What changed in this filing

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Item 1. Financial Statements

2024-05-03 compared with 2024-02-02 · 286 added, 164 removed, 577 unchanged (44% of the section changed)

3 unchanged sentences

(Dollar amounts in thousands)

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Current assets:

43 unchanged sentences

Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

Sales $ 471,223 $ 479,580 $ 921,209 $ 928,820

7 unchanged sentences

Other income (deductions), net ( 878 ) 1,503 ( 1,758 ) ( 551 )

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

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

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

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

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

Net loss attributable to noncontrolling interests — 2 — 58

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

(Loss) earnings per share attributable to Matthews shareholders:

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

Earnings per share attributable to Matthews shareholders:

Basic $ 0.29 $ 0.30 $ 0.22 $ 0.42

4 unchanged sentences

(Dollar amounts in thousands)

Three Months Ended December 31,

Three Months Ended March 31,

Matthews Noncontrolling Interest Total

2024 2023 2024 2023 2024 2023

Net (loss) income:

Net income (loss):

$ 9,027 $ 9,127 $ — $ ( 2 ) $ 9,027 $ 9,125

Other comprehensive income (loss) ("OCI"), net of tax:

Other comprehensive (loss) income ("OCI"), net of tax:

Foreign currency translation adjustment ( 6,026 ) 4,432 — ( 5 ) ( 6,026 ) 4,427

Pension plans and other postretirement benefits ( 282 ) ( 176 ) — — ( 282 ) ( 176 )

Unrecognized (loss) gain on cash flow hedges:

Unrecognized gain (loss) on cash flow hedges:

Net change from periodic revaluation 1,983 ( 1,471 ) — — 1,983 ( 1,471 )

Net amount reclassified to earnings ( 499 ) ( 771 ) — — ( 499 ) ( 771 )

Net change in unrecognized gain (loss) on cash flow hedges 1,484 ( 2,242 ) — — 1,484 ( 2,242 )

OCI, net of tax ( 4,824 ) 2,014 — ( 5 ) ( 4,824 ) 2,009

Comprehensive income (loss) $ 4,203 $ 11,141 $ — $ ( 7 ) $ 4,203 $ 11,134

Six Months Ended March 31,

Matthews Noncontrolling Interest Total

2024 2023 2024 2023 2024 2023

Net income (loss):

$ 6,724 $ 12,830 $ — $ ( 58 ) $ 6,724 $ 12,772

OCI, net of tax:

Foreign currency translation adjustment 5,659 24,992 22 ( 1 ) 5,681 24,991

Pension plans and other postretirement benefits ( 362 ) 769 — — ( 362 ) 769

Unrecognized loss on cash flow hedges:

Net change from periodic revaluation ( 2,406 ) ( 1,378 ) — — ( 2,406 ) ( 1,378 )

Net amount reclassified to earnings ( 991 ) ( 1,268 ) — — ( 991 ) ( 1,268 )

Net change in unrecognized loss on cash flow hedges ( 3,397 ) ( 2,646 ) — — ( 3,397 ) ( 2,646 )

4 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

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

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

(Dollar amounts in thousands, except per share data)

20 unchanged sentences

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

Net income — — 9,027 — — — 9,027

Minimum pension liability — — — ( 282 ) — — ( 282 )

Translation adjustment — — — ( 6,026 ) — — ( 6,026 )

Fair value of cash flow hedges — — — 1,484 — — 1,484

Total comprehensive income 4,203

Stock-based compensation — 4,327 — — — — 4,327

Purchase of 1,029 shares of treasury stock

— — — — ( 35 ) — ( 35 )

Issuance of 28,878 shares of treasury stock

— ( 1,077 ) — — 1,077 — —

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

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

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY, Continued

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

(Dollar amounts in thousands, except per share data)

Shareholders' Equity

20 unchanged sentences

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

Net income (loss) — — 9,127 — — ( 2 ) 9,125

Minimum pension liability — — — ( 176 ) — — ( 176 )

