MATTHEWS INTERNATIONAL CORP Q1 FY2025 earnings call

• Joe Bartolacci discussed an arbitration ruling regarding the company's energy business with Tesla, clarifying rights to market dry battery electrode technology. - Mentioned segment results including sales and adjusted EBITDA for memorialization, industrial technology, and SGK Brand Solutions segments. - Company initiated cost reduction programs expected to result in annual consolidated savings up to $50 million. - Board declared a quarterly dividend of $0.25 per share.

Memorialization segment: Sales for fiscal 2025 first quarter were $190.5 million compared to $208.1 million a year ago. Decrease due to lower Granite Memorial sales, casket unit volumes, and disposal of unprofitable European operations; partially offset by price realization and acquisition. Adjusted EBITDA was $36.6 million, relatively unchanged from $36.7 million a year ago. Industrial technology segment: Sales were $80.5 million compared to $111.4 million a year ago. Decrease due to slowdown in Tesla project, litigation impact, warehouse automation, and acquired product. Adjusted EBITDA was $1.8 million compared to $9.6 million a year ago. SGK Brand Solutions segment: Sales were $130.8 million compared to $130.5 million a year ago, an increase of $282,000. Increase due to improved pricing, private label, European cylinder, and Asia Pacific; offset by brand experience and European market decline. Adjusted EBITDA was $12.3 million compared to $12.9 million a year ago.

• Expect cash flow and net leverage ratio to improve over the remainder of the fiscal year. - $250 million cash proceeds from SGK transaction to be substantially applied to debt reduction upon receipt. - Stock repurchase of approximately 171,000 shares for withholding tax on equity compensation vesting. - Cost savings program on track to achieve and potentially exceed $50 million annual savings. - Quarterly dividend of $0.25 per share declared.

• Litigation impact on industrial technology segment sales. - Market conditions affecting sales in various segments. - Potential actions by Tesla post-arbitration ruling. - Execution risks of cost reduction programs affecting financial results.

Q: Could you give a sense of how quickly you can reestablish momentum in DBE technology and sales?

A: Joe Bartolacci stated that ramp would be slow at first due to automotive EV production development, but expected to expand with multiple customers.

Q: What was the impact of exiting the European cremation business on memorialization segment?

A: Steve Nicola and Joe Bartolacci said it was a significant contributor to the decline in memorialization sales.

Q: How much of the industrial technology decline relates to energy storage?

A: Joe Bartolacci said vast majority of decline was in energy business due to lawsuit delays, with warehouse business expected to recover.

Q: What are next steps for Tesla after arbitration ruling?

A: Joe Bartolacci said it's a confidential matter, but company will continue to defend its asset.

Q: Outlook for restructuring expenses during the year?

A: Steve Nicola said additional restructuring costs expected but should decline.

Q: How thinking about capital structure and using SGK proceeds?

A: Steve Nicola said proceeds to be applied to revolver debt, with focus on refinancing bonds post no-call expiration.