Core Viewpoint - Matthews International is undergoing a strategic pivot focused on divestitures, debt reduction, and enhancing its core business in memorialization and high-value intellectual property, with significant gains from recent asset sales [3][4][6]. Financial Performance - For Q1 of fiscal 2026, Matthews reported a net income of $43.6 million, a turnaround from a net loss of $3.5 million in the previous year, primarily due to gains from divestitures [4][9]. - Consolidated sales decreased to $285 million from $402 million a year ago, with divestitures accounting for approximately $120 million of the decline [11]. - Adjusted EBITDA for the quarter was $35.2 million, down from $40.0 million, reflecting lower performance in the engineering business [11]. Debt Management - Remaining pension liabilities have significantly decreased to below $10 million from over $300 million a few years ago [1]. - Net debt as of December 31, 2025, was reported at $506 million, a reduction of $173 million in the quarter, aided by divestiture proceeds [1][6]. - The company executed early redemption of $300 million of 8.625% senior secured notes, which is expected to save about $12 million annually in interest expenses [6]. Divestitures and Strategic Focus - Matthews completed the sale of its warehouse automation business for $225 million, achieving a 15x adjusted EBITDA multiple [2]. - The sale of Saueressig, a European packaging business, for $41 million helped the company avoid significant restructuring costs and further reduce pension liabilities [2]. - The strategic pivot includes a focus on memorialization, which saw segment sales increase to $204.2 million from $190.5 million, supported by the Dodge acquisition [12]. Future Outlook - The company anticipates adjusted EBITDA guidance of at least $180 million for fiscal 2026, factoring in contributions from the Dodge acquisition and additional cost actions in the engineering business [19]. - Management expects to exit its 40% equity position in Propelis within 18 to 24 months, with anticipated synergies exceeding $60 million [5][8]. - Capital spending for fiscal 2026 is projected to be around $25 million, with a quarterly dividend of $0.255 per share declared [19].

Financial Data and Key Metrics Changes - For Q1 2026, the company reported net income of $43.6 million, or $1.39 per share, compared to a net loss of $3.5 million, or -$0.11 per share a year ago, primarily due to a significant gain from the divestiture of the warehouse automation business [23][24] - Consolidated sales for Q1 2026 were $285 million, down from $402 million a year ago, mainly reflecting the divestitures of the SGK business and European packaging and tooling businesses [24][26] - Adjusted EBITDA for Q1 2026 was $35.2 million, compared to $40 million in the prior year, reflecting lower operating performance in the industrial technology segment [25][26] Business Line Data and Key Metrics Changes - The memorialization segment reported sales of $204.2 million, up from $190.5 million a year ago, driven by higher casket volumes and inflationary pricing [26][27] - The industrial technology segment's sales decreased to $69 million from $80.5 million, primarily due to lower sales in the engineering business and the divestiture of the tooling business [27][28] - The brand solutions segment reported sales of $11.6 million, down from $130.8 million a year ago, due to the divestiture of the SGK business [28][29] Market Data and Key Metrics Changes - The company noted strong demand for mausoleum construction, which is expected to positively impact the Gibraltar Construction business [10] - The energy solutions business faced challenges in the European market and U.S. battery space, but interest in their solutions remains strong, with over $100 million in the lead pipeline [15][16] Company Strategy and Development Direction - The company successfully executed a strategic pivot, achieving a leverage ratio below 3x and improving its balance sheet through divestitures [4][6] - Future cash realization is expected to be driven by a 40% interest in Propelis, with anticipated synergies exceeding $60 million [7][8] - The company is exploring strategic partnerships to enhance shareholder value and capture the full potential of its intellectual property [20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the memorialization segment, expecting growth driven by the Dodge acquisition and inflationary pricing [18][51] - The outlook for the energy solutions business remains cautious due to slowed demand in North America and Europe, but management is confident in the value of their intellectual property [19][15] - The company anticipates Adjusted EBITDA guidance of at least $180 million for fiscal 2026, factoring in various uncertainties [18][19] Other Important Information - The company reduced its pension liabilities significantly, from over $300 million to below $10 million [6][66] - Cash flow used in operating activities for Q1 2026 was $52 million, reflecting typical seasonal lower earnings [30] - The board declared a quarterly dividend of $0.255 per share, payable on February 23, 2026 [32] Q&A Session Summary Question: Can you discuss the potential customers for ultracapacitors and batteries in North America and Asia? - Management indicated ongoing conversations with OEMs and battery manufacturers in North America and Europe, emphasizing the importance of moving towards dry battery electrode (DBE) technology [35][36] Question: Are there any potential M&A opportunities in the energy sector? - Management noted a focus on joint development opportunities rather than acquisitions, as partnerships may provide necessary capital investments [38][39] Question: What are the expectations for the memorialization market in 2026? - Management expects growth in the memorialization segment driven by the Dodge acquisition and inflationary pricing, with a positive outlook for casket and mausoleum sales [49][51] Question: What is the expected revenue from energy storage in fiscal 2026? - Management projected revenue from energy storage to be in the range of $30-35 million [62] Question: What are the expectations for CapEx and free cash flow in fiscal 2026? - CapEx is expected to be around $25 million, with anticipated cash EBITDA of approximately $130 million after accounting for various factors [64]

Core Insights - The ongoing strategic review has led to significant divestitures, simplifying Matthews' business mix and strengthening its balance sheet [1][2][3] - The company has received another notice of director nominations from Barington Capital, following an unsuccessful proxy contest in 2025 [1][10] - Shareholder proposals for the upcoming 2026 Annual Meeting will include board declassification and majority voting [10][11] Strategic Initiatives - The Board engaged J.P. Morgan in November 2024 to assist with a review of strategic alternatives, leading to decisive actions to enhance shareholder value [2] - Recent divestitures are aimed at reducing debt towards a long-term net leverage ratio goal of 2.5x [3] - The company is focusing on growth in the Memorialization and energy storage solutions markets, leveraging competitive technologies [3] Financial Performance - Recent fourth quarter earnings showed higher EBITDA and adjusted EPS compared to the previous year, excluding the impact of the SGK divestiture [5] - The Memorialization segment reported increased revenues and adjusted EBITDA year-over-year [5] - The company reduced total debt by $65.6 million during the fiscal year and returned over $12 million in share repurchases and $32 million in dividends [8] Recent Transactions - The sale of SGK Brand Solutions to Propelis generated $350 million in upfront consideration and a 40% stake in Propelis [6] - The Warehouse Automations business was sold to Duravant for $230 million, with cash consideration of $223.3 million [6] - Other transactions include the acquisition of The Dodge Company and pending sales of European packaging and tooling businesses [6] Board and Governance - The Board has been refreshed with four new directors since 2023, enhancing its expertise and experience [9] - The company has engaged constructively with Barington, despite the latter's attempts to run a proxy contest [9][13] - Shareholders are not required to take action at this time regarding the upcoming Annual Meeting [11]

Fourth Quarter Fiscal 2025 Earnings Teleconference November 21, 2025 Joseph C. Bartolacci President and Chief Executive Officer Steven F. Nicola Chief Financial Officer and Treasurer www.matw.com | Nasdaq: MATW DISCLAIMER Any forward-looking statements contained in this presentation 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, belie ...