MATTHEWS INTERNATIONAL CORP 10-Q

Item 1. Financial Statements MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollar amounts in thousands) December 31, 2025 September 30, 2025 ASSETS Current assets: Cash and cash equivalents $ 31,357 $ 32,433 Accounts receivable, net 115,476 132,940 Inventories, net 192,378 202,827 Contract assets 111,366 107,147 Other current assets 38,566 44,821 Total current assets 489,143 520,168 Investments 287,118 288,637 Property, plant and equipment, net 191,255 224,575 Operating lease right-of-use assets 47,039 51,610 Deferred income taxes 5,802 6,435 Goodwill 431,794 487,561 Other intangible assets, net 93,762 105,958 Other non-current assets 6,953 9,498 Total assets $ 1,552,866 $ 1,694,442 LIABILITIES Current liabilities: Long-term debt, current maturities $ 7,271 $ 7,230 Current portion of operating lease liabilities 16,075 17,186 Trade accounts payable 94,677 98,462 Accrued rebates 17,828 18,185 Accrued compensation 25,414 36,408 Accrued income taxes 36,910 9,293 Contract liabilities 1,532 7,447 Other current liabilities 125,146 156,269 Total current liabilities 324,853 350,480 Long-term debt 529,756 703,602 Operating lease liabilities 33,253 36,099 Deferred income taxes 67,135 55,967 Other non-current liabilities 54,653 67,352 Total liabilities 1,009,650 1,213,500 SHAREHOLDERS' EQUITY Shareholders' equity-Matthews: Common stock $ 36,334 $ 36,334 Additional paid-in capital 139,979 154,617 Retained earnings 600,502 565,278 Accumulated other comprehensive loss ( 50,204 ) ( 78,010 ) Treasury stock, at cost ( 183,395 ) ( 197,277 ) Total shareholders' equity 543,216 480,942 Total liabilities and shareholders' equity $ 1,552,866 $ 1,694,442 The accompanying notes are an integral part of these consolidated financial statements. 2 MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollar amounts in thousands, except per share data) Three Months Ended December 31, 2025 2024 Sales $ 284,763 $ 401,842 Cost of sales ( 185,090 ) ( 276,150 ) Gross profit 99,673 125,692 Selling expense ( 31,108 ) ( 34,857 ) Administrative expense ( 81,284 ) ( 76,553 ) Intangible amortization ( 2,966 ) ( 8,608 ) Gain on divestitures, net 113,209 — Operating profit 97,524 5,674 Interest expense ( 14,633 ) ( 15,682 ) Other income (deductions), net 1,527 4,178 Income (loss) before income taxes 84,418 ( 5,830 ) Income tax (provision) benefit ( 40,789 ) 2,358 Net income (loss) $ 43,629 $ ( 3,472 ) Earnings (loss) per share: Basic $ 1.39 $ ( 0.11 ) Diluted $ 1.39 $ ( 0.11 ) The accompanying notes are an integral part of these consolidated financial statements. 3 MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Dollar amounts in thousands) Three Months Ended December 31, 2025 2024 Net income (loss): $ 43,629 $ ( 3,472 ) Other comprehensive income (loss) ("OCI"), net of tax: Foreign currency translation adjustment 29,339 ( 14,611 ) Pension plans and other postretirement benefits ( 1,337 ) ( 353 ) Unrecognized (loss) gain on cash flow hedges: Net change from periodic revaluation ( 47 ) 2,565 Net amount reclassified to earnings ( 149 ) ( 350 ) Net change in unrecognized (loss) gain on cash flow hedges ( 196 ) 2,215 OCI, net of tax 27,806 ( 12,749 ) Comprehensive income (loss) $ 71,435 $ ( 16,221 ) The accompanying notes are an integral part of these consolidated financial statements. 4 MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY for the three months ended December 31, 2025 and 2024 (Unaudited) (Dollar amounts in thousands, except per share data) Shareholders' Equity Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Treasury Stock Total Balance, September 30, 2025 $ 36,334 $ 154,617 $ 565,278 $ ( 78,010 ) $ ( 197,277 ) $ 480,942 Net income — — 43,629 — — 43,629 Minimum pension liability — — — ( 1,337 ) — ( 1,337 ) Translation adjustment — — — 29,339 — 29,339 Fair value of cash flow hedges — — — ( 196 ) — ( 196 ) Total comprehensive income 71,435 Stock-based compensation — 4,407 — — — 4,407 Purchase of 206,123 shares of treasury stock — — — — ( 5,163 ) ( 5,163 ) Issuance of 536,360 shares of treasury stock — ( 19,045 ) — — 19,045 — Dividends — — ( 8,405 ) — — ( 8,405 ) Balance, December 31, 2025 $ 36,334 $ 139,979 $ 600,502 $ ( 50,204 ) $ ( 183,395 ) $ 543,216 Shareholders' Equity Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Treasury Stock Non- controlling Interests Total Balance, September 30, 2024 $ 36,334 $ 159,497 $ 623,063 $ ( 168,742 ) $ ( 212,994 ) $ 48 $ 437,206 Net loss — — ( 3,472 ) — — — ( 3,472 ) Minimum pension liability — — — ( 353 ) — — ( 353 ) Translation adjustment — — — ( 14,611 ) — — ( 14,611 ) Fair value of cash flow hedges — — — 2,215 — — 2,215 Total comprehensive loss ( 16,221 ) Stock-based compensation — 4,979 — — — — 4,979 Purchase of 171,101 shares of treasury stock — — — — ( 4,275 ) — ( 4,275 ) Issuance of 537,295 shares of treasury stock — ( 19,888 ) — — 19,888 — — Dividends — — ( 8,233 ) — — — ( 8,233 ) Balance, December 31, 2024 $ 36,334 $ 144,588 $ 611,358 $ ( 181,491 ) $ ( 197,381 ) $ 48 $ 413,456 The accompanying notes are an integral part of these consolidated financial statements. 5 MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollar amounts in thousands) Three Months Ended December 31, 2025 2024 Cash flows from operating activities: Net income (loss) $ 43,629 $ ( 3,472 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation and amortization 12,696 22,504 Stock-based compensation expense 4,407 4,979 Deferred tax benefit ( 61 ) — Gain on sale of assets, net ( 713 ) ( 9,572 ) Gain on divestitures, net ( 113,209 ) — Equity and other investment losses (gains) 983 ( 24 ) Changes in working capital items 1,519 ( 39,170 ) Decrease in other non-current assets 6,539 6,996 Decrease in other non-current liabilities ( 10,111 ) ( 8,814 ) Other operating activities, net 2,329 1,564 Net cash used in operating activities ( 51,992 ) ( 25,009 ) Cash flows from investing activities: Capital expenditures ( 5,257 ) ( 9,532 ) Acquisitions, net of cash acquired ( 524 ) ( 2,218 ) Proceeds from sale of assets 3,476 13,249 Proceeds from divestitures 240,168 — Other investing activities, net ( 420 ) ( 63 ) Net cash provided by investing activities 237,443 1,436 Cash flows from financing activities: Proceeds from long-term debt 202,981 250,996 Payments on long-term debt ( 374,981 ) ( 219,047 ) Purchases of treasury stock ( 5,163 ) ( 4,275 ) Dividends ( 9,474 ) ( 9,237 ) Net cash (used in) provided by financing activities ( 186,637 ) 18,437 Effect of exchange rate changes on cash 110 ( 2,167 ) Net change in cash and cash equivalents ( 1,076 ) ( 7,303 ) Cash and cash equivalents at beginning of year 32,433 40,816 Cash and cash equivalents at end of period $ 31,357 $ 33,513 The accompanying notes are an integral part of these consolidated financial statements. 