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01/10 19:37
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals mixed signals: decreased revenue and EBITDA due to SGK divestiture, but a significant debt reduction. The Q&A section highlights concerns about unclear management responses and slowing demand in energy storage. However, optimistic guidance on warehouse automation and new technology synergies balance these concerns. The lack of specific numbers in key areas and management's evasiveness tempers optimism, resulting in a neutral outlook for the stock price movement.
Consolidated Sales $349 million in Q3 2025 compared to $428 million in Q3 2024, a decrease primarily due to the divestiture of SGK in May 2025.
Adjusted EBITDA $44.6 million in Q3 2025 compared to $44.7 million in Q3 2024, relatively steady despite the SGK divestiture, due to increases in Industrial Technologies and Memorialization segments and lower corporate costs.
Net Income $15.4 million or $0.49 per share in Q3 2025 compared to $1.8 million or $0.06 per share in Q3 2024, an increase primarily due to a gain on the SGK divestiture.
Memorialization Segment Sales $203.7 million in Q3 2025 compared to $202.7 million in Q3 2024, a modest increase driven by the Dodge acquisition and offset by lower volumes and the divestiture of the European cremation business.
Memorialization Segment Adjusted EBITDA $42.8 million in Q3 2025 compared to $38.7 million in Q3 2024, an increase due to cost savings initiatives, price realization, and the Dodge acquisition.
Industrial Technologies Segment Sales $87.9 million in Q3 2025 compared to $91.7 million in Q3 2024, a decline due to lower engineering sales and the shutdown of the R+S Automotive business, offset by higher warehouse automation sales.
Industrial Technologies Segment Adjusted EBITDA $9 million in Q3 2025 compared to $4.2 million in Q3 2024, an increase due to cost reduction actions and higher warehouse automation sales.
Brand Solutions Segment Sales $57.7 million in Q3 2025 compared to $133.4 million in Q3 2024, a decrease due to the divestiture of SGK.
Brand Solutions Segment Adjusted EBITDA $5 million in Q3 2025 compared to $16.1 million in Q3 2024, a decrease due to the SGK divestiture.
Operating Cash Flow Cash used in operating activities was $15.2 million in Q3 2025 compared to cash provided of $13.5 million in Q3 2024, a decline due to SGK transaction costs, restructuring actions, and legal costs.
Debt Position $702 million as of June 30, 2025, a reduction of $120 million during the quarter due to proceeds from the SGK divestiture.
Axiom Printhead Chip: Launching this fall in the U.S. and EMEA markets, it offers a 30% lower total cost of ownership, environmental benefits, and supports the transition to 2D barcodes under the Sunrise 2027 initiative. It creates high-margin recurring revenue streams through disposable printhead technology and proprietary ink.
Warehouse Automation: Positive order trends and backlog growth driven by AI-driven automation, predictive analytics, and autonomous robots. Big box retailers are reinvesting in warehouse infrastructure, with U.S. e-commerce projected to grow by 10% in 2025.
Cost Reduction Programs: Achieved annual savings exceeding $50 million, primarily from engineering and tooling operations in Europe and general administrative costs. Improved adjusted EBITDA margins for Industrial Technologies segment and reduced corporate costs.
Debt Reduction: Reduced debt by $120 million during the quarter, with further reductions expected through operating cash flow and asset sales.
SGK Divestiture and Propelis Group Formation: Divested SGK, retaining a 40% stake in Propelis Group. Propelis projects $100 million in annual adjusted EBITDA with $60 million in targeted synergies. The merger has received positive market feedback and added new business opportunities.
Dodge Acquisition: Acquired Dodge Company, the #1 supplier of funeral fluids, for $57 million. Expected to add $12 million in annual EBITDA, with smooth integration and synergy capture.
Strategic Alternatives Review: Ongoing review with several opportunities identified. Conclusions expected by November earnings release.
Tariffs Impact on Memorialization Segment: The Memorialization segment is susceptible to tariffs, which are impacting the cost of materials. Although sourcing alternatives have been found, domestic suppliers are adjusting prices upward to reflect higher competitive pricing due to tariffs. This could potentially affect profitability if costs cannot be passed on to customers.
Tesla Dispute in Industrial Technologies Segment: The ongoing legal dispute with Tesla over intellectual property rights related to dry battery electrodes (DBE) is creating legal costs and operational uncertainties. Tesla's attempts to overturn a favorable arbitration ruling for Matthews could delay or complicate the company's ability to capitalize on its DBE technology.
