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Date

May 1, 2026

Call participants

  • Chief Executive Officer — Joseph C. Bartolacci
  • Chief Financial Officer — Daniel Stopar

Takeaways

  • Revenue -- $259 million, down from $428 million, primarily due to the divestitures of SGK, warehouse automation, and European packaging and tooling (sales impact of $166 million), partially offset by $11 million from the Dodge acquisition.
  • Adjusted EBITDA -- $44.7 million, versus $51.4 million, with the decrease driven by lower Engineering performance in Industrial Technologies and the transition to a 40% equity stake in Propellus instead of full SGK consolidation.
  • Net loss -- $21.8 million, or $0.69 per share, compared to a net loss of $8.9 million, or $0.29 per share, with the change largely due to the $16.3 million debt extinguishment charge, higher strategic initiative costs, and weaker Industrial Technology segment results.
  • Non-GAAP adjusted net income -- $11.6 million, or $0.37 per share, compared with $10.5 million, or $0.34 per share, primarily reflecting reduced interest expense and higher other non-operating income offsetting lower operating profits.
  • Memorialization segment sales -- $215.3 million, up from $205.6 million, with Dodge contributing $11 million and underlying casket and cemetery memorial sales volume down due to lower U.S. casketed death rates.
  • Memorialization segment adjusted EBITDA -- $48.8 million, compared to $45 million, primarily due to Dodge, with further benefit from inflationary price increases and cost savings, partially offset by lower volume and higher labor and material costs.
  • Core Memorialization year-to-date sales -- $419 million, with year-to-date adjusted EBITDA of $88 million, both reflecting continued segment outperformance and acquisition integration.
  • Dodge acquisition performance -- Generating $10 million in sales per quarter, with EBITDA on track to exceed $12 million annually and a projected adjusted purchase price under $50 million after asset monetization and working capital actions.
  • Industrial Technologies segment sales -- $43.4 million, versus $80.8 million, reflecting divestitures and Engineering sales declines, offset by higher Product Identification sales and a $3.1 million favorable foreign exchange impact.
  • Industrial Technologies adjusted EBITDA -- $(3.3) million loss, compared to a $6 million profit, impacted by divestitures and lower Engineering sales, partially mitigated by cost reductions and lower compensation expense.
  • Product Identification business -- First production Axiom units shipped to customers post-beta corrections, with strong commercial interest and a $3 billion total addressable market estimate cited based on validated customer interest from premium market segments.
  • Engineering and Energy Solutions pipeline -- Recently awarded a U.S. order worth $25 million and actively managing $75 million of additional pipeline orders, with partnerships in progress around proprietary DBE technology.
  • DBE legal outcome -- Arbitration in February affirmed Matthews International Corporation (MATW +3.64%)’s DBE technology ownership and denied Tesla's request for broad injunctive relief, with the small injunction not materially impacting technology or go-to-market activities.
  • Propellus update -- Forty percent equity interest reported on a one-quarter lag, with SAP migration underway; expected to unlock over $25 million of planned $60 million synergy target, and an EBITDA run-rate anticipated to reach $130 million into 2027.
  • Cash flow from operations -- Usage of $67.4 million in the first half, up from $18.7 million, reflecting legacy settlement payments, divestiture- and legal-related fees, and normal seasonal cash flow outlays; the company expects positive operating cash flow in both Q3 and Q4.
  • Long-term debt -- $579 million outstanding, down from $822 million, and net debt of $543 million post-divestitures and senior secured notes redemption, reducing annual interest expense by approximately $10 million.
  • Adjusted EBITDA guidance -- Reaffirmed at "at least $180 million" for fiscal 2026, inclusive of forty percent Propellus equity interest and assuming stronger second-half performance, driven by Memorialization, Industrial Technologies pipeline, and Propellus execution.
  • Dividend declaration -- Quarterly dividend of $0.255 per share payable May 25, 2026, to stockholders of record as of May 11, 2026.

