Matthews International Corporation Q4 FY2025 earnings call

• Strategic Progress: Divested SGK and Warehouse Automation; retained 40% stake in Propelis which is outperforming; sold Warehouse Automation to Duravant LLC for $230M, expect $160M for debt reduction. Simplifying operating structure with smaller transactions. - Growth Investments: Dodge acquisition delivering better-than-expected results; acquired Keystone Memorials for personal mausoleums; launched Axian printhead with GS1 certification. - Cost Reductions: Reduced full year corporate costs by $8.5M. - Governance: Declassified Board, removed supermajority voting; appointed Michael Nauman as Chairman. - Engineering Business: Prolonged dispute with Tesla over proprietary dry battery electrode technology; received order for production scale machine for solid-state battery manufacturer; pipeline of opportunities over $150M.

Memorialization: Fourth quarter sales were $209.7 million compared to $196.8 million in the prior year. Adjusted EBITDA was $45.1 million compared to $40.5 million. Acquisitions (primarily Dodge) contributed ~$11 million, offset partially by the disposition of the European cremation equipment business. Industrial Technologies: Fourth quarter sales were $93 million compared to $113.9 million in the prior year. Adjusted EBITDA was $11 million compared to $15.9 million. Decline mainly due to lower engineering sales, offset partially by higher Warehouse Automation sales. Brand Solutions: Fourth quarter sales were $16.2 million compared to $135.9 million in the prior year. Adjusted EBITDA was $7.4 million compared to $17.3 million. Decrease resulted from the divestiture of the SGK business.

• Expect adjusted EBITDA for fiscal 2026 to be at least $180M. - Plan additional cost reductions at engineering business. - Anticipate significant debt reduction from divestitures: $160M from Warehouse Automation sale, $30M from European packaging and tooling sale.

• Tariffs impacting businesses, but team has mitigated by passing along prices. - Ongoing litigation with Tesla regarding proprietary dry battery electrode technology, with details in confidential arbitration. - Market volatility affecting business segments.

Q: Congratulations on the progress with the customers on the battery side. Can you talk a little bit about the opportunity set when you think about solid-state and ultracapacitors?

A: Our dry battery electrode technology applies to energy storage for data centers, ultracapacitors, etc. The customer looking at a $50M order next year is for storage, not automobiles. Interest is increasing.

Q: And then with the strategic review, you've been able to divest a number of businesses. You're potentially in a more flexible cash situation. How should we think about M&A and augmenting some of the technology portfolio?

A: Focused on reducing debt to target 2.5x or better. Exit of SGK will help. Will look at strategic initiatives on energy, memorialization, printheads but currently focused on debt reduction.

Q: Joe, you called out a firm order, and then you also called quantified another potential order. You also quoted pipeline opportunities. Is it -- are your customers less reticent to start working with you even though the Tesla lawsuit has not been completely resolved yet?

A: Customers are more focused on market environments. In EV, overcapacity on battery side. In solid state, smaller volumes but higher efficiency. Not so much worried about lawsuit as market opportunities.

Q: Can you provide an update on beta testing for the new Printhead solution? What are the key steps before you can commercialize it more broadly? And how should we think about the TAM for that product over the next 2 to 3 years?

A: Start deliveries in December. Limited chips initially. Market TAM over $2B. Steps include refining chip yield. Expect to commercialize further as process continues.

Q: Just to start, could you elaborate the solid-state opportunities for energy storage, which end markets are those primarily feeding?

A: Examples include motorcycles, small appliances, larger vehicles. Solid state offers better density, lighter weight, more safety, faster charge. Adoption is long term but addresses adoption challenges.