Core Insights - Matthews International Corporation announced the retirement of Chief Financial Officer Steven F. Nicola effective December 31, 2025, after over three decades with the company [1][2] - Daniel E. Stopar has been appointed as the new CFO and Treasurer, effective December 1, 2025, bringing extensive financial experience from his previous roles within Matthews and other companies [2] 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 [3] - The Industrial Technologies segment is a leading 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 [3] - The company has a significant investment in Propelis, a brand solutions business that offers integrated solutions including brand creative, packaging, and content production [3] - Matthews International employs over 5,400 individuals across 19 countries on four continents, dedicated to delivering high-quality products and services [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 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 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]