What changed in this filing

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Item 1. Financial Statements

2024-02-02 compared with 2023-07-28 · 223 added, 381 removed, 518 unchanged (54% of the section changed)

3 unchanged sentences

(Dollar amounts in thousands)

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Current assets:

2 unchanged sentences

Inventories, net 257,836 260,409

Restricted cash, current — 2,398

Contract assets 79,067 74,646

39 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

Sales $ 449,986 $ 449,240

7 unchanged sentences

Other income (deductions), net ( 880 ) ( 2,054 )

Income (loss) before income taxes 8,113 3,915 25,579 ( 21,182 )

(Loss) income before income taxes ( 3,029 ) 4,959

Income tax benefit (provision) 726 ( 1,312 )

Net income (loss) 8,671 2,875 21,443 ( 18,871 )

Net (loss) income ( 2,303 ) 3,647

Net loss attributable to noncontrolling interests — 56

Net income (loss) attributable to Matthews shareholders $ 8,738 $ 2,893 $ 21,568 $ ( 18,815 )

Earnings (loss) per share attributable to Matthews shareholders:

Net (loss) income attributable to Matthews shareholders $ ( 2,303 ) $ 3,703

(Loss) earnings per share attributable to Matthews shareholders:

Basic $ ( 0.07 ) $ 0.12

4 unchanged sentences

(Dollar amounts in thousands)

Three Months Ended June 30,

Three Months Ended December 31,

Matthews Noncontrolling Interest Total

2023 2022 2023 2022 2023 2022

Net income (loss):

Net (loss) income:

$ ( 2,303 ) $ 3,703 $ — $ ( 56 ) $ ( 2,303 ) $ 3,647

2 unchanged sentences

Pension plans and other postretirement benefits ( 80 ) 945 — — ( 80 ) 945

Unrecognized gain (loss) on cash flow hedges:

Net change from periodic revaluation 2,745 1,223 — — 2,745 1,223

Net amount reclassified to earnings ( 238 ) 353 — — ( 238 ) 353

Net change in unrecognized gain on cash flow hedges 2,507 1,576 — — 2,507 1,576

OCI, net of tax 3,220 ( 17,700 ) ( 31 ) 15 3,189 ( 17,685 )

Comprehensive income (loss) $ 11,958 $ ( 14,807 ) $ ( 98 ) $ ( 3 ) $ 11,860 $ ( 14,810 )

Nine Months Ended June 30,

Matthews Noncontrolling Interest Total

2023 2022 2023 2022 2023 2022

Net income (loss):

$ 21,568 $ ( 18,815 ) $ ( 125 ) $ ( 56 ) $ 21,443 $ ( 18,871 )

OCI, net of tax:

Foreign currency translation adjustment 25,915 ( 27,463 ) ( 32 ) 23 25,883 ( 27,440 )

Pension plans and other postretirement benefits 559 34,123 — — 559 34,123

Unrecognized gain (loss) on cash flow hedges:

Unrecognized (loss) gain on cash flow hedges:

Net change from periodic revaluation ( 4,389 ) 93 — — ( 4,389 ) 93

Net amount reclassified to earnings ( 492 ) ( 497 ) — — ( 492 ) ( 497 )

Net change in unrecognized (loss) gain on cash flow hedges ( 139 ) 7,149 — — ( 139 ) 7,149

Net change in unrecognized loss on cash flow hedges ( 4,881 ) ( 404 ) — — ( 4,881 ) ( 404 )

OCI, net of tax 6,724 21,101 22 4 6,746 21,105

3 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

for the three and nine months ended June 30, 2023 and 2022 (Unaudited)

for the three months ended December 31, 2023 and 2022 (Unaudited)

(Dollar amounts in thousands, except per share data)

7 unchanged sentences

September 30, 2023 $ 36,334 $ 168,211 $ 714,727 $ ( 174,404 ) $ ( 219,200 ) $ ( 387 ) $ 525,281

Net income (loss) — — 3,703 — — ( 56 ) 3,647

Net loss — — ( 2,303 ) — — — ( 2,303 )

Minimum pension liability — — — ( 80 ) — — ( 80 )

7 unchanged sentences

— ( 25,356 ) — — 25,356 — —

Cancellations of 34,327 shares of treasury stock

— 1,958 — — ( 1,958 ) — —

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

Transactions with non-controlling interest — ( 412 ) — — — 412 —

December 31, 2023 $ 36,334 $ 147,094 $ 704,043 $ ( 167,680 ) $ ( 211,029 ) $ 47 $ 508,809

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

March 31, 2023 $ 36,334 $ 159,948 $ 703,102 $ ( 167,076 ) $ ( 219,615 ) $ ( 302 ) $ 512,391

Net income (loss) — — 8,738 — — ( 67 ) 8,671

Minimum pension liability — — — ( 210 ) — — ( 210 )

Translation adjustment — — — 923 — ( 31 ) 892

Fair value of cash flow hedges — — — 2,507 — — 2,507

Total comprehensive income 11,860

Stock-based compensation — 5,023 — — — — 5,023

Purchase of 2,068 shares of treasury stock

— — — — ( 79 ) — ( 79 )

Issuance of 11,562 shares of treasury stock

— ( 331 ) — — 431 — 100

Dividends — — ( 7,474 ) — — — ( 7,474 )

June 30, 2023 $ 36,334 $ 164,640 $ 704,366 $ ( 163,856 ) $ ( 219,263 ) $ ( 400 ) $ 521,821

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY, Continued

for the three and nine months ended June 30, 2023 and 2022 (Unaudited)

(Dollar amounts in thousands, except per share data)

Shareholders' Equity

6 unchanged sentences

September 30, 2022 $ 36,334 $ 160,255 $ 706,749 $ ( 190,191 ) $ ( 225,795 ) $ ( 276 ) $ 487,076

Net loss — — ( 19,803 ) — — ( 7 ) ( 19,810 )

Net income (loss) — — 3,703 — — ( 56 ) 3,647

Minimum pension liability — — — 945 — — 945

11 unchanged sentences

December 31, 2022 $ 36,334 $ 157,393 $ 701,658 $ ( 169,090 ) $ ( 221,050 ) $ ( 328 ) $ 504,917

Net loss — — ( 1,905 ) — — ( 31 ) ( 1,936 )

Minimum pension liability — — — ( 27 ) — — ( 27 )

