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Item 1A. Risk Factors

2025-11-21 compared with 2024-11-22 · 62 added, 16 removed, 53 unchanged (60% of the section changed)

RISK FACTORS, (continued)

The Company relies on third parties and their systems for a variety of services, including significant information technology services, and the failure of these third parties to provide these services could disrupt the Company's business.

The Company has entered into agreements with a variety of third-party providers for information technology services, including telecommunications, network server maintenance, cloud computing and transaction processing services.

In addition, Matthews has agreements through which it has outsourced certain activities related to the operations of the Company’s business segments.

A provider’s ability to provide services could be disrupted for a variety of reasons, including, among others, software errors or design faults, human error, security breaches, power loss, telecommunications failures, equipment failures, electrical disruptions, labor issues, vandalism, fire, flood, extreme weather, terrorism and other events beyond their control.

If one or more of Matthews’ providers is unable to provide adequate or timely services, the Company’s ability to deliver products and services to customers could be adversely affected.

Matthews cannot completely eliminate the risk of such disruptions, many of which are impacted by events outside of the Company’s control.

Any significant disruption could harm the Company’s business, including damage to brands and loss of customers.

Additionally, although Matthews believes that most of these services are available from numerous sources, a failure to perform by one or more of the providers could cause a material disruption in the Company’s business and an increase in expense while it works to obtain alternative services.

Additionally, while the Company has policies and procedures for managing these relationships, they inherently involve a lesser degree of control over business operations, governance and compliance, thereby potentially increasing the profiles of Matthews’ financial, legal, reputational and operational risks.

If the Company is unable to keep pace with technological changes, some of which are beyond the Company's control, the Company may not be able to maintain the Company's competitive position.

The Company operates in certain markets in which technological product development contributes to its ability to compete effectively.

There can be no assurance that the Company will be able to develop new products, that new products can be manufactured and marketed profitably, or that new products will successfully meet the expectations of customers.

Changing laws and regulations relating to privacy, information security and data protection could increase the Company's costs, and the failure to comply with such laws and regulations could result in significant business disruptions, litigation or enforcement actions.

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Such conduct, or even the allegation thereof, could result in costly investigations and the imposition of severe criminal or civil sanctions, could disrupt the Company's business, and could materially and adversely affect the Company's reputation, business and results of operations or financial condition.

RISK FACTORS, (continued)

Further, the Company is subject to laws and regulations, worldwide, affecting its operations outside the United States in areas including, but not limited to, intellectual property ownership and infringement, tax, customs, import and export requirements, economic sanctions, anti-money laundering, anti-corruption and anti-bribery, foreign exchange controls and cash repatriation restrictions, foreign investment, data privacy requirements, anti-competition, pensions and social insurance, employment, and environment, health, and safety.

Compliance with these laws and regulations may be onerous and expensive and requirements may differ among jurisdictions.

Compliance with these laws and regulations may be onerous and expensive and requirements may differ across jurisdictions.

Further, the promulgation of new laws, changes in existing laws and abrogation of local regulations by national laws may have a negative impact on the Company's business and prospects.

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There can be no assurance that any of these factors will not have a material adverse effect on the Company's business, results of operations or financial condition.

Risks Related to the Company's Securities:

The Company's business could be negatively affected as a result of actions of activist shareholders.

Activist shareholders have previously nominated candidates for election to the Company's Board of Directors, resulting in a proxy contest, and may do so again in the future.

If the Company becomes engaged in a proxy contest with an activist shareholder in the future, the Company's business could be adversely affected because:

responding to public proposals and director nominations, special meeting requests and other actions by activist shareholders can disrupt the Company's operations, be costly and time-consuming, and divert the attention of the Company's management and employees;

perceived uncertainties as to the Company's future direction may result in the loss of potential business opportunities, and may make it more difficult to attract and retain qualified personnel and business partners;

cause an event of default under the Company's credit facilities or other agreements due to a change in control (i) if either the Company sustains a series of successful proxy contests or, (ii) if the Company's shareholders approve an amendment to the Company's Amended and Restated Articles of Incorporation to declassify the Company's Board of Directors and following such amendment a shareholder successfully engages in a proxy contest;

RISK FACTORS, (continued)

claims made by activist shareholders in connection with a proxy contest or otherwise may harm the Company's reputation, damage the Company's relations with customers, employees and business relations such as suppliers, or otherwise impair the Company's business.

