Matthews International Corporation (MATW): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at Matthews International Corporation (MATW) right now, and honestly, the story isn't one business; it's two very different fights happening at once as they pivot toward Memorialization and proprietary Dry Battery Electrode (DBE) tech. On one side, the Memorialization segment is dealing with consolidating funeral home customers and rivals like Service Corporation International, even as its sales hit $209.7 million in Q4 FY2025. On the other, the Industrial Technologies division faces off against massive battery makers who wield serious power-just look at the ongoing litigation-especially when customer quotes exceed $100 million. Before you decide where this company lands, you need to see how these five competitive pressures are squeezing both halves of the business, from supplier leverage on granite to the threat of cremation substituting for caskets. Dive in below to see the full, unvarnished breakdown of the forces shaping MATW's next chapter.

Matthews International Corporation (MATW) - Porter's Five Forces: Bargaining power of suppliers

When you look at Matthews International Corporation's supplier landscape as of late 2025, the power dynamic shifts quite a bit depending on which segment we're talking about. For the Memorialization business, which brought in $209.7 million in the fourth quarter of fiscal 2025, raw material costs like bronze and granite are definitely subject to the same commodity price swings as everyone else. We don't have the exact bronze price index for November 2025, but we do see the effect: the segment reported higher sales partly due to inflationary price realization. That means Matthews International is successfully passing some of those input cost pressures on to the buyer, which helps temper the supplier's leverage, at least on the pricing front.

Matthews International has been actively managing this by bringing sourcing in-house. You saw this clearly when the company acquired substantially all the assets of Keystone Memorials in October 2025. That move, bringing a wholesale granite manufacturer in Georgia under the fold, is a textbook example of vertical integration aimed squarely at reducing the bargaining power of external granite suppliers. This is a strategic play to lock in supply and control quality for a key component of their memorials.

Now, flip over to Industrial Technologies, specifically the proprietary Dry Battery Electrode (DBE) systems. This is a different story. While the segment's Q4 2025 sales were lower at $93 million, interest in the technology remains very strong, evidenced by receiving an order for a production-scale machine for a U.S.-based solid-state battery manufacturer recently. If the DBE system relies on highly specialized components or unique processing know-how from a few niche vendors, those suppliers could have significant leverage, even if the overall segment revenue is currently under pressure due to other factors like litigation. Honestly, the power here isn't about volume; it's about proprietary access.

General supply chain disruptions are still a risk, though perhaps less acute than a couple of years ago. The company has been streamlining its portfolio, divesting SGK Brand Solutions on May 1, 2025, and agreeing to sell its Warehouse Automation unit, which is expected to close early in fiscal 2026. These moves simplify the operational footprint, which generally helps manage the risk of component availability, but component sourcing for the remaining businesses still requires careful management. If onboarding takes 14+ days longer than expected for a critical part, production schedules can definitely get messy.

Here's a quick look at the segment context around the time we're analyzing supplier power:

To summarize the supplier leverage points for Matthews International:

• Bronze/Granite suppliers face reduced power due to vertical integration, notably the Keystone acquisition.
• Niche DBE component suppliers could hold high leverage due to technology specificity.
• Price realization in Memorialization suggests some success in offsetting commodity cost volatility.
• The overall strategy of divestitures helps streamline supply chain exposure.

Finance: draft 13-week cash view by Friday.

Matthews International Corporation (MATW) - Porter's Five Forces: Bargaining power of customers

You're analyzing the customer leverage facing Matthews International Corporation, and it's a tale of two segments, honestly. In some areas, customers have real muscle; in others, their power is definitely checked by necessity.

Memorialization customers, which are primarily funeral homes and cemeteries, are reportedly consolidating. This trend naturally increases their leverage when negotiating pricing for caskets and memorials. Still, the demand for these products is non-discretionary, which puts a floor under how much power they can effectively wield.

For the Industrial Technologies segment, specifically the Dry Battery Electrode (DBE) business, the customer base is made up of large, sophisticated battery manufacturers. These buyers have significant negotiation power, which was evident in the ongoing legal back-and-forth with Tesla. Matthews International Corporation confirmed on October 2, 2025, that the U.S. District Court upheld a prior arbitration decision in its favor, denying Tesla's attempt to overturn the ruling concerning proprietary DBE technology. This legal validation strengthens Matthews International Corporation's standing, but the very existence of the dispute underscores the high stakes and negotiation intensity with these key customers.

Here's a quick look at how the segments stack up in terms of revenue scale, which often correlates with customer importance:

The Memorialization segment's revenue in Q4 Fiscal 2025 was $209.7 million, showing growth from Q4 Fiscal 2024's $196.8 million, largely due to the Dodge Company acquisition. This segment benefits from the stable, non-discretionary nature of its core offerings, which limits the customer's ability to push for deep discounts on essential items.