Translation adjustment — — — ( 6,181 ) — 4 ( 6,177 )

Fair value of cash flow hedges — — — 4,092 — — 4,092

Total comprehensive loss ( 4,048 )

Stock-based compensation — 5,222 — — — — 5,222

Purchase of 289,184 shares of treasury stock

— — — — ( 9,703 ) — ( 9,703 )

Issuance of 45,096 shares of treasury stock

— ( 1,761 ) — — 1,761 — —

Cancellations of 80 shares of treasury stock

— 5 — — ( 5 ) — —

Dividends — — ( 7,128 ) — — — ( 7,128 )

March 31, 2022 $ 36,334 $ 151,891 $ 798,548 $ ( 161,230 ) $ ( 196,353 ) $ ( 175 ) $ 629,015

Net income (loss) — — 2,893 — — ( 18 ) 2,875

Minimum pension liability — — — 17 — — 17

Translation adjustment — — — ( 19,293 ) — 15 ( 19,278 )

Fair value of cash flow hedges — — — 1,576 — — 1,576

Total comprehensive loss ( 14,810 )

Stock-based compensation — 5,197 — — — — 5,197

Purchase of 704,531 shares of treasury stock

— — — — ( 21,848 ) — ( 21,848 )

Issuance of 3,830 shares of treasury stock

— ( 146 ) — — 146 — —

Dividends — — ( 6,860 ) — — — ( 6,860 )

Divestiture — — — — — ( 91 ) ( 91 )

June 30, 2022 $ 36,334 $ 156,942 $ 794,581 $ ( 178,930 ) $ ( 218,055 ) $ ( 269 ) $ 590,603

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

2 unchanged sentences

(Dollar amounts in thousands)

Nine Months Ended

Three Months Ended

Cash flows from operating activities:

Net income (loss) $ 21,443 $ ( 18,871 )

Adjustments to reconcile net income (loss) to net cash flows from operating activities:

Net (loss) income $ ( 2,303 ) $ 3,647

Adjustments to reconcile net (loss) income to net cash flows from operating activities:

Depreciation and amortization 23,523 23,729

Stock-based compensation expense 4,651 4,334

Deferred tax provision (benefit) 680 ( 2,712 )

Loss (gain) on sale of assets, net 594 ( 514 )

Asset write-downs — 10,017

Deferred tax benefit ( 1 ) ( 46 )

Gain on sale of assets, net ( 87 ) ( 17 )

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 ( 51,640 ) ( 43,152 )

Decrease in other assets 5,888 1,524

Decrease in other liabilities ( 4,748 ) ( 9,131 )

(Decrease) increase in other liabilities ( 4,068 ) 545

Other operating activities, net ( 3,229 ) ( 3,817 )

Net cash provided by operating activities 76,906 84,367

Net cash used in operating activities ( 27,266 ) ( 36,224 )

Cash flows from investing activities:

1 unchanged sentence

Acquisitions, net of cash acquired — ( 1,759 )

Proceeds from sale of investments — 3,127

Purchases of investments ( 1,536 ) ( 2,198 )

Other investing activities, net ( 113 ) 4

5 unchanged sentences

Dividends ( 9,280 ) ( 7,003 )

Acquisition holdback and contingent consideration payments — ( 613 )

Other financing activities — ( 946 )

Net cash used in financing activities ( 56,357 ) ( 43,776 )

Net cash provided by financing activities 36,114 22,322

Effect of exchange rate changes on cash 1,158 1,757

Net change in cash, cash equivalents and restricted cash ( 32,119 ) ( 2,200 )

Cash, cash equivalents and restricted cash at beginning of year 71,414 68,343

Cash, cash equivalents and restricted cash at end of period $ 39,295 $ 66,143

Net change in cash and cash equivalents ( 4,180 ) ( 26,298 )

Cash and cash equivalents at beginning of year 42,101 71,414

Cash and cash equivalents at end of period $ 37,921 $ 45,116

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

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2023

December 31, 2023

(Dollar amounts in thousands, except per share data)

4 unchanged sentences

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.

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.

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.

4 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included.

Operating results for the nine months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2023.

Operating results for the three months ended December 31, 2023 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.

4 unchanged sentences

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 applies highly inflationary accounting to its Turkish subsidiaries.

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 June 30, 2023 and September 30, 2022, the Company had net monetary assets related to its Turkish subsidiaries of $ 5,387 and $ 5,022 , respectively.

For the three and nine months ended June 30, 2023, exchange losses related to highly inflationary accounting totaled $ 1,826 and $ 3,074 , respectively, and were included in the Consolidated Statements of Income within other income (deductions), net.

For the three and nine months ended June 30, 2022, exchange losses related to highly inflationary accounting totaled $ 1,245 and were included in the Consolidated Statements of Income within other income (deductions), net.

As of December 31, 2023 and September 30, 2023, the Company had net monetary assets related to its Turkish subsidiaries of $ 4,917 and $ 4,271 , respectively.

For the three months ended December 31, 2023 and December 31, 2022, exchange losses related to highly inflationary accounting totaled $ 320 and $ 1,088 , respectively, and were included in the Consolidated Statements of Income within other income (deductions), net.

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.

4 unchanged sentences

New Accounting Pronouncements:

In October 2021, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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.

This ASU is effective for the Company beginning in interim periods starting in fiscal 2024.

While the impact of this ASU is dependent on the nature of any future transactions, the Company currently does not expect this ASU to have a significant impact on its consolidated financial statements.

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 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.

In September 2022, the FASB issued ASU No.

1 unchanged sentence

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 ASU will be effective beginning in the first quarter of fiscal 2024, except for the rollforward requirement, which is effective in fiscal year 2025.

The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.

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 nine months ended June 30, 2023 and 2022 were as follows:

Memorialization Industrial Technologies SGK Brand Solutions Consolidated

Three Months Ended

June 30, Three Months Ended

2023 2022 2023 2022 2023 2022 2023 2022

North America $ 197,309 $ 191,495 $ 43,924 $ 39,736 $ 63,000 $ 68,008 $ 304,233 $ 299,239

Central and South America — — — — 1,342 1,472 1,342 1,472

Europe 8,468 9,175 84,577 37,119 51,532 54,046 144,577 100,340

Australia 2,951 2,488 — — 2,020 2,797 4,971 5,285

Asia — — 2,032 1,588 14,753 13,795 16,785 15,383

Total Sales $ 208,728 $ 203,158 $ 130,533 $ 78,443 $ 132,647 $ 140,118 $ 471,908 $ 421,719

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 $ 3,314 and $ 3,027 at December 31, 2023 and September 30, 2023, respectively.

