Matthews International – Backbone Of Tesla’s Battery Gigafactory – Seeking Alpha

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Firm Overview

Matthews International Corporation (NASDAQ: MATW) is a commercial empire with varied industries. The business supplies automation and also brand name options to a range of firms, it exists in greater than 20 nations as well as utilizes greater than 10,000 individuals. It is separated right into 3 sectors with an arising brand-new company line that is the power storage space options.

MATW biz malfunction

MATW financier relationships

Power Solutions – Small, yet when driving to quadruple with Tesla as well as Porsche as primary consumers

The power storage space services sector of the business regardless of being the tiniest one today it is the one with one of the most prospective. It is led by Saueressig, a subsidiary gotten by Matthews in 2008 that focused on Rotary equipments, generally utilized for embossing as well as hindering high-end CPG plans.

In current years Saueressig changed its makers for lithium-ion batteries producing as well as specifically dry-cell batteries

Below is a photo of the devices the subsidiary costs the manufacture of lithium batteries.

SAUERESSIG rotating devices

Wet-Cell vs. dry-cell battery clarified by Elon Musk

To heritage means to create batteries is damp covering – where the electrode powder is blended with solvents and also the slurry product is covered right into the steel aluminum foil. Afterwards comes the drying out component where this subproduct enters into in massive stoves to completely dry. This procedure is much more costly as well as power consuming than the brand-new choice that is completely dry cell finish. Dry cell covering is a brand-new procedure created to minimize the expense of generating batteries. It removes the requirement of making use of solvents, the completely dry stage of manufacturing as well as calls for less actions as well as tools minimizing the manufacturing facility impacts. This will certainly make the 4680 batteries less costly for Tesla to create as well as the devices utilized for this manufacturing will certainly be from Saueressig, right here from Tesla’s exec:

“Yes. Therefore, when we placed everything with each other as well as most likely to our brand-new 80-millimeter size, 4680 we call this a brand-new cell style, we obtain 5 times the power with 6 times the power as well as allow 16% array boost, simply kind element alone.” – Drew Baglino Senior Vice President, Powertrain, as well as Energy Engineering, Tesla

In situation you question just how printing associates with battery production, right here is Elon Muck discusses (minutes 51:50 onwards)

Tesla Battery Day

The 4680 batteries will certainly be a game-changer for Tesla in regards to boosting the series of its cars and trucks as well as making them a lot more budget-friendly. For this venture, business are establishing their very own 4680 batteries for Tesla-like Panasonic and also LG.

The Terrifying Economics of TESLA’S 4680 BATTERY CELL

“In regards to item growth, the technical objectives have actually mainly been attained,” Kazuo Tadanobu, CEO of Panasonic’s battery department, stated. “But manufacturing them calls for brand-new methods.”

This is where Saueressig gets in, with its experience in power battery making the business will certainly help Tesla as well as various other business in the growth of equipment that can manufacture the 4680. Tesla introduced it will certainly increase its gigafactories and also completely dry cell manufacturing, this includes even more equipment as well as expense that Saueressig will certainly take advantage of, as well as it is producing a substantial stockpile.

“In our power storage space service presently reported as component of the SGK. Our shipments ended up practically as intended with incomes of over $50 million for 2021. We are predicting around $100 countless profits for ’22. And also presently have moreover in our stockpile. Task in this organization in both the lithium-ion battery calendaring remedy and also the hydrogen gas cell service is extremely high.”

Resource: MATW, Q3/21 teleconference

Saueressig Tesla Factory

It’s not a surprise that lately Saueressig revealed that is developing a brand-new manufacturing facility and also its American head office in Texas near Tesla’s gigafactory.

Tesla is presently 80%+ of MATW’s power services and also as Tesla increases its gigafactories as well as completely dry cell, the firm anticipates this organization to increase in 2022 and also double once again in 2023. Saueressig is readied to take advantage of the increase of manufacturing due to the fact that even more equipment will certainly be needed as well as the business will certainly exist to provide for the auto makes.

The power storage space service shows real development capacity to Matthews International – this year profits were $50M and also monitoring anticipates it will certainly be $100M for 2022 with 15% EBITDA as well as it might get to $500M by 2025 with 20% EBITDA as a result of range. Appointing x15 EV/2025 EBITDA for this section suggests it deserves $1.1 B-$1.5 B greater than the present MATW market cap. Which just for the tiniest section of MATW

Celebration (44% of rev, 20% EBITDA margin)

Matthew supplies burial grounds, funeral chapels, as well as monolith suppliers with a selection of items in the fatality treatment room varying from coffins, bronze as well as granite memorials and also cremation tools. Matthews is a reputable gamer in the market being the primary service provider of cremation devices worldwide. This sector had tailwinds from the Covid pandemic, nonetheless experienced the supply restraints and also enhancing products (steel and also lumber mostly) rates. Given that the business has the leading setting in the market, administration has actually been changing to carried out walks to maintain margins. Monitoring tips that they might maintain component of the rate walkings also after products stress abides (as we saw beginning in Q4/21).

Celebration line of products

Matthew’s IR Deck

This company is a genuine golden goose for Matthew International as well as the business is an outright market leader in the United States as well as Europe. This is a nonreligious company where its margins are affected by a variety of fatalities and also cremation/burial choices. Matthews is a solid gamer in both remedies so we would certainly appoint an EV/EBITDA of 14x to this service sector.

