matw-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

____________________________________________________________

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2024

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from _____ to _____

Commission File No. 0-09115

____________________________________________________________

MATTHEWS INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

____________________________________________________________


Pennsylvania						25-0644320
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

Two Northshore Center, Pittsburgh, PA 15212-5851

(Address of principal executive offices) (Zip Code)

(412) 442-8200

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A Common Stock, $1.00 par value

MATW

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ý

As of March 31, 2024, shares of common stock outstanding were: Class A Common Stock 30,709,859 shares.

PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollar amounts in thousands)


	March 31, 2024				September 30, 2023
ASSETS
Current assets:
Cash and cash equivalents			$	45,497			$	42,101
Accounts receivable, net			192,735				207,526
Inventories, net			253,301				260,409

Contract assets			90,835				74,646
Other current assets			71,681				63,575

Total current assets			654,049				648,257


Investments			26,780				24,988


Property, plant and equipment, net			277,903				270,326
Operating lease right-of-use assets			65,779				71,629
Deferred income taxes			2,316				2,269
Goodwill			707,881				698,109
Other intangible assets, net			143,884				160,478
Other assets			11,885				11,325

Total assets			$	1,890,477			$	1,887,381

LIABILITIES
Current liabilities:
Long-term debt, current maturities			$	5,419			$	3,696
Current portion of operating lease liabilities			23,442				23,983
Trade accounts payable			107,147				114,316
Accrued compensation			44,525				58,872
Accrued income taxes			4,035				12,561
Contract liabilities			35,613				36,935
Other current liabilities			138,571				144,237

Total current liabilities			358,752				394,600

Long-term debt			837,357				786,484
Operating lease liabilities			44,658				50,189
Deferred income taxes			69,672				71,255
Other liabilities			70,691				59,572
Total liabilities			1,381,130				1,362,100

SHAREHOLDERS' EQUITY
Shareholders' equity-Matthews:
Common stock	$	36,334			$	36,334
Additional paid-in capital	150,344				168,211
Retained earnings	705,113				714,727
Accumulated other comprehensive loss	(172,504)				(174,404)
Treasury stock, at cost	(209,987)				(219,200)
Total shareholders' equity-Matthews			509,300				525,668
Noncontrolling interests			47				(387)
Total shareholders' equity			509,347				525,281

Total liabilities and shareholders' equity			$	1,890,477			$	1,887,381

The accompanying notes are an integral part of these consolidated financial statements.

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollar amounts in thousands, except per share data)


	Three Months Ended March 31,				Six Months Ended March 31,
	2024		2023		2024		2023

Sales	$	471,223	$	479,580	$	921,209	$	928,820
Cost of sales	(323,041)		(329,957)		(640,674)		(640,267)

Gross profit	148,182		149,623		280,535		288,553

Selling expense	(36,004)		(34,539)		(70,448)		(67,978)
Administrative expense	(81,891)		(81,516)		(160,578)		(159,437)
Intangible amortization	(8,959)		(10,517)		(18,754)		(20,859)


Operating profit	21,328		23,051		30,755		40,279


Interest expense	(12,545)		(12,047)		(24,121)		(22,262)
Other income (deductions), net	(878)		1,503		(1,758)		(551)

Income before income taxes	7,905		12,507		4,876		17,466

Income tax benefit (provision)	1,122		(3,382)		1,848		(4,694)

Net income	9,027		9,125		6,724		12,772

Net loss attributable to noncontrolling interests	—		2		—		58

Net income attributable to Matthews shareholders	$	9,027	$	9,127	$	6,724	$	12,830

Earnings per share attributable to Matthews shareholders:
Basic	$	0.29	$	0.30	$	0.22	$	0.42

Diluted	$	0.29	$	0.29	$	0.22	$	0.41

The accompanying notes are an integral part of these consolidated financial statements.

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(Dollar amounts in thousands)



	Three Months Ended March 31,
	Matthews				Noncontrolling Interest				Total
	2024		2023		2024		2023		2024		2023

Net income (loss):	$	9,027	$	9,127	$	—	$	(2)	$	9,027	$	9,125
Other comprehensive (loss) income ("OCI"), net of tax:
Foreign currency translation adjustment	(6,026)		4,432		—		(5)		(6,026)		4,427
Pension plans and other postretirement benefits	(282)		(176)		—		—		(282)		(176)

Unrecognized gain (loss) on cash flow hedges:
Net change from periodic revaluation	1,983		(1,471)		—		—		1,983		(1,471)
Net amount reclassified to earnings	(499)		(771)		—		—		(499)		(771)
Net change in unrecognized gain (loss) on cash flow hedges	1,484		(2,242)		—		—		1,484		(2,242)
OCI, net of tax	(4,824)		2,014		—		(5)		(4,824)		2,009
Comprehensive income (loss)	$	4,203	$	11,141	$	—	$	(7)	$	4,203	$	11,134


	Six Months Ended March 31,
	Matthews				Noncontrolling Interest				Total
	2024		2023		2024		2023		2024		2023

Net income (loss):	$	6,724	$	12,830	$	—	$	(58)	$	6,724	$	12,772
OCI, net of tax:
Foreign currency translation adjustment	5,659		24,992		22		(1)		5,681		24,991
Pension plans and other postretirement benefits	(362)		769		—		—		(362)		769

Unrecognized loss on cash flow hedges:
Net change from periodic revaluation	(2,406)		(1,378)		—		—		(2,406)		(1,378)
Net amount reclassified to earnings	(991)		(1,268)		—		—		(991)		(1,268)
Net change in unrecognized loss on cash flow hedges	(3,397)		(2,646)		—		—		(3,397)		(2,646)
OCI, net of tax	1,900		23,115		22		(1)		1,922		23,114
Comprehensive income (loss)	$	8,624	$	35,945	$	22	$	(59)	$	8,646	$	35,886

The accompanying notes are an integral part of these consolidated financial statements.

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

for the three and six months ended March 31, 2024 and 2023 (Unaudited)

(Dollar amounts in thousands, except per share data)


	Shareholders' Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Non- controlling Interests		Total
Balance, September 30, 2023	$	36,334	$	168,211	$	714,727	$	(174,404)	$	(219,200)	$	(387)	$	525,281
Net loss	—		—		(2,303)		—		—		—		(2,303)
Minimum pension liability	—		—		—		(80)		—		—		(80)
Translation adjustment	—		—		—		11,685		—		22		11,707
Fair value of cash flow hedges	—		—		—		(4,881)		—		—		(4,881)
Total comprehensive income													4,443
Stock-based compensation	—		4,651		—		—		—		—		4,651
Purchase of 465,953 shares of treasury stock	—		—		—		—		(17,185)		—		(17,185)
Issuance of 678,750 shares of treasury stock	—		(25,356)		—		—		25,356		—		—

Dividends	—		—		(8,381)		—		—		—		(8,381)

Transactions with non-controlling interest	—		(412)		—		—		—		412		—
Balance, December 31, 2023	$	36,334	$	147,094	$	704,043	$	(167,680)	$	(211,029)	$	47	$	508,809
Net income	—		—		9,027		—		—		—		9,027
Minimum pension liability	—		—		—		(282)		—		—		(282)
Translation adjustment	—		—		—		(6,026)		—		—		(6,026)
Fair value of cash flow hedges	—		—		—		1,484		—		—		1,484
Total comprehensive income													4,203
Stock-based compensation	—		4,327		—		—		—		—		4,327
Purchase of 1,029 shares of treasury stock	—		—		—		—		(35)		—		(35)
Issuance of 28,878 shares of treasury stock	—		(1,077)		—		—		1,077		—		—

Dividends	—		—		(7,957)		—		—		—		(7,957)


Balance, March 31, 2024	$	36,334	$	150,344	$	705,113	$	(172,504)	$	(209,987)	$	47	$	509,347

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY, Continued

for the three and six months ended March 31, 2024 and 2023 (Unaudited)

(Dollar amounts in thousands, except per share data)


	Shareholders' Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Non- controlling Interests		Total
Balance, September 30, 2022	$	36,334	$	160,255	$	706,749	$	(190,191)	$	(225,795)	$	(276)	$	487,076
Net income (loss)	—		—		3,703		—		—		(56)		3,647
Minimum pension liability	—		—		—		945		—		—		945
Translation adjustment	—		—		—		20,560		—		4		20,564
Fair value of cash flow hedges	—		—		—		(404)		—		—		(404)
Total comprehensive income													24,752
Stock-based compensation	—		4,334		—		—		—		—		4,334
Purchase of 89,025 shares of treasury stock	—		—		—		—		(2,451)		—		(2,451)
Issuance of 245,006 shares of treasury stock	—		(9,154)		—		—		9,154		—		—
Cancellations of 34,327 shares of treasury stock	—		1,958		—		—		(1,958)		—		—
Dividends	—		—		(8,794)		—		—		—		(8,794)


Balance, December 31, 2022	$	36,334	$	157,393	$	701,658	$	(169,090)	$	(221,050)	$	(328)	$	504,917
Net income (loss)	—		—		9,127		—		—		(2)		9,125
Minimum pension liability	—		—		—		(176)		—		—		(176)
Translation adjustment	—		—		—		4,432		—		(5)		4,427
Fair value of cash flow hedges	—		—		—		(2,242)		—		—		(2,242)
Total comprehensive income													11,134
Stock-based compensation	—		4,278		—		—		—		—		4,278
Purchase of 7,606 shares of treasury stock	—		—		—		—		(288)		—		(288)
Issuance of 46,069 shares of treasury stock	—		(1,723)		—		—		1,723		—		—

Dividends	—		—		(7,683)		—		—		—		(7,683)
Transactions with noncontrolling interests	—		—		—		—		—		33		33
Balance, March 31, 2023	$	36,334	$	159,948	$	703,102	$	(167,076)	$	(219,615)	$	(302)	$	512,391

The accompanying notes are an integral part of these consolidated financial statements.

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollar amounts in thousands)


	Six Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net income	$	6,724	$	12,772
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	46,784		47,877
Stock-based compensation expense	8,978		8,612
Deferred tax provision	29		268
Gain on sale of assets, net	(316)		—




Defined benefit plan settlement losses	—		1,271
Defined benefit plan settlement payments	—		(24,242)
Proceeds from the settlement of cash flow hedges	—		10,474
Changes in working capital items	(35,609)		(10,885)
Decrease in other assets	11,724		3,298
Decrease in other liabilities	(7,782)		(2,083)
Other operating activities, net	(691)		(2,651)

Net cash provided by operating activities	29,841		44,711

Cash flows from investing activities:
Capital expenditures	(24,033)		(23,772)
Acquisitions, net of cash acquired	(5,825)		(7,586)



Other investing activities, net	95		155




Net cash used in investing activities	(29,763)		(31,203)

Cash flows from financing activities:
Proceeds from long-term debt	491,142		414,843
Payments on long-term debt	(449,509)		(441,963)

Purchases of treasury stock	(17,220)		(2,739)
Dividends	(16,691)		(14,126)
Payments of debt issuance costs	(4,704)		—
Other financing activities	—		(914)

Net cash provided by (used in) financing activities	3,018		(44,899)

Effect of exchange rate changes on cash	300		1,893

Net change in cash and cash equivalents	3,396		(29,498)
Cash and cash equivalents at beginning of year	42,101		71,414
Cash and cash equivalents at end of period	$	45,497	$	41,916

The accompanying notes are an integral part of these consolidated financial statements.