In October 2021, the FASB issued ASU No.

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)

Revenue Recognition (continued)

Revenue Recognition

Disaggregated sales by segment and region for the three months ended December 31, 2023 and 2022 were as follows:

Memorialization Industrial Technologies SGK Brand Solutions Consolidated

Nine Months Ended June 30, Nine Months Ended June 30, Nine Months Ended June 30, Nine Months Ended June 30,

Three Months Ended December 31, Three Months Ended December 31, Three Months Ended December 31, Three Months Ended December 31,

2023 2022 2023 2022 2023 2022 2023 2022

5 unchanged sentences

Total Sales $ 208,071 $ 206,502 $ 111,374 $ 109,143 $ 130,541 $ 133,595 $ 449,986 $ 449,240

Revenue from products or services provided to customers over time accounted for approximately 17 % and 13 % of revenue for the three months ended June 30, 2023 and 2022, respectively, and 14 % and 11 % of revenue for the nine months ended June 30, 2023 and 2022, respectively.

Revenue from products or services provided to customers over time accounted for approximately 19 % and 13 % of revenue for the three months ended December 31, 2023 and 2022, respectively.

Fair Value Measurements

5 unchanged sentences

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

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

8 unchanged sentences

(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 June 30, 2023 and September 30, 2022.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

1 unchanged sentence

Inventories consisted of the following:

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Raw materials $ 72,355 $ 70,451

3 unchanged sentences

Non-current investments consisted of the following:

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Equity and fixed income mutual funds $ 713 $ 699

3 unchanged sentences

$ 25,224 $ 24,988

During the second quarter of fiscal 2023, the Company purchased the remaining ownership interest in a small Industrial Technologies business, which was previously held as an equity-method investment.

See Note 15, "Acquisitions."

Debt and Financing Arrangements

Long-term debt at June 30, 2023 and September 30, 2022 consisted of the following:

June 30, 2023 September 30, 2022

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

7 unchanged sentences

A portion of the revolving credit facility (not to exceed $ 350,000 ) can be drawn in foreign currencies.

In March 2023, an amendment to the domestic credit facility implemented SOFR as the replacement of LIBOR as the benchmark interest rate under the facility.

The Company accounted for the change in reference rate as a non-substantial modification.

Borrowings under the revolving credit facility now bear interest at SOFR, plus a 0.10 % per annum rate spread adjustment, plus a factor ranging from 0.75 % to 2.00 % ( 1.25 % at June 30, 2023) based on the Company's secured leverage ratio.

Previously, borrowings under the revolving credit facility bore interest at LIBOR plus a factor ranging from 0.75 % to 2.00 % based on the Company's secured leverage ratio.

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.

1 unchanged sentence

The Company incurred debt issuance costs in connection with the domestic credit facility.

Unamortized costs were $ 1,065 and $ 1,522 at June 30, 2023 and September 30, 2022, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Debt and Financing Arrangements (continued)

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.

1 unchanged sentence

Outstanding U.S.

dollar denominated borrowings on the revolving credit facility at June 30, 2023 and September 30, 2022 were $ 450,329 and $ 472,057 , respectively.

The weighted-average interest rate on the outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps) at June 30, 2023 and 2022 was 5.59 % and 1.92 %, respectively.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Debt and Financing Arrangements (continued)

The Company has $ 299,625 of 5.25 % senior unsecured notes due December 1, 2025 (the "2025 Senior Notes").

3 unchanged sentences

The Company incurred direct financing fees and costs in connection with the 2025 Senior Notes.

Unamortized costs were $ 1,260 and $ 1,664 at June 30, 2023 and September 30, 2022, respectively.

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.

7 unchanged sentences

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 June 30, 2023 and September 30, 2022, the amount sold to the Purchasers was $ 113,200 and $ 96,590 , 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 $ 48,501 and $ 44,262 as of June 30, 2023 and September 30, 2022, respectively.

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:

Nine Months Ended

June 30, 2023 Nine Months Ended

June 30, 2022

Three Months Ended

December 31, 2023 Three Months Ended

December 31, 2022

Gross receivables sold

3 unchanged sentences

Net cash proceeds received $ 100 $ 17,410

During the second quarter of fiscal 2023, the Company, through its U.K.

In March 2023, the Company, through its U.K.

subsidiary, entered into a non-recourse factoring arrangement.

2 unchanged sentences

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 $ 36,045 during the nine months ended June 30, 2023.

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 June 30, 2023, the amount of factored receivables that remained outstanding was $ 15,714 .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Debt and Financing Arrangements (continued)

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.

2 unchanged sentences

This facility has no stated maturity date and is available until terminated.

Outstanding borrowings under the credit facility totaled € 2.2 million ($ 2,362 ) and € 8.2 million ($ 8,050 ) at June 30, 2023 and September 30, 2022, respectively.

The weighted-average interest rate on outstanding borrowings under this facility was 5.65 % and 2.25 % at June 30, 2023 and 2022, respectively.

Other borrowings totaled $ 17,345 and $ 13,434 at June 30, 2023 and September 30, 2022, respectively.

The weighted-average interest rate on all other borrowings was 2.44 % and 1.90 % at June 30, 2023 and 2022, respectively.

As of June 30, 2023 and September 30, 2022, 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 June 30, 2023.

Derivatives and Hedging Instruments

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

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.

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 June 30, 2023 and September 30, 2022, derivative instruments were reflected on a gross-basis in the consolidated balance sheets as follows:

June 30, 2023 September 30, 2022

At December 31, 2023 and September 30, 2023, derivative instruments were reflected on a gross-basis in the consolidated balance sheets as follows:

December 31, 2023 September 30, 2023

Interest Rate Swaps Cross- Currency Swaps Interest Rate Swaps Cross- Currency Swaps

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

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Notional amount $ 175,000 $ 175,000

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The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate.

In order to transition the Company's swaps from LIBOR-based to SOFR-based rates, the LIBOR-based swaps were settled during the second quarter of fiscal 2023, resulting in cash proceeds of $ 10,474 .

Concurrently, the Company entered into new interest rate swaps with SOFR-based rates with a notional amount of $ 175,000 .