Translation adjustment — — — 4,432 — ( 5 ) 4,427

Fair value of cash flow hedges — — — ( 2,242 ) — — ( 2,242 )

Total comprehensive income 11,134

Stock-based compensation — 4,278 — — — — 4,278

Purchase of 7,606 shares of treasury stock

— — — — ( 288 ) — ( 288 )

Issuance of 46,069 shares of treasury stock

— ( 1,723 ) — — 1,723 — —

Dividends — — ( 7,683 ) — — — ( 7,683 )

Transactions with noncontrolling interests — — — — — 33 33

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

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

2 unchanged sentences

(Dollar amounts in thousands)

Three Months Ended

Six Months Ended

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:

Net income $ 6,724 $ 12,772

Adjustments to reconcile net income to net cash flows from operating activities:

Depreciation and amortization 46,784 47,877

Stock-based compensation expense 8,978 8,612

Deferred tax benefit ( 1 ) ( 46 )

Deferred tax provision 29 268

Gain on sale of assets, net ( 316 ) —

1 unchanged sentence

Defined benefit plan settlement payments — ( 24,242 )

Proceeds from the settlement of cash flow hedges — 10,474

Changes in working capital items ( 35,609 ) ( 10,885 )

Decrease in other assets 11,724 3,298

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

Decrease in other liabilities ( 7,782 ) ( 2,083 )

Other operating activities, net ( 691 ) ( 2,651 )

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

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

Cash flows from investing activities:

8 unchanged sentences

Dividends ( 16,691 ) ( 14,126 )

Payments of debt issuance costs ( 4,704 ) —

Other financing activities — ( 914 )

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

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

Effect of exchange rate changes on cash 300 1,893

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

December 31, 2023

March 31, 2024

(Dollar amounts in thousands, except per share data)

14 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 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.

Operating results for the three and six months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2024.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2023.

7 unchanged sentences

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 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.

As of March 31, 2024 and September 30, 2023, the Company had net monetary assets related to its Turkish subsidiaries of $ 4,612 and $ 4,271 , respectively.

Exchange losses related to highly inflationary accounting totaled $ 390 and $ 710 for the three and six months ended March 31, 2024, respectively, and $ 160 and $ 1,248 for the three and six months ended March 31, 2023, respectively.

Such amounts were included in the Consolidated Statements of Income within other income (deductions), net.

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.

14 unchanged sentences

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 amendments in this update affect the presentation and disclosure of a variety of topics in the Codification, and align them with the Securities and Exchange Commission ("SEC") regulations.

The effective date of the amendments of this ASU will be determined for each individual disclosure based on the effective date of the SEC’s removal of the related disclosure from Regulation S-X or Regulation S-K.

10 unchanged sentences

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.

The amounts owed to a participating financial institution under the Program and included in trade accounts payable were $ 4,670 and $ 3,027 at March 31, 2024 and September 30, 2023, respectively.

In October 2021, the FASB issued ASU No.

5 unchanged sentences

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 months ended December 31, 2023 and 2022 were as follows:

Disaggregated sales by segment and region for the three and six months ended March 31, 2024 and 2023 were as follows:

Memorialization Industrial Technologies SGK Brand Solutions Consolidated

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

Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31,

2024 2023 2024 2023 2024 2023 2024 2023

5 unchanged sentences

Total Sales $ 222,156 $ 222,889 $ 116,136 $ 125,514 $ 132,931 $ 131,177 $ 471,223 $ 479,580

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.

Memorialization Industrial Technologies SGK Brand Solutions Consolidated

Six Months Ended March 31, Six Months Ended March 31, Six Months Ended March 31, Six Months Ended March 31,

2024 2023 2024 2023 2024 2023 2024 2023

North America $ 409,218 $ 407,077 $ 65,956 $ 77,975 $ 125,872 $ 129,904 $ 601,046 $ 614,956

Central and South America — — — — 2,562 2,332 2,562 2,332

Europe 15,878 16,825 158,355 153,271 102,863 101,458 277,096 271,554

Australia 5,131 5,489 — — 4,324 4,515 9,455 10,004

Asia — — 3,199 3,411 27,851 26,563 31,050 29,974

Total Sales $ 430,227 $ 429,391 $ 227,510 $ 234,657 $ 263,472 $ 264,772 $ 921,209 $ 928,820