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

March 31, 2024

(Dollar amounts in thousands, except per share data)

Note 1. Nature of Operations

Matthews International Corporation ("Matthews" or the "Company"), founded in 1850 and incorporated in Pennsylvania in 1902, is a global provider of memorialization products, industrial technologies and brand solutions. The Company manages its businesses under three segments: Memorialization, Industrial Technologies and SGK Brand Solutions. Memorialization products consist primarily of bronze and granite memorials and other memorialization products, caskets, cremation-related products, and cremation and incineration equipment primarily for the cemetery and funeral home industries. Industrial Technologies includes the design, manufacturing, service and distribution of high-tech custom energy storage solutions; product identification and warehouse automation technologies and solutions, including order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products; and coating and converting lines for the packaging, pharma, foil, décor and tissue industries. SGK Brand Solutions consists of brand management, pre-media services, printing plates and cylinders, imaging services, digital asset management, merchandising display systems, and marketing and design services primarily for the consumer goods and retail industries.

The Company has facilities in North America, Europe, Asia, Australia, and Central and South America.

Note 2. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information for commercial and industrial companies and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three and six months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2024. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2023. The consolidated financial statements include all domestic and foreign subsidiaries in which the Company maintains an ownership interest and has operating control and any variable interest entities for which the Company is the primary beneficiary. Investments in certain companies over which the Company exerts significant influence, but does not control the financial and operating decisions, are accounted for as equity method investments. Investments in certain companies over which the Company does not exert significant influence are accounted for as cost method investments. All intercompany accounts and transactions have been eliminated. The Company applies highly inflationary accounting for subsidiaries when the cumulative inflation rate for a three-year period meets or exceeds 100 percent.

Effective April 1, 2022, the Company has applied highly inflationary accounting to its Turkish subsidiaries. Under highly inflationary accounting, the financial statements of these subsidiaries are remeasured into the Company's reporting currency (U.S. dollar) and exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in current earnings, rather than accumulated other comprehensive loss on the Consolidated Balance Sheets, until such time as the applicable economy is no longer considered highly inflationary. As of March 31, 2024 and September 30, 2023, the Company had net monetary assets related to its Turkish subsidiaries of $4,612 and $4,271, respectively. Exchange losses related to highly inflationary accounting totaled $390 and $710 for the three and six months ended March 31, 2024, respectively, and $160 and $1,248 for the three and six months ended March 31, 2023, respectively. Such amounts were included in the Consolidated Statements of Income within other income (deductions), net.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 2. Basis of Presentation (continued)

New Accounting Pronouncements:

Issued

In December 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740) which enhances the transparency and decision usefulness of income tax disclosures including rate reconciliations and income taxes paid among other tax disclosures. The ASU is effective for annual periods for the Company beginning in fiscal year 2026. The Company is in the process of assessing the impact this ASU will have on its consolidated financial statements.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) which improves financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities, including enhanced disclosures about significant segment expenses. The ASU is effective for annual periods for the Company beginning in fiscal year 2025, and interim periods beginning in fiscal year 2026. The Company is in the process of assessing the impact this ASU will have on its consolidated financial statements.

In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements. The amendments in this update affect the presentation and disclosure of a variety of topics in the Codification, and align them with the Securities and Exchange Commission ("SEC") regulations. The effective date of the amendments of this ASU will be determined for each individual disclosure based on the effective date of the SEC’s removal of the related disclosure from Regulation S-X or Regulation S-K. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, then this ASU will not become effective. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.

Adopted

In September 2022, the FASB issued ASU No. 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50) which enhances the transparency of supplier finance programs by addressing disclosure requirements. Specifically, the amendment requires disclosure of key program terms, amounts outstanding, balance sheet presentation, and a rollforward of amounts outstanding during the annual period. The adoption of this ASU in the first quarter of fiscal 2024 had no material impact on the Company's consolidated financial statements.

The Company facilitates a voluntary supply chain finance program (the "Program") to provide certain suppliers with the opportunity to sell receivables due from the Company to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. The Company is not a party to the agreements between the suppliers and the financial institutions and has no economic interest in a supplier's decision to sell a receivable. The range of payment terms negotiated with a supplier is consistent, irrespective of whether a supplier participates in the Program. All outstanding payments owed under the Program are recorded within trade accounts payable in the Consolidated Balance Sheets. The Company accounts for all payments made under the Program as a reduction to operating cash flows in changes in working capital within the Consolidated Statements of Cash Flows. The amounts owed to a participating financial institution under the Program and included in trade accounts payable were $4,670 and $3,027 at March 31, 2024 and September 30, 2023, respectively.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) which improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract asset/liability, and payment terms and their effect on subsequent revenue recognized by the acquirer. The adoption of this ASU in the first quarter of fiscal 2024 had no material impact on the Company's consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 3. Revenue Recognition

The Company disaggregates revenue from contracts with customers by geography, as it believes geographic regions best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Disaggregated sales by segment and region for the three and six months ended March 31, 2024 and 2023 were as follows:


	Memorialization				Industrial Technologies				SGK Brand Solutions				Consolidated
	Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,
	2024		2023		2024		2023		2024		2023		2024		2023
North America	$	212,053	$	211,878	$	32,817	$	41,835	$	63,152	$	62,324	$	308,022	$	316,037
Central and South America	—		—		—		—		1,308		995		1,308		995
Europe	7,907		8,462		81,579		81,970		52,731		52,941		142,217		143,373
Australia	2,196		2,549		—		—		2,153		2,216		4,349		4,765
Asia	—		—		1,740		1,709		13,587		12,701		15,327		14,410
Total Sales	$	222,156	$	222,889	$	116,136	$	125,514	$	132,931	$	131,177	$	471,223	$	479,580


	Memorialization				Industrial Technologies				SGK Brand Solutions				Consolidated
	Six Months Ended March 31,				Six Months Ended March 31,				Six Months Ended March 31,				Six Months Ended March 31,
	2024		2023		2024		2023		2024		2023		2024		2023
North America	$	409,218	$	407,077	$	65,956	$	77,975	$	125,872	$	129,904	$	601,046	$	614,956
Central and South America	—		—		—		—		2,562		2,332		2,562		2,332
Europe	15,878		16,825		158,355		153,271		102,863		101,458		277,096		271,554
Australia	5,131		5,489		—		—		4,324		4,515		9,455		10,004
Asia	—		—		3,199		3,411		27,851		26,563		31,050		29,974
Total Sales	$	430,227	$	429,391	$	227,510	$	234,657	$	263,472	$	264,772	$	921,209	$	928,820

Revenue from products or services provided to customers over time accounted for approximately 18% and 13% of revenue for the three months ended March 31, 2024 and 2023, respectively and 19% and 13% of revenue for the six months ended March 31, 2024 and 2023, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 4. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three level fair value hierarchy is used to prioritize the inputs used in valuations, as defined below:



			Level 1:			Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets.
			Level 2:			Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
			Level 3:			Unobservable inputs for the asset or liability.

The fair values of the Company's assets and liabilities measured on a recurring basis are categorized as follows:


	March 31, 2024								September 30, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Derivatives (1)	$	—	$	1,889	$	—	$	1,889	$	—	$	4,006	$	—	$	4,006
Equity and fixed income mutual funds	—		1,466		—		1,466		—		699		—		699
Life insurance policies	—		4,825		—		4,825		—		4,926		—		4,926
Total assets at fair value	$	—	$	8,180	$	—	$	8,180	$	—	$	9,631	$	—	$	9,631

Liabilities:
Derivatives (1)	$	—	$	5,198	$	—	$	5,198	$	—	$	2,766	$	—	$	2,766
Total liabilities at fair value	$	—	$	5,198	$	—	$	5,198	$	—	$	2,766	$	—	$	2,766

(1) Interest rate swaps and cross currency swaps are valued based on observable market swap rates and are classified within Level 2 of the fair value hierarchy.

The carrying values for other financial assets and liabilities approximated fair value at March 31, 2024 and September 30, 2023.

Note 5. Inventories

Inventories consisted of the following:


	March 31, 2024		September 30, 2023
Raw materials	$	71,068	$	70,451
Work in process	103,060		108,400
Finished goods	79,173		81,558
	$	253,301	$	260,409

Note 6. Investments

Non-current investments consisted of the following:


	March 31, 2024		September 30, 2023
Equity and fixed income mutual funds	$	1,466	$	699
Life insurance policies	4,825		4,926
Equity-method investments	332		323
Other (primarily cost-method) investments	20,157		19,040
	$	26,780	$	24,988

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 7. Debt and Financing Arrangements

Long-term debt at March 31, 2024 and September 30, 2023 consisted of the following:


	March 31, 2024		September 30, 2023
Revolving credit facilities	$	511,057	$	463,168


2025 Senior Notes	298,362		298,500

Other borrowings	17,200		19,241
Finance lease obligations	16,157		9,271
Total debt	842,776		790,180
Less current maturities	(5,419)		(3,696)
Long-term debt	$	837,357	$	786,484

The Company has a domestic credit facility with a syndicate of financial institutions that was amended and restated in January 2024. The amended and restated loan agreement includes a $750,000 senior secured revolving credit facility, which matures in January 2029, subject to the terms and conditions of the amended facility. A portion of the revolving credit facility (not to exceed $350,000) can be drawn in foreign currencies. Borrowings under the revolving credit facility bear interest at the Secured Overnight Financing Rate ("SOFR"), plus a 0.10% per annum rate spread adjustment, plus a factor ranging from 1.00% to 2.00% (1.50% at March 31, 2024) based on the Company's leverage ratio. The leverage ratio is defined as total indebtedness divided by EBITDA (earnings before interest, income taxes, depreciation and amortization) as defined within the domestic credit facility agreement. The Company is required to pay an annual commitment fee ranging from 0.15% to 0.30% (based on the Company's leverage ratio) of the unused portion of the revolving credit facility. The Company incurred new debt issuance costs of $4,704 in connection with the amended and restated agreement, which were deferred and are being amortized over the term of the facility. Unamortized costs were $5,363 and $949 at March 31, 2024 and September 30, 2023, respectively.

The domestic credit facility requires the Company to maintain certain leverage and interest coverage ratios. A portion of the facility (not to exceed $55,000) is available for the issuance of trade and standby letters of credit. Outstanding U.S. dollar denominated borrowings on the revolving credit facility at March 31, 2024 and September 30, 2023 were $447,949 and $405,000, respectively. Outstanding Euro denominated borrowings on the revolving credit facility at March 31, 2024 and September 30, 2023 were €55.0 million ($59,370) and €55.0 million ($58,168), respectively. The weighted-average interest rate on the outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps and Euro denominated borrowings) at March 31, 2024 and 2023 was 4.89% and 5.17%, respectively.

The Company has $299,217 of 5.25% senior unsecured notes due December 1, 2025 (the "2025 Senior Notes"). The 2025 Senior Notes bear interest at a rate of 5.25% per annum with interest payable semi-annually in arrears on June 1 and December 1 of each year. The Company's obligations under the 2025 Senior Notes are guaranteed by certain of the Company's direct and indirect wholly-owned subsidiaries. The Company is subject to certain covenants and other restrictions in connection with the 2025 Senior Notes. The Company incurred direct financing fees and costs in connection with the 2025 Senior Notes. Unamortized costs were $855 and $1,125 at March 31, 2024 and September 30, 2023, respectively.

The Company and certain of its domestic subsidiaries sell, on a continuous basis without recourse, their trade receivables to Matthews Receivables Funding Corporation, LLC (“Matthews RFC”), a wholly-owned bankruptcy-remote subsidiary of the Company. Matthews RFC has a receivables purchase agreement (“RPA”) to sell up to $125,000 of receivables to certain purchasers (the “Purchasers”) on a recurring basis in exchange for cash (referred to as “capital” within the RPA) equal to the gross receivables transferred. The parties intend that the transfers of receivables to the Purchasers constitute purchases and sales of receivables. Matthews RFC has guaranteed to each Purchaser the prompt payment of sold receivables, and has granted a security interest in its assets for the benefit of the Purchasers. Under the RPA, each Purchaser’s share of capital accrues yield at a floating rate plus an applicable margin. The Company is the master servicer under the RPA, and is responsible for administering and collecting receivables. The RPA, which had a maturity date of March 2024, was amended in March 2024 to extend the maturity date to March 2026.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 7. Debt and Financing Arrangements (continued)

The proceeds of the RPA are classified as operating activities in the Company’s Consolidated Statements of Cash Flows. Cash received from collections of sold receivables may be used to fund additional purchases of receivables on a revolving basis, or to reduce all or any portion of the outstanding capital of the Purchasers. The fair value of the sold receivables approximated book value due to their credit quality and short-term nature, and as a result, no gain or loss on sale of receivables was recorded. As of March 31, 2024 and September 30, 2023, the amount sold to the Purchasers was $109,900 and $101,800, respectively, which was derecognized from the Consolidated Balance Sheets. As collateral against sold receivables, Matthews RFC maintains a certain level of unsold receivables, which was $51,819 and $57,897 as of March 31, 2024 and September 30, 2023, respectively.

