reflecting lower sales in the Industrial Technology segment and Memorialization segment [20] Business Line Data and Key Metrics Changes - Memorialization segment sales decreased to $190.5 million from $208.1 million, primarily due to lower Granite Memorial sales and casket unit volumes [22] - Industrial Technology segment sales fell to $80.5 million from $111.4 million, significantly impacted by lower engineering sales and the slowdown in the Tesla project [25] - SGK Brand Solutions segment reported sales of $130.8 million, slightly up from $130.5 million, driven by improved pricing and higher sales in private label and European cylinder businesses [27] Market Data and Key Metrics Changes - The U.S. casketed deaths declined, impacting sales in the Memorialization segment [20] - The company noted that the European cremation and incineration equipment operations were unprofitable and contributed to the decline in Memorialization sales [24] Company Strategy and Development Direction - The company plans to focus on higher growth and higher margin businesses following the sale of STK Brand Solutions, which is expected to create significant synergies and simplify the operating structure [9][10] - The recent arbitration ruling against Tesla allows the company to resume marketing its dry battery electrode technology, which is expected to unlock significant value [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the energy business and the potential for growth in the warehouse automation and product identification sectors [15] - The company is maintaining its guidance for adjusted EBITDA in the range of $200 million to $215 million, contingent on the timing of the SGK transaction [18] Other Important Information - The company expects to achieve annual consolidated savings of up to $50 million from ongoing cost reduction programs [33] - A quarterly dividend of $0.25 per share was declared, payable on February 24, 2025 [33] Q&A Session Summary Question: How quickly can momentum in DVE technology be reestablished post-lawsuit? - Management indicated that while there has been a slowdown due to the lawsuit, they expect to ramp up sales as they reinitiate marketing efforts and expand their customer base [37][39] Question: What was the impact of exiting the European cremation business on Memorialization? - The exit from the unprofitable European cremation business significantly contributed to the revenue decline in the Memorialization segment [48][52] Question: What are the next steps following the arbitration ruling against Tesla? - Management stated they have a definitive ruling in their favor and will continue to defend their rights to market and sell their proprietary technology [56][58] Question: What is the expected timeline for achieving cost savings from restructuring? - The company expects to reach a run rate of $25 million to $30 million in cost savings by the end of the fiscal year, with the remainder achieved in the following fiscal year [60] Question: How will the proceeds from the SGK transaction be used? - The company plans to apply a substantial portion of the proceeds to repay revolver debt, aiming to improve their leverage ratio [91][92]