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 loss of $ 1,345 ($ 1,004 after tax) at December 31, 2023 and a net unrealized gain of $ 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 $ 6,898 ($ 5,155 after tax) and $ 8,084 ($ 6,041 after tax) related to previously terminated LIBOR-based swaps were also included in AOCI as of December 31, 2023 and September 30, 2023, respectively.

Assuming market rates remain constant with the rates at December 31, 2023, a gain (net of tax) of approximately $ 2,577 included in AOCI is expected to be recognized in earnings over the next twelve months.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Derivatives and Hedging Instruments (continued)

The fair value of the interest rate swaps reflected a net unrealized gain of $ 1,171 ($ 876 after tax) at June 30, 2023 and an unrealized gain of $ 10,699 ($ 7,937 after tax) at September 30, 2022, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI").

Unrecognized gains of $ 9,263 ($ 6,922 after tax) related to the terminated LIBOR-based swaps were also included in AOCI as of June 30, 2023.

Assuming market rates remain constant with the rates at June 30, 2023, a gain (net of tax) of approximately $ 3,550 included in AOCI is expected to be recognized in earnings over the next twelve months.

Derivatives and Hedging Activities (continued)

The Company has a U.S.

Dollar/Euro cross currency swap with a notional amount of $ 81,392 , as of June 30, 2023 and September 30, 2022, which has been designated as a net investment hedge of foreign operations.

Dollar/Euro cross currency swap with a notional amount of $ 81,392 , as of December 31, 2023 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 $ 3,265 (net of income taxes of $ 1,103 ) and a gain of $ 2,782 (net of income taxes of $ 940 ), which represented effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at June 30, 2023 and September 30, 2022, respectively.

Income of $ 284 and $ 866 , 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 nine months ended June 30, 2023, respectively.

Income of $ 428 and $ 1,213 , 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 nine months ended June 30, 2022, respectively.

At June 30, 2023 and September 30, 2022, the swaps totaled $ 4,368 and $ 3,722 , respectively, and was included in other accrued liabilities and other assets in the Consolidated Balance Sheets, respectively.

A loss of $ 5,091 (net of income taxes of $ 1,728 ) 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 December 31, 2023 and September 30, 2023, respectively.

Income of $ 259 and $ 272 , 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 months ended December 31, 2023 and 2022, respectively.

At December 31, 2023 and September 30, 2023, the swap totaled $ 6,819 and $ 2,766 , 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 ($ 60,710 ) as of December 31, 2023.

Currency losses of $ 1,129 (net of income taxes of $ 383 ), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at December 31, 2023.

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.

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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 June 30, 2023, 493,758 shares have been issued under the 2017 Equity Incentive Plan.

At December 31, 2023, 1,175,258 shares have been issued under the 2017 Equity Incentive Plan.

1,233,583 time-based restricted share units, 1,579,514 performance-based restricted share units, and 75,000 stock options have been granted under the 2017 Equity Incentive Plan.

1,801,197 of these share-based awards are outstanding as of June 30, 2023.

1,812,642 of these share-based awards are outstanding as of December 31, 2023.

The 2017 Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors.

The number of shares issued under performance-based restricted share units may be up to 200 % of the number of performance-based restricted share units, based on the satisfaction of specific criteria established by the plan administrator.

For the three-month periods ended June 30, 2023 and 2022, stock-based compensation cost totaled $ 5,023 and $ 5,197 , respectively.

For the nine-month periods ended June 30, 2023 and 2022, stock-based compensation cost totaled $ 13,635 and $ 14,128 , respectively.

The associated future income tax benefit recognized for stock-based compensation was $ 1,249 and $ 1,282 for the three-month periods ended June 30, 2023 and 2022, respectively, and $ 2,856 and $ 2,970 for the nine-month periods ended June 30, 2023 and 2022, respectively.

For the three-month periods ended December 31, 2023 and 2022, stock-based compensation cost totaled $ 4,651 and $ 4,334 , respectively.

The associated future income tax benefit recognized for stock-based compensation was $ 684 and $ 551 for the three-month periods ended December 31, 2023 and 2022, respectively.

With respect to the restricted share unit grants, units generally vest on the third anniversary of the grant date.

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Share-Based Payments (continued)

The transactions for restricted shares and restricted share units for the nine months ended June 30, 2023 were as follows:

Shares /Units Weighted-

The transactions for restricted share units for the three months ended December 31, 2023 were as follows:

Restricted Share Units Weighted-

Non-vested at September 30, 2023 1,728,697 $ 30.90

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Expired or forfeited ( 2,900 ) 34.83

Non-vested at June 30, 2023 1,726,197 $ 30.89

Non-vested at December 31, 2023 1,737,642 $ 33.61

During the third quarter of fiscal 2021, 75,000 stock options were granted under the 2017 Equity Incentive Plan.

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The Company generally settles employee stock option exercises with treasury shares.

As of June 30, 2023, the total unrecognized compensation cost related to all unvested stock-based awards was $ 21,695 and is expected to be recognized over a weighted average period of 2.1 years.

As of December 31, 2023, the total unrecognized compensation cost related to all unvested stock-based awards was $ 31,712 and is expected to be recognized over a weighted average period of 2.3 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 three-month period ended December 31, 2023.

Three Months Ended

December 31, 2023

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 three months ended December 31, 2023 represents an estimate of the average period of time for restricted share units 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").

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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 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 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 45,005 shares and share units had been deferred under the Director Fee Plans as of June 30, 2023.

A total of 45,493 shares and share units had been deferred under the Director Fee Plans as of December 31, 2023.

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 June 30, 2023, 336,127 restricted shares and restricted share units have been granted under the Director Fee Plans, 162,898 of which were issued under the 2019 Director Fee Plan.

60,057 restricted share units are unvested at June 30, 2023 under the Director Fee Plans.

As of December 31, 2023, 336,127 restricted shares and restricted share units have been granted under the Director Fee Plans, 162,898 of which were issued under the 2019 Director Fee Plan.

60,057 restricted share units are unvested at December 31, 2023 under the Director Fee Plans.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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Earnings Per Share Attributable to Matthews' Shareholders

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

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

Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

Net income (loss) attributable to Matthews shareholders $ 8,738 $ 2,893 $ 21,568 $ ( 18,815 )

Net (loss) income attributable to Matthews shareholders $ ( 2,303 ) $ 3,703

Weighted-average shares outstanding (in thousands):

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Dividends declared per common share $ 0.24 $ 0.23

Anti-dilutive securities excluded from the dilution calculation were insignificant for the three and nine months ended June 30, 2023, and the three months ended June 30, 2022.