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Risks

  • Management specifically cited that full-year results could be impacted by "the pace and timing of Engineering orders, the outcome of current tariff discussions at the federal level, the timing of synergies at Propellus, and the economic impact of geopolitical challenges."
  • Industrial Technologies segment generated an adjusted EBITDA loss of $3.3 million, compared to a profit last year, with continued challenges and the need for further cost reductions in the Engineering business projected for the second half.
  • Lower sales volumes for caskets and cemetery memorials due to decreased U.S. casketed death rates, partially offset by price realization but contributing ongoing volume pressure in the core Memorialization business.
  • Cash flow from operating activities reflected a sizable $67.4 million outflow in the first half, driven by one-time items, seasonal factors, and legal expenditures, which do not reflect underlying business capacity but highlight vulnerability to non-operating cash uses.

Summary

Matthews International Corporation (MATW +3.64%) achieved a significant balance sheet transformation through the early redemption of $300 million in notes, resulting in lower net debt and a reduced interest burden. The company’s portfolio reshaping, marked by the divestitures of SGK, European packaging and tooling, and warehouse automation, produced a leaner revenue base, now supplemented by higher-margin contributions from the Dodge acquisition. Propellus' SAP system migration is underway, aiming to unlock substantial synergies and accelerate operational improvements, while recent arbitration confirmed the company’s DBE intellectual property ownership, removing legal barriers to new partnerships. Despite segment-level headwinds, management reaffirmed adjusted EBITDA guidance and highlighted Memorialization performance, with further M&A activity considered likely as part of a disciplined capital allocation strategy.

  • Management described the Propellus investment as "one of the most compelling unrecognized value drivers in our portfolio."
  • The company intends to exit its Propellus investment within twelve to eighteen months, with increasing value expectations as EBITDA and synergies rise.
  • Operational execution in the Memorialization segment drove efficiency improvements, which management cited as outperforming volume trends in the wider market.
  • Recent legal clarity in the DBE dispute directly increased customer engagement, including with the three largest ultracapacitor producers and new contacts in Japan and Europe.
  • Pipeline developments include pending $25 million and $75 million U.S.-based orders in Engineering, along with multiple partnership discussions in both the Energy Solutions and Axiom businesses.
  • There are no ongoing material cash costs associated with the company’s strategic alternatives review, according to management.

Industry glossary

  • Propellus: Equity-method investment, formerly part of SGK Brand Solutions, now a standalone brand and operations platform of which the company owns a forty percent stake.
  • DBE technology: Dry Battery Electrode technology, a proprietary process for producing battery components cited as critical for next-generation energy storage and solid-state batteries.
  • Axiom: The company’s Product Identification platform, delivering high-quality marks with reduced solvent use and lower maintenance costs, targeting a $3 billion addressable market.
  • Adjusted EBITDA: Non-GAAP financial measure reflecting earnings before interest, taxes, depreciation, amortization, and selected non-operating items as defined by the company.
  • SGK Brand Solutions: Previously a company business unit focused on brand management, now divested with related operations consolidated into Propellus.

Full Conference Call Transcript

Joseph C. Bartolacci: Good morning, and thank you for joining us to discuss Matthews International Corporation’s fiscal 2026 second quarter results. On our last earnings call, we said that we were focused on execution, and we did just that in the second quarter. The redemption of our high-cost notes is complete, our balance sheet is significantly improved, interest expense is down materially, and for the first time in several years, we are entering the second half of our fiscal year with greater clarity and flexibility in our outlook. Our Memorialization business continues to set the pace, delivering its fourth consecutive quarter of year-over-year EBITDA growth.

And while our Industrial Technology segment remains challenged, we are actively working to convert a substantial order pipeline that has grown since last quarter. Let us start with our balance sheet. In January, we completed the early redemption of our 300 million dollars of senior secured notes. This was not simply a refinancing exercise; this was a significant structural repair of a balance sheet that now looks fundamentally different than it did just 18 months ago. Our total long-term debt is now 579 million dollars, down from 822 million dollars one year ago, a reduction of over 240 million dollars.

