Diversified solutions provider Matthews International (NASDAQ: MATW) reported Q3 CY2025 results exceeding the market’s revenue expectations, but sales fell by 28.6% year on year to $318.8 million. Its GAAP loss of $0.88 per share was significantly below analysts’ consensus estimates.

Is now the time to buy MATW? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Matthews reported a mixed third quarter, with revenue ahead of analyst expectations but a significant year-on-year decline. Management attributed the performance to the divestiture of its SGK and Warehouse Automation businesses, which simplified the company's structure but reduced overall sales. CEO Joseph Bartolacci said, “The divestiture of SGK and Warehouse Automation at compelling valuations have clearly simplified our story.” The Memorialization segment outperformed, aided by the Dodge acquisition, while investments in core product lines and cost reduction efforts provided some offset to ongoing operational headwinds.

Looking forward, Matthews’ guidance reflects both the potential and risks of its streamlined portfolio. The company anticipates growth from the full-year contribution of the Dodge acquisition and further cost reductions, but also acknowledges transition costs and headwinds from ongoing divestitures. Bartolacci cautioned, “We will have multiple transition services agreements in place from various divestitures, which will limit our ability to take more significant action to reduce our overhead.” Management is also exploring partnerships to expand its dry battery electrode technology, signaling a focus on energy storage and industrial technology as growth priorities.

Key Insights from Management’s Remarks

Management pointed to portfolio optimization, product innovation, and cost discipline as primary factors shaping third quarter results and the company’s updated outlook.

• Portfolio streamlining: The completed sales of SGK and the pending sale of Warehouse Automation represent significant steps to focus Matthews on higher-growth, higher-margin businesses, with the company retaining a 40% stake in Propelis—now operating above initial expectations.
• Memorialization segment momentum: The Dodge acquisition exceeded management’s integration targets, contributing to improved revenues and EBITDA in the Memorialization business, while the addition of Keystone Memorials expands Matthews’ production capabilities in the growing mausoleum market.
• Industrial Technologies update: The launch of the new Axian printhead, which received GS1 certification for 2D code quality at industry-leading speeds, positions Matthews to capture share in global packaging automation, with market response described as “overwhelmingly positive.”
• Cost savings and restructuring: Actions to reduce corporate and operating costs yielded an $8.5 million year-over-year reduction, and the sale of unprofitable European units further improved segment profitability.
• Energy technology and litigation: Despite an ongoing legal dispute with Tesla over dry battery electrode (DBE) technology, Matthews reported growing customer interest in non-automotive applications such as data center energy storage and ultracapacitors, supporting future pipeline visibility.

Drivers of Future Performance

Matthews expects portfolio realignment and targeted investments to drive future growth, but faces margin pressures and transitional costs during the shift.

• Full-year Dodge contribution: Management expects the Dodge acquisition to be a key driver for Memorialization segment growth, with cross-selling opportunities and synergy capture anticipated to support EBITDA margins in the coming year.
• Transition and overhead costs: Multiple transition service agreements from recent divestitures will temporarily constrain Matthews’ ability to achieve deeper cost reductions, and management signaled that overhead will remain elevated until these agreements expire.
• Energy and industrial partnerships: The company is seeking partnerships and investment for its dry battery electrode and battery separator technologies, aiming to expand adoption beyond automotive, but noted that execution on these opportunities will be gradual and subject to industry demand cycles.

Catalysts in Upcoming Quarters

Going forward, StockStory’s analysts will monitor (1) the timing and financial impact of closing pending divestitures and the resulting balance sheet changes, (2) the market adoption and commercial ramp of the Axian printhead, especially following GS1 certification, and (3) progress on energy storage partnerships and legal resolution of the Tesla dispute. Execution in these areas will be critical to Matthews’ ability to deliver on its strategic priorities.

Matthews currently trades at $24.52, in line with $24.65 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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