Matthews International — Fiscal 2026 Third Quarter Earnings Summary

Financial Performance

• Consolidated sales for the three months ended June 30, 2026, were $246.0 million, a 29.6% decrease from $349.4 million in the prior year period; nine-month sales were $789.4 million, down 33.0% from $1.179 billion.
• Gross profit for the quarter was $88.2 million with a gross margin of 35.8%, compared to $122.0 million and 34.9% in the prior year; nine-month gross profit was $289.8 million with a 36.7% margin versus 33.2% previously.
• Operating loss for the quarter was $13.2 million with an operating margin of (5.4)%, compared to operating income of $75.2 million and a 21.5% margin in the prior year; nine-month operating income was $81.1 million with a 10.3% margin versus 7.4% previously.
• Net loss for the quarter was $23.7 million ($0.75 per diluted share), compared to net income of $15.4 million ($0.49 per share) in the prior year; nine-month net loss was $1.9 million ($0.06 per share) versus net income of $3.0 million ($0.10 per share).
• Adjusted EBITDA for the quarter was $35.0 million with a 14.2% margin, compared to $44.6 million and a 12.8% margin in the prior year; nine-month Adjusted EBITDA was $115.0 million with a 14.6% margin versus $136.0 million and an 11.5% margin previously.
• Adjusted net income for the quarter was $1.9 million ($0.06 per share), down 78.6% from $9.2 million ($0.28 per share) in the prior year; nine-month Adjusted net income was $7.5 million ($0.24 per share), down 68.4% from $24.0 million ($0.76 per share).
• Net debt was $529.7 million as of June 30, 2026, down from $678.4 million as of September 30, 2025.
• Cash and cash equivalents were $37.6 million as of June 30, 2026, compared to $32.4 million as of September 30, 2025.
• Net cash used in operating activities for the nine months ended June 30, 2026, was $69.5 million, compared to $33.9 million used in the prior year period.
• Net cash provided by investing activities for the nine months was $267.4 million, primarily driven by $243.6 million in proceeds from divestitures.
• Net cash used in financing activities for the nine months was $192.5 million, including $146.4 million in net payments on long-term debt.

Guidance and Future Outlook

• The Company revised its fiscal 2026 adjusted EBITDA guidance to a range of $158 million to $162 million, which includes an estimated 40% share of Propelis adjusted EBITDA.
• The revised guidance reflects an estimated $5 million shortfall to the full-year forecast due to timing delays in realizing synergy benefits at The Propelis Group.
• Energy storage solutions business delays are expected to extend through the balance of the fiscal year.
• Corporate and other non-operating costs are expected to yield savings compared to the prior year, positively impacting margins.
• Post-divestiture support obligations are expected to expire over the balance of the calendar year.

Business Segments and Product Lines

• Memorialization: Sales for the quarter were $208.1 million, up from $203.7 million in the prior year, primarily reflecting the acquisition of The Dodge Company. Adjusted EBITDA was $42.2 million. Sales volumes for caskets and cemetery memorials faced headwinds due to lower estimated U.S. casketed deaths and escalating input costs that inflationary price realization only partially offset.
• Industrial Technologies: Sales for the quarter were $37.9 million, down from $87.9 million in the prior year, mainly due to the divestiture of the warehouse automation business and challenges in the engineering business, including the ongoing Tesla dispute. Adjusted EBITDA was a loss of $5.4 million.
  • A restructuring program in European engineering operations was initiated to yield $10 million in annual cost savings, with total costs of approximately $10 million ($5 million impacting the quarter).
  • The Company launched MEODEO™, a next-generation full-scale mass production demonstration line for dry-electrode battery manufacturing in Vreden, Germany.
  • A strategic partnership with Linx Printing Technologies was announced to broaden access to MPERIA® Axian Inkjet (XIJ) systems in the UK and France.
• Propelis: The joint venture reported considerable margin improvement from the first to the second calendar quarter. Propelis redeemed a portion of shareholders' interests in the third quarter, providing $25 million in cash to Matthews. The Company expects Propelis to deliver a significant portion of the estimated $60 million in identified synergy opportunities over the coming quarters.

Market and Competitive Landscape

• The Company continues to execute a strategic alternatives review with a heavy focus on developing strategic partnerships for its Industrial Technologies businesses.
• The divestitures of SGK in 2025, and the warehouse automation and European packaging businesses in the first quarter of 2026, were outcomes of efforts to simplify the business structure and enhance shareholder value.
• The Company reports a significant new coating & converting order won in the quarter, though it has not yet contributed significantly to financial results.

Risks and Challenges

• Delays in the energy storage solutions business are expected to continue through the fiscal year.
• The engineering business faces challenges from the ongoing Tesla dispute, which incurred litigation costs of $7.8 million in the quarter and $18.9 million for the nine months.
• Memorialization segment profitability is impacted by lower volumes from estimated lower U.S. casketed deaths and input costs escalating beyond inflationary price increases.
• Synergy realization at Propelis has not met timing expectations, resulting in a forecast shortfall.
• Forward-looking statements involve risks including changes in economic conditions, foreign currency exchange rates, material costs, tariffs, supply chain disruptions, mortality and cremation rates, and global conflicts.

Management Commentary and Tone

• CEO Joseph C. Bartolacci described the quarter as "challenging" across all business segments.
• Management characterized the actions taken to reduce the cost base of the energy storage business as "difficult but necessary."
• Despite near-term challenges, management stated they remain "focused on driving shareholder value" and aligning the cost structure with the future state of operations.
• The tone acknowledges significant headwinds but highlights ongoing execution on cost reductions and strategic simplification.

Other Key Points

• Debt was reduced by $12 million during the third quarter and $144 million during fiscal 2026.
• Dividends declared per share for the quarter were $0.255, a 2.0% increase from $0.25 in the prior year; nine-month dividends were $0.765 per share.
• The Company's 40% portion of Propelis adjusted EBITDA for the quarter was estimated at $12.7 million, and for the nine months was $32.2 million.
• The Propelis financial results are reported on a one-quarter lag due to integration and transition to stand-alone reporting systems.
• The Company incurred a loss on debt extinguishment of $16.3 million in the nine-month period.
• The Company acquired The Dodge Company, which continues to be accretive to earnings.
• The Company has over 4,300 employees in 15 countries on four continents.