Matthews International(MATW) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the fiscal 2025 Fourth Quarter, the company reported a net loss of $27.5 million, or $0.88 per share, compared to a net loss of $68.2 million, or $2.21 per share, a year ago, primarily due to significant restructuring charges last year [22] - Consolidated sales for the fiscal 2025 Fourth Quarter were $319 million, down from $447 million a year ago, mainly due to the divestiture of the SGK business [22] - Consolidated adjusted EBITDA for the fiscal 2025 Fourth Quarter was $51.5 million, compared to $58.1 million a year ago, reflecting the impact of the SGK divestiture [22][23] Business Line Data and Key Metrics Changes - Memorialization segment sales for the fiscal 2025 Fourth Quarter were $209.7 million, up from $196.8 million a year ago, with acquisitions contributing approximately $11 million [24] - Industrial technology segment sales for the fiscal 2025 Fourth Quarter were $93 million, down from $113.9 million a year ago, primarily due to lower sales in the engineering business [26] - Brand solution segment sales were $16.2 million for the quarter, down from $135.9 million a year ago, due to the divestiture of the SGK business [27] Market Data and Key Metrics Changes - The warehouse automation business experienced strong order rates, contributing to improved revenues and adjusted EBITDA in Q4 [11] - The market response to Propelus, the new company formed from the SGK divestiture, has been favorable, with an EBITDA run rate significantly higher than the $100 million initially assumed [5] Company Strategy and Development Direction - The company aims to simplify its corporate structure, expand in higher growth and higher margin businesses, and reduce costs [4] - Recent divestitures, including the sale of SGK and warehouse automation, are part of a strategy to reduce debt and enhance shareholder value [6][9] - The company is actively evaluating other strategic portfolio opportunities with the assistance of JP Morgan [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term value creation for shareholders, emphasizing the importance of reducing debt and pursuing strategic initiatives [37][17] - The company expects adjusted EBITDA guidance of at least $180 million for fiscal 2026, factoring in the 40% interest in Propelus [17] Other Important Information - The company announced an increase in the quarterly dividend to $0.2505 per share, marking the 32nd consecutive annual dividend increase since becoming publicly traded [30] - The company is undergoing a leadership transition, with Steve Nicola retiring as CFO effective December 1, 2025 [65] Q&A Session Summary Question: Can you talk about the opportunity set regarding solid state and ultra capacitors? - Management noted increased interest in dry battery electrode technology for energy storage applications beyond automotive, including data centers [33] Question: How should we think about M&A and augmenting the technology portfolio? - The focus is currently on reducing debt, with no immediate M&A plans as the company manages ongoing divestitures and restructuring [36] Question: How is the memorialization business performing? - The business is operating well, with improvements noted after the sale of the underperforming European business [43] Question: Can you provide an update on beta testing for the new printhead solution? - The new printhead solution is set to begin deliveries in December, with significant market interest noted at trade shows [45] Question: What is the significance of the GS1 certification for the new chip product ID solution? - GS1 certification standardizes the reading of 2D codes, allowing for faster and more efficient scanning, which is critical for retailers [58]