The following table sets forth a summary of receivables sold as part of the RPA:


	Six Months Ended March 31, 2024		Six Months Ended March 31, 2023
Gross receivables sold	$	194,116	$	201,115
Cash collections reinvested	(186,016)		(189,105)
Net cash proceeds received	$	8,100	$	12,010

In March 2023, the Company, through its U.K. subsidiary, entered into a non-recourse factoring arrangement. In connection with this arrangement, the Company periodically sells trade receivables to a third-party purchaser in exchange for cash. These transfers of financial assets are recorded at the time the Company surrenders control of the assets. As these transfers qualify as true sales under the applicable accounting guidance, the receivables are de-recognized from the Company's Consolidated Balance Sheets upon transfer. The principal amount of receivables sold under this arrangement was $34,993 and $16,950 during the six months ended March 31, 2024 and 2023, respectively. The discounts on the trade receivables sold are included within administrative expense in the Consolidated Statements of Income. The proceeds from the sale of receivables are classified as operating activities in the Company's Consolidated Statements of Cash Flows. As of March 31, 2024 and September 30, 2023, the amount of factored receivables that remained outstanding was $15,411 and $18,045, respectively.

The Company, through certain of its European subsidiaries, has a credit facility with a European bank, which is guaranteed by Matthews. The maximum amount of borrowing available under this facility is €10.0 million ($10,795). The facility also provides €18.5 million ($19,970) for bank guarantees. This facility has no stated maturity date and is available until terminated. Outstanding borrowings under the credit facility totaled €3.5 million ($3,738) at March 31, 2024. There were no outstanding borrowings under the credit facility at September 30, 2023. The weighted-average interest rate on outstanding borrowings under this facility was 6.11% and 5.17% at March 31, 2024 and 2023, respectively.

Other borrowings totaled $17,200 and $19,241 at March 31, 2024 and September 30, 2023, respectively. The weighted-average interest rate on all other borrowings was 2.55% and 3.01% at March 31, 2024 and 2023, respectively.

As of March 31, 2024 and September 30, 2023, the fair value of the Company's long-term debt, including current maturities, which is classified as Level 2 in the fair value hierarchy, approximated the carrying value included in the Consolidated Balance Sheets. The Company was in compliance with all of its debt covenants as of March 31, 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 8. Derivatives and Hedging Activities

The Company operates internationally and utilizes certain derivative financial instruments to manage its foreign currency, debt and interest rate exposures. At March 31, 2024 and September 30, 2023, derivative instruments were reflected on a gross-basis in the consolidated balance sheets as follows:


Derivatives:	March 31, 2024				September 30, 2023
	Interest Rate Swaps		Cross- Currency Swaps		Interest Rate Swaps		Cross- Currency Swaps
Current assets:
Other current assets	$	472	$	—	$	920	$	—
Long-term assets:
Other assets	1,417		—		3,086		—
Current liabilities:
Other current liabilities	(31)		—		—		—
Long-term liabilities:
Other liabilities	(91)		(5,076)		—		(2,766)
Total derivatives	$	1,767	$	(5,076)	$	4,006	$	(2,766)

The following table presents information related to interest rate swaps entered into by the Company and designated as cash flow hedges:


	March 31, 2024			September 30, 2023
Notional amount	$	175,000		$	175,000

Weighted-average maturity period (years)	3.6			4.1
Weighted-average received rate	5.33		%	5.32		%
Weighted-average pay rate	3.83		%	3.83		%

The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate. The interest rate swaps have been designated as cash flow hedges of future variable interest payments which are considered probable of occurring. Based on the Company's assessment, all of the critical terms of each of the hedges matched the underlying terms of the hedged debt and related forecasted interest payments, and as such, these hedges were considered highly effective.

The fair value of the interest rate swaps reflected a net unrealized gain of $1,767 ($1,319 after tax) at March 31, 2024 and $4,006 ($2,991 after tax) at September 30, 2023, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI"). Unrecognized gains of $5,775 ($4,316 after tax) and $8,084 ($6,041 after tax) related to previously terminated LIBOR-based swaps were also included in AOCI as of March 31, 2024 and September 30, 2023, respectively. Assuming market rates remain constant with the rates at March 31, 2024, a gain (net of tax) of approximately $2,896 included in AOCI is expected to be recognized in earnings over the next twelve months.

The Company has a U.S. Dollar/Euro cross currency swap with a notional amount of $81,392, as of March 31, 2024 and September 30, 2023, which has been designated as a net investment hedge of foreign operations. The swap contract matures in September 2027. The Company assesses hedge effectiveness for this contract based on changes in fair value attributable to changes in spot prices. A loss of $3,790 (net of income taxes of $1,286) and a loss of $2,065 (net of income taxes of $701), which represented effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at March 31, 2024 and September 30, 2023, respectively. Income of $327 and $586, which represented the recognized portion of the fair value of cross currency swaps excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of interest expense for the three and six months ended March 31, 2024, respectively. Income of $309 and $581, which represented the recognized portion of the fair value of cross currency swaps excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of interest expense for the three and six months ended March 31, 2023, respectively. At March 31, 2024 and September 30, 2023, the swap totaled $5,076 and $2,766, respectively, and was included in other accrued liabilities in the Consolidated Balance Sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 8. Derivatives and Hedging Activities (continued)

The Company uses certain foreign currency debt instruments as net investment hedges of foreign operations with a notional amount of €55.0 million ($59,370) as of March 31, 2024. Currency losses of $1,991 (net of income taxes of $675), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at March 31, 2024.

Refer to Note 12, "Accumulated Other Comprehensive Income" for further details regarding amounts recorded in AOCI and the Consolidated Statements of Income (Loss) related to derivatives.

Note 9. Share-Based Payments

The Company maintains an equity incentive plan (as amended and restated, the "2017 Equity Incentive Plan") that provides for grants of stock options, restricted shares, restricted share units ("RSUs"), stock-based performance units and certain other types of stock-based awards. Under the 2017 Equity Incentive Plan, which has a ten-year term from the date the Company's Board of Directors approved of the amendment and restatement of the 2017 Equity Incentive Plan, the maximum number of shares available for grants or awards is an aggregate of 3,450,000 (subject to adjustment upon certain events such as stock dividends or stock splits), following the amendment and restatement of the 2017 Equity Incentive Plan at the Company's 2022 Annual Shareholder Meeting. At March 31, 2024, 1,178,558 shares have been issued under the 2017 Equity Incentive Plan. 1,233,583 time-based RSUs, 1,579,514 performance-based RSUs, and 75,000 stock options have been granted under the 2017 Equity Incentive Plan. 1,720,892 of these share-based awards are outstanding as of March 31, 2024. The 2017 Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors. The number of shares issued under performance-based RSUs may be up to 200% of the number of performance-based RSUs, based on the satisfaction of specific criteria established by the plan administrator.

For the three-month periods ended March 31, 2024 and 2023, stock-based compensation cost totaled $4,327 and $4,278, respectively. For the six-month periods ended March 31, 2024 and 2023, stock-based compensation totaled $8,978 and $8,612, respectively. The associated future income tax benefit recognized for stock-based compensation was $1,093 and $1,057 for the three-month periods ended March 31, 2024 and 2023, respectively, and $1,778 and $1,608 for the six-month periods ended March 31, 2024 and 2023, respectively.

With respect to the restricted share unit grants, units generally vest on the third anniversary of the grant date. The number of units that vest depend on certain time and performance thresholds. Such performance thresholds include adjusted earnings per share, return on invested capital, appreciation in the market value of the Company's Class A Common Stock, or other targets established by the Compensation Committee of the Board of Directors. Approximately 40% of the outstanding share units vest based on time, while the remaining vest based on pre-defined performance thresholds. The Company issues common stock from treasury shares once the units become vested.

The transactions for RSUs for the six months ended March 31, 2024 were as follows:


	RSUs	Weighted- average Grant-date Fair Value
Non-vested at September 30, 2023	1,728,697	$	30.90
Granted	458,320	40.39
Vested	(449,775)	30.07
Expired or forfeited	(16,350)	35.22
Non-vested at March 31, 2024	1,720,892	$	33.60

During the third quarter of fiscal 2021, 75,000 stock options were granted under the 2017 Equity Incentive Plan. The option price for each stock option granted was $41.70, which was equal to the fair market value of the Company's Class A Common Stock on the date of grant. During the second quarter of fiscal 2024, all of these stock options were forfeited in connection with an employee retirement.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 9. Share-Based Payments (continued)

As of March 31, 2024, the total unrecognized compensation cost related to all unvested stock-based awards was $28,205 and is expected to be recognized over a weighted average period of 2.2 years.

The fair value of certain stock-based awards that are subject to performance conditions are estimated on the date of grant using a binomial lattice valuation model. The following table indicates the assumptions used in estimating the fair value of certain stock-based awards granted during the six-month period ended March 31, 2024.


	Six Months Ended March 31, 2024

Expected volatility	31.8	%
Dividend yield	2.4	%
Average risk-free interest rate	4.7	%
Average expected term (years)	3.0

The risk-free interest rate is based on United States Treasury yields at the date of grant. The dividend yield is based on the most recent dividend payment and average stock price over the 12 months prior to the grant date. Expected volatilities are based on the historical volatility of the Company's stock price. The expected term for grants in the six months ended March 31, 2024 represents an estimate of the average period of time for RSUs to vest.

The Company maintains the Amended and Restated 2019 Director Fee Plan, the Amended and Restated 2014 Director Fee Plan and the 1994 Director Fee Plan (collectively, the "Director Fee Plans"). There will be no further fees or share-based awards granted under the Amended and Restated 2014 Director Fee Plan and the 1994 Director Fee Plan. Under the Amended and Restated 2019 Director Fee Plan, non-employee directors (except for the Chairman of the Board) each receive, as an annual retainer fee for fiscal 2024, either cash or shares of the Company's Class A Common Stock with a value equal to $90. The annual retainer fee for fiscal 2024 paid to the non-employee Chairman of the Board is $210. Where the annual retainer fee is provided in shares, each director may elect to be paid these shares on a current basis or have such shares credited to a deferred stock account as phantom stock, with such shares to be paid to the director subsequent to leaving the Board. The total number of shares of stock that have been authorized to be issued under the Amended and Restated 2019 Director Fee Plan or credited to a deferred stock compensation account for subsequent issuance is 300,000 shares of Class A Common Stock (subject to adjustment upon certain events such as stock dividends or stock splits), following the amendment and restatement of the 2019 Director Fee Plan at the Company's 2023 Annual Shareholder Meeting. The value of deferred shares is recorded in other liabilities. A total of 50,355 shares and share units had been deferred under the Director Fee Plans as of March 31, 2024. Additionally, non-employee directors each receive an annual stock-based grant (non-statutory stock options, stock appreciation rights and/or restricted shares or units) with a value of $140 for fiscal 2024. As of March 31, 2024, 373,471 restricted shares and RSUs have been granted under the Director Fee Plans, 200,242 of which were issued under the 2019 Director Fee Plan. 67,560 RSUs are unvested at March 31, 2024 under the Director Fee Plans.