6 MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) December 31, 2025 (Dollar amounts in thousands, except per share data) Note 1. Nature of Operations Matthews International Corporation ("Matthews" or the "Company"), founded in 1850 and incorporated in Pennsylvania in 1902, is a global provider of memorialization products, industrial technologies and brand solutions. The Company manages its businesses under three segments: Memorialization, Industrial Technologies and Brand Solutions. Memorialization products consist primarily of bronze and granite memorials and other memorialization products, caskets, cremation-related products, and cremation and incineration equipment primarily for the cemetery and funeral home industries. Industrial Technologies includes product identification, and the design, manufacturing, service and sales of high-tech custom energy storage solutions. The segment historically provided 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. Brand Solutions historically provided 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. On May 1, 2025, the Company contributed the vast majority of its Brand Solutions segment (the "SGK Business") to a newly-formed entity, Peninsula Parent LLC, d.b.a. Propelis Group (“Propelis”), in exchange for a 40 % ownership interest in Propelis and other consideration. Propelis is a leading global provider of brand solutions. In December 2025, the Company sold its European roto-gravure packaging and tooling and flexographic print businesses to the local management of those businesses in exchange for cash and other consideration. On December 31, 2025, the Company sold its warehouse automation business for cash and other consideration. Following the completion of these transactions, the Company's Industrial Technologies segment consists of product identification, and the design, manufacturing, service and sales of high-tech custom energy storage solutions, and the Company's Brand Solutions segment consists of its 40 % ownership interest in Propelis. See Notes 7, "Investments" and 16, "Acquisitions and Divestitures" for further information. As of December 31, 2025, the Company had facilities in North America, Europe, Asia, Australia, and Central America. Note 2. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information for commercial and industrial companies and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three months ended December 31, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2026. 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 fiscal year ended September 30, 2025. The consolidated financial statements include all domestic and foreign subsidiaries in which the Company maintains an ownership interest and has operating control and any variable interest entities for which the Company is the primary beneficiary. Investments in certain companies over which the Company has the ability to exert significant influence, but not control the financial and operating decisions, are accounted for as equity method investments. Investments in certain companies over which the Company does not exert significant influence are accounted for as cost method investments. All intercompany accounts and transactions have been eliminated. Activity prior to May 1, 2025 for the SGK Business is included within the consolidated financial statements of the Company. As of May 1, 2025 the SGK Business has been deconsolidated from the financial statements and is now accounted for as part of the Company's equity-method investment in Propelis. The Company recognizes its portion of the earnings or losses for its equity-method investment in Propelis on a three-month lag to ensure consistency and timely filing of the Company's financial statements. Consequently, in fiscal 2026, the Company's portion of earnings for its equity-method investment in Propelis includes the months of July, August and September 2025. See Note 7, "Investments" for further information with respect to the equity-method investment in Propelis. The Company applies highly inflationary accounting for subsidiaries when the cumulative inflation rate for a three-year period meets or exceeds 100 percent. The Company applied highly inflationary accounting to its Turkish subsidiaries effective April 1, 2022 and through December 2025, at which time these subsidiaries were divested. Under highly inflationary accounting, the financial statements of these subsidiaries were remeasured into the Company's reporting currency (U.S. dollar) and exchange 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 2. Basis of Presentation (continued) gains and losses from the remeasurement of monetary assets and liabilities were reflected in current earnings, rather than accumulated other comprehensive loss on the Consolidated Balance Sheets . As of September 30, 2025, the Company had net monetary assets related to its Turkish subsidiaries of $ 2,109 . Exchange losses related to highly inflationary accounting totaled $ 16 and $ 191 for the three months ended December 31, 2025 and December 31, 2024, 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. Actual results could differ from those estimates. New Accounting Pronouncements: Issued In December 2025, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements . The amendments in this ASU aim to clarify existing requirements, not to change interim disclosure obligations, and introduce a disclosure principle requiring entities to report material events occurring since the end of the last annual reporting period. The ASU is effective for annual and interim periods beginning in fiscal year 2029. The Company is in the process of assessing the impact this ASU will have on its consolidated financial statements. In November 2025, the FASB issued ASU No. 