Anti-dilutive securities excluded from the dilution calculation were insignificant for the three months ended December 31, 2022.

During periods in which the Company incurs a net loss, diluted weighted-average shares outstanding are equal to basic weighted-average shares outstanding because the effect of all equity awards is anti-dilutive.

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Net periodic pension and other postretirement benefit cost for the plans included the following:

Three months ended June 30,

Pension Other Postretirement

2023 2022 2023 2022

Service cost $ 31 $ 4 $ 19 $ 42

Interest cost * 106 48 161 102

Expected return on plan assets * — — — —

Amortization:

Prior service credit — ( 66 ) ( 92 ) ( 91 )

Net actuarial loss * ( 5 ) 88 ( 177 ) —

Net benefit cost $ 132 $ 74 $ ( 89 ) $ 53

Nine months ended June 30,

Three months ended December 31,

Pension Other Postretirement

2 unchanged sentences

Interest cost * 129 143 171 161

Expected return on plan assets * — ( 1,042 ) — —

Amortization:

Prior service credit — — ( 91 ) ( 91 )

Net actuarial loss * ( 21 ) 380 ( 531 ) —

Net actuarial gains * ( 11 ) ( 10 ) ( 180 ) ( 177 )

Settlement losses * — 1,271 — —

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* Non-service components of pension and postretirement expense are included in other income (deductions), net.

Benefit payments under the Company's principal defined benefit retirement plan ("DB Plan") were made from plan assets, while benefit payments under the supplemental retirement plan were made from the Company's operating funds.

Benefit payments under the Company's postretirement benefit plan are made from the Company's operating funds.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Pension and Other Postretirement Benefit Plans (continued)

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 nine months ended June 30, 2023.

This amount represents the immediate recognition of the deferred AOCI balances related to the SERP and ORRP.

During the second quarter of fiscal 2023, the remaining funds held in a rabbi trust associated with the SERP were transferred to the Company.

Consequently, these amounts are no longer classified as restricted cash.

In the first quarter of fiscal 2022, the Company terminated its DB Plan and made plan contributions totaling $ 35,706 to fully fund the planned settlement of the DB Plan obligations.

Also during the first quarter of fiscal 2022, lump sum distributions of $ 185,958 were made from the DB Plan to plan participants, and non-participating annuity contracts totaling $ 56,274 were purchased by the DB Plan for plan participants, resulting in the full settlement of the DB Plan obligations.

The settlement of the DB Plan obligations resulted in the recognition of a non-cash charge of $ 30,856 , which has been presented as a component of other income (deductions), net for the nine months ended June 30, 2022.

This amount represents the immediate recognition of the remaining portion of the deferred AOCI balances related to the DB Plan.

Accumulated Other Comprehensive Income

The changes in AOCI by component, net of tax, for the three-month periods ended June 30, 2023 and 2022 were as follows:

Post-retirement benefit plans Currency translation adjustment Cash Flow Hedges Total

Attributable to Matthews:

Balance, March 31, 2023 $ 5,951 $ ( 178,318 ) $ 5,291 $ ( 167,076 )

OCI before reclassification ( 5 ) 1,135 2,745 3,875

Amounts reclassified from AOCI ( 205 ) (a)

( 212 ) ( 238 ) (b)

Net current-period OCI ( 210 )

Balance, June 30, 2023 $ 5,741 $ ( 177,395 ) $ 7,798 $ ( 163,856 )

Attributable to noncontrolling interest:

Balance, March 31, 2023 $ — $ 254 $ — $ 254

OCI before reclassification — ( 31 ) — ( 31 )

Net current-period OCI — ( 31 ) — ( 31 )

Balance, June 30, 2023 $ — $ 223 $ — $ 223

Post-retirement benefit plans Currency translation adjustment Cash Flow Hedges Total

Attributable to Matthews:

Balance, March 31, 2022 $ ( 1,824 ) $ ( 163,421 ) $ 4,015 $ ( 161,230 )

OCI before reclassification 69 ( 18,970 ) 1,223 ( 17,678 )

Amounts reclassified from AOCI ( 52 ) (a)

( 323 ) 353 (b)

Net current-period OCI 17 ( 19,293 ) 1,576 ( 17,700 )

Balance, June 30, 2022 $ ( 1,807 ) $ ( 182,714 ) $ 5,591 $ ( 178,930 )

Attributable to noncontrolling interest:

Balance, March 31, 2022 $ — $ 249 $ — $ 249

OCI before reclassification — 15

Net current-period OCI — 15 — 15

Balance, June 30, 2022 $ — $ 264

(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)

Accumulated Other Comprehensive Income (continued)

The changes in AOCI by component, net of tax, for the nine-month periods ended June 30, 2023 and 2022 were as follows:

Accumulated Other Comprehensive Income

The changes in AOCI by component, net of tax, for the three-month periods ended December 31, 2023 and 2022 were as follows:

Post-retirement benefit plans Currency translation adjustment Cash Flow Hedges Total

6 unchanged sentences

( 4,881 ) 6,724

Balance, June 30, 2023 $ 5,741 $ ( 177,395 ) $ 7,798 $ ( 163,856 )

Balance, December 31, 2023 $ 6,680 $ ( 178,511 ) $ 4,151 $ ( 167,680 )

Attributable to noncontrolling interest:

2 unchanged sentences

Net current-period OCI — 22 — 22

Balance, June 30, 2023 $ — $ 223 $ — $ 223

Balance, December 31, 2023 $ — $ 288 $ — $ 288

Post-retirement benefit plans Currency translation adjustment Cash Flow Hedges Total

5 unchanged sentences

Net current-period OCI 945 20,560 ( 404 ) 21,101

Balance, June 30, 2022 $ ( 1,807 ) $ ( 182,714 ) $ 5,591 $ ( 178,930 )

Balance, December 31, 2022 $ 6,127 $ ( 182,750 ) $ 7,533 $ ( 169,090 )

Attributable to noncontrolling interest:

2 unchanged sentences

Net current-period OCI — 4 — 4

Balance, June 30, 2022 $ — $ 264

Balance, December 31, 2022 $ — $ 259

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

3 unchanged sentences

Accumulated Other Comprehensive Income (continued)

