NEW YORK - Barington Capital Group, L.P., an activist investor owning about 2% of Matthews International (NASDAQ:MATW) Corporation (NASDAQ: MATW), a company with a market capitalization of approximately $915 million, has publicly advocated for significant changes in the company's leadership and strategic direction. According to InvestingPro data, the company currently shows a Fair overall financial health score, though it faces profitability challenges. In a letter addressed to Matthews' Board Chairman, Alvaro Garcia-Tunon, Barington outlined its concerns over the company's underperformance and stagnant share price under CEO Joseph C. Bartolacci's 18-year tenure.
Barington's Chairman and CEO, James Mitarotonda, criticized the current leadership for a 20.2% decline in share price, increased debt, and returns on invested capital that have fallen below Matthews' cost of capital. Recent InvestingPro data shows the company's debt-to-equity ratio stands at 1.93, while its return on invested capital is just 7%. Despite these challenges, Matthews maintains a strong dividend tradition, having raised its dividend for 27 consecutive years. The investor group has suggested a series of measures aimed at enhancing shareholder value, including divesting underperforming segments, increasing cost reduction initiatives, reducing debt, and refreshing the board with new directors.
Specifically, Barington proposes that Matthews focus on its Memorialization business, which it views as a valuable asset, and divest its SGK Brand Solutions segment. Moreover, it recommends pursuing strategic reviews of its Warehouse Automation and Product Identification businesses within its Industrial Technologies segment, and finding a partner for its Energy Storage manufacturing business.
To address governance concerns, Barington has nominated three directors with strong boardroom skills and records of creating shareholder value for election at Matthews' 2025 annual meeting. The investor group emphasizes the need for a new CEO and a strengthened board to unlock the company's value potential.
This push for change comes as Barington expresses frustration with the lack of progress following two years of consultancy with Matthews. Despite attempts to work constructively with Bartolacci, Barington contends that their initiatives have not been met with meaningful advancements.
The information regarding Barington's position and actions is based on a press release statement. Matthews International has not publicly responded to Barington's letter or the proposed measures at the time of reporting. For investors seeking deeper insights into Matthews International's financial health and prospects, InvestingPro offers comprehensive analysis through its Pro Research Report, featuring detailed metrics, peer comparisons, and expert analysis of all key aspects of the company's performance.
In other recent news, Matthews International Corporation reported mixed results for fiscal year 2024. The company's consolidated sales for Q4 fell to $447 million, down from $480 million in the same period last year. Moreover, Matthews International reported a significant net loss of $68.2 million in Q4, a stark contrast to the net income of $17.7 million reported the previous year. Despite these challenges, the company met its revised adjusted EBITDA guidance at $205 million and reduced its debt by over $50 million during the quarter.
For fiscal 2025, Matthews International projects an adjusted EBITDA between $205-$215 million. The company anticipates a strong performance in its Memorialization segment, growth in SGK Brand Solutions, and potential recovery in warehouse automation. New technologies are expected to make a meaningful revenue impact in the latter part of fiscal 2025 and into 2026.
Matthews International is also conducting a strategic review with JPMorgan to maximize shareholder value. Despite an ongoing dispute with Tesla (NASDAQ:TSLA) and challenges in the Industrial Technologies segment, the company maintains a positive outlook, particularly in the energy storage sector, and continues to focus on strategic initiatives, including a cost reduction program expected to save up to $50 million annually.
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