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Overview of Matthews International Corporation
Matthews International Corporation (NASDAQ: MATW) is a globally diversified company operating across three primary business segments: Brand Solutions, Memorialization, and Industrial Technologies. With a history spanning over 175 years, the company has built a robust reputation for delivering innovative, high-quality products and services to a wide range of industries. Headquartered in Pittsburgh, Pennsylvania, Matthews maintains a significant global presence, with operations in more than 30 countries and a workforce of over 11,000 employees.
Brand Solutions Segment
Matthews’ Brand Solutions segment specializes in providing comprehensive packaging and brand management services. Through its acquisition of SGK, a globally recognized brand activation and deployment company, Matthews supports consumer packaged goods (CPG) companies by ensuring consistency in brand standards across packaging components. This segment offers services such as creative design, printing equipment, and embossing tools, helping businesses amplify their brand presence and streamline marketing efforts. By leveraging its expertise in packaging solutions, Matthews plays a critical role in enhancing the market performance of its clients.
Memorialization Segment
A cornerstone of Matthews’ operations, the Memorialization segment serves the funeral and cemetery industries with a comprehensive range of products and services. These include bronze and granite memorials, caskets, cremation equipment, and related products designed to help families honor and remember their loved ones. With over a century and a half of experience, Matthews has become a trusted partner for funeral homes and cemeteries worldwide. This segment’s consistent cash flow underscores its importance to the company’s overall financial stability.
Industrial Technologies Segment
The Industrial Technologies segment represents Matthews’ commitment to innovation and technological advancement. This division focuses on the design, manufacturing, and distribution of cutting-edge solutions, including high-tech energy storage systems, product identification technologies, and warehouse automation solutions. Notably, Matthews has made significant strides in the development of dry battery electrode (DBE) technology, which supports the growing electric vehicle (EV) market. By addressing critical industrial needs, this segment positions Matthews as a forward-thinking leader in industrial technology.
Global Reach and Market Significance
Matthews International’s operations span six continents, enabling the company to serve diverse markets and industries effectively. Its global footprint and diversified business model provide resilience against economic fluctuations and industry-specific challenges. The company’s ability to integrate traditional craftsmanship with modern technological solutions sets it apart in competitive landscapes.
Competitive Landscape
In the Brand Solutions segment, Matthews competes with other packaging and branding firms, differentiating itself through its global capabilities and comprehensive service offerings. The Memorialization segment faces competition from regional and global providers of memorial products, while the Industrial Technologies segment contends with other innovators in energy storage and automation technologies. Matthews’ strategic focus on innovation, quality, and customer-centric solutions enables it to maintain a competitive edge.
Commitment to Quality and Innovation
Matthews International’s long-standing commitment to quality and innovation is evident across all its business segments. By continuously investing in research and development, the company ensures its offerings remain relevant and impactful. This dedication to improvement not only enhances customer satisfaction but also solidifies Matthews’ position as a trusted partner in its industries.
Matthews International (MATW) has announced a letter of intent to sell the remaining operating businesses within its SGK Brand Solutions segment for $50 million, primarily consisting of European roto-gravure packaging and surfaces businesses. This follows the previously announced sale of its interest in SGK for $350 million on January 8, 2025.
The combined transactions will bring total upfront consideration to $400 million, implying a total current value exceeding $600 million. The company expects the total realized value to exceed $700 million once the new entity is fully synergized and after disposing of investment in operating software.
The proceeds will be predominantly in cash and used for debt repayment. The transaction is expected to complete in the third quarter, subject to definitive agreement, buyer financing, and regulatory approvals.
Matthews International (MATW) has received significant support from sell-side analysts following its fiscal 2025 Q1 earnings announcement. The company reported solid performance in Memorialization and SGK Brand Solutions segments, while Industrial Technologies faced challenges due to Tesla litigation. An arbitrator recently ruled in Matthews' favor, confirming their right to sell Dry Battery Electrode (DBE) solutions to customers beyond Tesla.
Analysts highlighted several positive aspects, including the DBE technology's potential in the EV market, with its process reducing energy and labor costs by 75% and requiring 70% less capital investment. Multiple analysts provided optimistic price targets, with CJS Securities suggesting a $42 target, representing ~60% upside potential. GAMCO Asset Management, a top 5 shareholder, endorsed Matthews' director nominees, supporting the company's current strategy and leadership.
Barington Capital, owning approximately 2.1% of Matthews International (NASDAQ: MATW), has sent a letter to shareholders urging them to vote for their three director nominees to the Matthews Board. The letter highlights that all three leading proxy advisory firms - ISS, Glass Lewis, and Egan-Jones - have unanimously recommended shareholders vote in favor of Barington's nominees: Ana B. Amicarella, Chan W. Galbato, and James Mitarotonda.
Barington emphasizes Matthews' poor fiscal 2025 first quarter earnings results as evidence of management's pattern of unfulfilled promises. The activist investor believes their nominees bring necessary skills and fresh perspectives to drive meaningful change and long-term value creation at Matthews.