Net debt stands at approximately 543 million dollars today, and the interest expense savings from retiring those high-cost notes are now flowing through, reducing annual interest expense by approximately 10 million dollars and materially improving our cash profile dollar for dollar. The debt extinguishment charge of 16.3 million dollars recorded in Q2 included non-cash items of 3.4 million dollars and is a one-time cost. It should be read for exactly what it is: the price of materially improving our cost of capital, a trade that we are very comfortable with. Turning to Propellus, our 40% equity interest continues to represent what we believe is one of the most compelling unrecognized value drivers in our portfolio.

The Propellus team is making great progress on their SAP migration, the single most important operational milestone that will unlock the next layer of significant synergies. As we shared last quarter, this migration is expected to unlock over 25 million dollars of the more than 60 million dollars in total identified synergies. The Propellus team has successfully stood up their own instance of SAP during the quarter, and we will begin the migration of SGS locations onto SAP over the next six to nine months. We expect to begin to see the results of these actions in our fourth quarter.

Also, as further evidence of the performance of Propellus, we expect to receive a partial redemption of our preferred interest in the coming quarter. Propellus is continuing to perform well above the 100 million dollars EBITDA run-rate that was assumed when we structured the transaction. As they move through 2026 and execute on their synergies, their EBITDA run-rate is expected to be around 130 million dollars going into 2027. We continue to expect an exit from this investment within the next 12 to 18 months. Every quarter Propellus continues to grow EBITDA and capture synergies increases the value we expect to realize upon exit.

With regard to our second quarter results, total revenues were 259 million dollars compared to 428 million dollars a year ago. As we have consistently communicated, year-over-year revenue comparisons will continue to reflect the deliberate portfolio reshaping we executed in fiscal 2025 and early fiscal 2026. The divestitures of SGK, warehouse automation, and European packaging and tooling account for the majority of the reduction. Adjusted EBITDA for the fiscal 2026 second quarter was 45 million dollars compared to 51 million dollars in the prior year's second quarter. A solid result when you consider that the prior year's second quarter included a full quarter of SGK results, while this quarter contains only our 40% interest in Propellus.

Stripping out the businesses we have deliberately exited, the continuing portfolio is performing as we projected: Memorialization delivering, the balance sheet improving, and Industrial Technologies remaining the variable we are actively working to improve. That is what we laid out at the start of this fiscal year. Daniel will walk you through our cash flow in detail, but I want to briefly note that our first-half operating cash outflow reflects a cluster of discrete items: a legacy settlement payment, transaction-related fees from our recent divestitures, and annual recurring payments concentrated in our first quarter that do not represent the underlying cash generation capacity of our continuing businesses. We expect both Q3 and Q4 to generate positive operating cash flow.

Turning to our businesses, the Memorialization business continues to be the engine that drives this company. Our core Cornerstone segment reported sales of 215 million dollars for the second quarter, an almost 5% increase over the prior year, and adjusted EBITDA of 49 million dollars, up 8% year over year. For fiscal 2026 year-to-date, sales grew to 419 million dollars and adjusted EBITDA grew to 88 million dollars. This segment continues to perform well. The Dodge acquisition continues to contribute meaningfully, adding approximately 10 million dollars in sales per quarter and is ahead of our EBITDA targets.

Our team has done an excellent job integrating Dodge, and we are now realizing cost and commercial synergies we expected when the deal was first identified. After accounting for asset monetization and working capital actions, we expect the adjusted purchase price of Dodge to be under 50 million dollars with EBITDA contributions exceeding 12 million dollars. This will stand as another highly accretive acquisition for our shareholders. We are also seeing continued strength in mausoleum construction orders through our Gibraltar Mausoleum business, which not only generates good margins directly, but pulls through demand from bronze lettering, vases, and other memorialization products. Pricing realization remains solid in the business, and we continue to benefit from productivity improvements across the segment.