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements . Among other provisions, the amendments in this ASU expand the hedged risks permitted to be aggregated in a group of individual forecasted transactions in a cash flow hedge, and eliminate the recognition and presentation mismatch related to a dual hedge strategy. The ASU is effective for annual and interim periods beginning in fiscal year 2028. The Company is in the process of assessing the impact this ASU will have on its consolidated financial statements. In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) . The amendments in this ASU remove all references to prescriptive and sequential software development stages and now require entities to begin capitalizing software costs once management has authorized and committed to funding the software project, and when it is probable that the project will be completed and the software will fulfill its intended purpose. The ASU is effective for annual and interim periods beginning in fiscal year 2029. The Company is in the process of assessing the impact this ASU will have on its consolidated financial statements. In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326) which provides all entities with a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The ASU is effective for annual and interim periods beginning in fiscal year 2027. The Company is in the process of assessing the impact this ASU will have on its consolidated financial statements. In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) which improves financial reporting by requiring disclosure of specified information about certain costs and expenses on an annual and interim basis for all public entities, including enhanced disaggregation disclosures. The ASU is effective for annual periods for the Company beginning in fiscal year 2028, and interim periods beginning in fiscal year 2029. The Company is in the process of assessing the impact this ASU will have on its consolidated financial statements. In December 2023, the FASB issued 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 adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements. 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 2. Basis of Presentation (continued) 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 Accounting Standards Codification, and align them with the Securities and Exchange Commission ("SEC") regulations. The effective date of the amendments of this ASU will be determined for each individual disclosure based on the effective date of the SEC’s removal of the related disclosure from Regulation S-X or Regulation S-K. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, then this ASU will not become effective. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements. Adopted In 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 was effective for annual periods for the Company beginning in fiscal year 2025, and interim periods beginning in fiscal year 2026. The adoption of this ASU in the fourth quarter of fiscal 2025 did not affect the recognition, measurement, or financial statement presentation of expenses, but did result in expanded segment information disclosures, as reflected in Note 15, "Segment Information." Note 3. Revenue Recognition The Company disaggregates revenue from contracts with customers by geography, as it believes geographic regions best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Disaggregated sales by segment and region for the three months ended December 31, 2025 and 2024 were as follows: Memorialization Industrial Technologies Brand Solutions Consolidated Three Months Ended December 31, Three Months Ended December 31, Three Months Ended December 31, Three Months Ended December 31, 2025 2024 2025 2024 2025 2024 2025 2024 North America $ 195,532 $ 181,389 $ 28,414 $ 31,452 $ — $ 61,802 $ 223,946 $ 274,643 Central and South America (1) — — — — — 1,122 — 1,122 Europe 5,495 5,866 39,248 47,669 6,904 49,487 51,647 103,022 Australia 3,148 3,231 — — — 2,367 3,148 5,598 Asia — — 1,353 1,412 4,669 16,045 6,022 17,457 Total Sales $ 204,175 $ 190,486 $ 69,015 $ 80,533 $ 11,573 $ 130,823 $ 284,763 $ 401,842 (1) Following the contribution of the SGK Business to Propelis in the third quarter of fiscal 2025, the Company no longer had operations in South America. Revenue recognized using the over time method accounted for approximately 11 % and 12 % of revenue for the three months ended December 31, 2025 and 2024, respectively. As of December 31, 2025 and September 30, 2025, the Company had net contract assets for projects recognized using the over time method totaling $ 109,834 and $ 99,700 , respectively, which primarily represent unbilled revenues, net of deferred revenues related to customer deposits and progress billings. Net contract assets at December 31, 2025 and September 30, 2025 predominantly related to ongoing projects with Tesla, Inc. ("Tesla"). Unbilled revenues are generally expected to be invoiced upon the attainment of certain contractual conditions and milestones. The Company continues to perform according to the general terms and conditions of its contractual arrangements with Tesla. Customer delays within the energy storage business have impacted the timing of projects, and consequently, have resulted in invoicing delays for this business. 9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 4. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three level fair value hierarchy is used to prioritize the inputs used in valuations, as defined below: Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs for the asset or liability. The fair values of the Company's assets and liabilities measured on a recurring basis are categorized as follows: December 31, 2025 September 30, 2025 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Derivatives (1) $ — $ — $ — $ — $ — $ 39 $ — $ 39 Equity and fixed income mutual funds — 570 — 570 — 859 — 859 Life insurance policies — 4,057 — 4,057 — 5,239 — 5,239 Total assets at fair value $ — $ 4,627 $ — $ 4,627 $ — $ 6,137 $ — $ 6,137 Liabilities: Derivatives (1) (2) $ — $ 59,726 $ — $ 59,726 $ — $ 60,918 $ — $ 60,918 Total liabilities at fair value $ — $ 59,726 $ — $ 59,726 $ — $ 60,918 $ — $ 60,918 (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. (2) Derivative amounts at both December 31, 2025 and September 30, 2025 reflect $ 40,186 of partial advance payments received from the counterparties to certain cross-currency swaps. See Note 9, "Derivatives and Hedging Activities" for further details. The carrying values for other financial assets and liabilities approximated fair value at December 31, 2025 and September 30, 2025. Note 5. Allowance for Credit Losses The following table summarizes the activity for the accounts receivable allowance for credit losses for the three months ended December 31, 2025 and 2024. Three Months Ended December 31, 2025 2024 Balance at beginning of period $ 13,481 $ 12,055 Charged to expense 859 195 Deductions (1) ( 921 ) ( 1,656 ) Balance at end of period $ 13,419 $ 10,594 (1) Amounts determined not to be collectible (including direct write-offs), net of recoveries. 