Matthews International(US:MATW)2025-02-07 17:16Sales 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].