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]

Financial Data and Key Metrics Changes - The company reported a net loss of $8.9 million or $0.29 per share for Q2 2025, compared to a net income of $9 million or $0.29 per share a year ago [20] - Consolidated sales for Q2 2025 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 [21] - Adjusted EBITDA for Q2 2025 was $51.4 million, down from $56.8 million in the prior year, reflecting declines in industrial technologies and memorialization segments [22] 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 US casketed deaths and the disposal of unprofitable operations [23] - Industrial Technology segment sales fell to $80.8 million from $116.1 million, driven by lower engineering sales and warehouse automation sales [25] - SGK Brand Solutions segment sales increased to $141.2 million from $132.9 million, reflecting 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 energy solutions business is seeing renewed interest from South Korea, North America, and Europe, particularly in the grid storage market [37] - The memorialization segment is expected to stabilize, while warehouse automation is anticipated to show improved results in the second half of the fiscal year [17] Company Strategy and Development Direction - The company is focused on expanding its energy solutions business, particularly through dry battery electrode technology, and is building solutions to retrofit existing facilities [7] - The SGK transaction is expected to close soon, with an initial consideration of $350 million, which will primarily be used to reduce debt [9] - The company is committed to unlocking shareholder value and is exploring various strategic initiatives despite current market turbulence [18] 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 remains strong [6] - The company expects another stable year for the memorialization business and improved results in warehouse automation as the market begins to recover [17] - Cost reduction initiatives are on track to exceed initial projections of $50 million, with significant savings expected from engineering and administrative costs [30] Other Important Information - The company’s outstanding debt increased to $822 million as of March 31, 2025, with expectations of significant reduction following the SGK transaction [28] - A quarterly dividend of $0.25 per share was declared, payable on May 26, 2025 [31] Q&A Session Summary Question: How does the $100 million in customer quotes compare to last year? - Management indicated that the current quotes are dramatically higher than the same period last year, as the company was relatively out of the market previously [35][36] Question: What are the expectations for organic growth in the memorialization segment? - Management noted that there was normalization in the market, with expectations for continued growth in the upcoming quarters [39][40] Question: Can you elaborate on the cost reduction actions? - Management confirmed that the cost reduction target is running about $20 million this year and $30 million next year [42] Question: What is the status of customer engagement in battery solutions? - Management stated 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 equipment, significantly increasing production efficiency without major changes to the factory [66][70]

Financial Performance - Consolidated sales for Q2 FY2025 were $427.6 million, a decrease of 9.3% from $471.2 million in Q2 FY2024[9] - Net loss attributable to Matthews for Q2 FY2025 was $8.9 million, compared to a net income of $9.0 million in the prior year, representing a 198.8% decline[11] - Adjusted EBITDA for Q2 FY2025 was $51.4 million, down 9.5% from $56.8 million in Q2 FY2024[11] - Year-to-date consolidated sales for FY2025 were $829.5 million, a decrease of 10.0% from $921.2 million in FY2024[12] - Operating profit for the three months ended March 31, 2025, was $5,948, a significant decline of 72.1% from $21,328 in 2024[19] - Total Adjusted EBITDA for the six months ended March 31, 2025, was $91,437 thousand, down from $102,282 thousand in the prior year, reflecting a decrease of approximately 10.6%[27] - The Adjusted EBITDA for the trailing 12 months is $194,312,000, down from $199,698,000 in the previous quarter[35] - The decline in Adjusted EBITDA indicates potential challenges in operational performance[35] Debt and Cash Flow - Long-term debt increased to $815,823 as of March 31, 2025, from $769,614 as of September 30, 2024[23] - As of March 31, 2025, the total debt stands at $822,180,000, an increase from $809,211,000 on December 31, 2024[35] - Net Debt is reported at $781,934,000, showing a slight increase from $775,698,000 as of December 31, 2024[35] - Cash flows from operating activities for the six months ended March 31, 2025, resulted in a net cash used of $18,681, compared to $29,841 provided in 2024[24] - The company reported a net change in cash and cash equivalents of $(570) for the six months ended March 31, 2025, compared to a positive change of $3,396 in 2024[24] - Cash and cash equivalents decreased to $40,246,000 from $33,513,000 in the previous quarter[35] - The increase in the Net Debt Leverage Ratio suggests a higher reliance on debt financing[35] - The company may need to address cash flow management given the rising debt levels and declining EBITDA[35] Strategic Transactions - The SGK transaction is expected to close in early May 2025, with an upfront consideration of $350 million, including $250 million in cash for debt reduction[4] - The company projects a pro forma consolidated adjusted EBITDA of at least $190 million for FY2025, adjusted for the SGK transaction[8] - The company anticipates synergies exceeding $50 million from the combined entity post-SGK transaction[4] - Costs related to the pending sale of the company's interest in the SGK Brand Solutions business amounted to $10,586 thousand for the three months ended March 31, 2025[33] Shareholder Value and Cost Management - The company is evaluating strategic alternatives to unlock shareholder value, believing its inherent value is above current trading levels[6] - Cost reduction initiatives are on track to generate savings above the initial estimate of $50 million[3] Other Financial Metrics - Gross profit for the six months ended March 31, 2025, was $269,804, down 3.8% from $280,535 in 2024, with a gross margin of 32.5%[19] - Dividends declared per share increased by 4.2% to $0.25 for the three months ended March 31, 2025, compared to $0.24 in 2024[19] - The Adjusted EBITDA margin for the three months ended March 31, 2025, was 12.0%, compared to 12.1% for the same period in 2024[27] - The company incurred interest expenses of $17,010 thousand for the three months ended March 31, 2025, compared to $13,783 thousand in the prior year, representing an increase of approximately 23.5%[27] Legal and Acquisition Costs - Acquisition and divestiture costs for the three months ended March 31, 2025, totaled $12,353 thousand, significantly higher than $1,511 thousand in the same period of 2024[30] - Legal costs associated with an ongoing dispute with Tesla totaled $1,757 thousand for the three months ended March 31, 2025, compared to $2,602 thousand in the same period of 2024[33] - The company experienced a loss of $2,072 thousand related to the divestiture of a business in the Industrial Technologies segment for the three and six months ended March 31, 2025[33]

Core Viewpoint - Matthews International reported quarterly earnings of $0.34 per share, missing the Zacks Consensus Estimate of $0.36 per share, and down from $0.69 per share a year ago [1][2] Financial Performance - The company experienced an earnings surprise of -5.56% for the quarter, and previously, it had a significant earnings surprise of -46.15% when it reported $0.14 per share against an expectation of $0.26 per share [2] - Revenues for the quarter were $427.63 million, missing the Zacks Consensus Estimate by 1.79%, and down from $471.22 million year-over-year [3] - Over the last four quarters, Matthews International has surpassed consensus EPS estimates only once and has topped consensus revenue estimates just once [2][3] Stock Performance - Matthews International shares have declined approximately 22.4% since the beginning of the year, compared to a decline of -5.5% for the S&P 500 [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 consensus EPS estimate for the upcoming quarter is $0.41 on revenues of $427 million, and for the current fiscal year, it is $1.73 on revenues of $1.74 billion [8] - The outlook for the Funeral Services industry, where Matthews International operates, is currently in the top 36% of over 250 Zacks industries, suggesting a favorable environment for performance [9]