Decline in Granite Memorial Sales: The Memorialization segment experienced a decline in granite memorial sales due to the release of COVID-related backlog in fiscal 2024. This has led to a negative year-over-year comparison of approximately $3 million, impacting revenue stability.
Lower Revenues in Industrial Technologies Segment: The Industrial Technologies segment reported lower revenues due to declines in engineering sales and the impact of the Tesla dispute. This has been partially offset by growth in warehouse automation, but the segment remains vulnerable to market fluctuations.
Cash Flow Challenges: Operating cash flow was negatively impacted by costs related to the SGK transaction, restructuring actions, and legal expenses from the Tesla dispute. This has led to a year-to-date cash usage of $33.9 million, compared to cash provided of $43.3 million last year.
Debt Levels: Despite a reduction in debt by $120 million during the quarter, the company still has $702 million in outstanding debt. High debt levels could limit financial flexibility and increase vulnerability to interest rate changes.
Propelis Group Synergies: Propelis has initiated synergy capture, expecting a $10 million run rate by year-end and $40 million by the end of calendar 2026. Total targeted synergies are $60 million, higher than originally expected.
Memorialization Segment Outlook: The segment is expected to return to a normal cadence in revenue and pricing for the remainder of the year. The Dodge acquisition is expected to add around $12 million of annual EBITDA as it integrates into the system.
Warehouse Automation Business: Positive order trends are expected to continue, driven by AI-driven automation, predictive analytics, and autonomous robots. The company anticipates entering fiscal 2026 with very strong backlogs.
Axiom Product Launch: The new printhead chip product, Axiom, is set to launch this fall, targeting the U.S. and EMEA markets. It is expected to benefit from the global implementation of the Sunrise 2027 initiative and create high-margin recurring revenue streams.
Battery Separator Coating Line: The company is working on a significant order for a U.S. customer for a battery separator coating line, which operates at up to 2x the speed of competitive lines.
Debt Reduction: The company expects further debt reduction by 2025, supported by operating cash flow projections and potential asset sales.
Adjusted EBITDA Guidance: The company maintains its adjusted EBITDA guidance of at least $190 million for fiscal 2025, including its 40% share of Propelis adjusted EBITDA.
Quarterly Dividend: The Board declared a quarterly dividend of $0.25 per share on the company's common stock. The dividend is payable on August 25, 2025, to stockholders of record on August 11, 2025.
Stock Repurchase Program: The company purchased approximately 386,000 shares under its stock repurchase program at an average cost of $19.96 per share during the fiscal 2025 third quarter. Year-to-date repurchases totaled approximately 562,000 shares.
The earnings call presents a mixed outlook. Strong RNG production and carbon credit revenue, along with strategic initiatives for growth, are positives. However, challenges like prior capital constraints, lower tipping revenues, and increased operating costs weigh negatively. The Q&A session provided clarity on financing and operational improvements, but the absence of significant shareholder return announcements and only slight EBITDA improvements suggest a neutral impact on stock price.
The earnings call presents mixed signals: solid financial metrics with a focus on debt reduction and strategic divestitures, but weak guidance and unresolved issues like the Tesla lawsuit. Positive developments in product launches and certifications are offset by declines in Brand Solutions and cash flow. The Q&A reveals cautious optimism, but management's evasiveness on certain issues adds uncertainty. Overall, the sentiment is neutral, with no clear catalyst for a strong price movement.
The earnings call reveals mixed signals: decreased revenue and EBITDA due to SGK divestiture, but a significant debt reduction. The Q&A section highlights concerns about unclear management responses and slowing demand in energy storage. However, optimistic guidance on warehouse automation and new technology synergies balance these concerns. The lack of specific numbers in key areas and management's evasiveness tempers optimism, resulting in a neutral outlook for the stock price movement.
The earnings call reveals several negative financial indicators, including a decline in consolidated sales, adjusted EBITDA, and a net loss compared to last year. The Q&A section highlights management's vague responses about organic growth, raising concerns. Despite a positive dividend declaration and potential stock repurchases, the overall sentiment is negative due to financial underperformance and management's lack of clarity on future growth. The decline in key segments and increased net debt further contribute to a negative outlook for the stock price over the next two weeks.
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