We believe there are more M&A opportunities in the Memorialization space that look like Dodge—highly accretive, strategic, defensible market positions. Our relationships in this industry are deep and longstanding, and we are positioned well to move when the time is right. With regard to the tariff environment and its impact on our businesses, the situation remains fluid, and we will continue to manage this proactively as we have over the past several years. Moving on to Industrial Technologies, revenue was 43 million dollars for the quarter compared to 81 million dollars a year ago. The year-over-year decline reflects the divestitures of the warehouse automation and tooling businesses completed in 2025.

What remains is a focused, technology-driven portfolio of high-value Product Identification and Engineered Solutions, and we continue to see significant opportunities in both businesses. Let me start with Product Identification. We can report that we shipped our first production units to paying customers, several of whom were beta customers that saw the tremendous value of the technology. As noted last quarter, we had stopped deliveries as we corrected certain minor issues noted during beta testing, but now those issues have been resolved. The commercial response to Axiom remains strong.

The value propositions that we hoped to deliver are proving true: higher quality marks using significantly less solvent, while reducing the cost of maintenance, are driving strong interest in our new product. As we noted last quarter, we have expanded our total addressable market estimate to about 3 billion dollars as we have validated interest from customers currently using high-quality but more expensive solutions. We continue to actively pursue and engage in strategic partnership discussions, including white-label opportunities with leading industry participants, to accelerate adoption and market reach. These opportunities will speed up adoption and give us access to markets that we would not develop for a while.

We hope to have news to share on these discussions before fiscal 2026 year end. With that said, let me reiterate that Axiom will not be a material contributor to the top line this year given last quarter's delays, but we expect to see a more meaningful contribution from the product line next year. Moving now to our Engineering and Energy Solutions business. The second quarter was again challenging, as expected. However, let me walk you through our pipeline. We were recently awarded a 25 million dollars order converting line to be delivered to the United States.

Together with 75 million dollars of orders that we continue to confidently work on, we expect a material change in this business next year. In addition to those orders, we are working on multiple partnership agreements that utilize our highly proprietary DBE technology. We hope to announce those partnerships before the end of our fiscal year as well. Included in those partnerships are discussions with global ultracapacitor manufacturers looking to move their production to DBE technology. Ultracapacitors, an essential element of energy delivery to the data storage industry, are yet another energy storage solution that will benefit from DBE. On the DBE front, we received an important legal development in the second quarter.

On February 13, an arbitrator issued an interim decision that favorably affirmed our ownership of and rights in our DBE technology, and denied Tesla's request for broad injunctive relief. Tesla's attempt to prevent us from selling our own proprietary DBE technology was rejected again. The very narrow injunction on certain components has had no material impact on our technology, as we already have alternative components. This is a meaningful win for our IP position and for the long-term value of our Energy Solutions business. Practically speaking, the ruling removes a key overhang that we believe has caused several sophisticated counterparties to delay deepening their engagement with us. Moreover, this ruling meaningfully mitigates any material liability.

Our near-term expectations from the DBE market remain measured, but the long-term thesis is intact and is actually strengthening. Many industry participants continue to affirm that DBE is a critical enabling technology for next-generation chemistries, including solid state. We expect to take additional cost reductions within the Engineering business in the second half to protect cash while we wait for the market to absorb our pipeline. With regard to our full-year outlook, we set guidance of at least 180 million dollars in adjusted EBITDA for fiscal 2026, inclusive of our 40% interest in Propellus.

Achieving the full-year target requires a stronger second half, driven primarily by Memorialization continuing its current trajectory, Industrial Technologies converting its pipeline, and Propellus’ continuous operational execution. We continue to believe this is achievable. Memorialization is operating at an annualized run-rate well above 175 million dollars in adjusted EBITDA on its own. Propellus' contribution provides meaningful incremental EBITDA in our Brand Solutions segment, and the recent win in Engineering gives us confidence in our Engineering forecast.