Note 10. Earnings Per Share Attributable to Matthews' Shareholders

The information used to compute earnings per share attributable to Matthews' common shareholders was as follows:


	Three Months Ended March 31,				Six Months Ended March 31,
	2024		2023		2024		2023
Net income attributable to Matthews shareholders	$	9,027	$	9,127	$	6,724	$	12,830


Weighted-average shares outstanding (in thousands):
Basic shares	30,926		30,778		30,921		30,741
Effect of dilutive securities	293		401		292		330
Diluted shares	31,219		31,179		31,213		31,071

Dividends declared per common share	$	0.24	$	0.23	$	0.48	$	0.46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 11. Pension and Other Postretirement Benefit Plans

The Company provides defined benefit pension and other postretirement plans to certain employees. Net periodic pension and other postretirement benefit cost for the plans included the following:



	Three months ended March 31,
	Pension				Other Postretirement
	2024		2023		2024		2023

Service cost	$	31	$	31	$	13	$	19
Interest cost *	129		105		171		161

Amortization:
Prior service credit	—		—		(91)		(91)
Net actuarial gains *	(9)		(6)		(181)		(177)


Net benefit cost	$	151	$	130	$	(88)	$	(88)


	Six months ended March 31,
	Pension				Other Postretirement
	2024		2023		2024		2023

Service cost	$	61	$	88	$	27	$	38
Interest cost *	258		248		342		322

Amortization:
Prior service credit	—		—		(182)		(182)
Net actuarial gains *	(20)		(16)		(361)		(354)
Settlement losses *	—		1,271		—		—


Net benefit cost	$	299	$	1,591	$	(174)	$	(176)
* Non-service components of pension and postretirement expense are included in other income (deductions), net.

In the first quarter of fiscal 2023, the Company made lump sum payments totaling $24,242 to fully settle the supplemental retirement plan ("SERP") and defined benefit portion of the officers retirement restoration plan ("ORRP") obligations. The settlement of these plan obligations resulted in the recognition of a non-cash charge of $1,271, which has been presented as a component of other income (deductions), net for the six months ended March 31, 2023. This amount represents the immediate recognition of the deferred AOCI balances related to the SERP and ORRP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 12. Accumulated Other Comprehensive Income

The changes in AOCI by component, net of tax, for the three-month periods ended March 31, 2024 and 2023 were as follows:


	Post-retirement benefit plans			Currency translation adjustment		Cash Flow Hedges			Total
Attributable to Matthews:
Balance, December 31, 2023	$	6,680		$	(178,511)	$	4,151		$	(167,680)
OCI before reclassification	(72)			(5,779)		1,983			(3,868)
Amounts reclassified from AOCI	(210)		(a)	(247)		(499)		(b)	(956)
Net current-period OCI	(282)			(6,026)		1,484			(4,824)
Balance, March 31, 2024	$	6,398		$	(184,537)	$	5,635		$	(172,504)
Attributable to noncontrolling interest:
Balance, December 31, 2023	$	—		$	288	$	—		$	288
OCI before reclassification	—			—		—			—
Net current-period OCI	—			—		—			—
Balance, March 31, 2024	$	—		$	288	$	—		$	288


	Post-retirement benefit plans			Currency translation adjustment		Cash Flow Hedges			Total
Attributable to Matthews:
Balance, December 31, 2022	$	6,127		$	(182,750)	$	7,533		$	(169,090)
OCI before reclassification	29			4,663		(1,471)			3,221
Amounts reclassified from AOCI	(205)		(a)	(231)		(771)		(b)	(1,207)
Net current-period OCI	(176)			4,432		(2,242)			2,014
Balance, March 31, 2023	$	5,951		$	(178,318)	$	5,291		$	(167,076)
Attributable to noncontrolling interest:
Balance, December 31, 2022	$	—		$	259	$	—		$	259
OCI before reclassification	—			(5)		—			(5)
Net current-period OCI	—			(5)		—			(5)
Balance, March 31, 2023	$	—		$	254	$	—		$	254

(a) Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note 11).

(b) Amounts were included in interest expense in the periods the hedged item affected earnings (see Note 8).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 12. Accumulated Other Comprehensive Income (continued)

The changes in AOCI by component, net of tax, for the six-month periods ended March 31, 2024 and 2023 were as follows:



	Post-retirement benefit plans			Currency translation adjustment		Cash Flow Hedges			Total
Attributable to Matthews:
Balance, September 30, 2023	$	6,760		$	(190,196)	$	9,032		$	(174,404)
OCI before reclassification	59			6,102		(2,406)			3,755
Amounts reclassified from AOCI	(421)		(a)	(443)		(991)		(b)	(1,855)
Net current-period OCI	(362)			5,659		(3,397)			1,900

Balance, March 31, 2024	$	6,398		$	(184,537)	$	5,635		$	(172,504)
Attributable to noncontrolling interest:
Balance, September 30, 2023	$	—		$	266	$	—		$	266
OCI before reclassification	—			22		—			22
Net current-period OCI	—			22		—			22
Balance, March 31, 2024	$	—		$	288	$	—		$	288



	Post-retirement benefit plans			Currency translation adjustment		Cash Flow Hedges			Total
Attributable to Matthews:
Balance, September 30, 2022	$	5,182		$	(203,310)	$	7,937		$	(190,191)
OCI before reclassification	232			25,426		(1,378)			24,280
Amounts reclassified from AOCI	537		(a)	(434)		(1,268)		(b)	(1,165)
Net current-period OCI	769			24,992		(2,646)			23,115
Balance, March 31, 2023	$	5,951		$	(178,318)	$	5,291		$	(167,076)
Attributable to noncontrolling interest:
Balance, September 30, 2022	$	—		$	255	$	—		$	255
OCI before reclassification	—			(1)		—			(1)
Net current-period OCI	—			(1)		—			(1)
Balance, March 31, 2023	$	—		$	254	$	—		$	254

(a) Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note 11).

(b) Amounts were included in interest expense in the periods the hedged item affected earnings (see Note 8).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 12. Accumulated Other Comprehensive Income (continued)

Reclassifications out of AOCI for the three and six-month periods ended March 31, 2024 and 2023 were as follows:



	Amount reclassified from AOCI
Details about AOCI Components	Three Months Ended March 31, 2024		Six Months Ended March 31, 2024		Affected line item in the Statement of income

Postretirement benefit plans
Prior service credit (a)	$	91	$	182
Actuarial losses	190		381		Other income (deductions), net

	281		563		Income before income tax (b)
	(71)		(142)		Income taxes
	$	210	$	421	Net income
Derivatives
Cash flow hedges	$	668	$	1,327	Interest expense
Net investment hedges	327		586		Interest expense
	995		1,913		Income before income tax (b)
	(249)		(479)		Income taxes
	$	746	$	1,434	Net income





Details about AOCI Components	Three Months Ended March 31, 2023		Six Months Ended March 31, 2023		Affected line item in the Statement of income

Postretirement benefit plans
Prior service credit (a)	$	91	$	182
Actuarial losses	183		370		Other income (deductions), net
Settlement losses	—		(1,271)		Other income (deductions), net
	274		(719)		Income before income tax (b)
	(69)		182		Income taxes
	$	205	$	(537)	Net income
Derivatives
Cash flow hedges	$	1,032	$	1,697	Interest expense
Net investment hedges	309		581		Interest expense
	1,341		2,278		Income before income tax (b)
	(339)		(576)		Income taxes
	$	1,002	$	1,702	Net income


(a) Prior service cost amounts are included in the computation of pension and other postretirement benefit expense, which is reported in cost of goods sold and selling and administrative expenses. For additional information, see Note 11.
(b) For pre-tax items, positive amounts represent income and negative amounts represent expense.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 13. Income Taxes

Income tax provisions for the Company's interim periods are based on the effective income tax rate expected to be applicable for the full year. The Company's consolidated income taxes for the first six months of fiscal 2024 were a benefit of $1,848, compared to an expense of $4,694 for the first six months of fiscal 2023. The difference between the Company’s consolidated income taxes for the first six months of fiscal 2024 compared to the same period for fiscal 2023 resulted from a decrease in consolidated pre-tax income in fiscal 2024 compared to fiscal 2023 as well as a net tax benefit from discrete items. The Company’s fiscal 2024 six month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to state taxes, foreign statutory rate differentials, tax credits, non-tax benefited foreign losses, and a net discrete tax benefit. The Company’s fiscal 2023 six month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to state taxes, foreign statutory rate differentials, tax credits, and non-tax benefited foreign losses.

The Company had unrecognized tax benefits (excluding penalties and interest) of $4,549 and $3,779 on March 31, 2024 and September 30, 2023, respectively, which would impact the annual effective rate at March 31, 2024 and September 30, 2023, respectively. It is reasonably possible that the amount of unrecognized tax benefits could decrease by approximately $2,913 in the next 12 months primarily due to the completion of audits and the expiration of the statute of limitations.

The Company classifies interest and penalties on tax uncertainties as a component of the provision for income taxes. Total penalties and interest accrued were $862 and $730 at March 31, 2024 and September 30, 2023, respectively. These accruals may potentially be applicable in the event of an unfavorable outcome of uncertain tax positions.

The Company is currently under examination in several tax jurisdictions and remains subject to examination until the statute of limitations expires for those tax jurisdictions. As of March 31, 2024, the tax years that remain subject to examination by major jurisdictions generally are:


United States – Federal			2020 and forward
United States – State			2019 and forward
Canada			2020 and forward
Germany			2019 and forward
United Kingdom			2022 and forward
Singapore			2020 and forward
Australia			2018 and forward

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 14. Segment Information

The Company manages its businesses under three segments: Memorialization, Industrial Technologies and SGK Brand Solutions. The Memorialization segment consists primarily of bronze and granite memorials and other memorialization products, caskets, cremation-related products, and cremation and incineration equipment primarily for the cemetery and funeral home industries. The Industrial Technologies segment includes the design, manufacturing, service and distribution of high-tech custom energy storage solutions; product identification and warehouse automation technologies and solutions, including order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products; and coating and converting lines for the packaging, pharma, foil, décor and tissue industries. The SGK Brand Solutions segment consists of brand management, pre-media services, printing plates and cylinders, imaging services, digital asset management, merchandising display systems, and marketing and design services primarily for the consumer goods and retail industries.

The Company's primary measure of segment profitability is adjusted earnings before interest, income taxes, depreciation and amortization ("adjusted EBITDA"). Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results. These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition and divestiture costs, enterprise resource planning ("ERP") integration costs, and strategic initiatives and other charges. This presentation is consistent with how the Company's chief operating decision maker (the “CODM”) evaluates the results of operations and makes strategic decisions about the business. For these reasons, the Company believes that adjusted EBITDA represents the most relevant measure of segment profit and loss.

In addition, the CODM manages and evaluates the operating performance of the segments, as described above, on a pre-corporate cost allocation basis. Accordingly, for segment reporting purposes, the Company does not allocate corporate costs to its reportable segments. Corporate costs include management and administrative support to the Company, which consists of certain aspects of the Company’s executive management, legal, compliance, human resources, information technology (including operational support) and finance departments. These costs are included within "Corporate and Non-Operating" in the following table to reconcile to consolidated adjusted EBITDA and are not considered a separate reportable segment. Management does not allocate non-operating items such as investment income, other income (deductions), net and noncontrolling interest to the segments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 14. Segment Information (continued)

The following table sets forth information about the Company's segments, including a reconciliation of adjusted EBITDA to net income.