Conversely, the high-value nature of the Industrial Technologies' energy storage solutions means a few large customers drive significant volume, giving them substantial power. You can see this in the pipeline activity:

• Customer quotes for energy storage solutions exceeded $100 million since early February 2025, as reported in the Q2 2025 results.
• These quotes, issued to multiple EV battery manufacturers and OEMs, were for dry battery electrode equipment across South Korea, Europe, and North America.
• Looking ahead, Matthews International Corporation anticipated engaging with a domestic energy solutions provider in December 2025 for a potential $50 million U.S.-based order for a battery separator line.

The fact that customer quotes for these advanced solutions hit over $100 million in Q2 2025 clearly signals that a small number of large contracts are critical to this part of the business, meaning those buyers have outsized influence on terms and pricing.

Matthews International Corporation (MATW) - Porter's Five Forces: Competitive rivalry

You're analyzing the competitive intensity facing Matthews International Corporation, and honestly, it's a mixed bag depending on which segment you look at. The rivalry force is definitely not uniform across the business.

Memorialization Segment Rivalry

In the Memorialization segment, the rivalry is quite direct and established. Matthews International competes head-to-head with major players like Hillenbrand, which owns Batesville, and the outline also points to Service Corporation International (SCI) as a key rival. This suggests a market where market share gains often come at the expense of established competitors. Still, the market shows signs of growth, which can sometimes temper the most aggressive competitive actions. For instance, the Memorialization segment posted sales of $209.7 million in the fourth quarter of fiscal year 2025, showing that despite the rivalry, the segment is expanding, partly due to strategic moves like the recent acquisition of The Dodge Company. To give you a sense of the segment's recent scale, sales in the second quarter of fiscal 2025 were $205.6 million.

Here is a quick look at the sales performance for the Memorialization segment in recent quarters:

Industrial Technologies Fragmentation

Moving over to Industrial Technologies, the competitive landscape shifts. Here, the competition is much more fragmented. You have numerous rivals across the specialized areas Matthews International operates in, such as product identification and specialized engineering solutions. This fragmentation means competition is often based on niche technology, specific customer needs, or project bids rather than broad market share battles seen in Memorialization. For example, the engineering business faced specific challenges related to ongoing litigation with Tesla during the fourth quarter of fiscal 2025. However, interest in their innovative dry battery electrode (DBE) solutions remains strong, with customer quotes exceeding $100 million since early February 2025, suggesting a potential area for future competitive advantage.

Mitigating Rivalry Through Action

Matthews International is definitely taking proactive steps to manage the pressures from rivals by focusing internally on efficiency. The company is actively implementing cost reduction actions across the organization. Management has reiterated a target to achieve over $50 million in annual savings through these initiatives. Furthermore, they are reducing corporate overhead; for fiscal 2026, they anticipate corporate costs to be materially lower after transition services agreements expire, supplementing other cost-cutting efforts.

The firm is also reshaping its portfolio to focus on areas where it can compete more effectively or reduce exposure to highly competitive, lower-margin areas. This includes strategic divestitures, like the sale of the warehouse automation unit for $230 million, with $160 million net proceeds intended for debt reduction.

The competitive rivalry forces the company to be lean. Here are some key financial metrics related to their efforts to improve operational standing:

• Cost reduction initiative target: Over $50 million in annual savings.
• Warehouse Automation sale proceeds for debt reduction: Approximately $160 million net.
• FY2026 Adjusted EBITDA guidance: At least $180 million.
• Target net leverage ratio post-divestitures: Below 3.0x, moving toward 2.5x.

Matthews International Corporation (MATW) - Porter's Five Forces: Threat of substitutes

The threat of substitutes in Matthews International Corporation's Memorialization segment is clearly defined by demographic shifts away from traditional interment. Increasing cremation rates globally substitute for traditional burial products like caskets and bronze memorials. While the company noted that U.S. deaths appeared to have generally normalized following COVID in late 2024, the underlying trend favoring cremation continues to exert pressure on the volume of traditional products. For instance, in the fiscal 2025 second quarter, sales volumes for bronze and granite cemetery memorials and caskets were lower, primarily resulting from lower US casketed deaths. This substitution effect is a persistent headwind for legacy product lines.

Matthews International mitigates this by being a major provider of cremation equipment and related products. The company is a key player in the Cremation Machine Market, which is experiencing strategic significance driven by these rising global cremation rates. However, even this area saw pressure; in the fiscal 2025 second quarter, cremation equipment sales were also lower for the quarter, which was compounded by the recent disposal of unprofitable cremation and incineration equipment operations in Europe. To counter the volume declines from substitution, Matthews International has focused on strategic acquisitions and pricing power. The Memorialization segment reported higher sales for the fiscal 2025 fourth quarter compared to a year ago, primarily reflecting the benefit of its recent acquisition of The Dodge Company, alongside higher sales volumes for bronze memorials and inflationary price realization.