But several things may impact that forecast: the pace and timing of Engineering orders, the outcome of current tariff discussions at the federal level, the timing of synergies at Propellus, and the economic impact of geopolitical challenges all can have an impact on our full-year results. With that said, we are working hard on things that we can control to deliver those results. The pipeline is real, the synergies are clearly identified, and tariffs can come and go. With these factors in mind, we are reaffirming our full-year adjusted EBITDA guidance of 180 million dollars. Finally, our strategic alternative review continues. As I have noted above, we have multiple potential partnerships and arrangements currently in discussion.

The Board is actively engaged, and our focus remains on delivering on the full value of our intellectual property, particularly in Energy Solutions and Axiom, through partnerships, licensing, or other structures that do not require us to sell our businesses at a discount to their intrinsic value. I will now turn it over to Daniel for a deeper dive on our financial performance.

Daniel Stopar: Thank you, Joe. Before starting the financial review, I want to give a reminder on the financial reporting with respect to the SGK business. As you are aware, the divestiture of this business closed on 05/01/2025. The fiscal 2025 consolidated financial information presented in this release reflects the financial results of the SGK business through the closing date. As a result of the integration process of Propellus and transition to its standalone reporting systems, our 40% portion of the financial results of Propellus is reported on a one-quarter lag. Consequently, for the three months ended 03/31/2026, the company's portion of earnings or losses for its equity method investment in Propellus includes the months from October 2025 through December 2025.

Similarly, for the six months ended 03/31/2026, the company's portion includes the months from July 2025 through December 2025. Now let us begin the financial review. For the fiscal 2026 second quarter, the company reported a net loss of 21.8 million dollars, or 0.69 dollars per share, compared to a net loss of 8.9 million dollars, or 0.29 dollars per share, a year ago. The change primarily reflected a loss recorded this year on the redemption of 300 million dollars of senior secured notes, higher strategic initiative costs, and lower operating performance in the Industrial Technology segment, which was partially offset by lower acquisition and divestiture costs, reduced net interest and other deductions, and higher income tax benefits.

Consolidated sales for fiscal 2026 second quarter were 259 million dollars compared to 428 million dollars a year ago. The decrease primarily reflected the divestitures of the SGK business on 05/01/2025, the European packaging and tooling businesses on 12/01/2025, and the warehouse automation business on 12/31/2025. The consolidated sales impact of these divestitures was approximately 166 million dollars for the current quarter and was partially offset by an 11 million dollars contribution from the acquisition of the Dodge Company. Sales for the Industrial Technologies and Brand Solutions segments were lower for the quarter, offset partially by higher sales for the Memorialization segment.

Consolidated adjusted EBITDA for the fiscal 2026 second quarter was 44.7 million dollars compared to 51.4 million dollars a year ago. The decline reflected lower operating performance by the Engineering business within the Industrial Technologies segment. In addition, our 40% share of Propellus' adjusted EBITDA included in our results for the quarter was lower than the amount of adjusted EBITDA that we reported for the SGK Brand Solutions segment last year. The Memorialization segment reported higher adjusted EBITDA for the quarter, while corporate and other non-operating costs were lower in the current year.

On a non-GAAP adjusted basis, net income attributable to the company for the current quarter was 11.6 million dollars, or 0.37 dollars per share, compared to 10.5 million dollars, or 0.34 dollars per share, last year. The increase primarily reflected the impact of lower interest expense and higher other non-operating income, which more than offset lower operating profits. Please see the reconciliations of adjusted EBITDA and non-GAAP adjusted earnings per share provided in our earnings release. Sales for the Memorialization segment for the quarter were 215.3 million dollars compared to 205.6 million dollars for the same quarter a year ago. The Dodge acquisition contributed sales of approximately 11 million dollars to the quarter.

