Matthews International(MATW) - 2025 Q2 - Quarterly Results

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]