In addition, pursuit of an activist shareholder’s agenda may adversely affect the Company's ability to effectively implement the Company's business strategy and create additional value for the Company's shareholders.

Activist investors may seek to influence the Company's corporate strategy, governance, capital allocation, or structure through public campaigns, proxy contests, or direct engagement with the Company's Board of Directors.

While the Company values constructive input from shareholders, actions by activist investors could result in significant disruption to the Company's operations, divert management attention, and lead to short-term decision-making that may not align with the Company's long-term strategic goals.

In particular, activist investors may advocate for a breakup of the Company through spin-offs, divestitures, or other structural changes.

While such proposals may be positioned as enhancing shareholder value, there is no assurance that any resulting transactions would be successful or in the best interests of all shareholders.

A breakup could result in:

Loss of operational synergies and scale efficiencies;

Increased costs associated with separation, including legal, tax, and restructuring expenses;

Reduced strategic flexibility and competitive positioning;

Potential adverse impacts on employee morale, retention, and recruitment;

Market uncertainty and volatility in the Company's stock price.

Moreover, if a breakup is pursued under pressure rather than through a deliberate strategic process, it may lead to suboptimal outcomes, including undervaluation of assets or businesses, weakened financial performance, and diminished shareholder returns.

These risks could materially and adversely affect the Company's business, financial condition, and results of operations.

The market price for the Company's common stock has experienced significant price and volume volatility and is likely to continue to experience significant volatility in the future.

This volatility may impair the ability to finance strategic transactions with the Company's stock and otherwise harm the Company's business.

The Company's stock price has experienced significant price and volume volatility for the past several years, and the Company's stock price is likely to experience significant volatility in the future.

The trading price of the Company's common stock may be influenced by factors beyond the Company's control, such as the volatility of the financial markets, uncertainty surrounding domestic and foreign economies, conditions and trends in the markets the Company serves, changes in the estimation of the future size and growth rate of the Company's markets, publication of research reports, and recommendations by financial analysts relating to the Company's business, the business of competitors, or the industries in which the Company operates and compete, changes in market valuation or earnings of competitors, legislation or regulatory policies, practices, or actions, sales of the Company's common stock by principal shareholders, actions or other announcements by activist shareholders regarding the Company's business or the trading price of the Company's common stock, and the trading volume of the Company's common stock.

The historical market prices of the Company's common stock may not be indicative of future market prices and the Company may be unable to sustain or increase the value of the Company's common stock.

The Company has historically used equity incentive compensation as part of the Company's overall compensation arrangements.

The effectiveness of equity incentive compensation in retaining key employees may be adversely impacted by volatility in the Company's stock price.

Significant declines in the Company's stock price may also interfere with the ability, if needed, to raise additional funds through equity financing or to finance strategic transactions with the Company's stock.

In addition, there may be increased risk of securities litigation following periods of fluctuations in the Company's stock price.

Securities class action lawsuits are often brought against companies after periods of volatility in the market price of their securities.

These and other consequences of volatility in the Company's stock price which could be exacerbated by macroeconomic conditions that affect the market generally, or the Company's industries in particular, could have the effect of diverting management’s attention and could materially harm the Company's business.

The Company's Amended and Restated Articles of Incorporation grants the Company's board of directors the power to designate and issue additional shares of common and/or preferred stock.

The Company's authorized capital consists of 70,000,000 shares of common stock and 10,000 shares of preferred stock.

In addition, there are authorized 30,000,000 shares of Class B Common Stock, none of which are outstanding and all of which have previously converted into shares of Class A Common Stock and may not be reissued.

The Company's preferred stock may be designated into series pursuant to authority granted by the Company's Amended and Restated Articles of Incorporation (the “Articles of Incorporation”), and on approval from the Company's board of directors (the “Board of Directors” or “Board”).

The Board of Directors, without any action by the Company's common shareholders, may designate and issue additional shares of preferred stock in such classes or series as it deems appropriate and establish the rights, preferences and privileges of such shares, including dividends, liquidation and voting rights.

The rights of holders of other classes or series of stock that may be issued could be superior to the rights of holders of the Company's common stock.

The designation and issuance of shares of capital stock having preferential rights could adversely affect other rights appurtenant to shares of the Company's common stock.