Celebration financials

Matthews economic records

Industrial Technologies Division (9% of rev, 21% EBITDA margin)

Responsible for 10% of sales is devoted to creating modern technologies as well as remedies for commercial automation consisting of coding and also noting. It has actually aided its clients create numerous incorporated circulation and also satisfaction systems with laser recognition. Some consumers in utilizing Matthew’s experience in the location are Target. Regardless of the difficult years this section has actually experienced our team believe in the coming years it will certainly recoup with the remedies Matthews established involving market. With the development of ecommerce and also the need of having a facilities of warehouse to sustain it, Industrial Technologies is readied to take advantage of it.

Storehouse automation

Matthew’s capitalists deck

A comparable business to the Industrial Technologies sector is Rockwell Automation, the firm presently has an EV/EBITDA of 33X. Utilizing it as a proxy to value the Industrial Technologies section our team believe the present numerous for this section of Matthews is 15X as they concentrate their organization and also boost EBITDA

Industrial Technologies

Business’s financials

Brand Name Solutions – Legacy printing (46% of rev, 14% EBITDA margin)

Brand Solutions

Firm’s’ IR deck

SGK Brand Solutions, a worldwide product packaging and also supplier of brand name experience to its clients. It likewise uses printing assistance services to its clients in a range of markets from medical care, retail, and also drinks. A few of their customers are Walmart, Amazon, Apple, as well as Tesco. They aid develop a brand name layout for the items, input all the needed lawful as well as brand name inputs in the product packaging such as code bar and also nourishment info, and after that create the product packaging design as well as the end product plan. This sector has actually been experiencing difficulties because of the Covid-19 pandemic as well as is underperforming because of restricted POP re-design as well as must recuperate as foot website traffic in the shops return. One more problem that has actually been taking place is the customers have actually been a lot more worried in having the products to place the items in the racks than in rebranding as well as this has actually seriously adversely affected this section.

Brand name Solutions earnings

Business’s financials

A peer we selected to compare to is R. R. Donnelley & & Sons Company, which presently has an EV/EBITDA of 6.6 x and also it has actually had the ability to enhance its earnings. Matthew’s SGK Brand Solutions has actually not been experiencing the very same, it obtained struck hard by the pandemic as well as it hasn’t completely recuperated yet, so we appointed an EV/EBITDA is of 6x.

Assessment – Sum of components hints x2 upside

Currently we summed the components of business ahead to an evaluation relating to Matthews International. We made presumptions that all company lines will certainly recuperate from the Covid pandemic and also return to the exact same degree of development as previously.

Organization Segment

Income CAGR (2018 – 2021)

Revenue CAGR (2022 – 2025)


Power Solutions


15x *





Brand name Solutions




Industrial Technologies




Matthews International




* on 2025 EBITDA

Taking into consideration EBITDA of 2021 (keep in mind Covid was significant headwinds for all heritage MATW’s organization) for all organization sectors. For the Energy Storage options we took EBITDA of 2025, right here is the acquired EV for Matthews International: $3.2 B, nearly 1.7 x the present EV.

Company Segment EV/EBITDA 2021 EBITDA ($m) EV ($m)
Energy Solutions * 15 75 1,125
Celebration 14 100 1,395
Brand name Solutions 6 166 994
Company Expenses 10 -64 -642
Industrial Technologies 15 27 399
Derived Matthews International EV 3,271

* EBITDA since 2025

We can see just how capitalists in the share of this business will certainly profit from the growth of the Energy Storage Solutions organization when we look a lot more very closely at this number. Business Value is made up of Market Value of Debt + Market Cap – Cash as well as Cash Equivalents. The financial debt of the business has actually been lowering significantly in the previous number of quarters and also the business has actually started deleveraging. This suggests the investors are the ones to gain from the advancement of the Energy Storage organization.

financial debt

firm’s financials

Utilizing the info presently offered on Seeking Alpha we computed listed below a feasible share rate for Matthew International taking into consideration the EBITDA of all its sectors, other than the Energy Storage remedies (EBITDA of 2025), Cash Equivalents, as well as financial obligation remain the very same. This cost is $77 per share, greater than 2 times the existing cost.

Matthews International Derived EV 3,271
Existing EV 1,930
Financial Obligation (2021 ) 848
Money Equivalents (2021 ) 49
Existing Market Cap 1,131
Feasible Market Cap 2,472
Shares Outstanding (2021 ) 32
Advantage Share rate 77

We would certainly such as to say thanks to Yoav from Phoenix insurance coverage (among the significant investors of MATW) that brought this concept to our intent as well as to Caio L. from our group that placed this assemble

Massive advantage unlocks for SOTP energetic financiers

While MATW is presently a salad of company, it’s unbelievably underestimated because of its absence of motif. While administration means to drop even more light on the Energy Business by taking it out from the “Marketing Segment”, it’s apparent that monitoring requires to unload the tradition Marketing organization as well as perhaps the Memorialization. Our team believe the massive advantage will certainly bring in even more resources allotment minded investors that will certainly require it from the administration.

Tesla is presently 80%+ of MATW’s power services and also as Tesla ramps up its gigafactories as well as completely dry cell, the firm anticipates this service to increase in 2022 and also double once more in 2023. A comparable business to the Industrial Technologies section is Rockwell Automation, the firm presently has an EV/EBITDA of 33X. Thinking about EBITDA of 2021 (bear in mind Covid was significant headwinds for all tradition MATW’s service) for all service sectors. When we look extra very closely at this number, we can see just how capitalists in the share of this business will certainly profit from the growth of the Energy Storage Solutions company. While monitoring plans to lose even more light on the Energy Business by taking it out from the “Marketing Segment”, it’s apparent that monitoring requires to unload the heritage Marketing organization and also perhaps the Memorialization.


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