Fiscal 2026 third quarter
Filed Aug 7, 2026Matthews International reports a challenging fiscal 2026 third quarter and reduces fiscal 2026 adjusted EBITDA outlook to $158 million to $162 million.
Management characterized the quarter as challenging across all business segments, cited continuing energy storage project delays, lower Memorialization volumes, escalating input costs, Engineering business challenges and a Propelis synergy-timing shortfall, and reduced adjusted EBITDA guidance.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Product Identification sales growthother | 5% | – | grew 5% in Q3 compared to last year |
| Propelis adjusted EBITDA contribution to consolidated adjusted EBITDA, fiscal 2026 third quarternon-GAAP | $10.0 million | – | – |
| Matthews' 40% portion of preliminary Propelis adjusted EBITDA, quarter ended June 30, 2026non-GAAP | $12.7 million | – | – |
| Propelis adjusted EBITDA contribution to consolidated adjusted EBITDA, fiscal 2026 nine months ended June 30, 2026non-GAAP | $32.4 million | – | – |
| Matthews' 40% portion of preliminary Propelis adjusted EBITDA, period October 1, 2025 through June 30, 2026non-GAAP | $32.2 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| MemorializationSales primarily reflected the recent acquisition of The Dodge Company. Lower estimated U.S. casketed deaths, lower casket and cemetery memorial volumes, and escalating input costs were headwinds, while inflationary price realization only partially offset these factors. | higher sales for Q3 | – | higher than a year ago |
| Industrial TechnologiesThe decline mainly resulted from the fiscal first-quarter divestiture of the warehouse automation business and challenges in the Engineering business, including impacts of the ongoing Tesla dispute. | decline in sales | – | – |
| Product IdentificationThe business continued to receive significant customer interest in MPERIA® Axian Inkjet (XIJ) systems and entered a strategic partnership with Linx Printing Technologies. | sales grew 5% in Q3 compared to last year | – | 5% |
| Propelis equity-method investmentManagement said results showed considerable margin improvement from the first calendar quarter to the second, although the timing to realize synergies did not meet expectations. | not reported | – | – |
fiscal 2026 outlook
- NoteAdjusted EBITDA of $158 million to $162 million, which includes our estimated 40% share of Propelis adjusted EBITDA
- Note$10 million annualized savings from restructuring actions in the Engineering business
- Noteapproximately $10 million total cost to achieve related to the European engineering restructuring
- Notean estimated $5 million shortfall to our full year forecast related to timing of Propelis synergies
- Noteestimated $60 million of identified synergy opportunities at Propelis
What drove it
- A significant new coating & converting order was won during the quarter, but it has not yet contributed significantly to financial results.
- Energy storage solutions business delays are expected to extend through the balance of the fiscal year.
- The European engineering restructuring is expected to yield $10 million annual cost savings.
- MEODEO™, a full-scale mass production demonstration line for dry-electrode battery manufacturing, was launched in Vreden, Germany.
- Corporate and other non-operating costs yielded savings compared with last year, positively impacting margins.
- Propelis synergy benefits are beginning to scale, and management said the joint venture remains on track to deliver a significant portion of the estimated $60 million of identified synergy opportunities over the coming quarters.
Concerns
- Management said the fiscal 2026 third quarter was challenging across all business segments.
- Energy storage project delays are expected to continue through the balance of fiscal 2026.
- The significant coating & converting order has not yet contributed significantly to financial results.
- Memorialization faced lower estimated U.S. casketed deaths, lower casket and cemetery memorial volumes, and input costs escalating beyond inflationary price increases.
- Industrial Technologies was affected by the warehouse automation divestiture, Engineering business challenges and the ongoing Tesla dispute.
- Propelis synergy realization has been slower than expected, resulting in an estimated $5 million shortfall to the full-year forecast.
- Approximately $5 million of restructuring cost impacted third-quarter results.
What to watch
- The duration and financial effect of energy storage solutions project delays through the balance of fiscal 2026.
- Whether the significant coating & converting order begins to contribute materially to results.
- Delivery of $10 million annual cost savings from the European engineering restructuring relative to approximately $10 million of total cost to achieve.
- Memorialization volumes, input-cost pressure and the ability of pricing to offset those pressures.
- The pace of Propelis margin improvement and realization of its estimated $60 million synergy opportunities.