RISK FACTORS, (continued)

Provisions of the Company's charter documents or Pennsylvania law could discourage, delay or prevent the Company from being acquired even if being acquired would be beneficial to the Company's shareholders and could make it more difficult to change management.

The Articles and the Amended and Restated Bylaws contain a number of provisions relating to corporate governance and to the rights of the Company’s shareholders.

Certain of these provisions may have a potential “anti-takeover” effect by delaying, deferring or preventing a change of control of the Company.

In addition, certain provisions of Pennsylvania law may have a similar effect.

See “Anti-takeover Effect of the Company’s Governing Documents and Pennsylvania Business Corporation Law” included in the Description of Securities filed as Exhibit 4.4 to this Annual Report on Form 10-K for a description of such provisions.

Such provisions may have the effect of delaying or preventing a change in control of the Company, even if such transaction would be beneficial to most or all of the shareholders.

General Risk Factors:

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These and other economic factors could have an effect on demand for the Company's products and services and negatively impact the Company's financial condition and results of operations.

The Company is subject to various risks related to the local and international nature of the Company's business, including domestic and foreign laws, regulations and standards.

In recent years, there have been significant shifts in governments’ priorities with respect to enforcing such laws, regulations and standards.

Notwithstanding such shifts, failure to comply with such laws and regulations or the occurrence of unforeseen developments such as litigation, investigations, governmental proceedings or enforcement actions could adversely affect the Company's business.

In recent years, a number of new laws and regulations have been adopted, new executive orders have been announced, and there has been expanded enforcement of certain existing laws and regulations by federal, state and local agencies.

These laws and regulations, and related interpretations and enforcement activity, may change as a result of a variety of factors, including political, economic or social events.

For example, since taking office, the current administration of the U.S.

government has sought to adopt new regulations and policies and to suspend, revise or rescind prior policies that are identified as conflicting with the administration’s position, which has resulted in increased regulatory uncertainty.

Any changes in, expanded enforcement of, or adoption of new federal, state or local laws and regulations could increase the Company's costs of doing business or impact the Company's operations.

Failure to comply with any of these laws, regulations and standards has in the past and may in the future result in civil, criminal, monetary and non-monetary penalties as well as potential damage to the Company's reputation.

Furthermore, while the Company has implemented policies and procedures designed to facilitate compliance with these laws, regulations and standards, there can be no assurance that associates, contractors or agents will not violate such laws, regulations and standards or the Company's policies.

Any failure to comply with or violation of the various laws, regulations and standards to which the Company is subject could individually or in the aggregate have a material adverse effect on the Company's business, financial condition, results of operations and cash flows.

The Company's results of operations could be adversely affected by labor shortages, turnover and labor cost increases.

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Security breaches of the Company's network or data, including physical or electronic break-ins, vendor service outages, computer viruses, attacks by hackers or similar breaches, can create system disruptions, shutdowns, or unauthorized disclosure of confidential information.

Although the Company is not aware of any significant incidents to date, if it is unable to prevent, detect and timely remediate such security or privacy breaches, its operations could be disrupted or the Company may suffer legal claims, loss of reputation, financial loss, property damage, or regulatory penalties because of lost or misappropriated information.

Although the Company is not aware of

RISK FACTORS, (continued)

any significant incidents to date, if it is unable to prevent, detect and timely remediate such security or privacy breaches, its operations could be disrupted or the Company may suffer legal claims, reputational damage, financial loss, property damage, or regulatory penalties because of lost or misappropriated information.

The Company expects that compliance with laws governing data privacy and data protection will require ongoing investment in systems, policies and personnel and will continue to impact Matthews’ business in the future by increasing legal, operational and compliance costs.

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Any such developments may subject Matthews to material fines and other monetary penalties and damages, divert management’s time and attention, and lead to enhanced regulatory oversight, all of which could have a material adverse effect on the Company’s business and results of operations.

RISK FACTORS, (continued)

If the Company fails to maintain effective internal controls over financial reporting at a reasonable assurance level, the Company may not be able to accurately report the Company's financial results, and may require the restatement of previously published financial information, which could have a material adverse effect on the Company's operations, investor confidence in the Company's business and the trading price of the Company's securities.

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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-K

Item 1A. Risk Factors