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

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:

December 31, 2023 September 30, 2023

March 31, 2024 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 December 31, 2023 and September 30, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

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

Inventories consisted of the following:

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Raw materials $ 71,068 $ 70,451

3 unchanged sentences

Non-current investments consisted of the following:

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Equity and fixed income mutual funds $ 1,466 $ 699

3 unchanged sentences

$ 26,780 $ 24,988

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

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

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

March 31, 2024 September 30, 2023

Revolving credit facilities $ 511,057 $ 463,168

5 unchanged sentences

Long-term debt $ 837,357 $ 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.

The Company has a domestic credit facility with a syndicate of financial institutions that was amended and restated in January 2024.

The amended and restated loan agreement includes a $ 750,000 senior secured revolving credit facility, which matures in January 2029, subject to the terms and conditions of the amended facility.

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

Borrowings under the revolving credit facility bear interest at the Secured Overnight Financing Rate ("SOFR"), plus a 0.10 % per annum rate spread adjustment, plus a factor ranging from 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.

Borrowings under the revolving credit facility bear interest at the Secured Overnight Financing Rate ("SOFR"), plus a 0.10 % per annum rate spread adjustment, plus a factor ranging from 1.00 % to 2.00 % ( 1.50 % at March 31, 2024) based on the Company's leverage ratio.

The leverage ratio is defined as total indebtedness divided by EBITDA (earnings before interest, income taxes, depreciation and amortization) as defined within the domestic credit facility agreement.

The Company is required to pay an annual commitment fee ranging from 0.15 % to 0.30 % (based on the Company's leverage ratio) of the unused portion of the revolving credit facility.

The Company incurred 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 Company incurred new debt issuance costs of $ 4,704 in connection with the amended and restated agreement, which were deferred and are being amortized over the term of the facility.

Unamortized costs were $ 5,363 and $ 949 at March 31, 2024 and September 30, 2023, respectively.

The domestic credit facility requires the Company to maintain certain leverage and interest coverage ratios.

1 unchanged sentence

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Debt and Financing Arrangements (continued)

dollar denominated borrowings on the revolving credit facility at March 31, 2024 and September 30, 2023 were $ 447,949 and $ 405,000 , respectively.

Outstanding Euro denominated borrowings on the revolving credit facility at March 31, 2024 and September 30, 2023 were € 55.0 million ($ 59,370 ) and € 55.0 million ($ 58,168 ), respectively.

The weighted-average interest rate on the outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps and Euro denominated borrowings) at March 31, 2024 and 2023 was 4.89 % and 5.17 %, respectively.

The Company has $ 299,217 of 5.25 % senior unsecured notes due December 1, 2025 (the "2025 Senior Notes").

3 unchanged sentences

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.

Unamortized costs were $ 855 and $ 1,125 at March 31, 2024 and September 30, 2023, respectively.

The Company and certain of its domestic subsidiaries sell, on a continuous basis without recourse, their trade receivables to Matthews Receivables Funding Corporation, LLC (“Matthews RFC”), a wholly-owned bankruptcy-remote subsidiary of the Company.

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.

Matthews RFC has a receivables purchase agreement (“RPA”) to sell up to $ 125,000 of receivables to certain purchasers (the “Purchasers”) on a recurring basis in exchange for cash (referred to as “capital” within the RPA) equal to the gross receivables transferred.

The parties intend that the transfers of receivables to the Purchasers constitute purchases and sales of receivables.

Matthews RFC has guaranteed to each Purchaser the prompt payment of sold receivables, and has granted a security interest in its assets for the benefit of the Purchasers.

Under the RPA, which matures in March 2024, each Purchaser’s share of capital accrues yield at a floating rate plus an applicable margin.

Under the RPA, each Purchaser’s share of capital accrues yield at a floating rate plus an applicable margin.