Matthews International (MATW) has issued a response to ISS's February 6, 2025 report, strongly disagreeing with its recommendations supporting Barington's positions. The company defends its current board strategy and criticizes Barington's nominees for lacking relevant skills and business understanding.
The company highlights several achievements under the current Board, including: development of the market-leading Memorialization segment, a recent arbitration victory against Tesla regarding DBE technology, and a strategic $350 million disposition of the SGK business. Matthews also disclosed an ongoing comprehensive evaluation of strategic alternatives with J.P. Morgan.
The company announced board refreshment initiatives, including three new independent directors since 2020 and a fourth nominee for the 2025 annual meeting. GAMCO Asset Management, holding approximately 4.38% stake, has announced support for Matthews' director nominees.
Matthews International (MATW) reported Q1 fiscal 2025 results with sales of $401.8 million, down 10.7% from $450.0 million in Q1 2024. The company posted a net loss of $3.5 million ($0.11 per share) compared to a $2.3 million loss ($0.07 per share) in the prior year. Adjusted EBITDA decreased to $40.0 million from $45.5 million.
The company maintains its fiscal 2025 adjusted EBITDA outlook of $205-215 million. A positive arbitration ruling affirmed Matthews' right to sell its DBE technology. The planned SGK Brand Solutions transaction, expected to complete by mid-2025, will yield $350 million upfront including $250 million cash plus a 40% interest in the new entity. The company expects to achieve cost reductions of at least $50 million through ongoing initiatives.
The Memorialization segment saw lower sales due to decreased U.S. deaths, while SGK Brand Solutions reported modest sales growth. Industrial Technologies experienced declining sales, primarily due to reduced Tesla project work and litigation impact.
Matthews International (MATW) received a favorable arbitration ruling against Tesla on February 5, 2025, confirming the company's right to sell its proprietary Dry Battery Electrode (DBE) technology to other customers in the electric vehicle market. The decision acknowledged Matthews' extensive pre-Tesla experience in manufacturing DBE technology.
The dispute began over a year ago when Matthews sought a declaratory judgment through arbitration regarding its rights to sell DBE solutions. Tesla subsequently filed federal court litigation alleging trade secret theft. Matthews was recently awarded U.S. Patent No. 12,136,727 B2 for DBE manufacturing systems on November 5, 2024.
CEO Joseph C. Bartolacci emphasized that this ruling validates their rights to the technology and their decade-long experience in the battery space. The company plans to immediately resume marketing and delivering DBE products to battery and automobile manufacturers globally.
Matthews International (MATW) issued a letter to shareholders highlighting support from GAMCO Asset Management, a top 5 shareholder with 4.38% stake, for the company's director nominees ahead of the Annual Meeting. The letter addresses the proxy contest with Barington, emphasizing Matthews' 175-year evolution from a hand stamp business to a diversified company with memorialization products, industrial technologies, and brand solutions.
The Board urges shareholders to vote for their nominees - Terry L. Dunlap, Alvaro Garcia-Tunon, and J. Michael Nauman - on the WHITE proxy card. The company criticizes Barington's nominees for their lack of understanding of Matthews' businesses and questions their track record in other companies. Matthews defends its strategic evolution, particularly highlighting the development of its energy storage business and the value generated through strategic acquisitions like Saueressig in 2008 and Schawk in 2014.
Barington Capital, owning 1.9% of Matthews International (NASDAQ: MATW), has sent a letter to shareholders criticizing the company's recent 68-page investor presentation and management's approach. The activist investor highlights what it describes as Matthews' 'longstanding culture of deceit' and argues that the status quo is unsustainable.
Barington claims Matthews has failed over the past 18 years to take meaningful action in simplifying its portfolio, conducting strategic reviews, reducing costs and debt, or addressing Board independence. The investor group is pushing for the election of Ana Amicarella, Chan Galbato and James Mitarotonda to Matthews' Board of Directors, arguing these changes are important for unlocking the company's full value potential.
Matthews International (MATW) has announced its Board of Directors has declared a quarterly dividend of $0.25 per share on the Company's common stock. The dividend will be payable on February 24, 2025, to stockholders of record as of February 10, 2025. This declaration was made during the board's regularly scheduled meeting on January 29, 2025.
Matthews International (MATW) has filed an investor presentation ahead of its February 20, 2025 Annual Meeting, highlighting its strategic initiatives and urging shareholders to vote for its three director nominees. The company emphasizes several key achievements, including:
The company has returned approximately $490 million to shareholders through dividends and share repurchases since 2014, while implementing a cost reduction program targeting annual savings of up to $50 million. Matthews has agreed to sell SGK Brand Solutions for $350 million and expects to announce additional value-creation initiatives throughout fiscal 2025.
The Board, which collectively owns 3.3% of shares, has welcomed three new independent directors since 2020 and nominated a fourth for the 2025 annual meeting. The company opposes Barington's director nominees, citing their lack of relevant experience and understanding of Matthews' business operations.
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