	Three Months Ended March 31,				Six Months Ended March 31,
	2024		2023		2024		2023
Sales:
Memorialization	$	222,156	$	222,889	$	430,227	$	429,391
Industrial Technologies	116,136		125,514		227,510		234,657
SGK Brand Solutions	132,931		131,177		263,472		264,772
Consolidated Sales	$	471,223	$	479,580	$	921,209	$	928,820


Adjusted EBITDA:
Memorialization	$	46,614	$	48,030	$	83,314	$	87,167
Industrial Technologies	10,028		15,565		19,650		27,767
SGK Brand Solutions	15,370		11,020		28,263		23,252
Corporate and Non-Operating	(15,212)		(16,168)		(28,945)		(30,448)
Total Adjusted EBITDA	$	56,800	$	58,447	$	102,282	$	107,738


Acquisition and divestiture related items (1)**	(2,062)		(2,852)		(3,299)		(4,137)
Strategic initiatives and other charges (2)**	(4,962)		(1,280)		(10,882)		(3,061)

Highly inflationary accounting losses (primarily non-cash) (3)	(390)		(160)		(710)		(1,248)


Stock-based compensation	(4,327)		(4,278)		(8,978)		(8,612)

Non-service pension and postretirement expense (4)	(110)		(83)		(219)		(1,471)
Depreciation and amortization *	(23,261)		(24,148)		(46,784)		(47,877)
Interest expense, including RPA and factoring financing fees (5)	(13,783)		(13,137)		(26,534)		(23,808)
Net loss attributable to noncontrolling interests	—		(2)		—		(58)
Income before income taxes	7,905		12,507		4,876		17,466
Income tax benefit (provision)	1,122		(3,382)		1,848		(4,694)
Net income	$	9,027	$	9,125	$	6,724	$	12,772



(1) Includes certain non-recurring items associated with recent acquisition and divestiture activities.
(2) Includes certain non-recurring costs associated with commercial, operational and cost-reduction initiatives, and costs associated with global ERP system integration efforts. Fiscal 2024 also includes costs related to an ongoing contractual dispute which totaled $4,972 for the six months ended March 31, 2024. Fiscal 2023 includes loss recoveries totaling $2,154 for the six months ended March 31, 2023, which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.

(3) Represents exchange losses associated with highly inflationary accounting related to the Company's Turkish subsidiaries (see Note 2, "Basis of Presentation").


(4) Non-service pension and postretirement expense includes interest cost, expected return on plan assets, amortization of actuarial gains and losses, curtailment gains and losses, and settlement gains and losses. These benefit cost components are excluded from adjusted EBITDA since they are primarily influenced by external market conditions that impact investment returns and interest (discount) rates. Curtailment gains and losses and settlement gains and losses are excluded from adjusted EBITDA since they generally result from certain non-recurring events, such as plan amendments to modify future benefits or settlements of plan obligations. The service cost and prior service cost components of pension and postretirement expense are included in the calculation of adjusted EBITDA, since they are considered to be a better reflection of the ongoing service-related costs of providing these benefits. Please note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans.
(5) Includes fees for receivables sold under the RPA and factoring arrangements totaling $1,238 and $1,090 for the three months ended March 31, 2024 and 2023, respectively, and $2,413 and $1,546 for the six months ended March 31, 2024 and 2023, respectively.

* Depreciation and amortization was $6,914 and $5,711 for the Memorialization segment, $5,571 and $5,916 for the Industrial Technologies segment, $9,669 and $11,319 for the SGK Brand Solutions segment, and $1,107 and $1,202 for Corporate and Non-Operating, for the three months ended March 31, 2024 and 2023, respectively. Depreciation and amortization was $13,327 and $11,285 for the Memorialization segment, $11,948 and $11,769 for the Industrial Technologies segment, $19,241 and $22,379 for the SGK Brand Solutions segment, and $2,268 and $2,444 for Corporate and Non-Operating, for the six months ended March 31, 2024 and 2023, respectively.

** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $1,037 and $333 for the Memorialization segment, $4,431 and $2,437 for the Industrial Technologies segment, $358 and $2,610 for the SGK Brand Solutions segment, and $1,198 and income of $1,248 for Corporate and Non-Operating, for the three months ended March 31, 2024 and 2023, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $1,097 and $711 for the Memorialization segment, $9,799 and $3,374 for the Industrial Technologies segment, $1,221 and $3,131 for the SGK Brand Solutions segment, and $2,064 and income of $18 for Corporate and Non-Operating, for the six months ended March 31, 2024 and 2023, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 15. Acquisitions and Divestitures

Fiscal 2024:

In January 2024, the Company completed a small acquisition within the Memorialization segment for a purchase price of $5,825 (net of holdbacks and other adjustments, including working capital). The preliminary purchase price allocation was not finalized as of March 31, 2024 and remains subject to change as the Company obtains additional information related to working capital, intangible assets and other liabilities.

Fiscal 2023:

In September 2023, the Company completed a small divestiture within the Industrial Technologies segment. Net proceeds from the divestiture totaled approximately $6,700, and the transaction resulted in a pre-tax gain of $1,827, which was recorded as a component of administrative expenses in the fourth quarter of fiscal 2023. The transaction also included $2,250 of contingent consideration, which represents the maximum amount the Company could potentially recognize at the resolution of the two-year contingency period.

In March 2023, the Company purchased the remaining ownership interest in a non-consolidated Industrial Technologies subsidiary for $4,759 (net of cash acquired and holdbacks). The Company finalized the allocation of the purchase price in the first quarter of fiscal 2024, resulting in no significant adjustments.

In February 2023, the Company acquired Eagle Granite Company ("Eagle") within the Memorialization segment for a total purchase price of $18,384, consisting of cash of $8,650 (net of cash acquired) and a deferred purchase price amount of $9,734, which is scheduled to be paid to the seller two years from the acquisition date. In addition, the Company recorded a liability of approximately $3,800 for potential future contingent consideration related to certain earnout provisions, which, if owed, is scheduled to be paid to the seller four years from the acquisition date. Eagle serves cemeteries and monument companies with a full complement of granite memorialization products. The Company finalized the allocation of the purchase price in the first quarter of fiscal 2024, resulting in adjustments to certain liability accounts.

During the first fiscal quarter of 2023, the Company completed small acquisitions within the SGK Brand Solutions segment for a combined purchase price of $1,932 (net of cash acquired and holdbacks). The Company finalized the purchase price allocations in the fourth quarter of fiscal 2023, resulting in an immaterial adjustment to certain tax accounts.

Note 16. Goodwill and Other Intangible Assets

A summary of the carrying amount of goodwill attributable to each segment as well as the changes in such amounts are as follows:


	Memorialization		Industrial Technologies		SGK Brand Solutions		Consolidated




Net goodwill at September 30, 2023	$	366,015	$	115,073	$	217,021	$	698,109
Additions during period	2,551		—		—		2,551

Translation and other adjustments	3,397		620		3,204		7,221



Net goodwill at March 31, 2024	$	371,963	$	115,693	$	220,225	$	707,881

The net goodwill balances at March 31, 2024 and September 30, 2023 included $261,186 of accumulated impairment losses. Accumulated impairment losses at March 31, 2024 and September 30, 2023 were $5,000, $23,946 and $232,240 for the Memorialization, Industrial Technologies and SGK Brand Solutions segments, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 16. Goodwill and Other Intangible Assets (continued)

The Company performed its annual impairment review of goodwill and indefinite-lived intangible assets in the second quarter of fiscal 2024 (January 1, 2024) and determined that the estimated fair values for all goodwill reporting units exceeded their carrying values, therefore no impairment charges were necessary. The results of this review indicated that the estimated fair value of the Company's SGK Brand Solutions reporting unit exceeded the carrying value (expressed as a percentage of carrying value) by approximately 7%. The fair value for the reporting unit was determined using level 3 inputs (including estimates of revenue growth, EBITDA contribution and the discount rates) and a combination of the income approach using the estimated discounted cash flows and a market-based valuation methodology. If current projections are not achieved or specific valuation factors outside the Company's control (such as discount rates and continued economic and industry challenges) significantly change, additional goodwill write-downs may be necessary in future periods.

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of March 31, 2024 and September 30, 2023, respectively.


	Carrying Amount		Accumulated Amortization		Net
March 31, 2024:
Indefinite-lived trade names	$	30,540	$	—	$	30,540
Definite-lived trade names	151,338		(124,986)		26,352
Customer relationships	379,416		(295,742)		83,674
Copyrights/patents/other	19,268		(15,950)		3,318
	$	580,562	$	(436,678)	$	143,884
September 30, 2023:
Indefinite-lived trade names	$	30,540	$	—	$	30,540
Definite-lived trade names	151,185		(122,474)		28,711
Customer relationships	378,161		(280,910)		97,251
Copyrights/patents/other	19,375		(15,399)		3,976
	$	579,261	$	(418,783)	$	160,478

The net change in intangible assets during the six months ended March 31, 2024 included the impact of foreign currency fluctuations during the period, additional amortization, and additions related to a small acquisition within the Memorialization segment.

Amortization expense on intangible assets was $8,959 and $10,517 for the three-month periods ended March 31, 2024 and 2023, respectively. Amortization expense on intangible assets was $18,754 and $20,859 for the six-month periods ended March 31, 2024 and 2023, respectively. Amortization expense is estimated to be $17,736 for the remainder of fiscal 2024, $20,614 in 2025, $14,293 in 2026, $13,200 in 2027 and $11,135 in 2028.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES:

The following discussion should be read in conjunction with the consolidated financial statements of Matthews International Corporation ("Matthews" or the "Company") and related notes thereto included in this Quarterly Report on Form 10-Q and the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023. Any forward-looking statements contained herein are included pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding the expectations, hopes, beliefs, intentions or strategies of the Company regarding the future, and may be identified by the use of words such as “expects,” “believes,” “intends,” “projects,” “anticipates,” “estimates,” “plans,” “seeks,” “forecasts,” “predicts,” “objective,” “targets,” “potential,” “outlook,” “may,” “will,” “could” or the negative of these terms, other comparable terminology and variations thereof. Such forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to be materially different from management's expectations, and no assurance can be given that such expectations will prove correct. Factors that could cause the Company's results to differ materially from the results discussed in such forward-looking statements principally include changes in domestic or international economic conditions, changes in foreign currency exchange rates, changes in interest rates, changes in the cost of materials used in the manufacture of the Company's products, any impairment of goodwill or intangible assets, environmental liability and limitations on the Company’s operations due to environmental laws and regulations, disruptions to certain services, such as telecommunications, network server maintenance, cloud computing or transaction processing services, provided to the Company by third-parties, changes in mortality and cremation rates, changes in product demand or pricing as a result of consolidation in the industries in which the Company operates or other factors such as supply chain disruptions, labor shortages or labor cost increases, changes in product demand or pricing as a result of domestic or international competitive pressures, ability to achieve cost-reduction objectives, unknown risks in connection with the Company's acquisitions and divestitures, cybersecurity concerns and costs arising with management of cybersecurity threats, effectiveness of the Company's internal controls, compliance with domestic and foreign laws and regulations, technological factors beyond the Company's control, impact of pandemics or similar outbreaks or other disruptions to our industries, customers or supply chains, the impact of global conflicts, such as the current war between Russia and Ukraine, and other factors described in Item 1A - "Risk Factors" in this Form 10-Q and Item 1A - "Risk Factors" in the Company's Form 10-K for the fiscal year ended September 30, 2023. In addition, although the Company does not currently have any customers that would be considered individually significant to consolidated sales, changes in the distribution of the Company's products or the potential loss of one or more of the Company's larger customers are also considered risk factors. Matthews cautions that the foregoing list of important factors is not all inclusive. Readers are also cautioned not to place undue reliance on any forward looking statements, which reflect management's analysis only as of the date of this report, even if subsequently made available by Matthews on its website or otherwise. Matthews does not undertake to update any forward looking statement, whether written or oral, that may be made from time to time by or on behalf of Matthews to reflect events or circumstances occurring after the date of this report unless required by law.