The Company is the master servicer under the RPA, and is responsible for administering and collecting receivables.

The RPA, which had a maturity date of March 2024, was amended in March 2024 to extend the maturity date to March 2026.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Debt and Financing Arrangements (continued)

The proceeds of the RPA are classified as operating activities in the Company’s Consolidated Statements of Cash Flows.

1 unchanged sentence

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.

As of March 31, 2024 and September 30, 2023, the amount sold to the Purchasers was $ 109,900 and $ 101,800 , respectively, which was derecognized from the Consolidated Balance Sheets.

As collateral against sold receivables, Matthews RFC maintains a certain level of unsold receivables, which was $ 51,819 and $ 57,897 as of March 31, 2024 and September 30, 2023, respectively.

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

Three Months Ended

December 31, 2023 Three Months Ended

December 31, 2022

Six Months Ended

March 31, 2024 Six Months Ended

March 31, 2023

Gross receivables sold

8 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 $ 17,118 during the three months ended December 31, 2023.

The principal amount of receivables sold under this arrangement was $ 34,993 and $ 16,950 during the six months ended March 31, 2024 and 2023, respectively.

The discounts on the trade receivables sold are included within administrative expense in the Consolidated Statements of Income.

The proceeds from the sale of receivables are classified as operating activities in the Company's Consolidated Statements of Cash Flows.

As of December 31, 2023 and September 30, 2023, the amount of factored receivables that remained outstanding was $ 16,436 and $ 18,045 , respectively.

As of March 31, 2024 and September 30, 2023, the amount of factored receivables that remained outstanding was $ 15,411 and $ 18,045 , respectively.

The Company, through certain of its European subsidiaries, has a credit facility with a European bank, which is guaranteed by Matthews.

2 unchanged sentences

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.

Outstanding borrowings under the credit facility totaled € 3.5 million ($ 3,738 ) at March 31, 2024.

There were no outstanding borrowings under the credit facility at September 30, 2023.

The weighted-average interest rate on outstanding borrowings under this facility was 6.11 % and 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.

The weighted-average interest rate on outstanding borrowings under this facility was 6.11 % and 5.17 % at March 31, 2024 and 2023, respectively.

Other borrowings totaled $ 17,200 and $ 19,241 at March 31, 2024 and September 30, 2023, respectively.

The weighted-average interest rate on all other borrowings was 2.55 % and 3.01 % at March 31, 2024 and 2023, respectively.

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

The Company was in compliance with all of its debt covenants as of March 31, 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

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 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

At March 31, 2024 and September 30, 2023, derivative instruments were reflected on a gross-basis in the consolidated balance sheets as follows:

March 31, 2024 September 30, 2023

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

9 unchanged sentences

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

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Notional amount $ 175,000 $ 175,000

5 unchanged sentences

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 Activities (continued)

The fair value of the interest rate swaps reflected a net unrealized gain of $ 1,767 ($ 1,319 after tax) at March 31, 2024 and $ 4,006 ($ 2,991 after tax) at September 30, 2023, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI").

Unrecognized gains of $ 5,775 ($ 4,316 after tax) and $ 8,084 ($ 6,041 after tax) related to previously terminated LIBOR-based swaps were also included in AOCI as of March 31, 2024 and September 30, 2023, respectively.

Assuming market rates remain constant with the rates at March 31, 2024, a gain (net of tax) of approximately $ 2,896 included in AOCI is expected to be recognized in earnings over the next twelve months.

The Company has a U.S.

Dollar/Euro cross currency swap with a notional amount of $ 81,392 , as of December 31, 2023 and September 30, 2023, 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 March 31, 2024 and September 30, 2023, which has been designated as a net investment hedge of foreign operations.

The swap contract matures in September 2027.

The Company assesses hedge effectiveness for this contract based on changes in fair value attributable to changes in spot prices.

A loss of $ 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.

A loss of $ 3,790 (net of income taxes of $ 1,286 ) and a loss of $ 2,065 (net of income taxes of $ 701 ), which represented effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at March 31, 2024 and September 30, 2023, respectively.