Reclassifications out of AOCI for the three and nine-month periods ended June 30, 2023 and 2022 were as follows:

Reclassifications out of AOCI for the three-month periods ended December 31, 2023 and 2022 were as follows:

Amount reclassified from AOCI

Details about AOCI Components Three Months Ended June 30, 2023 Nine Months Ended June 30, 2023 Affected line item in the Statement of income

Details about AOCI Components Three Months Ended December 31, 2023 Three Months Ended December 31, 2022 Affected line item in the Statement of income

Postretirement benefit plans

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$ 688 $ 700 Net income

Details about AOCI Components Three Months Ended

June 30, 2022 Nine Months Ended

June 30, 2022 Affected line item in the Statement of income

Postretirement benefit plans

Prior service credit (a)

Actuarial losses ( 88 ) ( 380 ) Other income (deductions), net

Settlement losses — ( 30,856 ) Other income (deductions), net

69 ( 30,878 ) Income before income tax (b)

7,565 Income taxes

$ ( 23,313 ) Net income

Cash flow hedges $ ( 470 )

$ ( 2,006 ) Interest expense

Net investment hedges 428 1,213 Interest expense

( 42 ) ( 793 ) Income before income tax (b)

196 Income taxes

$ ( 30 ) $ ( 597 ) Net income

(a) Prior service cost amounts are included in the computation of pension and other postretirement benefit expense, which is reported in both cost of goods sold and selling and administrative expenses.

1 unchanged sentence

(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)

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 nine months of fiscal 2023 were an expense of $ 4,136 , compared to a benefit of $ 2,311 for the first nine months of fiscal 2022.

The difference between the Company’s consolidated income taxes for the first nine months of fiscal 2023 compared to the same period for fiscal 2022 primarily resulted from consolidated pre-tax income in fiscal 2023 compared to a pre-tax loss in fiscal 2022.

The Company’s fiscal 2023 nine-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’s fiscal 2022 nine-month effective tax rate varied from the U.S.

statutory tax rate of 21.0% primarily due to the non-deductible asset write-downs in Russia, state taxes, foreign statutory rate differentials, and tax credits.

The Company had unrecognized tax benefits (excluding penalties and interest) of $ 4,582 and $ 4,123 on June 30, 2023 and September 30, 2022, respectively, which would impact the annual effective rate at June 30, 2023 and September 30, 2022, respectively.

The Company's consolidated income taxes for the first three months of fiscal 2024 were a benefit of $ 726 , compared to an expense of $ 1,312 for the first three months of fiscal 2023.

The difference between the Company’s consolidated income taxes for the first three months of fiscal 2024 compared to the same period for fiscal 2023 resulted from a consolidated pre-tax loss in fiscal 2024 compared to pre-tax income in fiscal 2023 as well as a net tax benefit from discrete items.

The Company’s fiscal 2024 three 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 a net discrete tax benefit.

The Company’s fiscal 2023 three month effective tax rate varied from the U.S.

statutory tax rate of 21.0% primarily due to state taxes, foreign statutory rate differentials, and tax credits.

The Company had unrecognized tax benefits (excluding penalties and interest) of $ 4,245 and $ 3,779 on December 31, 2023 and September 30, 2023, respectively, which would impact the annual effective rate at December 31, 2023 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 $ 959 and $ 876 at June 30, 2023 and September 30, 2022, respectively.

Total penalties and interest accrued were $ 804 and $ 730 at December 31, 2023 and September 30, 2023, respectively.

These accruals may potentially be applicable in the event of an unfavorable outcome of uncertain tax positions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Income Taxes (continued)

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 June 30, 2023, the tax years that remain subject to examination by major jurisdictions generally are:

As of December 31, 2023, the tax years that remain subject to examination by major jurisdictions generally are:

United States – Federal 2020 and forward

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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.

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.

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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.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Segment Information (continued)

In addition, the CODM manages and evaluates the operating performance of the segments, as described above, on a pre-corporate cost allocation basis.

3 unchanged sentences

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)

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

June 30, Nine Months Ended

2023 2022 2023 2022

Memorialization $ 208,071 $ 206,502

8 unchanged sentences

Total Adjusted EBITDA $ 45,482 $ 49,291

Acquisition and divestiture costs (1)**

Acquisition and divestiture related items (1)**

( 1,237 ) ( 1,285 )

1 unchanged sentence

( 5,920 ) ( 1,781 )

Non-recurring / incremental coronavirus disease 2019 ("COVID-19") costs (3)***

— ( 301 ) — ( 2,204 )

Highly inflationary accounting losses (primarily non-cash) (3)

( 320 ) ( 1,088 )

Defined benefit plan termination related items (5)

— 63 ( 21 ) ( 284 )

Asset write-downs (6)

— 469 — ( 10,017 )

Stock-based compensation ( 4,651 ) ( 4,334 )

6 unchanged sentences

Net loss attributable to noncontrolling interests — ( 56 )

Income (loss) before income taxes 8,113 3,915 25,579 ( 21,182 )

(Loss) income before income taxes ( 3,029 ) 4,959

Income tax benefit (provision) 726 ( 1,312 )

Net income (loss) $ 8,671 $ 2,875 $ 21,443 $ ( 18,871 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Segment Information (continued)

(1) Includes certain non-recurring costs associated with recent acquisition and divestiture activities.

(2) Includes certain non-recurring costs associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels and costs associated with global ERP system integration efforts, net of loss recoveries of $ 2,154 related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.

(3) Includes certain non-recurring direct incremental costs (such as costs for purchases of computer peripherals and devices to facilitate working-from-home, additional personal protective equipment and cleaning supplies and services, etc.) incurred in response to COVID-19.

This amount does not include the impact of any lost sales or underutilization due to COVID-19.

Net (loss) income $ ( 2,303 ) $ 3,647

(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.

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

(5) Represents items associated with the termination of the Company's DB Plan, supplemental retirement plan and the defined benefit portion of the officers retirement restoration plan.

(6) Represents asset write-downs within the SGK Brand Solutions segment (see Note 17, "Asset Write-Downs").

(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.

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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.

(8) Includes fees for receivables sold under the RPA and factoring arrangements totaling $ 1,212 and $ 2,758 for the three and nine months ended June 30, 2023, respectively.