- Further debt reduction following the $25 million Propelis preferred-equity redemption proceeds.
- Progress in the ongoing strategic alternatives review, including potential strategic partnerships for Industrial Technologies businesses.
Balance sheet and cash flow
- $25 million cash received in Q3 for the redemption of preferred equity interest in Propelis
- Debt was reduced by $12 million during Q3
- Debt was reduced by $144 million during fiscal 2026
- The $25 million of cash received from Propelis was used primarily to bring down the debt balance
Analysis
Matthews described the fiscal 2026 third quarter as challenging across all business segments and lowered fiscal 2026 adjusted EBITDA guidance to $158 million to $162 million. Management attributed the revision to continued energy storage project delays, the limited current contribution from a new coating & converting order, Memorialization volume and cost pressure, and slower-than-expected realization of Propelis synergies. Management estimated the Propelis timing issue created a $5 million shortfall to its full-year forecast.
Memorialization sales were higher than a year ago primarily because of the Dodge acquisition, which management said is accretive and has already delivered the majority of targeted cost synergies. Underlying operating conditions remained difficult: lower estimated U.S. casketed deaths reduced casket and cemetery memorial volumes, while input costs escalated beyond inflationary pricing. Pricing only partially offset these pressures, making volume recovery and cost inflation central variables for segment profitability.
Industrial Technologies reported lower sales, principally reflecting the warehouse automation divestiture and Engineering business challenges, including the Tesla dispute. Energy storage delays are expected through the balance of fiscal 2026, and the major coating & converting order has not yet materially contributed. The company responded with a European Engineering restructuring expected to yield $10 million of annual cost savings, with approximately $10 million of total cost to achieve and approximately $5 million affecting third-quarter results. Product Identification was a relative positive, with sales growing 5% in Q3 compared to last year.
Propelis remains important to both earnings and liquidity. Consolidated adjusted EBITDA included approximately a $10.0 million Propelis contribution in the fiscal third quarter, while Matthews' 40% portion of preliminary Propelis adjusted EBITDA for the quarter ended June 30, 2026 was $12.7 million. Management reported margin improvement from the first calendar quarter to the second, but said synergy timing has not met expectations. Propelis also redeemed a portion of shareholders' interests, providing Matthews $25 million of cash that was used primarily to reduce debt.
Capital allocation in the release centered on deleveraging and structural simplification rather than shareholder distributions. Debt declined by $12 million during Q3 and by $144 million during fiscal 2026. The company continues to pursue further cost reductions as post-divestiture support obligations are expected to expire over the balance of the calendar year, while its strategic alternatives review remains ongoing with a focus on strategic partnerships for Industrial Technologies businesses.
Management, verbatim
The fiscal 2026 third quarter was a challenging quarter for us across all business segments. We continue to experience delays in the energy storage solutions business which are expected to extend through the balance of the fiscal year.
Joseph C. Bartolacci, President and Chief Executive Officer
Due to these combination of factors, we are reducing our previous earnings guidance for adjusted EBITDA to be in the range of $158 million to $162 million (which includes our estimated 40% share of Propelis adjusted EBITDA) for fiscal 2026.
Joseph C. Bartolacci, President and Chief Executive Officer
Results for Propelis have shown considerable margin improvement from the first calendar quarter to the second. The joint venture remains on track to deliver a significant portion of the estimated $60 million of identified synergy opportunities over the coming quarters.
Joseph C. Bartolacci, President and Chief Executive Officer
Not in the filing
stated, not guessed- Complete earnings-release financial statement tables were not included in the provided filing text.
- Total revenue for the fiscal 2026 third quarter
- Total revenue prior-year comparison and percentage change
- Gross profit and gross margin
- Operating income or loss
- Net income or loss
- GAAP earnings per share
- Non-GAAP earnings per share
- Total adjusted EBITDA for the fiscal 2026 third quarter
- Cash flow from operating activities
- Free cash flow
- Cash and cash equivalents balance
- Total debt balance
- Share repurchases
- Dividends
- Absolute Memorialization segment sales
- Absolute Industrial Technologies segment sales
- Absolute Product Identification sales
- Segment operating income, loss, or margins
- Fiscal 2026 revenue, gross-margin, operating-expense, and tax-rate guidance
- Prior fiscal 2026 guidance range needed to compare the revised outlook
- Prior-quarter financial metrics
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.