Income of $ 327 and $ 586 , which represented the recognized portion of the fair value of cross currency swaps excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of interest expense for the three and six months ended March 31, 2024, respectively.

Income of $ 309 and $ 581 , which represented the recognized portion of the fair value of cross currency swaps excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of interest expense for the three and six months ended March 31, 2023, respectively.

At March 31, 2024 and September 30, 2023, the swap totaled $ 5,076 and $ 2,766 , respectively, and was included in other accrued liabilities in the Consolidated Balance Sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Derivatives and Hedging Activities (continued)

The Company uses certain foreign currency debt instruments as net investment hedges of foreign operations with a notional amount of € 55.0 million ($ 59,370 ) as of March 31, 2024.

Currency losses of $ 1,991 (net of income taxes of $ 675 ), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at March 31, 2024.

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

Share-Based Payments

The Company maintains an equity incentive plan (as amended and restated, the "2017 Equity Incentive Plan") that provides for grants of stock options, restricted shares, restricted share units, stock-based performance units and certain other types of stock-based awards.

The Company maintains an equity incentive plan (as amended and restated, the "2017 Equity Incentive Plan") that provides for grants of stock options, restricted shares, restricted share units ("RSUs"), stock-based performance units and certain other types of stock-based awards.

Under the 2017 Equity Incentive Plan, which has a ten-year term from the date the Company's Board of Directors approved of the amendment and restatement of the 2017 Equity Incentive Plan, the maximum number of shares available for grants or awards is an aggregate of 3,450,000 (subject to adjustment upon certain events such as stock dividends or stock splits), following the amendment and restatement of the 2017 Equity Incentive Plan at the Company's 2022 Annual Shareholder Meeting.

At 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.

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

At March 31, 2024, 1,178,558 shares have been issued under the 2017 Equity Incentive Plan.

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

1,720,892 of these share-based awards are outstanding as of March 31, 2024.

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

The number of shares issued under performance-based 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 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.

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

For the three-month periods ended March 31, 2024 and 2023, stock-based compensation cost totaled $ 4,327 and $ 4,278 , respectively.

For the six-month periods ended March 31, 2024 and 2023, stock-based compensation totaled $ 8,978 and $ 8,612 , respectively.

The associated future income tax benefit recognized for stock-based compensation was $ 1,093 and $ 1,057 for the three-month periods ended March 31, 2024 and 2023, respectively, and $ 1,778 and $ 1,608 for the six-month periods ended March 31, 2024 and 2023, respectively.

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

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The Company issues common stock from treasury shares once the units become vested.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Share-Based Payments (continued)

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

Restricted Share Units Weighted-

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

RSUs Weighted-

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

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Expired or forfeited ( 16,350 ) 35.22

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

Non-vested at March 31, 2024 1,720,892 $ 33.60

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

The option price for each stock option granted was $ 41.70 , which was equal to the fair market value of the Company's Class A Common Stock on the date of grant.

These options vest in one-third increments annually over three years from the grant date.

Unvested stock options expire on the earlier of five years from the date of grant, or upon employment termination, retirement or death.

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

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.

During the second quarter of fiscal 2024, all of these stock options were forfeited in connection with an employee retirement.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Share-Based Payments (continued)

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

The fair value of certain stock-based awards that are subject to performance conditions are estimated on the date of grant using a binomial lattice valuation model.

The following table indicates the assumptions used in estimating the fair value of certain stock-based awards granted during the three-month period ended December 31, 2023.

Three Months Ended

December 31, 2023

The following table indicates the assumptions used in estimating the fair value of certain stock-based awards granted during the six-month period ended March 31, 2024.

Six Months Ended

March 31, 2024

Expected volatility 31.8 %

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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 expected term for grants in the six months ended March 31, 2024 represents an estimate of the average period of time for RSUs to vest.

The Company maintains the Amended and Restated 2019 Director Fee Plan, the Amended and Restated 2014 Director Fee Plan and the 1994 Director Fee Plan (collectively, the "Director Fee Plans").

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The value of deferred shares is recorded in other liabilities.