Included in this report are measures of financial performance that are not defined by generally accepted accounting principles in the United States ("GAAP"). These non-GAAP financial measures assist management in comparing the Company's performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the Company's core operations. For additional information and reconciliations from the consolidated financial statements see "Non-GAAP Financial Measures" below.

RESULTS OF OPERATIONS:

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

The Company's primary measure of segment profitability is adjusted earnings before interest, income taxes, depreciation and amortization ("adjusted EBITDA"). Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results. These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition and divestiture costs, enterprise resource planning ("ERP") integration costs, and strategic initiatives and other charges. This presentation is consistent with how the Company's chief operating decision maker (the “CODM”) evaluates the results of operations and makes strategic decisions about the business. For these reasons, the Company believes that adjusted EBITDA represents the most relevant measure of segment profit and loss.

In addition, the CODM manages and evaluates the operating performance of the segments, as described above, on a pre-corporate cost allocation basis. Accordingly, for segment reporting purposes, the Company does not allocate corporate costs to its reportable segments. Corporate costs include management and administrative support to the Company, which consists of certain aspects of the Company’s executive management, legal, compliance, human resources, information technology (including operational support) and finance departments. These costs are included within "Corporate and Non-Operating" in the following table to reconcile to consolidated adjusted EBITDA and are not considered a separate reportable segment. Management does not allocate non-operating items such as investment income, other income (deductions), net and noncontrolling interest to the segments.

The following table sets forth the sales and adjusted EBITDA for the Company's three reporting segments for the three and six-month periods ended March 31, 2024 and 2023. Refer to Note 14, "Segment Information" in Item 1 - "Financial Statements" for the Company's financial information by segment.


	Three Months Ended March 31,				Six Months Ended March 31,
	2024		2023		2024		2023
Sales:	(Dollar amounts in thousands)
Memorialization	$	222,156	$	222,889	$	430,227	$	429,391
Industrial Technologies	116,136		125,514		227,510		234,657
SGK Brand Solutions	132,931		131,177		263,472		264,772
Consolidated Sales	$	471,223	$	479,580	$	921,209	$	928,820


Adjusted EBITDA:
Memorialization	$	46,614	$	48,030	$	83,314	$	87,167
Industrial Technologies	10,028		15,565		19,650		27,767
SGK Brand Solutions	15,370		11,020		28,263		23,252
Corporate and Non-Operating	(15,212)		(16,168)		(28,945)		(30,448)
Total Adjusted EBITDA (1)	$	56,800	$	58,447	$	102,282	$	107,738

(1) Total Adjusted EBITDA is a non-GAAP financial measure. See the "Non-GAAP Financial Measures" section below.

Sales for the six months ended March 31, 2024 were $921.2 million, compared to $928.8 million for the six months ended March 31, 2023. The decrease in fiscal 2024 sales reflected higher sales in the Memorialization segment, offset by lower sales in the Industrial Technologies and SGK Brand Solutions segments. On a consolidated basis, changes in foreign currency exchange rates were estimated to have a favorable impact of $4.8 million on fiscal 2024 sales compared to the prior year.

Memorialization segment sales for the first six months of fiscal 2024 were $430.2 million, compared to $429.4 million for the first six months of fiscal 2023. The sales increase reflected higher sales of granite memorial products, benefits from recent acquisitions (primarily the fiscal 2023 acquisition of Eagle Granite Company) and improved price realization. These increases were partially offset by lower unit sales of caskets, bronze memorial products and cremation equipment. These declines reflected a return to more normalized death rates following the COVID-19 pandemic. Changes in foreign currency exchange rates had a favorable impact of $403,000 on the segment's sales compared to the prior year. Industrial Technologies segment sales were $227.5 million for the first six months of fiscal 2024, compared to $234.7 million for the first six months of fiscal 2023. The change in sales reflected higher sales of purpose-built engineered products (primarily energy storage solutions for the electric vehicle market), higher product identification sales, and increased sales of surfaces products. These increases were offset by reduced sales of warehouse automation solutions and automotive engineering solutions, and the sales impact of a fiscal 2023 divestiture (see Acquisitions and Divestitures below). Changes in foreign currency exchange rates had a favorable impact of $4.7 million on the segment's sales compared to the prior year. In the SGK Brand Solutions segment, sales for the first six months of fiscal 2024 were $263.5 million, compared to $264.8 million for the first six months of fiscal 2023. The

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

decrease in sales primarily reflected lower retail-based sales and lower brand sales in Europe. These decreases were partially offset by higher brand sales in the U.S., increased sales of cylinder (packaging) products in Europe, and improved price realization. Changes in foreign currency exchange rates had an unfavorable impact of $314,000 on the segment's sales compared to the prior year.

Gross profit for the six months ended March 31, 2024 was $280.5 million, compared to $288.6 million for the same period a year ago. Consolidated gross profit as a percent of sales was 30.5% and 31.1% for the first six months of fiscal 2024 and fiscal 2023, respectively. The decrease in gross profit reflected the impact of lower sales, lower margins on engineered products and cremation products, and higher material and labor costs. These decreases were partially offset by improved margins on product identification, warehouse automation solutions and cylinder (packaging) products, and benefits from the realization of productivity improvements and other cost-reduction initiatives. Gross profit also included acquisition integration costs and other charges primarily in connection with cost-reduction initiatives totaling $5.9 million and $3.1 million for the six months ended March 31, 2024 and 2023, respectively.

Selling and administrative expenses for the six months ended March 31, 2024 were $231.0 million, compared to $227.4 million for the first six months of fiscal 2023. Consolidated selling and administrative expenses, as a percent of sales, were 25.1% for the six months ended March 31, 2024, compared to 24.5% for the same period last year. Selling and administrative expenses included acquisition integration and related systems-integration costs, and other charges primarily in connection with certain commercial, operational and cost-reduction initiatives totaling $10.8 million in fiscal 2024, compared to $7.8 million in fiscal 2023. Fiscal 2024 selling and administrative expenses also reflected the impact of higher compensation, partially offset by benefits from ongoing cost-reduction initiatives. Intangible amortization for the six months ended March 31, 2024 was $18.8 million, compared to $20.9 million for the six months ended March 31, 2023.

Adjusted EBITDA was $102.3 million for the six months ended March 31, 2024 and $107.7 million for the six months ended March 31, 2023. Memorialization segment adjusted EBITDA was $83.3 million for the first six months of fiscal 2024 compared to $87.2 million for the first six months of fiscal 2023. The decrease in segment adjusted EBITDA reflected the impact of higher material and labor costs, and lower margins on cremation products. These decreases were partially offset by the impact of benefits from productivity initiatives and lower performance-based compensation compared to fiscal 2023. Adjusted EBITDA for the Industrial Technologies segment was $19.7 million for the six months ended March 31, 2024 compared to $27.8 million for the six months ended March 31, 2023. The decrease in segment adjusted EBITDA primarily reflected the impact of lower sales, higher labor costs, and lower margins on engineered products. These decreases were partially offset by improved margins on product identification and warehouse automation solutions, and benefits from cost-reduction initiatives. Adjusted EBITDA for the SGK Brand Solutions segment was $28.3 million for the first six months of fiscal 2024 compared to $23.3 million for the same period a year ago. The increase in segment adjusted EBITDA primarily reflected the impact of benefits from cost-reduction initiatives and improved margins on cylinder (packaging) products, partially offset by the impact of higher labor costs.

Interest expense for the first six months of fiscal 2024 was $24.1 million, compared to $22.3 million for the same period last year. The increase in interest expense reflected higher average interest rates and an increase in average borrowing levels in the current fiscal year. Other income (deductions), net, for the six months ended March 31, 2024 represented a decrease in pre-tax income of $1.8 million, compared to a decrease in pre-tax income of $551,000 for the same period last year. Other income (deductions), net includes the non-service components of pension and postretirement expense, which totaled $219,000 and $1.5 million for the six months ended March 31, 2024 and 2023, respectively. Fiscal 2023 non-service pension expense included a $1.3 million non-cash charge resulting from the settlement of the Company's supplemental retirement plan ("SERP") and defined benefit portion of the officers retirement restoration plan ("ORRP") obligations. Refer to Note 11, "Pension and Other Postretirement Benefit Plans" in Item 1 - "Financial Statements" for further details. Other income (deductions), net also includes investment income, banking-related fees and the impact of currency gains and losses on certain intercompany debt and foreign denominated cash balances. Other income (deductions), net included $710,000 and $1.2 million of currency losses associated with highly inflationary accounting for the Company's subsidiaries in Turkey for the six months ended March 31, 2024 and 2023, respectively (see Note 2, "Basis of Presentation" in Item 1 - "Financial Statements"). Fiscal 2023 other income (deductions), net also included loss recoveries of $2.2 million related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

The Company’s fiscal 2024 six-month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to state taxes, foreign statutory rate differentials, tax credits, non-tax benefited foreign losses, and a net discrete tax benefit. The Company’s fiscal 2023 six-month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to state taxes, foreign statutory rate differentials, tax credits, and non-tax benefited foreign losses.

Net losses attributable to noncontrolling interests were $58,000 for the six months ended March 31, 2023, reflecting losses in less than wholly-owned businesses.

NON-GAAP FINANCIAL MEASURES:

Included in this report are measures of financial performance that are not defined by GAAP. The Company uses non-GAAP financial measures to assist in comparing its performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the Company’s core operations including acquisition and divestiture costs, ERP integration costs, strategic initiatives and other charges (which includes non-recurring charges related to certain commercial and operational initiatives and exit activities), stock-based compensation and the non-service portion of pension and postretirement expense. Management believes that presenting non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items that management believes do not directly reflect the Company's core operations, (ii) permits investors to view performance using the same tools that management uses to budget, forecast, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating the Company’s results. The Company believes that the presentation of these non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provided herein, provides investors with an additional understanding of the factors and trends affecting the Company’s business that could not be obtained absent these disclosures.

The Company believes that adjusted EBITDA provides relevant and useful information, which is used by the Company’s management in assessing the performance of its business. Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results. These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges. Adjusted EBITDA provides the Company with an understanding of earnings before the impact of investing and financing charges and income taxes, and the effects of certain acquisition and divestiture and ERP integration costs, and items that do not reflect the ordinary earnings of the Company’s operations. This measure may be useful to an investor in evaluating operating performance. It is also useful as a financial measure for lenders and is used by the Company’s management to measure business performance. Adjusted EBITDA is not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to net income or other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of the Company's liquidity. The Company's definition of adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

The reconciliation of net income to adjusted EBITDA is as follows:


	Three Months Ended March 31,				Six Months Ended March 31,
	2024		2023		2024		2023
	(Dollar amounts in thousands)
Net income	$	9,027	$	9,125	$	6,724	$	12,772
Income tax (benefit) provision	(1,122)		3,382		(1,848)		4,694
Income before income taxes	7,905		12,507		4,876		17,466
Net loss attributable to noncontrolling interests	—		2		—		58
Interest expense, including RPA and factoring financing fees (1)	13,783		13,137		26,534		23,808
Depreciation and amortization *	23,261		24,148		46,784		47,877

Acquisition and divestiture related items (2)**	2,062		2,852		3,299		4,137
Strategic initiatives and other charges (3)**	4,962		1,280		10,882		3,061

Highly inflationary accounting losses (primarily non-cash) (4)	390		160		710		1,248


Stock-based compensation	4,327		4,278		8,978		8,612

Non-service pension and postretirement expense (5)	110		83		219		1,471
Total Adjusted EBITDA	$	56,800	$	58,447	$	102,282	$	107,738



(1) Includes fees for receivables sold under the RPA and factoring arrangements totaling $1.2 million and $1.1 million for the three months ended March 31, 2024 and 2023, respectively, and $2.4 million and $1.5 million for the six months ended March 31, 2024 and 2023, respectively.
(2) Includes certain non-recurring items associated with recent acquisition and divestiture activities.
(3) Includes certain non-recurring costs associated with commercial, operational and cost-reduction initiatives, and costs associated with global ERP system integration efforts. Fiscal 2024 also includes costs related to an ongoing contractual dispute which totaled $5.0 million for the six months ended March 31, 2024. Fiscal 2023 includes loss recoveries totaling $2.2 million for the six months ended March 31, 2023, which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.

