Quarterly report pursuant to Section 13 or 15(d)

Debt and Financing Arrangements

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Debt and Financing Arrangements
 3 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Debt and Financing Arrangements Debt and Financing Arrangements
Long-term debt at December 31, 2023 and September 30, 2023 consisted of the following:
  December 31, 2023 September 30, 2023
Revolving credit facilities $ 521,071  $ 463,168 
2025 Senior Notes 298,635  298,500 
Other borrowings 28,117  19,241 
Finance lease obligations 14,548  9,271 
Total debt 862,371  790,180 
Less current maturities (4,948) (3,696)
Long-term debt $ 857,423  $ 786,484 

The Company has a domestic credit facility with a syndicate of financial institutions that includes a $750,000 senior secured revolving credit facility, which matures in March 2025. 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 0.75% to 2.00% (1.25% at December 31, 2023) based on the Company's secured leverage ratio. The secured leverage ratio is defined as net secured 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 debt issuance costs in connection with the domestic credit facility. Unamortized costs were $795 and $949 at December 31, 2023 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 December 31, 2023 and September 30, 2023 were $454,358 and $405,000, respectively. Outstanding Euro denominated borrowings on the revolving credit facility at December 31, 2023 and September 30, 2023 were €55.0 million ($60,710) 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 December 31, 2023 and 2022 was 5.32% and 4.24%, respectively. The Company amended the domestic credit facility in January 2024. Refer to Note 17, "Subsequent Event" for further details.
Note 7.   Debt and Financing Arrangements (continued)

The Company has $299,625 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 $990 and $1,125 at December 31, 2023 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. In March 2022, Matthews RFC entered into 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, which matures in March 2024, 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 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 December 31, 2023 and September 30, 2023, the amount sold to the Purchasers was $101,900 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 $57,459 and $57,897 as of December 31, 2023 and September 30, 2023, respectively.

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

Three Months Ended
December 31, 2023		 Three Months Ended
December 31, 2022
Gross receivables sold
 $ 92,809  $ 106,971 
Cash collections reinvested
 (92,709) (89,561)
Net cash proceeds received $ 100  $ 17,410 

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 $17,118 during the three months ended December 31, 2023. 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 December 31, 2023 and September 30, 2023, the amount of factored receivables that remained outstanding was $16,436 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 ($11,038). The facility also provides €18.5 million ($20,420) for bank guarantees.  This facility has no stated maturity date and is available until terminated. Outstanding borrowings under the credit facility totaled €5.4 million ($6,003) at December 31, 2023. 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 3.96% at December 31, 2023 and 2022, respectively.

Other borrowings totaled $28,117 and $19,241 at December 31, 2023 and September 30, 2023, respectively. The weighted-average interest rate on all other borrowings was 4.20% and 3.09% at December 31, 2023 and 2022, respectively.
Note 7.   Debt and Financing Arrangements (continued)

As of December 31, 2023 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 December 31, 2023.