* Depreciation and amortization was $ 5,807 and $ 5,835 for the Memorialization segment, $ 5,815 and $ 2,459 for the Industrial Technologies segment, $ 11,164 and $ 13,334 for the SGK Brand Solutions segment, and $ 1,150 and $ 1,310 for Corporate and Non-Operating, for the three months ended June 30, 2023 and 2022, respectively.

Depreciation and amortization was $ 17,092 and $ 17,448 for the Memorialization segment, $ 17,584 and $ 7,643 for the Industrial Technologies segment, $ 33,543 and $ 51,119 for the SGK Brand Solutions segment, and $ 3,594 and $ 3,953 for Corporate and Non-Operating, for the nine months ended June 30, 2023 and 2022, respectively.

** Acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges were $ 270 and $ 902 for the Memorialization segment, $ 120 and $ 1,183 for the Industrial Technologies segment, $ 3,897 and $ 1,970 for the SGK Brand Solutions segment, $ 715 and $ 3,235 for Corporate and Non-Operating, for the three months ended June 30, 2023 and 2022, respectively.

Acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges were $ 981 and $ 2,090 for the Memorialization segment, $ 3,494 and $ 1,376 for the Industrial Technologies segment, $ 7,028 and $ 7,673 for the SGK Brand Solutions segment, $ 676 and $ 6,724 for Corporate and Non-Operating, for the nine months ended June 30, 2023 and 2022, respectively.

*** Non-recurring/incremental COVID-19 costs were $ 225 for the Memorialization segment, $ 1 for the Industrial Technologies segment, $ 74 for the SGK Brand Solutions segment, and $ 1 for Corporate and Non-Operating, for the three months ended June 30, 2022.

Non-recurring/incremental COVID-19 costs were $ 1,268 for the Memorialization segment, $ 6 for the Industrial Technologies segment, $ 464 for the SGK Brand Solutions segment, and $ 466 for Corporate and Non-Operating, for the nine months ended June 30, 2022.

(5) Includes fees for receivables sold under the RPA and factoring arrangements totaling $ 1,175 and $ 456 for the three months ended December 31, 2023 and 2022, respectively.

* Depreciation and amortization was $ 6,413 and $ 5,574 for the Memorialization segment, $ 6,377 and $ 5,853 for the Industrial Technologies segment, $ 9,572 and $ 11,060 for the SGK Brand Solutions segment, and $ 1,161 and $ 1,242 for Corporate and Non-Operating, for the three months ended December 31, 2023 and 2022, respectively.

** Acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges were $ 60 and $ 378 for the Memorialization segment, $ 5,367 and $ 937 for the Industrial Technologies segment, $ 863 and $ 521 for the SGK Brand Solutions segment, $ 867 and $ 1,230 for Corporate and Non-Operating, for the three months ended December 31, 2023 and 2022, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Acquisitions and Divestitures

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 preliminary purchase price allocation was not finalized as of June 30, 2023 and remains subject to change as the Company obtains additional information related to working capital and other assets and liabilities.

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.

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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 preliminary purchase price allocations were not finalized as of June 30, 2023 and remain subject to change as the Company obtains additional information related to working capital and other assets and liabilities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Acquisitions (continued)

In August 2022, the Company acquired German-based engineering firms OLBRICH and R+S Automotive for a purchase price of approximately € 43,700 ($ 44,469 ) (net of cash acquired) within the Industrial Technologies segment.

OLBRICH is a production and intelligent equipment manufacturer, specializing in purpose-built rotary processing equipment, including equipment used in the manufacturing of dry and wet electrodes for lithium-ion batteries used in electric vehicles and components for hydrogen fuel cells and electrolyzers, with additional strong positions in Specialty & Pharma, Packaging and Home & Décor.

R+S Automotive is a specialty engineering services provider of automation, plant and tooling concepts for automotive manufacturing companies around the world.

Annual sales for these businesses were approximately $ 140,000 prior to the acquisition.

The preliminary purchase price allocation was not finalized as of June 30, 2023 and remains subject to change as the Company obtains additional information related to other assets and liabilities.

The Company finalized the purchase price allocations in the fourth quarter of fiscal 2023, resulting in an immaterial adjustment to certain tax accounts.

Goodwill and Other Intangible Assets

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$ 366,015 $ 115,073 $ 217,021 $ 698,109

Additions during period 2,682 6,756 1,924 11,362

Translation and other adjustments 4,013 931 5,908 10,852

Net goodwill at June 30, 2023

Net goodwill at December 31, 2023

$ 370,028 $ 116,004 $ 222,929 $ 708,961

The net goodwill balances at June 30, 2023 and September 30, 2022 included $ 261,186 of accumulated impairment losses.

Accumulated impairment losses at June 30, 2023 and September 30, 2022 were $ 5,000 , $ 23,946 and $ 232,240 for the Memorialization, Industrial Technologies and SGK Brand Solutions segments, respectively.

The net goodwill balances at December 31, 2023 and September 30, 2023 included $ 261,186 of accumulated impairment losses.

Accumulated impairment losses at December 31, 2023 and September 30, 2023 were $ 5,000 , $ 23,946 and $ 232,240 for the Memorialization, Industrial Technologies and SGK Brand Solutions segments, respectively.

The Company performed its annual impairment review of goodwill and indefinite-lived intangible assets in the second quarter of fiscal 2023 (January 1, 2023) and determined that the estimated fair values for all goodwill reporting units exceeded their carrying values, therefore no impairment charges were necessary.

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 9 %.

The Company performed an interim assessment of its SGK Brand Solutions goodwill reporting unit as of September 1, 2023.

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 4 %.

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.

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Goodwill and Other Intangible Assets (continued)

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of June 30, 2023 and September 30, 2022, respectively.

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

Amount Accumulated

Amortization Net

June 30, 2023:

December 31, 2023:

Indefinite-lived trade names $ 30,540 $ — $ 30,540

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$ 579,261 $ ( 418,783 ) $ 160,478

The net change in intangible assets during the nine months ended June 30, 2023 included the impact of foreign currency fluctuations during the period, additional amortization, and additions related to the Eagle acquisition.

Amortization expense on intangible assets was $ 10,640 and $ 11,804 for the three-month periods ended June 30, 2023 and 2022, respectively.

Amortization expense on intangible assets was $ 31,499 and $ 45,303 for the nine-month periods ended June 30, 2023 and 2022, respectively.