10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 6. Inventories Inventories consisted of the following: December 31, 2025 September 30, 2025 Raw materials $ 57,305 $ 60,585 Work in process 48,952 56,397 Finished goods 86,121 85,845 $ 192,378 $ 202,827 Note 7. Investments Non-current investments consisted of the following: December 31, 2025 September 30, 2025 Equity and fixed income mutual funds $ 570 $ 859 Life insurance policies 4,057 5,239 Equity-method investments 211,835 214,133 Preferred equity investment 53,336 52,086 Other (primarily cost-method) investments 17,320 16,320 $ 287,118 $ 288,637 On May 1, 2025, the Company contributed its SGK Business to a newly-formed entity, Propelis, in exchange for consideration which included 40 % of the common equity of Propelis and a $ 50,000 preferred equity investment in Propelis. The Company initially recognized these investments at fair value, which totaled $ 263,000 ($ 213,000 equity-method and $ 50,000 preferred equity investment). The Company will subsequently adjust the carrying amount of its equity-method investment for its share of earnings and losses reported by the investee, distributions received, and other-than-temporary impairments. The Company recognizes its portion of the earnings or losses for its equity-method investment in Propelis on a three-month lag to ensure consistency and timely filing of the Company’s financial statements. Consequently, for the three months ended December 31, 2025, the Company's portion of earnings (losses) for its equity-method investment in Propelis includes the months of July, August and September 2025. For the three months ended December 31, 2025, the Company recognized $ 2,298 of equity-method losses for its equity-method investment in Propelis, which has been recorded as a component of administrative expense. Equity-method losses for the three months ended December 31, 2025 included $ 1,106 of losses, representing the Company's portion of the investee's losses, and $ 1,192 of additional expense, reflecting the amortization of the Company's portion of the basis difference of the amortizable assets contributed from SGS & Co. ("SGS") to Propelis. The Company also recognized $ 1,250 of paid-in-kind interest income for the three months ended December 31, 2025 related to the Company's preferred equity investment in Propelis, which was included as a component of other income (deductions), net. Note 8. Debt and Financing Arrangements Long-term debt at December 31, 2025 and September 30, 2025 consisted of the following: December 31, 2025 September 30, 2025 Revolving credit facilities $ 214,088 $ 385,007 2027 Senior Secured Notes 296,596 296,110 Other borrowings 5,385 7,151 Finance lease obligations 20,957 22,564 Total debt 537,027 710,832 Less current maturities ( 7,271 ) ( 7,230 ) Long-term debt $ 529,756 $ 703,602 11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 8. Debt and Financing Arrangements (continued) The Company has a domestic credit facility with a syndicate of financial institutions that was amended and restated in September 2024. The amended and restated loan agreement includes a $ 700,000 senior secured revolving credit facility, which matures in January 2029, subject to the terms and conditions of the amended facility. The obligations under the domestic credit facility are secured by a first priority lien on substantially all of the assets of the Company and certain of its domestic subsidiaries. A portion of the revolving credit facility (not to exceed $ 350,000 ) can be drawn in foreign currencies. Borrowings under the revolving credit facility bear interest at the Secured Overnight Financing Rate ("SOFR"), plus a 0.10 % per annum rate spread adjustment, plus a factor ranging from 1.00 % to 2.00 % ( 1.25 % at December 31, 2025) 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 amended and restated agreement. Unamortized costs were $ 3,618 and $ 3,918 at December 31, 2025 and September 30, 2025, respectively. The domestic credit facility requires the Company to maintain certain leverage and interest coverage ratios. A portion of the facility (not to exceed $ 55,000 ) is available for the issuance of trade and standby letters of credit. Outstanding U.S. dollar denominated borrowings on the revolving credit facility at December 31, 2025 and September 30, 2025 were $ 213,986 and $ 384,233 , respectively. The weighted-average interest rate on outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps) at December 31, 2025 and 2024 was 3.68 % and 5.17 %, respectively. As of December 31, 2025, the Company had $ 300,000 aggregate principal amount of 8.625 % senior secured second lien notes due October 1, 2027 (the "2027 Senior Secured Notes"). The 2027 Senior Secured Notes bore interest at a rate of 8.625 % per annum with interest payable semi-annually in arrears on April 1 and October 1 of each year. The Company's obligations under the 2027 Senior Secured Notes were secured by a second priority lien on substantially all of the assets of the Company and certain of its domestic subsidiaries. The Company was subject to certain covenants and other restrictions including cross default provisions in connection with the 2027 Senior Secured Notes. The Company incurred direct financing fees and costs in connection with 2027 Senior Secured Notes. Unamortized costs related to the Company’s notes were $ 3,404 and $ 3,890 at December 31, 2025 and September 30, 2025, respectively. On January 22, 2026, subsequent to the date of the balance sheet, the Company redeemed all of the outstanding 2027 Senior Secured Notes for a redemption price of 104.313 % of the outstanding principal amount of the 2027 Senior Secured Notes, plus accrued and unpaid interest on such notes as of the redemption date. The total amount paid to redeem the 2027 Senior Secured Notes was $ 320,917 , which was primarily funded using proceeds from recent divestitures, and additional borrowings under the Company’s domestic credit facility. In connection with this redemption, the Company expects to recognize debt extinguishment charges of approximately $ 16,343 during the second quarter of fiscal 2026. The Company and certain of its domestic subsidiaries sell, on a continuous basis without recourse, their trade receivables to Matthews Receivables Funding Corporation, LLC (“Matthews RFC”), a wholly-owned bankruptcy-remote subsidiary of the Company. Matthews RFC has a receivables purchase agreement (“RPA”) to sell up to $ 75,000 of receivables to certain purchasers (the “Purchasers”) on a recurring basis in exchange for cash (referred to as “capital” within the RPA) equal to the gross receivables transferred. The parties intend that the transfers of receivables to the Purchasers constitute purchases and sales of receivables. Matthews RFC has guaranteed to each Purchaser the prompt payment of sold receivables, and has granted a security interest in its assets for the benefit of the Purchasers. Under the RPA, each Purchaser’s share of capital accrues yield at a floating rate plus an applicable margin. The Company is the master servicer under the RPA, and is responsible for administering and collecting receivables. The RPA matures in April 2027. The proceeds of the RPA are classified as operating activities in the Company’s Consolidated Statements of Cash Flows. Cash received from collections of sold receivables may be used to fund additional purchases of receivables on a revolving basis, or to reduce all or any portion of the outstanding capital of the Purchasers. The fair value of the sold receivables approximated book value due to their credit quality and short-term nature, and as a result, no gain or loss on sale of receivables was recorded. As of December 31, 2025 and September 30, 2025, the amount sold to the Purchasers was $ 51,000 and $ 65,600 , 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 $ 73,011 and $ 63,720 as of December 31, 2025 and September 30, 2025, respectively. 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 8. Debt and Financing Arrangements (continued) The following table sets forth a summary of receivables sold as part of the RPA: Three Months Ended December 31, 2025 Three Months Ended December 31, 2024 Gross receivables sold $ 37,353 $ 89,486 Cash collections reinvested ( 51,953 ) ( 85,086 ) Net cash (reinvested) received $ ( 14,600 ) $ 4,400 The Company, through a former U.K. subsidiary, previously participated in a non-recourse factoring arrangement. In connection with this arrangement, the Company periodically sold trade receivables to a third-party purchaser in exchange for cash. These transfers of financial assets were recorded at the time the Company surrendered control of the assets. As these transfers qualified as true sales under the applicable accounting guidance, the receivables were de-recognized from the Company's Consolidated Balance Sheets upon transfer. As a result of the sale of the Company's interest in the SGK Business, this arrangement no longer exists for the Company at December 31, 2025. The principal amount of receivables sold under this arrangement was $ 21,449 during the three months ended December 31, 2024. 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. See Note 16, "Acquisitions and Divestitures" for further information with respect to the sale of the Company's interest in the SGK Business. 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 amounts owed to a participating financial institution under the Program and included in trade accounts payable were $ 5,792 and $ 6,136 at December 31, 2025 and September 30, 2025, respectively. The Company, through certain of its European subsidiaries, has a credit facility with a European bank, which is guaranteed by Matthews. The maximum amount of borrowing available under this facility is € 6.0 million ($ 7,045 ). The facility also provides € 14.0 million ($ 16,437 ) for bank guarantees. This facility has no stated maturity date and is available until terminated. Outstanding borrowings under the credit facility totaled € 86,000 ($ 101 ) and € 659,000 ($ 774 ) at December 31, 2025 and September 30, 2025, respectively. The weighted-average interest rate on outstanding borrowings under this facility was 4.93 % and 5.10 % at December 31, 2025 and 2024, respectively. Other borrowings totaled $ 5,385 and $ 7,151 at December 31, 2025 and September 30, 2025, respectively. The weighted-average interest rate on all other borrowings was 1.33 % and 2.33 % at December 31, 2025 and 2024, respectively. As of December 31, 2025 and September 30, 2025, 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, 2025. On March 11, 2025, in connection with the filing of an automatic shelf registration statement on Form S-3 pursuant to which the Company re-registered 3,000,000 shares of Class A Common Stock, the Company entered into an Equity Distribution Agreement for an At-The-Market equity offering program ("ATM Program") pursuant to which the Company may issue and sell, from time to time, up to 1,250,000 shares of its Class A Common Stock under the shelf registration. For the three months ended December 31, 2025, the Company did not sell any shares of its Class A Common Stock under its ATM Program. As of December 31, 2025, the Company had 1,250,000 shares remaining for sale under the ATM Program. The Company has no near-term intention to utilize the ATM Program. 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 9. 