Matthews International (NASDAQ:MATW) executives used the company’s fiscal 2026 first-quarter earnings call to emphasize what CEO Joe Bartolacci described as a “strategic pivot” centered on divestitures, debt reduction, and a sharper focus on memorialization and high-value intellectual property. Management highlighted that the company achieved its target of bringing net leverage below 3x, supported by asset sales and refinancing actions.
Balance sheet actions and divestitures
Bartolacci said Matthews closed the sale of its warehouse automation business for $225 million, which he characterized as a 15x adjusted EBITDA multiple and an 11x after-tax multiple. He also noted the recent sale of Saueressig, the company’s European packaging and surfaces business, for $41 million in total consideration, including cash, assumption of pension and other liabilities, and promissory notes. Saueressig had generated about $1.5 million of EBITDA in the prior year, and Bartolacci said the transaction helped Matthews avoid significant restructuring costs and shed pension liabilities.
Separately, Bartolacci said Matthews redeemed $300 million of its 8.625% senior secured notes early in January, and expects the move to reduce annual interest expense by about $12 million.
Propelis stake and cash realization plans
A central element of Matthews’ longer-term cash flow expectations is its 40% interest in Propelis, the entity created through the merger of SGK and SGS. Bartolacci said Propelis is operating at an EBITDA run rate “significantly higher” than the $100 million assumed when the deal closed. He also said Propelis is migrating to its own SAP system, a move expected to “activate” $20 million in potential synergies, within a synergy target that exceeds $60 million.
Management said it anticipates exiting the Propelis equity position in an 18- to 24-month window. Bartolacci added that if the system conversion is successful, Matthews hopes to begin receiving some repayment of its $50 million preferred equity stake (which includes 10% PIK interest), possibly as soon as the company’s fiscal third quarter.
Stopar reminded investors that Matthews’ share of Propelis earnings is reported with a one-quarter lag. The fiscal first-quarter 2026 consolidated results include Matthews’ 40% share of Propelis results for July through September 2025, while the prior-year quarter included 100% of SGK.
First-quarter results: earnings boosted by divestiture gains
For the fiscal 2026 first quarter, Matthews reported net income of $43.6 million, or $1.39 per share, compared with a net loss of $3.5 million, or $0.11 per share, a year earlier. Stopar attributed the swing primarily to a significant gain on the warehouse automation divestiture, partly offset by losses on European packaging and tooling divestitures, higher litigation and strategic initiative costs, and weaker performance in industrial technologies.
Consolidated sales were $285 million, down from $402 million a year ago. Stopar said divestitures reduced quarterly sales by about $120 million. Adjusted EBITDA was $35.2 million, down from $40.0 million, primarily reflecting lower operating performance in the engineering business. On a non-GAAP adjusted basis, Matthews posted an adjusted net loss of $6.0 million, or $0.19 per share, versus adjusted net income of $4.3 million, or $0.14 per share, in the prior-year quarter.
Memorialization strength and Dodge integration
Management repeatedly pointed to memorialization as the company’s “engine.” Segment sales increased to $204.2 million from $190.5 million. Stopar said the Dodge acquisition contributed about $10.4 million of sales in the quarter, while higher casket, bronze, and granite cemetery memorial volumes and inflationary pricing also helped results. He noted that mausoleum sales declined due to project timing, and cremation equipment and related sales were also lower than a year ago.
Memorialization adjusted EBITDA rose to $38.9 million from $36.6 million, driven by volume, pricing, and cost savings initiatives, partially offset by higher labor and material costs. Stopar also cited benefits from the Dodge acquisition and the disposition of the unprofitable European cremation equipment business.
Bartolacci said Dodge integration is ahead of plan on synergies and that Matthews has taken steps to reduce the initial outlay for the deal through expected asset sales and working capital reductions. He said those actions should bring the adjusted purchase price closer to $50 million, with anticipated EBITDA contributions of over $12 million.
In Q&A, management said it continues to expect death rates in the 1.5% to 2% range, cremation rates to keep increasing but at a declining rate, and ongoing pricing actions to offset inflation. Executives also said January was “a difficult month” for memorialization, but they expected activity to pick up in February and March. On cremation, Bartolacci said Matthews consolidated manufacturing after shutting a West Coast facility and is expecting a “strong year,” citing interest in new products and service offerings.
Industrial Technologies headwinds; product identification progress and energy pipeline
Industrial Technologies sales declined to $69.0 million from $80.5 million. Stopar said results were hurt by lower engineering sales and the divestiture of the tooling business, partially offset by higher sales in warehouse automation prior to its sale. The segment posted an adjusted EBITDA loss of $4.5 million, compared with a $1.8 million profit a year ago, as lower engineering sales more than offset cost reduction actions and lower compensation expense.
On product identification, Bartolacci said the company’s new printhead chip product, Axian, received “exceptionally strong” interest following its debut at Pack Expo, with global interest building and distributor pull particularly in EMEA. He said Axian has broadened Matthews’ total addressable market in consumer packaged goods to over $3 billion. Management also disclosed it paused shipments temporarily to add electronic shielding to address electrical noise issues, describing the update as minor and consistent with early product launches. In Q&A, executives said the tweak caused about a 30 to 45 day delay.
Energy Solutions faced what Bartolacci described as near-term headwinds in Europe and the U.S., but he said interest remains supported by a lead pipeline over $100 million. He cited several quoted opportunities in calendering expected to see decisions in the second half of the fiscal year, and discussions related to ultracapacitors. He also highlighted a $50 million U.S.-based battery separator line opportunity that has passed technical validation, with an order expected later in the fiscal year as the customer secures supply agreements. Management said near-term expectations for the dry battery electrode market have decreased, though they continue to view the technology as an enabler of next-generation chemistries.
For fiscal 2026, Matthews expects adjusted EBITDA guidance (including its 40% interest in Propelis) of at least $180 million, with management citing a full-year contribution from Dodge and additional cost actions planned in the engineering business. Stopar said fiscal 2026 capital spending should be about $25 million. The board declared a quarterly dividend of $0.255 per share, payable February 23, 2026, to shareholders of record February 9, 2026.
About Matthews International (NASDAQ:MATW)
Matthews International Corporation (NASDAQ:MATW) is a diversified industrial company headquartered in Pittsburgh, Pennsylvania. The company operates through two primary business segments—Brand Solutions and Memorialization—offering a broad range of products and services designed to meet the needs of industrial manufacturers, brand marketers and the funeral industry worldwide.
In its Brand Solutions segment, Matthews International provides engraving and digital printing systems, automated finishing equipment, thermal management products and electronics assembly solutions.
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