Financial Performance - Consolidated sales for Q1 FY2025 were $401.8 million, a decrease of 10.7% from $450.0 million in Q1 FY2024[16] - Net loss attributable to Matthews for Q1 FY2025 was $3.5 million, or $0.11 per share, compared to a net loss of $2.3 million, or $0.07 per share in the prior year, representing a 50.8% increase in loss[16] - Adjusted EBITDA for Q1 FY2025 was $40.0 million, down 12.0% from $45.5 million in Q1 FY2024, primarily due to lower performance in the Industrial Technologies segment[16] - The net loss for the three months ended December 31, 2024, was $3,472 thousand, compared to a net loss of $2,303 thousand for the same period in 2023, indicating a worsening of approximately 51%[24] - Adjusted EBITDA for the three months ended December 31, 2024, was $40,023 thousand, down from $45,482 thousand in 2023, reflecting a decrease of about 12%[27] - The adjusted EBITDA margin for the three months ended December 31, 2024, was 10.0%, slightly down from 10.1% in the previous year[27] - Adjusted net income for the three months ended December 31, 2024, was $4,334 thousand, down from $11,347 thousand in 2023, representing a decline of about 62%[30] Segment Performance - The Memorialization segment reported sales of $190.5 million, down from $208.1 million in the prior year, while the SGK Brand Solutions segment saw a slight increase in sales to $130.8 million[22] - The Industrial Technologies segment experienced a significant decline in sales to $80.5 million, down from $111.4 million, largely due to reduced Tesla project work[22] - Reported sales for the three months ended December 31, 2024, totaled $401,842 thousand, with Memorialization at $190,486 thousand, SGK Brand Solutions at $80,533 thousand, and Industrial Technologies at $130,823 thousand[32] - Constant currency sales for the same period were $403,023 thousand, reflecting slight increases across all segments[32] - Reported adjusted EBITDA for the three months ended December 31, 2024, was $40,023 thousand, with a breakdown of $36,612 thousand from Memorialization, $1,832 thousand from SGK Brand Solutions, and $12,292 thousand from Industrial Technologies[32] Cash Flow and Debt - Cash flows from operating activities resulted in a net cash outflow of $25,009 thousand for the three months ended December 31, 2024, compared to an outflow of $27,266 thousand in 2023, showing an improvement of approximately 9.2%[24] - Outstanding debt increased by $32.7 million during Q1 FY2025, reflecting seasonal cash outflows and litigation-related costs[13] - The net debt as of December 31, 2024, was $775,698 thousand, an increase from $735,651 thousand on September 30, 2024[33] - The adjusted EBITDA for the trailing 12 months was $199,698 thousand, resulting in a net debt leverage ratio of 3.9 as of December 31, 2024, compared to 3.6 on September 30, 2024[33] Cost Management and Outlook - The company is maintaining its fiscal 2025 outlook, projecting adjusted EBITDA in the range of $205 million to $215 million[14] - Cost reduction initiatives are on track to achieve at least $50 million in savings, despite initial unfavorable impacts on GAAP results[8] - The company incurred acquisition and divestiture costs of $355 thousand for the three months ended December 31, 2024, compared to $899 thousand in 2023, a reduction of approximately 60%[30] Capital Expenditures and Assets - The company reported capital expenditures of $9,532 thousand for the three months ended December 31, 2024, down from $14,073 thousand in 2023, indicating a reduction of approximately 32%[24] - Total assets decreased from $1,834,890 thousand on September 30, 2024, to $1,791,719 thousand on December 31, 2024, representing a decline of approximately 2.4%[23] - Total shareholders' equity decreased from $437,206 thousand on September 30, 2024, to $413,456 thousand on December 31, 2024, a decline of about 5.4%[23] Strategic Initiatives - The SGK transaction is expected to close by mid-2025, with $350 million in upfront consideration, including $250 million in cash for debt reduction[5] - The company plans to market and sell its Dry Battery Electrode technology following a favorable arbitration ruling affirming its ownership rights[4]

Core Viewpoint - Matthews International reported quarterly earnings of $0.14 per share, missing the Zacks Consensus Estimate of $0.26 per share, and down from $0.37 per share a year ago, indicating a significant earnings surprise of -46.15% [1][2]. Financial Performance - The company posted revenues of $401.84 million for the quarter ended December 2024, which was 6.19% below the Zacks Consensus Estimate and down from $449.99 million year-over-year [3]. - Over the last four quarters, Matthews International has surpassed consensus revenue estimates two times [3]. Stock Performance - Matthews International shares have declined approximately 3.4% since the beginning of the year, contrasting with the S&P 500's gain of 3.1% [4]. - The current Zacks Rank for the stock is 3 (Hold), indicating expected performance in line with the market in the near future [7]. Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.55 on revenues of $453.76 million, and for the current fiscal year, it is $2 on revenues of $1.79 billion [8]. - The estimate revisions trend for Matthews International is mixed, and changes in these estimates could impact stock performance [7]. Industry Context - The Funeral Services industry, to which Matthews International belongs, is currently ranked in the top 34% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9]. - Another company in the same industry, Service Corp. (SCI), is expected to report quarterly earnings of $1.05 per share, reflecting a year-over-year increase of 12.9% [10].