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, 2025 and September 30, 2025, derivative instruments were reflected on a gross-basis in the Consolidated Balance Sheets as follows: Derivatives: December 31, 2025 September 30, 2025 Interest Rate Swaps Cross-Currency Swaps Interest Rate Swaps Cross-Currency Swaps Current assets: Other current assets $ — $ — $ 15 $ — Long-term assets: Other non-current assets — — 24 — Current liabilities: Other current liabilities ( 1,082 ) ( 45,360 ) ( 973 ) ( 45,914 ) Long-term liabilities: Other non-current liabilities ( 1,209 ) ( 12,075 ) ( 1,404 ) ( 12,627 ) Total derivatives (1) $ ( 2,291 ) $ ( 57,435 ) $ ( 2,338 ) $ ( 58,541 ) (1) Cross-currency swap amounts at both December 31, 2025 and September 30, 2025 reflect $ 40,186 of partial advanced payments received from the counterparties to certain swap contracts (see below). The following table presents information related to interest rate swaps entered into by the Company and designated as cash flow hedges: December 31, 2025 September 30, 2025 Notional amount $ 225,000 $ 225,000 Weighted-average maturity period (years) 2.4 2.7 Weighted-average received rate 3.67 % 4.13 % Weighted-average pay rate 3.80 % 3.80 % The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate. The interest rate swaps have been designated as cash flow hedges of future variable interest payments which are considered probable of occurring. Based on the Company's assessment, all of the critical terms of each of the hedges matched the underlying terms of the hedged debt and related forecasted interest payments, and as such, these hedges were considered highly effective. The fair value of the interest rate swaps reflected a net unrealized loss of $ 2,291 ($ 1,721 after tax) and $ 2,338 ($ 1,752 after tax) at December 31, 2025 and September 30, 2025, respectively, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI"). Unrecognized gains of $ 1,301 ($ 972 after tax) and $ 1,605 ($ 1,199 after tax) related to previously terminated London Interbank Offered Rate ("LIBOR") based swaps were also included in AOCI as of December 31, 2025 and September 30, 2025, respectively. Assuming market rates remain constant with the rates at December 31, 2025, a loss (net of tax) of approximately $ 18 included in AOCI is expected to be recognized in earnings over the next twelve months. The Company utilizes certain cross currency swaps as net investment hedges of foreign operations and assesses effectiveness for these contracts based on changes in fair value attributable to changes in spot prices. The following table presents information related to cross currency swaps entered into by the Company and designated as net investment hedges: 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 9. Derivatives and Hedging Activities (continued) Notional Amount Unrealized Gains (Losses) Recognized in AOCI Swap Currencies Maturity Date December 31, 2025 September 30, 2025 December 31, 2025 September 30, 2025 USD/EUR September 2027 $ 81,392 $ 81,392 $ ( 9,045 ) $ ( 9,443 ) USD/SEK June 2026 20,000 20,000 ( 2,621 ) ( 2,571 ) USD/EUR August 2026 25,000 25,000 ( 1,246 ) ( 1,689 ) $ 126,392 $ 126,392 $ ( 12,912 ) (1) $ ( 13,703 ) (1) (1) Total unrealized gains (losses) are presented net of tax of $ 4,337 and $ 4,652 as of December 31, 2025 and September 30, 2025, respectively. In connection with certain of these cross currency swaps, the Company received cash from the counterparties, representing partial advance payments of amounts due under the U.S. dollar leg of the swaps. Outstanding advance payment amounts totaled $ 40,186 at both December 31, 2025 and September 30, 2025, all of which were included in other current liabilities on the Consolidated Balance Sheet. Refer to Note 13, "Accumulated Other Comprehensive Income" for further details regarding amounts recorded in AOCI and the Consolidated Statements of Income (Loss) related to derivatives. Note 10. Restructuring During the fourth quarter of fiscal 2024, the Company initiated restructuring programs focused primarily on the Company's engineering and tooling operations in Europe, and certain of the Company's general and administrative functions. Total estimated restructuring costs for these programs are currently expected to be approximately $ 42,000 , of which $ 39,500 relates to severance and employee termination benefits, and $ 2,500 relates to other exit and disposal activities. These restructuring activities are expected to be completed in fiscal 2026. The following table sets forth amounts recognized by the Company in connection with its restructuring programs: Restructuring amounts by line item in the Statement of Income (a) Three Months Ended December 31, 2025 2024 Cost of sales $ ( 1,519 ) $ ( 601 ) Administrative expense ( 4 ) 288 Income (loss) before income taxes $ ( 1,523 ) $ ( 313 ) (a) Positive amounts represent income and negative amounts represent expense. The costs associated with the Company's restructuring programs principally relate to severance and employee termination benefits. The following table provides a summary of the severance and employee termination restructuring activities for the three-month period ended December 31, 2025. 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 10. Restructuring (continued) Severance and Employee Termination Restructuring Activities Memorialization Industrial Technologies Brand Solutions Corporate/Non-Operating Consolidated Liability at September 30, 2025 $ 2 $ 942 $ — $ 219 $ 1,163 Amounts charged (credited) to expense — 1,513 — — 1,513 Net cash payments — ( 1,680 ) — ( 136 ) ( 1,816 ) Other adjustments (1) ( 2 ) — — ( 83 ) ( 85 ) Liability at December 31, 2025 $ — $ 775 $ — $ — $ 775 Cumulative severance and employee termination costs incurred to date (2) $ 181 $ 33,674 $ 1,720 $ 4,441 $ 40,016 (1) Other adjustments primarily reflects reclassifications of certain balance sheet amounts. (2) Substantially all estimated severance and employee termination costs related to the restructuring programs have been recognized as of December 31, 2025. The severance and employee termination liability is included in accrued compensation in the accompanying Consolidated Balance Sheets. The restructuring programs initiated in fiscal 2024 that were focused primarily on the Company's engineering and tooling operations in Europe, and certain of the Company's general and administrative functions have been substantially completed as of December 31, 2025. Note 11. Share-Based Payments The Company maintains an equity incentive plan (as amended and restated, the "2017 Equity Incentive Plan") that provides for grants of stock options, restricted shares, restricted share units ("RSUs"), stock-based performance units and certain other types of stock-based awards. Under the 2017 Equity Incentive Plan, which has a ten-year term from the date the Company's Board of Directors approved of the second amendment and restatement of the 2017 Equity Incentive Plan, the maximum number of shares available for grants or awards is an aggregate of 4,950,000 (subject to adjustment upon certain events such as stock dividends or stock splits), following the second amendment and restatement