(4) Represents exchange losses associated with highly inflationary accounting related to the Company's Turkish subsidiaries (see Note 2, "Basis of Presentation" in Item 1 - "Financial Statements and Supplementary Data").


(5) Non-service pension and postretirement expense includes interest cost, expected return on plan assets, amortization of actuarial gains and losses, curtailment gains and losses, and settlement gains and losses. These benefit cost components are excluded from adjusted EBITDA since they are primarily influenced by external market conditions that impact investment returns and interest (discount) rates. Curtailment gains and losses and settlement gains and losses are excluded from adjusted EBITDA since they generally result from certain non-recurring events, such as plan amendments to modify future benefits or settlements of plan obligations. The service cost and prior service cost components of pension and postretirement expense are included in the calculation of adjusted EBITDA, since they are considered to be a better reflection of the ongoing service-related costs of providing these benefits. Please note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans.

* Depreciation and amortization was $6.9 million and $5.7 million for the Memorialization segment, $5.6 million and $5.9 million for the Industrial Technologies segment, $9.7 million and $11.3 million for the SGK Brand Solutions segment, and $1.1 million and $1.2 million for Corporate and Non-Operating, for the three months ended March 31, 2024 and 2023, respectively. Depreciation and amortization was $13.3 million and $11.3 million for the Memorialization segment, $11.9 million and $11.8 million for the Industrial Technologies segment, $19.2 million and $22.4 million for the SGK Brand Solutions segment, and $2.3 million and $2.4 million for Corporate and Non-Operating, for the six months ended March 31, 2024 and 2023, respectively.

** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $1.0 million and $333,000 for the Memorialization segment, $4.4 million and $2.4 million for the Industrial Technologies segment, $358,000 and $2.6 million for the SGK Brand Solutions segment, and $1.2 million and income of $1.2 million for Corporate and Non-Operating, for the three months ended March 31, 2024 and 2023, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $1.1 million and $711,000 for the Memorialization segment, $9.8 million and $3.4 million for the Industrial Technologies segment, $1.2 million and $3.1 million for the SGK Brand Solutions segment, and $2.1 million and income of $18,000 for Corporate and Non-Operating, for the six months ended March 31, 2024 and 2023, respectively.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

LIQUIDITY AND CAPITAL RESOURCES:

Net cash provided by operating activities was $29.8 million for the first six months of fiscal 2024, compared to $44.7 million for the first six months of fiscal 2023. Operating cash flow for both periods principally included net income adjusted for deferred taxes, depreciation and amortization, stock-based compensation expense, non-cash pension expense, other non-cash adjustments, and changes in working capital items. Fiscal 2023 operating cash flow also reflected $24.2 million of contributions to fund the settlement of the Company's SERP and ORRP obligations, and $10.5 million of proceeds from the settlement of cash flow hedges. Net changes in working capital items decreased operating cash flow by $35.6 million and $10.9 million in fiscal 2024 and fiscal 2023, respectively. The fiscal 2024 change in working capital principally reflected incentive compensation-related payments, changes in contract assets and liabilities related to products and services provided to customers over time, lower accounts receivable, inventory and trade accounts payables, and changes in other accounts.

Cash used in investing activities was $29.8 million for the six months ended March 31, 2024, compared to $31.2 million for the six months ended March 31, 2023. Investing activities for the first six months of fiscal 2024 primarily reflected capital expenditures of $24.0 million, and acquisitions, net of cash acquired, of $5.8 million. Investing activities for the first six months of fiscal 2023 primarily reflected capital expenditures of $23.8 million, and acquisitions, net of cash acquired, of $7.6 million.

Capital expenditures reflected reinvestment in the Company's business segments and were made primarily for the purchase of new production machinery, equipment, software and systems, and facilities designed to improve product quality, increase manufacturing efficiency and capacity, lower production costs and meet regulatory requirements. Capital expenditures for the last three fiscal years were primarily financed through operating cash. Capital spending for property, plant and equipment has averaged $48.7 million for the last three fiscal years. Capital spending for fiscal 2024 is currently estimated to be approximately $60 million. Capital spending in fiscal 2023 and 2024 reflects additional capital projects to support new production capabilities and increased efficiencies within the Memorialization and Industrial Technologies segments. The Company expects to generate sufficient cash from operations to fund all anticipated capital spending projects.

Cash provided by financing activities for the six months ended March 31, 2024 was $3.0 million, primarily reflecting proceeds, net of repayments, on long-term debt of $41.6 million, treasury stock purchases of $17.2 million, dividends of $16.7 million, and payments of debt issuance costs of $4.7 million (see below). Cash used in financing activities for the six months ended March 31, 2023 was $44.9 million, primarily reflecting repayments, net of proceeds, on long-term debt of $27.1 million, treasury stock purchases of $2.7 million and dividends of $14.1 million.

The Company has a domestic credit facility with a syndicate of financial institutions that was amended and restated in January 2024. The amended and restated loan agreement includes a $750.0 million senior secured revolving credit facility, which matures in January 2029, subject to the terms and conditions of the amended facility. A portion of the revolving credit facility (not to exceed $350.0 million) can be drawn in foreign currencies. Borrowings under the revolving credit facility bear interest at the Secured Overnight Financing Rate ("SOFR"), plus a 0.10% per annum rate spread adjustment, plus a factor ranging from 1.00% to 2.00% (1.50% at March 31, 2024) based on the Company's leverage ratio. The leverage ratio is defined as total indebtedness divided by EBITDA (earnings before interest, income taxes, depreciation and amortization) as defined within the domestic credit facility agreement. The Company is required to pay an annual commitment fee ranging from 0.15% to 0.30% (based on the Company's leverage ratio) of the unused portion of the revolving credit facility. The Company incurred new debt issuance costs of $4.7 million in connection with the amended and restated agreement, which were deferred and are being amortized over the term of the facility. Unamortized costs were $5.4 million and $949,000 at March 31, 2024 and September 30, 2023, respectively.

The domestic credit facility requires the Company to maintain certain leverage and interest coverage ratios. A portion of the facility (not to exceed $55.0 million) is available for the issuance of trade and standby letters of credit. Outstanding U.S. dollar denominated borrowings on the revolving credit facility at March 31, 2024 and September 30, 2023 were $447.9 million and $405.0 million, respectively. Outstanding Euro denominated borrowings on the revolving credit facility at March 31, 2024 and September 30, 2023 were €55.0 million ($59.4 million) and €55.0 million ($58.2 million), respectively. The weighted-average interest rate on outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps and Euro denominated borrowings) at March 31, 2024 and 2023 was 4.89% and 5.17%, respectively.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

The Company has $299.2 million of 5.25% senior unsecured notes due December 1, 2025 (the "2025 Senior Notes"). The 2025 Senior Notes bear interest at a rate of 5.25% per annum with interest payable semi-annually in arrears on June 1 and December 1 of each year. The Company's obligations under the 2025 Senior Notes are guaranteed by certain of the Company's direct and indirect wholly-owned subsidiaries. The Company is subject to certain covenants and other restrictions in connection with the 2025 Senior Notes. The Company incurred direct financing fees and costs in connection with the 2025 Senior Notes. Unamortized costs were $855,000 and $1.1 million at March 31, 2024 and September 30, 2023, respectively.

The Company and certain of its domestic subsidiaries sell, on a continuous basis without recourse, their trade receivables to Matthews Receivables Funding Corporation, LLC (“Matthews RFC”), a wholly-owned bankruptcy-remote subsidiary of the Company. Matthews RFC has a receivables purchase agreement (“RPA”) to sell up to $125.0 million of receivables to certain purchasers (the “Purchasers”) on a recurring basis in exchange for cash (referred to as “capital” within the RPA) equal to the gross receivables transferred. The parties intend that the transfers of receivables to the Purchasers constitute purchases and sales of receivables. Matthews RFC has guaranteed to each Purchaser the prompt payment of sold receivables, and has granted a security interest in its assets for the benefit of the Purchasers. Under the RPA, each Purchaser’s share of capital accrues yield at a floating rate plus an applicable margin. The Company is the master servicer under the RPA, and is responsible for administering and collecting receivables. The RPA, which had a maturity date of March 2024, was amended in March 2024 to extend the maturity date to March 2026.

The proceeds of the RPA are classified as operating activities in the Company’s Consolidated Statements of Cash Flows. Cash received from collections of sold receivables may be used to fund additional purchases of receivables on a revolving basis, or to reduce all or any portion of the outstanding capital of the Purchasers. The fair value of the sold receivables approximated book value due to their credit quality and short-term nature, and as a result, no gain or loss on sale of receivables was recorded. As of March 31, 2024 and September 30, 2023, the amount sold to the Purchasers was $109.9 million and $101.8 million, respectively, which was derecognized from the Consolidated Balance Sheets. As collateral against sold receivables, Matthews RFC maintains a certain level of unsold receivables, which was $51.8 million and $57.9 million as of March 31, 2024 and September 30, 2023, respectively.

The following table sets forth a summary of receivables sold as part of the RPA:


	Six Months Ended March 31, 2024		Six Months Ended March 31, 2023
	(Dollar amounts in thousands)
Gross receivables sold	$	194,116	$	201,115
Cash collections reinvested	(186,016)		(189,105)
Net cash proceeds received	$	8,100	$	12,010

In March 2023, the Company, through its U.K. subsidiary, entered into a non-recourse factoring arrangement. In connection with this arrangement, the Company periodically sells trade receivables to a third-party purchaser in exchange for cash. These transfers of financial assets are recorded at the time the Company surrenders control of the assets. As these transfers qualify as true sales under the applicable accounting guidance, the receivables are de-recognized from the Company's Consolidated Balance Sheets upon transfer. The principal amount of receivables sold under this arrangement was $35.0 million and $17.0 million during the six months ended March 31, 2024 and 2023, respectively. The discounts on the trade receivables sold are included within administrative expense in the Consolidated Statements of Income. The proceeds from the sale of receivables are classified as operating activities in the Company's Consolidated Statements of Cash Flows. As of March 31, 2024 and September 30, 2023, the amount of factored receivables that remained outstanding was $15.4 million and $18.0 million, respectively.

The Company, through certain of its European subsidiaries, has a credit facility with a European bank, which is guaranteed by Matthews. The maximum amount of borrowing available under this facility is €10.0 million ($10.8 million). The facility also provides €18.5 million ($20.0 million) for bank guarantees. This facility has no stated maturity date and is available until terminated. Outstanding borrowings under the credit facility totaled €3.5 million ($3.7 million) at March 31, 2024. There were no outstanding borrowings under the credit facility at September 30, 2023. The weighted-average interest rate on outstanding borrowings under this facility was 6.11% and 5.17% at March 31, 2024 and 2023, respectively.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

Other borrowings totaled $17.2 million and $19.2 million at March 31, 2024 and September 30, 2023, respectively. The weighted-average interest rate on these borrowings was 2.55% and 3.01% at March 31, 2024 and 2023, respectively.

The Company operates internationally and utilizes certain derivative financial instruments to manage its foreign currency, debt and interest rate exposures. The following table presents information related to interest rate swaps entered into by the Company and designated as cash flow hedges:


	March 31, 2024			September 30, 2023
	(Dollar amounts in thousands)
Notional amount	$	175,000		$	175,000
Weighted-average maturity period (years)	3.6			4.1
Weighted-average received rate	5.33		%	5.32		%
Weighted-average pay rate	3.83		%	3.83		%

The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate. The interest rate swaps have been designated as cash flow hedges of future variable interest payments, which are considered probable of occurring. Based on the Company's assessment, all of the critical terms of each of the hedges matched the underlying terms of the hedged debt and related forecasted interest payments, and as such, these hedges were considered highly effective.