Core Insights - Matthews International Corporation reported financial results for the first quarter of fiscal 2025, indicating that results were generally in line with expectations, maintaining the outlook for the full fiscal year [1][10] - The company experienced solid performance in the Memorialization and SGK Brand Solutions segments, while the Industrial Technologies segment faced challenges due to litigation with Tesla [1][2] Financial Performance - Consolidated sales for Q1 FY2025 were $401.8 million, a decrease of 10.7% from $450.0 million in Q1 FY2024 [13][14] - The net loss attributable to Matthews was $3.5 million, or $0.11 per share, compared to a loss of $2.3 million, or $0.07 per share in the prior year, representing a 50.8% increase in loss [14][19] - Adjusted EBITDA for Q1 FY2025 was $40.0 million, down 12.0% from $45.5 million in the same quarter last year [13][14] Segment Performance - The Memorialization segment reported sales of $190.5 million, down from $208.1 million, with adjusted EBITDA remaining relatively unchanged [20] - The Industrial Technologies segment saw a decline in sales to $80.5 million from $111.4 million, primarily due to reduced project work with Tesla [20][8] - The SGK Brand Solutions segment had a modest increase in sales to $130.8 million, reflecting improving conditions in the U.S. brand market and increased sales in the Asia-Pacific region [20][7] Strategic Developments - The company is on track to complete the SGK transaction by mid-2025, with an upfront consideration of $350 million, including $250 million in cash for debt reduction [3][10] - Cost reduction actions are underway, with expectations to achieve at least $50 million in savings, despite upfront costs affecting current GAAP results [5][10] - The board is conducting a comprehensive evaluation of strategic alternatives for the entire portfolio [4] Litigation and Costs - A recent arbitration ruling affirmed the company's ownership rights to its Dry Battery Electrode technology, allowing it to market and sell these solutions [2] - Litigation costs related to the Tesla matter have negatively impacted GAAP results, alongside increased healthcare costs of approximately $1.6 million compared to the previous year [9][14] Balance Sheet and Cash Flow - Outstanding debt increased by $32.7 million during Q1 FY2025, reflecting seasonal cash outflows and litigation-related expenses [12][21] - The company reported a net cash used in operating activities of $25.0 million for the quarter, compared to $27.3 million in the prior year [23]

Core Viewpoint - The arbitrator's ruling affirms Matthews International Corporation's right to sell its proprietary Dry Battery Electrode technology to customers other than Tesla, allowing the company to resume marketing and selling its products in the electric vehicle market [2][4]. Company Overview - Matthews International Corporation is a global provider of industrial technologies, memorialization products, and brand solutions, with approximately 12,000 employees across more than 30 countries [6]. Technology and Innovation - The company has a long-standing background in manufacturing advanced Dry Battery Electrode technology and was awarded U.S. Patent No. 12,136,727 B2 for systems related to manufacturing dry electrodes on November 5, 2024, which is expected to lead to further innovations in the DBE industry [3][4]. Market Position - The ruling allows Matthews to capitalize on the growing demand for battery solutions in the electric vehicle market, where manufacturers are seeking innovative technologies [2][3].

Core Viewpoint - Matthews International Corporation emphasizes the importance of shareholder support for its director nominees and highlights the potential risks associated with the opposing nominees from Barington, asserting that their understanding of Matthews' business is inadequate [2][3][5]. Group 1: Shareholder Support and Board Composition - GAMCO Asset Management, a significant shareholder with approximately 4.38% stake, has endorsed Matthews' director nominees, indicating confidence in the current board's ability to create long-term shareholder value [4]. - Matthews' board nominees, including Terry L. Dunlap, Alvaro Garcia-Tunon, and J. Michael Nauman, are presented as having the necessary experience and skills to guide the company's strategic direction effectively [17][18]. Group 2: Critique of Barington's Nominees - Barington's nominees are criticized for lacking relevant experience and understanding of Matthews' business, with specific examples highlighting their past failures and lack of preparedness during interactions with Matthews [12][13][14][15][16]. - The letter argues that Barington's simplistic view of Matthews' business could lead to detrimental decisions that would harm shareholder value [11]. Group 3: Business Overview and Strategy - Matthews International has a long history of evolving through innovation and investment, focusing on memorialization products, industrial technologies, and brand solutions [2][20]. - The company has successfully built a leading position in the memorialization segment, generating predictable free cash flow that supports dividends and reinvestment in high-growth areas [8][10].

Highlights Matthews' Longstanding Culture of Deceit Most Recently Evidenced by its Meandering and Misguided 68-page Presentation Believes Matthews' Status Quo is Untenable and the Election of Ana Amicarella, Chan Galbato and James Mitarotonda is Required to Drive Much-Needed Change and Long-Term Value CreationUrges Shareholders to Vote the GOLD Proxy Card "FOR" the Election of ALL of Barington Capital's Nominees NEW YORK, Jan. 30, 2025 /PRNewswire/ -- Barington Capital Group, L.P. ("Barington Capital"), a f ...