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

A total of 50,355 shares and share units had been deferred under the Director Fee Plans as of March 31, 2024.

Additionally, non-employee directors each receive an annual stock-based grant (non-statutory stock options, stock appreciation rights and/or restricted shares or units) with a value of $ 140 for fiscal 2024.

As of 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

(Dollar amounts in thousands, except per share data)

As of March 31, 2024, 373,471 restricted shares and RSUs have been granted under the Director Fee Plans, 200,242 of which were issued under the 2019 Director Fee Plan.

67,560 RSUs are unvested at March 31, 2024 under the Director Fee Plans.

Earnings Per Share Attributable to Matthews' Shareholders

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

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

Three Months Ended

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

March 31, Six Months Ended

2024 2023 2024 2023

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

Weighted-average shares outstanding (in thousands):

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

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Pension and Other Postretirement Benefit Plans

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

Three months ended December 31,

Three months ended March 31,

Pension Other Postretirement

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Net actuarial gains * ( 9 ) ( 6 ) ( 181 ) ( 177 )

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

Six months ended March 31,

Pension Other Postretirement

2024 2023 2024 2023

Service cost $ 61 $ 88 $ 27 $ 38

Interest cost * 258 248 342 322

Amortization:

Prior service credit — — ( 182 ) ( 182 )

Net actuarial gains * ( 20 ) ( 16 ) ( 361 ) ( 354 )

Settlement losses * — 1,271 — —

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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 three months ended December 31, 2022.

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

2 unchanged sentences

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:

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

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

Attributable to Matthews:

Balance, September 30, 2023 $ 6,760 $ ( 190,196 ) $ 9,032 $ ( 174,404 )

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

OCI before reclassification ( 72 ) ( 5,779 ) 1,983 ( 3,868 )

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1,484 ( 4,824 )

Balance, March 31, 2024 $ 6,398 $ ( 184,537 ) $ 5,635 $ ( 172,504 )

Attributable to noncontrolling interest:

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

OCI before reclassification — — — —

Net current-period OCI — — — —

Balance, March 31, 2024 $ — $ 288 $ — $ 288

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

Attributable to Matthews:

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

OCI before reclassification 29 4,663 ( 1,471 ) 3,221

Amounts reclassified from AOCI ( 205 ) (a)

( 231 ) ( 771 ) (b)

Net current-period OCI ( 176 ) 4,432 ( 2,242 ) 2,014

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

Attributable to noncontrolling interest:

Balance, December 31, 2022 $ — $ 259 $ — $ 259

OCI before reclassification — ( 5 )

Net current-period OCI — ( 5 ) — ( 5 )

Balance, March 31, 2023 $ — $ 254

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Accumulated Other Comprehensive Income (continued)

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

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

Attributable to Matthews:

Balance, September 30, 2023 $ 6,760 $ ( 190,196 ) $ 9,032 $ ( 174,404 )

OCI before reclassification 59 6,102 ( 2,406 ) 3,755

Amounts reclassified from AOCI ( 421 ) (a)

( 443 ) ( 991 ) (b)

Net current-period OCI ( 362 )

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

5,659 ( 3,397 ) 1,900

Balance, March 31, 2024 $ 6,398 $ ( 184,537 ) $ 5,635 $ ( 172,504 )

Attributable to noncontrolling interest:

Balance, September 30, 2023 $ — $ 266 $ — $ 266

OCI before reclassification — 22 — 22

Net current-period OCI — 22 — 22

Balance, March 31, 2024 $ — $ 288 $ — $ 288

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

5 unchanged sentences

Net current-period OCI 769 24,992 ( 2,646 ) 23,115

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

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

Attributable to noncontrolling interest:

2 unchanged sentences

Net current-period OCI — ( 1 ) — ( 1 )

Balance, December 31, 2022 $ — $ 259

Balance, March 31, 2023 $ — $ 254

(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-month periods ended December 31, 2023 and 2022 were as follows:

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

Amount reclassified from AOCI

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

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

Postretirement benefit plans

1 unchanged sentence

Actuarial losses 190 381 Other income (deductions), net

Settlement loss — ( 1,271 ) Other income (deductions), net

281 563 Income before income tax (b)

7 unchanged sentences

$ 746 $ 1,434 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.

Details about AOCI Components Three Months Ended

March 31, 2023 Six Months Ended

March 31, 2023 Affected line item in the Statement of income

Postretirement benefit plans

Prior service credit (a)

Actuarial losses 183 370 Other income (deductions), net

Settlement losses — ( 1,271 ) Other income (deductions), net

274 ( 719 ) Income before income tax (b)

182 Income taxes

$ ( 537 ) Net income

Cash flow hedges $ 1,032

$ 1,697 Interest expense

Net investment hedges 309 581 Interest expense

1,341 2,278 Income before income tax (b)

( 576 ) Income taxes

$ 1,002 $ 1,702 Net income

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

For additional information, see Note 11.

(b) For pre-tax items, positive amounts represent income and negative amounts represent expense.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

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 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.

The Company's consolidated income taxes for the first six months of fiscal 2024 were a benefit of $ 1,848 , compared to an expense of $ 4,694 for the first six months of fiscal 2023.

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

The Company’s fiscal 2024 six month effective tax rate varied from the U.S.

statutory tax rate of 21.0% primarily due to state taxes, foreign statutory rate differentials, tax credits, non-tax benefited foreign losses, and a net discrete tax benefit.

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

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

The Company had unrecognized tax benefits (excluding penalties and interest) of $ 4,549 and $ 3,779 on March 31, 2024 and September 30, 2023, respectively, which would impact the annual effective rate at March 31, 2024 and September 30, 2023, respectively.

It is reasonably possible that the amount of unrecognized tax benefits could decrease by approximately $ 2,913 in the next 12 months primarily due to the completion of audits and the expiration of the statute of limitations.

The Company classifies interest and penalties on tax uncertainties as a component of the provision for income taxes.

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

Total penalties and interest accrued were $ 862 and $ 730 at March 31, 2024 and September 30, 2023, respectively.

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

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

As of March 31, 2024, the tax years that remain subject to examination by major jurisdictions generally are:

United States – Federal 2020 and forward

5 unchanged sentences

Australia 2018 and forward

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Segment Information

21 unchanged sentences

Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

Memorialization $ 222,156 $ 222,889 $ 430,227 $ 429,391

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Net loss attributable to noncontrolling interests — ( 2 ) — ( 58 )

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

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

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

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

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

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

(2) Includes certain non-recurring costs associated with commercial, operational and cost-reduction initiatives, and costs associated with global ERP system integration efforts.

Fiscal 2024 also includes costs related to an ongoing contractual dispute which totaled $ 4,972 for the six months ended March 31, 2024.

Fiscal 2023 includes loss recoveries totaling $ 2,154 for the six months ended March 31, 2023, which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.

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

4 unchanged sentences

Please note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans.

(5) Includes fees for receivables sold under the RPA and factoring arrangements totaling $ 1,175 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.

(5) Includes fees for receivables sold under the RPA and factoring arrangements totaling $ 1,238 and $ 1,090 for the three months ended March 31, 2024 and 2023, respectively, and $ 2,413 and $ 1,546 for the six months ended March 31, 2024 and 2023, respectively.

* Depreciation and amortization was $ 6,914 and $ 5,711 for the Memorialization segment, $ 5,571 and $ 5,916 for the Industrial Technologies segment, $ 9,669 and $ 11,319 for the SGK Brand Solutions segment, and $ 1,107 and $ 1,202 for Corporate and Non-Operating, for the three months ended March 31, 2024 and 2023, respectively.

Depreciation and amortization was $ 13,327 and $ 11,285 for the Memorialization segment, $ 11,948 and $ 11,769 for the Industrial Technologies segment, $ 19,241 and $ 22,379 for the SGK Brand Solutions segment, and $ 2,268 and $ 2,444 for Corporate and Non-Operating, for the six months ended March 31, 2024 and 2023, respectively.