The fair value of the interest rate swaps reflected a net unrealized gain of $1.8 million ($1.3 million after tax) at March 31, 2024 and $4.0 million ($3.0 million after tax) at September 30, 2023, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI"). Unrecognized gains of $5.8 million ($4.3 million after tax) and $8.1 million ($6.0 million after tax) related to previously terminated LIBOR-based swaps were also included in AOCI as of March 31, 2024 and September 30, 2023, respectively. Assuming market rates remain constant with the rates at March 31, 2024, a gain (net of tax) of approximately $2.9 million included in AOCI is expected to be recognized in earnings over the next twelve months.

The Company has a U.S. Dollar/Euro cross currency swap with a notional amount of $81.4 million as of March 31, 2024 and September 30, 2023, which has been designated as a net investment hedge of foreign operations. The swap contract matures in September 2027. The Company assesses hedge effectiveness for this contract based on changes in fair value attributable to changes in spot prices. A loss of $3.8 million (net of income taxes of $1.3 million) and a loss of $2.1 million (net of income taxes of $701,000), which represented effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at March 31, 2024 and September 30, 2023, respectively. Income of $327,000 and $586,000, which represented the recognized portion of the fair value of cross currency swaps excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of interest expense for the three and six months ended March 31, 2024, respectively. Income of $309,000 and $581,000, which represented the recognized portion of the fair value of cross currency swaps excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of interest expense for the three and six months ended March 31, 2023, respectively. At March 31, 2024 and September 30, 2023, the swap totaled $5.1 million and $2.8 million, respectively, and was included in other accrued liabilities in the Consolidated Balance Sheets.

The Company uses certain foreign currency debt instruments as net investment hedges of foreign operations with a notional amount of €55.0 million ($59.4 million) as of March 31, 2024. Currency losses of $2.0 million (net of income taxes of $675,000), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at March 31, 2024.

The Company has a stock repurchase program. The buy-back program is designed to increase shareholder value, enlarge the Company's holdings of its Class A common stock, and add to earnings per share. Repurchased shares may be retained in treasury, utilized for acquisitions, or reissued to employees or other purchasers, subject to the restrictions set forth in the Company's Restated Articles of Incorporation. Under the current authorization, 728,031 shares remain available for repurchase as of March 31, 2024. Refer to Item 2 - "Unregistered Sales of Equity Securities and Use of Proceeds" in Part II - "Other Information" for further details on the Company's repurchases in fiscal 2024.

Consolidated working capital of the Company was $295.3 million at March 31, 2024, compared to $253.7 million at September 30, 2023. Cash and cash equivalents were $45.5 million at March 31, 2024, compared to $42.1 million at September 30, 2023. The Company's current ratio was 1.8 at March 31, 2024 and 1.6 at September 30, 2023, respectively.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

Long-Term Contractual Obligations:

The following table summarizes the Company's contractual obligations at March 31, 2024, and the effect such obligations are expected to have on its liquidity and cash flows in future periods.


	Payments due in fiscal year:
	Total		2024 Remainder		2025 to 2026		2027 to 2028		After 2028
Contractual Cash Obligations:	(Dollar amounts in thousands)
Revolving credit facilities	$	511,057	$	—	$	3,738	$	—	$	507,319


2025 Senior Notes	329,862		7,875		321,987		—		—


Finance lease obligations (1)	17,890		2,779		8,811		5,029		1,271
Non-cancelable operating leases (1)	73,193		13,533		40,402		14,671		4,587
Other	32,540		509		18,289		6,135		7,607
Total contractual cash obligations	$	964,542	$	24,696	$	393,227	$	25,835	$	520,784

(1) Lease obligations have not been discounted to their present value.

In the first quarter of fiscal 2023, the Company made lump sum payments totaling $24.2 million to fully settle the SERP and defined benefit portion of the ORRP obligations. The settlement of these plan obligations resulted in the recognition of a non-cash charge of $1.3 million, which has been presented as a component of other income (deductions), net for the six months ended March 31, 2023. This amount represents the immediate recognition of the deferred AOCI balances related to the SERP and ORRP.

Unrecognized tax benefits are positions taken, or expected to be taken, on an income tax return that may result in additional payments to tax authorities. If a tax authority agrees with the tax position taken, or expected to be taken, or the applicable statute of limitations expires, then additional payments will not be necessary. As of March 31, 2024, the Company had unrecognized tax benefits, excluding penalties and interest, of approximately $4.5 million. The timing of potential future payments related to the unrecognized tax benefits is not presently determinable. The Company believes that its current liquidity sources, combined with its operating cash flow and borrowing capacity, will be sufficient to meet its capital needs for the foreseeable future.

REGULATORY MATTERS:

The Company’s operations are subject to various federal, state and local laws and regulations requiring strict compliance, including, but not limited to, the protection of the environment. The Company has established numerous internal compliance programs to further enhance measures meant to ensure lawful satisfaction of the applicable regulations. In addition, the Company is party to specific environmental matters which include obligations to investigate and mitigate the effects on the environment of certain materials at operating and non-operating sites. The Company is currently performing environmental assessments and remediation at certain sites, as applicable.

ACQUISITIONS AND DIVESTITURES:

Refer to Note 15, "Acquisitions and Divestitures" in Item 1 - "Financial Statements" for further details on the Company's acquisitions and divestitures.

FORWARD-LOOKING INFORMATION:

Management routinely develops and reviews with the Company’s Board of Directors strategic plans with the primary objective of continuous improvement in the Company’s consolidated sales and operating results. Strategic plans are developed at the business segment level and generally contain strategies for organic growth and acquisitions. Organic growth primarily reflects the Company’s internal efforts to grow its businesses including commercial activities, cost structure and productivity improvements, new product development, and the expansion into new markets with existing products. Growth through

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

acquisitions reflects the benefits from acquired businesses and also includes related integration activities to achieve commercial and cost synergy benefits.

The significant factors influencing organic sales growth in the Industrial Technologies segment include economic/industrial market conditions, new product development, and the electric vehicles ("EV") and e-commerce trends. For the Memorialization segment, the Company expects that sales growth will be influenced by North America death rates and the impact of the increasing trend toward cremation on the segment's product offerings, including caskets, cemetery memorial products and cremation-related products. For the SGK Brand Solutions segment, the Company expects that sales growth will be influenced by global economic conditions, brand innovation, the level of marketing spending by the Company's clients, and government regulation. Due to the global footprint of the Company’s businesses, particularly the Industrial Technologies and SGK Brand Solutions segments, currency fluctuations can also be a significant factor on Company’s U.S. dollar reported results.

Recent labor cost increases, supply chain challenges, and other inflation-related impacts are expected to impact the Company's results for the near future. The Company expects to partially mitigate these cost increases through price realization and cost-reduction initiatives.

CRITICAL ACCOUNTING POLICIES:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Therefore, the determination of estimates requires the exercise of judgment based on various assumptions and other factors such as historical experience, economic conditions, and in some cases, actuarial techniques. Actual results may differ from those estimates. A discussion of market risks affecting the Company can be found in Item 7A - "Quantitative and Qualitative Disclosures about Market Risk" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

A summary of the Company's significant accounting policies are included in the Notes to Consolidated Financial Statements and in the critical accounting policies in Management's Discussion and Analysis included in the Company's Annual Report on Form 10-K for the year ended September 30, 2023. Management believes that the application of these policies on a consistent basis enables the Company to provide useful and reliable financial information about the Company's operating results and financial condition.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

Refer to Note 2, "Basis of Presentation" in Item 1 - "Financial Statements," for further details on recently issued accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the Company’s market risk during the three and six months ended March 31, 2024. For additional information see Item 7A - "Quantitative and Qualitative Disclosures About Market Risk" in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

Item 4. Controls and Procedures

The Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are designed to provide reasonable assurance that information required to be disclosed in our reports filed under that Act (the "Exchange Act"), such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission. These disclosure controls and procedures also are designed to provide reasonable assurance that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

Management, under the supervision and with the participation of our Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures in effect as of March 31, 2024. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2024, the Company's disclosure controls and procedures were effective to provide reasonable assurance that material information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, and that such information is recorded, summarized and properly reported within the appropriate time period, relating to the Company and its consolidated subsidiaries, required to be included in the Exchange Act reports, including this Quarterly Report on Form 10-Q.

There have been no changes in the Company's internal controls over financial reporting that occurred during the fiscal quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

PART II ‑ OTHER INFORMATION

Item 1. Legal Proceedings

The Company is subject to various legal proceedings and claims arising in the ordinary course of business. Management does not expect that the results of any of these legal proceedings, as presently positioned, will have a material adverse effect on Matthews' financial condition, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended September 30, 2023. The risk factors disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, in addition to the other information set forth in this report, could adversely affect the Company's operating performance and financial condition. Additional risks not currently known or deemed immaterial may also result in adverse effects on the Company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Stock Repurchase Plan

The Company has a stock repurchase program. The buy-back program is designed to increase shareholder value, enlarge the Company's holdings of its common stock, and add to earnings per share. Repurchased shares may be retained in treasury, utilized for acquisitions, or reissued to employees or other purchasers, subject to the restrictions set forth in the Company's Restated Articles of Incorporation. Under the current authorization, 728,031 shares remain available for repurchase as of March 31, 2024.

The following table shows the monthly stock repurchase activity for the second quarter of fiscal 2024:


Period	Total number of shares purchased	Weighted-average price paid per share		Total number of shares purchased as part of a publicly announced plan	Maximum number of shares that may yet be purchased under the plan



January 2024	1,029	$	35.15	1,029	728,031
February 2024	—	—		—	728,031
March 2024	—	—		—	728,031



Total	466,982	$	36.88	466,982

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Mine Safety Disclosures

Not Applicable.

Part II - Other Information, Continued

Item 5. Other Information

(a)

None.

(b)

None.

(c)

None of the Company’s directors or officers adopted or terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended March 31, 2024.

Item 6. Exhibits and Reports on Form 8-K


(a)	Exhibits

	Exhibit No.	Description	Method of Filing

	3.1	Restated Articles of Incorporation*	Exhibit Number 3.1 to the Annual Report on Form 10-K for the year ended September 30, 1994 (filed in paper format)
	3.2	Amended and Restated By-laws of Matthews International Corporation*	Exhibit Number 3.2 to the Annual Report on Form 10-K for the year ended September 30, 2023
	10.1	Fifth Amendment to Third Amended and Restated Loan Agreement*	Exhibit Number 10.1 to the Current Report on Form 8-K filed on February 5, 2024
	31.1	Certification of Principal Executive Officer for Joseph C. Bartolacci	Filed herewith
	31.2	Certification of Principal Financial Officer for Steven F. Nicola	Filed herewith
	32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Joseph C. Bartolacci	Furnished herewith
	32.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Steven F. Nicola	Furnished herewith
	101.INS	XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	Filed herewith
	101.SCH	XBRL Taxonomy Extension Schema	Filed herewith
	101.CAL	XBRL Taxonomy Extension Calculation Linkbase	Filed herewith
	101.DEF	XBRL Taxonomy Extension Definition Linkbase	Filed herewith
	101.LAB	XBRL Taxonomy Extension Label Linkbase	Filed herewith
	101.PRE	XBRL Taxonomy Extension Presentation Linkbase	Filed herewith
	104	Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)	Filed herewith

* Incorporated by reference

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		MATTHEWS INTERNATIONAL CORPORATION
		(Registrant)

Date:	May 3, 2024	By: /s/ Joseph C. Bartolacci
		Joseph C. Bartolacci, President
		and Chief Executive Officer


Date:	May 3, 2024	By: /s/ Steven F. Nicola
		Steven F. Nicola, Chief Financial Officer
		and Secretary