The net change in intangible assets during the three months ended December 31, 2023 included the impact of foreign currency fluctuations during the period and additional amortization.

Amortization expense on intangible assets was $ 9,795 and $ 10,342 for the three-month periods ended December 31, 2023 and 2022, respectively.

Amortization expense is estimated to be $ 26,436 for the remainder of fiscal 2024, $ 20,493 in 2025, $ 14,081 in 2026, $ 13,007 in 2027 and $ 10,960 in 2028.

Asset Write-Downs

The Company has certain operations in Russia within its SGK Brand Solutions segment.

During fiscal 2022, in light of the war between Russia and Ukraine, and the resulting regional instability and evolving political and economic conditions within the region, the Company evaluated certain of its assets for recoverability and impairment.

As a result of this assessment, and due to the uncertainty in projecting future cash flows for the Company's operations in Russia, the Company recorded asset write-downs totaling $ 10,017 (net of recoveries) during fiscal 2022 to reduce the carrying value of these assets to zero.

Asset write-downs (primarily related to property, plant and equipment) totaling $ 9,686 and $ 331 were reported within cost of sales and administrative expense, respectively, for the nine months ended June 30, 2022.

Subsequent Event

On January 31, 2024, subsequent to the date of the balance sheet, the Company amended its domestic credit facility.

The amended domestic credit facility now matures in January 2029, subject to the terms and conditions of the amended facility.

Under the amended domestic credit facility, borrowing limits remain unchanged, and borrowings bear interest at SOFR, plus a 0.10 % per annum rate spread adjustment, plus a factor ranging from 1.00 % to 2.00 % 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 amended domestic credit facility agreement.

Other critical terms of the domestic credit facility remain unchanged.

Management's Discussion and Analysis of Financial Condition and Results of Operations

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Any forward-looking statements contained herein are included pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.

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.

Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, 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, 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, cybersecurity concerns, 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, 2022.

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.

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.

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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.

Included in this report are measures of financial performance that are not defined by generally accepted accounting principles in the United States ("GAAP").

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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.

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").

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.

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

In addition, the CODM manages and evaluates the operating performance of the segments, as described above, on a pre-corporate cost allocation basis.

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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 nine-month periods ended June 30, 2023 and 2022.

The following table sets forth the sales and adjusted EBITDA for the Company's three reporting segments for the three-month periods ended December 31, 2023 and 2022.

Refer to Note 14, "Segment Information" in Item 1 - "Financial Statements" for the Company's financial information by segment.

Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

(Dollar amounts in thousands)

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See the "Non-GAAP Financial Measures" section below.

Sales for the nine months ended June 30, 2023 were $1.40 billion, compared to $1.31 billion for the nine months ended June 30, 2022, representing an increase of $95.5 million.

The increase in fiscal 2023 sales reflected higher sales in the Industrial Technologies and Memorialization segments, partially offset by lower sales in the SGK Brand Solutions segment.

On a consolidated basis, changes in foreign currency exchange rates were estimated to have an unfavorable impact of $28.6 million on fiscal 2023 sales compared to the prior year.

Memorialization segment sales for the first nine months of fiscal 2023 were $638.1 million, compared to $633.9 million for the first nine months of fiscal 2022.

The sales increase reflected improved price realization, higher sales of granite memorial products, mausoleums and cremation equipment in the U.S., and benefits from the recent acquisition of Eagle Granite Company (see Acquisitions below).

These increases were partially offset by lower unit sales of caskets and bronze memorial products, reflecting a decrease in coronavirus disease 2019 ("COVID-19") related deaths in fiscal 2023.

Changes in foreign currency exchange rates had an unfavorable impact of $2.3 million on the segment's sales compared to the prior year.

Industrial Technologies segment sales were $365.2 million for the first nine months of fiscal 2023, compared to $230.9 million for the first nine months of fiscal 2022.

The sales increase primarily reflected the impact of the fiscal 2022 acquisitions of OLBRICH GmbH ("OLBRICH") and R+S Automotive GmbH ("R+S Automotive") (see Acquisitions below).

The increase in sales also 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 warehouse automation solutions.

Changes in foreign currency exchange rates had an unfavorable impact of $8.5 million on the segment's sales compared to the prior year.

In the SGK Brand Solutions segment, sales for the first nine months of fiscal 2023 were $397.4 million, compared to $440.5 million for the first nine months of fiscal 2022.

Changes in foreign currency exchange rates had an unfavorable impact of $17.9 million on the segment's sales compared to the prior year.

The decrease in sales also reflected lower brand sales in Europe, a decline in sales of cylinder (packaging) products in Europe, and lower U.S.

and European retail-based sales.

These decreases were partially offset by improved price realization.

Gross profit for the nine months ended June 30, 2023 was $426.9 million, compared to $377.0 million for the same period a year ago.

Consolidated gross profit as a percent of sales was 30.5% and 28.9% for the first nine months of fiscal 2023 and fiscal 2022, respectively.

The increase in gross profit primarily reflected the impact of higher sales (including benefits from

Sales for the three months ended December 31, 2023 were $450.0 million, compared to $449.2 million for the three months ended December 31, 2022.

The increase in fiscal 2024 sales reflected higher sales in the Memorialization and Industrial Technologies segments, partially offset by lower sales in the SGK Brand Solutions segment.

On a consolidated basis, changes in foreign currency exchange rates were estimated to have a favorable impact of $5.1 million on fiscal 2024 sales compared to the prior year.

Memorialization segment sales for the first three months of fiscal 2024 were $208.1 million, compared to $206.5 million for the first three months of fiscal 2023.

The sales increase reflected higher sales of granite memorial products, benefits from the fiscal 2023 acquisition of Eagle Granite Company (see Acquisitions and Divestitures below) and improved price realization.

These increases were partially offset by lower sales of caskets and cremation equipment.

Changes in foreign currency exchange rates had a favorable impact of $382,000 on the segment's sales compared to the prior year.

Industrial Technologies segment sales were $111.4 million for the first three months of fiscal 2024, compared to $109.1 million for the first three months of fiscal 2023.

The sales increase 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 partially 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 $3.7 million on the segment's sales compared to the prior year.

In the SGK Brand Solutions segment, sales for the first three months of fiscal 2024 were $130.5 million, compared to $133.6 million for the first three months of fiscal

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements