Matthews International(US:MATW)2025-08-06 14:00Financial Data and Key Metrics Changes - Consolidated sales for Q3 2025 were $349 million, down from $428 million in Q3 2024, primarily due to the divestiture of SGK [5][28] - Net income increased to $15.4 million or $0.49 per share compared to $1.8 million or $0.06 per share a year ago, reflecting a gain from the SGK divestiture [27] - Consolidated adjusted EBITDA for Q3 2025 was $44.6 million, slightly down from $44.7 million in the previous year, indicating stability despite the divestiture [29] Business Line Data and Key Metrics Changes - Memorialization segment sales increased to $203.7 million from $202.7 million year-over-year, driven by the Dodge acquisition and inflationary pricing [31] - Industrial Technology segment sales decreased to $87.9 million from $91.7 million, primarily due to lower engineering sales, although warehouse automation showed improvement [33] - Brand Solutions segment sales fell to $57.7 million from $133.4 million, significantly impacted by the SGK divestiture [36] Market Data and Key Metrics Changes - The warehouse automation market is experiencing positive order trends, with significant increases in backlog due to renewed interest in automation technologies [14] - U.S. e-commerce is projected to grow by 10% in 2025, indicating a favorable market environment for the company's automation solutions [15] Company Strategy and Development Direction - The company is focused on a value creation plan aimed at simplifying corporate structure, reducing costs, and expanding into higher growth and margin businesses [6][9] - The merger of SGS and SGK is expected to create significant value, with projected annual adjusted EBITDA of about $100 million for Propellus Group [6][7] - The company is maintaining its previous earnings guidance of at least $190 million in adjusted EBITDA for 2025, despite the impact of the SGK divestiture [40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the early results of cost reduction initiatives and the potential for further debt reduction [9][24] - The company anticipates a return to normal revenue and pricing cadence in the memorialization segment for the remainder of the year [11] - Management noted ongoing legal disputes with Tesla but remains confident in the strength of its proprietary technology and market position [20][22] Other Important Information - The company expects to close the sale of remaining SGK German assets, further simplifying its structure and reducing debt levels [9] - Cash flow used in operating activities for Q3 2025 was $15.2 million, a decline from cash provided by operating activities of $13.5 million in the previous year [37] Q&A Session Summary Question: What was the EBITDA contribution from the Dodge Company this quarter? - The EBITDA contribution was approximately $1 million on $6 million in sales, consistent with previous estimates [43] Question: What was the energy storage related revenue for the quarter? - Sales in the energy business were down from a year ago, primarily due to ongoing issues discussed earlier [44] Question: How much synergy is expected between the new print head business and warehouse automation? - The connection between warehouse automation and the new print head business is significant, with expectations for future synergies as the products are rolled out [50][54] Question: Has the RotoGravir sale closed? - The sale is expected to close before September 30, generating over $30 million in net cash [70] Question: What is the status of the European packaging sale? - The European packaging business has an annual revenue run rate of about $50-60 million, with EBITDA being relatively breakeven [73] Question: Any updates on the legal front with Tesla? - Tesla has filed additional suits seeking to overturn a favorable ruling, but the likelihood of success is low [84]