Sales volumes for caskets and cemetery memorials declined in the quarter due to lower estimated U.S. casketed death rates. Sales of cremation equipment and mausoleums were also lower in the current quarter. These volume declines were partially offset by the impact of inflationary price increases. Memorialization segment adjusted EBITDA for the current quarter was 48.8 million dollars compared to 45 million dollars for the same quarter last year. The increase was primarily contributed by the Dodge acquisition. Benefits from inflationary price realization and cost savings initiatives were partially offset by the impact of lower sales volume combined with higher labor and material costs.

Sales for the Industrial Technologies segment for the quarter were 43.4 million dollars compared to 80.8 million dollars a year ago. The decrease primarily reflected the divestiture of the segment's tooling business on 12/01/2025 and warehouse automation business on 12/31/2025. The segment's Engineering business also reported a decline in sales compared to last year, which was offset partially by higher sales for the Product Identification business. Changes in foreign currency rates had a favorable impact of 3.1 million dollars on the segment's current quarter sales compared to a year ago.

Adjusted EBITDA for the Industrial Technologies segment for the current quarter was a loss of 3.3 million dollars compared to a profit of 6 million dollars for the same quarter a year ago. The decrease primarily resulted from the impact of the warehouse automation divestiture and lower Engineering sales, offset partially by the segment's cost-reduction actions in its Engineering business and the impact of lower compensation expense. With the divestiture of the European packaging operations on 12/01/2025, combined with the divestiture of the SGK business on 05/01/2025, the Brand Solutions segment did not have reportable revenue for the quarter ended 03/31/2026. A year ago, the divested operations reported sales of 141.2 million dollars.

Adjusted EBITDA for the Brand Solutions segment was 9.6 million dollars for the current quarter compared to 15.6 million dollars a year ago. The current quarter mainly reflects the company's 40% interest in Propellus. To reiterate, our 40% portion of the financial results of Propellus is reported on a one-quarter lag; as a result, the consolidated financial information for the quarter ended 03/31/2026 includes our 40% interest in the financial results of Propellus for the months of October through December 2025. Cash flow used in operating activities for the six months ended 03/31/2026 was 67.4 million dollars compared to 18.7 million dollars a year ago.

During the period, the company made significant disbursements in connection with divestitures, including income taxes, transaction fees, and repayments of securitized receivables. Expenditures for litigation and proxy defense also consumed significant cash in the period. Additionally, our first half of the fiscal year is typically slower than the second half, generally reflecting a net operating cash outflow due primarily to seasonally lower earnings and the payment of year-end bonus accruals and other annual payment items. Outstanding debt at 03/31/2026 was 579 million dollars, and net debt, which represents debt less cash, was 543 million dollars.

The net debt decreased by 135 million dollars since the end of fiscal 2025, driven by the receipt of 243 million dollars of cash proceeds from the divestitures of the warehouse automation business and the European packaging and tooling businesses during the first quarter. These cash inflows were partially offset by cash used in operations and the payment of fees to redeem the 300 million dollars senior secured notes. During fiscal 2026, the company purchased 22,953 shares under its stock repurchase program at an average cost of 26.33 dollars per share. These repurchases were solely related to the withholding tax obligations for vested equity compensation.

Finally, the Board declared this week a quarterly dividend of 0.255 dollars per share on the company's common stock. The dividend is payable on 05/25/2026 to stockholders of record at 05/11/2026. This concludes the financial review. We will now open the call for questions.

Operator: Thank you. If you would like to ask a question, please press star and 1 on your keypad. To leave the queue at any time, press 2. Once again, that is star and 1 to ask a question. We will take our first question from Daniel Moore with CJS Securities. Please go ahead. Your line is open.

Daniel Moore: Good morning, Daniel. Good morning, Joe. Let us start with Memorialization outlook. You guided to modest sales growth through the remainder of the year. I think Dodge has maybe a half a quarter left. Looking at your expectations for organic growth beyond the next quarter or so with the revised mix, including Dodge. And then from an inorganic perspective, are you seeing more inbound inquiries from competitors or other players in that arena since the acquisition?