Here's the quick math on that segment's performance shift:

In Industrial Technologies, the proprietary DBE technology is a potential substitute for traditional wet-coating battery processes. Following a positive arbitration ruling in Q1 FY2025 that affirmed ownership rights, Matthews International intends to immediately begin marketing and selling its DBE solutions to other customers. Interest from non-automotive customers in these energy storage solutions remains very strong, with management citing a current estimate of a ~$50M storage-related customer opportunity. Matthews anticipates this interest will start to convert to orders in fiscal 2026, positioning DBE as a disruptive alternative in the battery component space, which is a significant substitute threat to incumbent coating methods.

Digital and non-physical memorialization alternatives pose a long-term, slow-moving threat to the traditional memorialization business. While the search for concrete 2025 market penetration figures for purely digital remembrance services is ongoing, the shift in consumer preference toward cremation-which is already impacting unit volumes of caskets and in-ground memorials-suggests a broader acceptance of less permanent, potentially digital-first remembrance methods. Matthews International's focus on cremation equipment sales and bronze memorials shows they are addressing the physical substitute (cremation), but the digital substitute remains a structural, slow-moving risk to the core bronze and granite business.

Finance: draft 13-week cash view by Friday.

Matthews International Corporation (MATW) - Porter's Five Forces: Threat of new entrants

You're assessing barriers to entry for Matthews International Corporation, and the picture is quite segmented across its operations. New players face a tough climb, especially in the more traditional parts of the business.

High capital investment and regulatory hurdles in the Memorialization segment create a strong barrier to entry.

The Memorialization segment, which is a market leader providing memorials, caskets, and cremation equipment, requires substantial upfront capital. Think about setting up the specialized manufacturing for bronze and granite memorials, or establishing the logistics to serve cemeteries and funeral homes nationwide. Furthermore, this industry often involves local regulations and long-standing relationships that are not easily bought or replicated. For instance, the segment reported higher fourth-quarter fiscal 2025 sales, partly due to the integration of The Dodge Company, showing the value of established, acquired assets in this space. Matthews International Corporation's consolidated sales for fiscal 2025 reached $1.50 billion, illustrating the scale of the established players.

The Industrial Technologies segment's proprietary 'all-in-one' DBE solution and intellectual property rights establish a significant technological barrier.

In Industrial Technologies, the barrier is less about physical plant size and more about protected knowledge. Matthews International Corporation affirmatively established its intellectual property rights related to its proprietary 'all-in-one' solution for dry battery electrode (DBE) production in 2025. This was reinforced by a favorable arbitration ruling against Tesla in February 2025, which reaffirmed the Company's right to sell this innovative technology globally. This legal defense and the underlying IP rights, which Matthews notes date back over 25 years, create a high barrier for any new entrant trying to offer a comparable, proven DBE system. The pipeline of quotes for this technology alone was over $150 million at one point, showing market validation that new entrants would struggle to achieve quickly.

Established distribution networks with funeral homes and cemeteries are hard for new Memorialization competitors to replicate.

The Memorialization business relies on deep, trust-based relationships with funeral homes and cemeteries. These channels are not just transactional; they involve service, reliability, and long-term contracts. New entrants must spend years building the trust and logistical infrastructure to compete with Matthews International Corporation's existing footprint. The segment's ability to generate solid performance, even amidst industry shifts like rising cremation rates, speaks to the stickiness of these established customer relationships. Here's a quick look at the financial context of the established scale:

The company's net leverage ratio of 3.6x (as of September 30, 2025) is a barrier for new entrants needing capital, but MATW itself is prioritizing debt reduction.

While a net leverage ratio of 3.6x on September 30, 2025, indicates Matthews International Corporation carries significant debt, this high level of existing financial scale can itself deter new, smaller entrants who would need massive capital just to compete on balance sheet size. New entrants must secure financing to match the scale of operations Matthews International Corporation maintains. However, the company is actively reducing this leverage, projecting the ratio to fall below 3.0x following the sale of its warehouse automation business. This deleveraging strategy, funded by divestiture proceeds, will further solidify the financial strength of the incumbent. The net debt at that date was approximately $678 million.

The threat of new entrants is currently moderated by these structural and technological moats. You should watch the Industrial Technologies segment closely for any signs of new, well-funded competitors challenging the DBE IP, but for now, the barriers look high.

• High capital for manufacturing facilities.
• Proprietary, legally defended DBE technology.
• Long-term, entrenched distribution channels.
• Net Debt Leverage Ratio of 3.6x as of September 30, 2025.

Finance: draft 13-week cash view by Friday.