of the 2017 Equity Incentive Plan at the Company's 2025 Annual Shareholder Meeting. At December 31, 2025, 2,428,387 shares have been issued under the 2017 Equity Incentive Plan. 1,758,505 time-based RSUs, 2,241,872 performance-based RSUs, and 75,000 stock options have been granted under the 2017 Equity Incentive Plan. 1,657,675 of these share-based awards are outstanding as of December 31, 2025. The 2017 Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors. The number of shares issued under performance-based RSUs may be up to 200 % of the number of performance-based RSUs, based on the satisfaction of specific criteria established by the plan administrator. For the three-month periods ended December 31, 2025 and 2024, stock-based compensation cost totaled $ 4,407 and $ 4,979 , respectively. The associated future income tax benefit recognized for stock-based compensation was $ 645 and $ 818 for the three-month periods ended December 31, 2025 and 2024, respectively. With respect to the grants of RSUs, awards generally vest on the third anniversary of the grant date. The number of units that vest depend on certain time and performance thresholds. Such performance thresholds include adjusted earnings per share, return on invested capital, appreciation in the market value of the Company's Class A Common Stock, or other targets established by the Compensation Committee of the Board of Directors. Approximately 40 % of the outstanding share units vest based on time, while the remaining vest based on pre-defined performance thresholds. The Company issues common stock from treasury shares once the units become vested. 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 11. Share-Based Payments (continued) The transactions for RSUs for the three months ended December 31, 2025 were as follows: RSUs Weighted- average Grant-date Fair Value Non-vested at September 30, 2025 1,648,145 $ 30.22 Granted 518,080 27.69 Vested ( 495,560 ) 27.69 Expired or forfeited ( 12,990 ) 32.94 Non-vested at December 31, 2025 1,657,675 $ 30.17 As of December 31, 2025, the total unrecognized compensation cost related to all unvested stock-based awards was $ 23,485 and is expected to be recognized over a weighted average period of 2.3 years. The fair value of certain RSUs 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 or modified during the three-month period ended December 31, 2025. Three Months Ended December 31, 2025 Expected volatility 36.7 % Dividend yield 4.1 % Average risk-free interest rate 3.6 % Average expected term (years) 3.0 The risk-free interest rate is based on United States Treasury yields at the date of grant or modification. The dividend yield is based on the most recent dividend payment and average stock price over the 12 months prior to the grant or modification 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, 2025 represents an estimate of the average period of time for RSUs to vest. The Company maintains the Amended and Restated 2019 Director Fee Plan, the Amended and Restated 2014 Director Fee Plan and the 1994 Director Fee Plan (collectively, the "Director Fee Plans"). There will be no further fees or share-based awards granted under the Amended and Restated 2014 Director Fee Plan and the 1994 Director Fee Plan. Under the Amended and Restated 2019 Director Fee Plan, non-employee directors (except for the Chairman of the Board) each receive, as an annual retainer fee for fiscal 2026, either cash or shares of the Company's Class A Common Stock with a value equal to $ 90 . The annual retainer fee for fiscal 2026 paid to the non-employee Chairman of the Board under the Amended and Restated 2019 Director Fee Plan is $ 210 . Where the annual retainer fee is provided in shares, each director may elect to be paid these shares on a current basis or have such shares credited to a deferred stock account as phantom stock, with such shares to be paid to the director subsequent to leaving the Board. The total number of shares of stock that have been authorized to be issued under the Amended and Restated 2019 Director Fee Plan or credited to a deferred stock compensation account for subsequent issuance is 300,000 shares of Class A Common Stock (subject to adjustment upon certain events such as stock dividends or stock splits), following the amendment and restatement of the 2019 Director Fee Plan at the Company's 2023 Annual Shareholder Meeting. In November 2025, the Board of Directors approved the Second Amended and Restated 2019 Director Fee Plan, which increases the maximum number of shares available for grants or awards to 550,000 shares. The Second Amended and Restated 2019 Director Fee Plan is subject to shareholder approval at the 2026 Annual Meeting of Shareholders. The value of deferred shares is recorded in other non-current liabilities. A total of 57,668 shares and share units had been deferred under the Director Fee Plans as of December 31, 2025. 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 2026. As of December 31, 2025, 439,740 restricted shares and RSUs have been granted under the Director Fee Plans, 266,511 of which were issued under the 2019 Director Fee Plan. 98,945 RSUs are unvested at December 31, 2025 under the Director Fee Plans. 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 12. Earnings Per Share The information used to compute earnings (loss) per share attributable to Matthews' common shareholders was as follows: Three Months Ended December 31, 2025 2024 Net income (loss) $ 43,629 $ ( 3,472 ) Weighted-average shares outstanding (in thousands): Basic shares 31,305 31,110 Effect of dilutive securities 159 — Diluted shares 31,464 31,110 Dividends declared per common share $ 0.255 $ 0.25 Anti-dilutive securities excluded from the dilutive calculation were insignificant for applicable periods. 