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

1 unchanged sentence

Acquisitions and Divestitures

In January 2024, the Company completed a small acquisition within the Memorialization segment for a purchase price of $ 5,825 (net of holdbacks and other adjustments, including working capital).

The preliminary purchase price allocation was not finalized as of March 31, 2024 and remains subject to change as the Company obtains additional information related to working capital, intangible assets and other liabilities.

In September 2023, the Company completed a small divestiture within the Industrial Technologies segment.

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

Additions during period 2,551 — — 2,551

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

Net goodwill at December 31, 2023

Net goodwill at March 31, 2024

$ 371,963 $ 115,693 $ 220,225 $ 707,881

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 net goodwill balances at March 31, 2024 and September 30, 2023 included $ 261,186 of accumulated impairment losses.

Accumulated impairment losses at March 31, 2024 and September 30, 2023 were $ 5,000 , $ 23,946 and $ 232,240 for the Memorialization, Industrial Technologies and SGK Brand Solutions segments, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Goodwill and Other Intangible Assets (continued)

The Company performed its annual impairment review of goodwill and indefinite-lived intangible assets in the second quarter of fiscal 2024 (January 1, 2024) and determined that the estimated fair values for all goodwill reporting units exceeded their carrying values, therefore no impairment charges were necessary.

The 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 7 %.

1 unchanged sentence

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Goodwill and Other Intangible Assets (continued)

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

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

Amount Accumulated

Amortization Net

December 31, 2023:

March 31, 2024:

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

9 unchanged sentences

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

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.

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

Amortization expense on intangible assets was $ 8,959 and $ 10,517 for the three-month periods ended March 31, 2024 and 2023, respectively.

Amortization expense on intangible assets was $ 18,754 and $ 20,859 for the six-month periods ended March 31, 2024 and 2023, respectively.

Amortization expense is estimated to be $ 17,736 for the remainder of fiscal 2024, $ 20,614 in 2025, $ 14,293 in 2026, $ 13,200 in 2027 and $ 11,135 in 2028.

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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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-month periods ended December 31, 2023 and 2022.

The following table sets forth the sales and adjusted EBITDA for the Company's three reporting segments for the three and six-month periods ended March 31, 2024 and 2023.

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

Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

(Dollar amounts in thousands)

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

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.

Sales for the six months ended March 31, 2024 were $921.2 million, compared to $928.8 million for the six months ended March 31, 2023.

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

On a consolidated basis, changes in foreign currency exchange rates were estimated to have a favorable impact of $4.8 million on fiscal 2024 sales compared to the prior year.

Memorialization segment sales for the first 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.

Memorialization segment sales for the first six months of fiscal 2024 were $430.2 million, compared to $429.4 million for the first six months of fiscal 2023.

The sales increase reflected higher sales of granite memorial products, benefits from recent acquisitions (primarily the fiscal 2023 acquisition of Eagle Granite Company) and improved price realization.

These increases were partially offset by lower unit sales of caskets, bronze memorial products and cremation equipment.

These declines reflected a return to more normalized death rates following the COVID-19 pandemic.

Changes in foreign currency exchange rates had a favorable impact of $403,000 on the segment's sales compared to the prior year.

Industrial Technologies segment sales were $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).

Industrial Technologies segment sales were $227.5 million for the first six months of fiscal 2024, compared to $234.7 million for the first six months of fiscal 2023.

The change in sales reflected higher sales of purpose-built engineered products (primarily energy storage solutions for the electric vehicle market), higher product identification sales, and increased sales of surfaces products.

These increases were offset by reduced sales of warehouse automation solutions and automotive engineering solutions, and the sales impact of a fiscal 2023 divestiture (see Acquisitions and Divestitures below).

Changes in foreign currency exchange rates had a favorable impact of $4.7 million on the segment's sales compared to the prior year.

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

In the SGK Brand Solutions segment, sales for the first six months of fiscal 2024 were $263.5 million, compared to $264.8 million for the first six months of fiscal 2023.

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What changed 10-Q

Item 1. Financial Statements