Matthews International Corp ((MATW)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Matthews International Corp’s recent earnings call painted a mixed picture, highlighting both achievements and challenges. The company reported significant strides in cost reduction and strategic divestitures, alongside growth in segments like Memorialization and warehouse automation. However, these positives were counterbalanced by an overall revenue decline, primarily due to divestitures and hurdles in the Industrial Technologies segment, particularly with Tesla.
Value Creation and Cost Reduction Success
The company has begun to reap the benefits of its value creation plan, which includes gains from the divestiture of SGK, consolidated savings from a cost reduction program, and lower corporate and nonoperating costs. Notably, there was an improvement in EBITDA performance in both the Memorialization and Industrial Technologies segments.
Memorialization Segment Performance
The Memorialization segment reported a modest revenue increase and strong margin results in Q3 2025. This growth was driven by the Dodge acquisition and the divestiture of the European cremation business. The Dodge acquisition is expected to contribute an additional $12 million in annual EBITDA.
Warehouse Automation Business Growth
The warehouse automation business continued to experience positive order trends, fueled by AI-driven automation and other market dynamics. This resulted in a significant increase in backlog, indicating robust future growth potential.
Debt Reduction
Matthews International successfully reduced its debt by $120 million during the quarter, largely due to proceeds from the SGK transaction. The company anticipates further debt reductions in the future.
Positive Market Feedback for Propelis
The newly formed Propelis Group is projecting an initial annual adjusted EBITDA of approximately $100 million, with significant synergies identified. This positive market feedback underscores the potential of the Propelis initiative.
Revenue Decline Due to Divestiture
The company reported consolidated sales of $349 million in Q3 2025, a decline from $428 million year-over-year. This decrease was primarily attributed to the divestiture of SGK, which impacted overall revenue figures.
Challenges in Industrial Technologies Segment
The Industrial Technologies segment faced challenges, reporting lower revenues due to an ongoing dispute with Tesla that has affected the engineering business. This remains a critical area for resolution.
Cash Flow Challenges
Matthews International experienced cash flow challenges, with cash used in operating activities amounting to $15.2 million, compared to cash provided by $13.5 million a year ago. This was impacted by transaction and legal costs.
Forward-Looking Guidance
Looking ahead, Matthews International maintained its full-year adjusted EBITDA guidance of at least $190 million, factoring in its 40% interest in Propelis, the successor entity to SGK. The company highlighted improved performance in the Memorialization and Industrial Technologies segments, along with future synergies from the Propelis entity and ongoing strategic alternatives.
In summary, Matthews International’s earnings call revealed a balanced outlook with significant achievements in cost reduction and strategic growth initiatives. However, challenges remain, particularly in the Industrial Technologies segment. The company’s forward guidance remains optimistic, with expectations of continued growth and strategic synergies.