Joseph C. Bartolacci: Let me parse that out. First, with regard to our forecast for the balance of the year, I would tell you to expect volume to be stable to modestly down. If you listen to some of our customers' earnings calls, you will recognize that casketed deaths had a pretty low period this past quarter. We performed better than that because of some things that we have done internally—both the addition of Dodge and pricing—and, frankly, some better execution in other markets that we serve.

As we move forward through the balance of the year, we are in the midst of cross-selling activities, trying to get both Dodge customers to become our customers on the casket and bronze side and our customers to become Dodge customers as well. Those efforts are baked into our forecast looking forward. Hopefully, they will be successful, but that is part of the synergy expectations we expect to get. On the M&A front, we are always in the market and there are always a few opportunities floating around. I would not say there are a lot of inbounds, but there are opportunities out there.

We will pick timing based on when it is right for us as well as when others are ready to sell. There still are small opportunities like that. As I said, these are highly accretive over a wonderful base that we have, so we expect to be able to pull those off. I just cannot pick the timing of them all the time.

Daniel Moore: Understood. On Propellus, are we at the front end of the IT and SAP implementation? Talk about your progress and when we will have a better sense for execution.

Joseph C. Bartolacci: We are in the middle. The biggest part of that middle was standing up their own instance of SAP. All of the SGK team has separated onto their own instance of SAP. We are still supporting, but they have separated. That is a massive lift, and that is the key to bringing on the other parts of the company, in particular SGS. One thing I would stress: we have already implemented all of the changes necessary to make SAP adaptable to a brand-related business like SGK when we bought SGK, so it is not a novel ERP implementation.

Yes, there are some flows that are going to be different and some keystrokes that are going to be different, but at the end of the day, SGS is moving onto a platform that is already fully baked and ready to go for brand-related systems. We are very confident in their ability to execute going forward. They will start that migration in about 90 days and will go location by location like we did in 2014 successfully. I would hope that would go even easier because the SGK team will populate the SGS team with people that know how the system already works for their business.

Daniel Moore: Thanks. One more on the arbitration with Tesla announced in February. What are the next steps, and more importantly, have you seen increased engagement with potential customers since that ruling?

Joseph C. Bartolacci: I am not in the minds of our friends, nor do I want to be, but I can tell you it has given a lot of clarity both to us and to the customers that we have been trying to work with for a while. Those efforts will continue. We have opened more doors in the last 60 days or so. We have expanded our geographies to include Japan, we have gone deeper with our European potential customers and partners, and we have had some U.S.-based companies reach out to us that had not been very specific in the past. This clarity has been the hindrance for a long time.

I cannot tell you what is next for them; I can tell you that we are emboldened by it.

Operator: Thank you. Our next question comes from Colin William Rusch with Oppenheimer. Please go ahead. Your line is open.

Colin William Rusch: Thanks so much. Could you talk about the breadth and depth of the supercapacitor and ultracapacitor customers? The need for voltage buffering at the data center is enormous. How quickly could that opportunity develop and how many folks might participate?

Joseph C. Bartolacci: We have the three largest producers of ultracapacitors at our doorstep today. As you know, this is how we got into DBE in 2015. We converted some activated carbon for Maxwell using our technology back then, so we are well down the path. When we talk about partnerships, there are multiple forms with the three largest producers we are dealing with—both in terms of joint investment to produce the electrode used for an ultracapacitor as well as to provide the electrode to them. We have a piece of equipment in Germany right now that is being commissioned as we speak.

That production-level equipment will be ready shortly, and we are lining up to produce test results at production rates of speed, something we did not have capacity to do before. So the opportunity on the ultracapacitor side is significant, and it is something we have already done; we do not need to relearn it.

Colin William Rusch: Understood. And on re-shoring of supply chains—particularly around drones and U.S. military requirements for integrated North American supply—how active are conversations around supporting battery manufacturing in the U.S. for those applications?

