Matthews International: A Quarter of Converging Headwinds, but DBE Keeps the Long-Term Story Alive
All four identified risks hit at once; the company slashes guidance while leaning into dry battery electrode and a new printhead.
MATW · Earnings Call · 2026-08-07
The Perfect Storm
On the fiscal Q3 2026 call, CEO Joe Bartolacci was blunt: “This quarter, all four of those identified risks affected us negatively to some extent.” — Joseph Bartolacci, President and Chief Executive Officer · 2026-08-07 The company had warned about the pace of engineering orders, tariff outcomes, Propelis synergies, and geopolitical impacts. All four went against them. “Unfortunately, we did not expect that all of those risks would go against us.” — Joseph Bartolacci, President and Chief Executive Officer · 2026-08-07 The result was a net loss of $23.7 million and an adjusted EBITDA of only $35 million, forcing guidance down to $158–162 million. The input cost pressure was acute, especially in Memorialization, where copper prices spiked from $4.50 to $6.60 per pound and steel rose 21% y/y. The operating margin fell to -10.8% from a positive level a year ago, though revenue was also hit by divestitures.Memorialization: Stable Volumes, Pinched Margins
Memorialization revenues were actually up 2.1% to $208 million, helped by the Dodge acquisition, but adjusted EBITDA was flat. The problem was margin compression: “We have watched as copper prices have gone from $4.50 per pound to $6.60 per pound and continue to rise.” — Joseph Bartolacci, President and Chief Executive Officer · 2026-08-07 The segment still targets $175 million adjusted EBITDA for the year, implying a record second half, but record low death rates and commodity escalation cloud near-term earnings power.Engineering: The Pain and the Promise
The engineering business, under Industrial Technologies, saw revenue plunge to $14 million (excluding product ID). The company lost two anticipated orders and had one modified, but more importantly, the mass production DBE machine is being commissioned, and interest is surging.The CEO says the long-term thesis on DBE technology is "intact and actually strengthening," and the Energy storage opportunity is broadening beyond EVs to ultracapacitors and grid storage. At the same time, the company initiated a $10 million cost reduction in European engineering and is evaluating strategic alternatives for the OLBRICH coating/converting business, signaling a potential exit from legacy operations.Many of the leading players in the European, Japanese, Korean, and U.S. auto industries and several key players in the battery industry are back again at our doors seeking testing time, quotes, and joint development discussions.