Joseph C. Bartolacci: You could not have teed it up better. We are operating in several forms with respect to that. You have heard us speak about a relatively large order for North American battery separators—that is one of the big orders we expect here over the next three to four months, going specifically to the United States for onshoring. We are having significant discussions with solid-state manufacturers who use, or have used, our equipment to produce batteries necessary for solid state, which is a military application. Importantly, it is not limited to our battery business. We have talked about our 3D printing capabilities in our Memorialization segment.

That business produces 3D-printed molds at highly rapid speeds, with great application to the military for spare parts and other cast-related products. We think we have some legs in front of us on a couple of fronts in our industry, not just the battery side.

Operator: Thank you. Once again, that is star and 1 on your telephone keypad if you would like to join the queue. We will move next with Justin Laurence Bergner with Gabelli Funds. Please go ahead. Your line is open.

Justin Laurence Bergner: Good morning, Joe. Good morning, Dan. Nice quarter, particularly on the Memorialization side. A few clarifying questions. I think you said you got 11 million dollars of revenue from Dodge, but you lost about 166 million dollars from the divestitures. Do I have those numbers correct?

Daniel Stopar: 166 million dollars from the divestitures is correct.

Justin Laurence Bergner: On Propellus, you said it is already doing a 100 million dollars-plus EBITDA run-rate, but the 40% figures of roughly 9.5 million dollars to 9.9 million dollars are slightly below that. Is that just seasonality being a little bit weaker in the fourth calendar quarter?

Daniel Stopar: That is exactly right. Their slowest quarter is typically the fourth calendar quarter, and that is the quarter we reported in this fiscal quarter for Matthews International Corporation.

Justin Laurence Bergner: On Memorialization, did it perform better than you expected in the quarter or about in line? And is there any element of price-cost timing from inflation in your average cost method of inventory that might have temporarily boosted EBITDA in March at the expense of future quarters?

Joseph C. Bartolacci: The quarter actually performed better at an execution level and worse at a revenue level. One of our customers reported a 4.5% decline in casketed deaths. We were well better than that. Our casket volumes outperformed that level, but we were not anticipating that dynamic. We had a strong early flu season with strong results in our November and December period that did not carry forward, so volumes were modestly lower than we would have expected. Price was consistent with expectations, and execution was even better.

Justin Laurence Bergner: When you say execution was better, what does that mean in terms of KPIs?

Joseph C. Bartolacci: In the factories, they are running well. Yields and efficiencies are performing at admirable levels, and that helped this quarter tremendously. There are things going on that are somewhat out of our control, such as tariffs coming and going, which are difficult to anticipate. Those flow through our forecast today as if they would be implemented, so we are cautious looking forward on items we do not control. On the things we do control, we have it under our belt.

Justin Laurence Bergner: So you are actually factoring in some incremental tariff headwind for the rest of the year?

Joseph C. Bartolacci: Rather modest, yes. We have implemented some expectation around Section 232. Whether that gets worse or better is something we do not control, but there is a forecast for some impact.

Justin Laurence Bergner: On cash costs that are mostly one-time—debt redemption, transaction fees, legal and proxy costs—were there any other major buckets? And are you paying a material amount for the ongoing strategic review, or is that more conditional on outcomes?

Daniel Stopar: The items that hit in the quarter were payments pursuant to the closure of the warehouse sale. We received 225 million dollars right at the end of last quarter and closed that deal on the 31st. We had tax payments this quarter, deal fees that had to be paid, and we also had to settle out on securitized receivables.

Justin Laurence Bergner: What are securitized receivables at as of now?

Daniel Stopar: About 55 million dollars.

Justin Laurence Bergner: And ongoing cash costs associated with the strategic review?

Joseph C. Bartolacci: There are no ongoing costs associated with that. It is mostly done internally. To the extent we need external advice, it will be around legal more than anything else.

Justin Laurence Bergner: Thank you for taking all my questions.

Daniel Stopar: Thank you, Justin.

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