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. Note 13. Accumulated Other Comprehensive Income The changes in AOCI by component, net of tax, for the three-month periods ended December 31, 2025 and 2024 were as follows: Post-retirement benefit plans Currency translation adjustment Cash Flow Hedges Total Attributable to Matthews: Balance, September 30, 2025 $ 7,540 $ ( 84,997 ) $ ( 553 ) $ ( 78,010 ) OCI before reclassification ( 1,121 ) 10,620 ( 47 ) 9,452 Amounts reclassified from AOCI ( 216 ) (a) 18,719 ( 149 ) (b) 18,354 Net current-period OCI ( 1,337 ) 29,339 ( 196 ) 27,806 Balance, December 31, 2025 $ 6,203 $ ( 55,658 ) $ ( 749 ) $ ( 50,204 ) Post-retirement benefit plans Currency translation adjustment Cash Flow Hedges Total Attributable to Matthews: Balance, September 30, 2024 $ 4,955 $ ( 174,623 ) $ 926 $ ( 168,742 ) OCI before reclassification ( 181 ) ( 21,187 ) 2,565 ( 18,803 ) Amounts reclassified from AOCI ( 172 ) (a) 6,576 ( 350 ) (b) 6,054 Net current-period OCI ( 353 ) ( 14,611 ) 2,215 ( 12,749 ) Balance, December 31, 2024 $ 4,602 $ ( 189,234 ) $ 3,141 $ ( 181,491 ) Attributable to noncontrolling interest: Balance, September 30, 2024 $ — $ 289 $ — $ 289 OCI before reclassification — — — — Net current-period OCI — — — — Balance, December 31, 2024 $ — $ 289 $ — $ 289 (a) Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans. (b) Amounts were included in interest expense in the periods in which the hedged item affected earnings (see Note 9). 18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 13. Accumulated Other Comprehensive Income (continued) Reclassifications out of AOCI for the three-month periods ended December 31, 2025 and 2024 were as follows: Amount reclassified from AOCI Details about AOCI Components Three Months Ended December 31, 2025 Three Months Ended December 31, 2024 Affected line item in the Financial Statements Postretirement benefit plans Prior service credit (a) $ 57 $ 91 Actuarial losses 232 139 Other income (deductions), net 289 230 Income before income tax (b) ( 73 ) ( 58 ) Income taxes $ 216 $ 172 Net income Derivatives Cash flow hedges $ 200 $ 468 Interest expense Net investment hedges 122 354 Interest expense 322 822 Income before income tax (b) ( 82 ) ( 204 ) Income taxes $ 240 $ 618 Net income Other Divestitures $ ( 18,810 ) $ — Gain on divestitures, net Divestitures — ( 6,844 ) Other current liabilities (c) (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. (b) For pre-tax items, positive amounts represent income and negative amounts represent expense. (c) Reflects the release of a reserve that was established for currency translation amounts related to certain net assets classified as held-for-sale as of September 30, 2024. See Note 16, "Acquisitions and Divestitures". Note 14. Income Taxes Income tax provisions for the Company's interim periods are based on the effective income tax rate expected to be applicable for the full year. The Company's consolidated income taxes for the first three months of fiscal 2026 represented an expense of $ 40,789 , compared to a benefit of $ 2,358 for the first three months of fiscal 2025. The difference between the Company’s consolidated income taxes for the first three months of fiscal 2026 compared to the same period for fiscal 2025 resulted from consolidated pre-tax income in fiscal 2026 compared to a consolidated pre-tax loss in fiscal 2025, and net discrete tax expense related to the divestiture of the Company's warehouse automation and European roto-gravure packaging and tooling and flexographic print businesses. The Company’s fiscal 2026 three month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to state taxes, tax credits, non-tax benefited foreign losses and discrete tax expense related to the divestiture of the Company's warehouse automation and European roto-gravure packaging and tooling and flexographic print businesses. The Company’s fiscal 2025 three month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to state taxes, tax credits, non-tax benefited foreign losses, and other net discrete tax benefits. The Company had unrecognized tax benefits (excluding penalties and interest) of $ 2,860 and $ 2,972 on December 31, 2025 and September 30, 2025, respectively, which would impact the annual effective rate at December 31, 2025 and September 30, 2025, respectively. It is reasonably possible that the amount of unrecognized tax benefits could decrease by approximately $ 366 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 $ 204 and $ 241 at December 31, 2025 and September 30, 2025, respectively. These accruals may potentially be applicable in the event of an unfavorable outcome of uncertain tax positions. 19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 14. Income Taxes (continued) On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company continues to evaluate the impact of the OBBBA, and at this time does not expect the provisions of the new legislation to have a material impact on the Company's consolidated financial statements. The Company expects the provisions of the legislation will have a favorable impact on fiscal 2026 cash tax payments. 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, 2025, the tax years that remain subject to examination by major jurisdictions generally are: United States – Federal 2019, 2020, 2022 and forward United States – State 2021 and forward Canada 2021 and forward Germany 2020 and forward United Kingdom 2024 and forward Singapore 2021 and forward Australia 2021 and forward Note 15. Segment Information The Company manages its businesses under three reportable segments: Memorialization, Industrial Technologies and Brand Solutions. The Memorialization segment consists primarily of bronze and granite memorials and other memorialization products, caskets, cremation-related products, and cremation and incineration equipment primarily for the cemetery and funeral home industries. The Industrial Technologies segment includes product identification, and the design, manufacturing, service and sales of high-tech custom energy storage solutions. The segment historically provided 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 Brand Solutions segment historically provided 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. On May 1, 2025, the Company contributed its SGK Business to a newly-formed entity, Propelis, in exchange for a 40 % ownership interest in Propelis and other consideration. Propelis is a leading global provider of brand solutions. In December 2025, the Company sold its European roto-gravure packaging and tooling and flexographic print businesses to the local management of those businesses in exchange for cash and other consideration. On December 31, 2025, the Company sold its warehouse automation business for cash and other consideration. Following the completion of these transactions, the Company's Industrial Technologies segment consists of product identification, and the design, manufacturing, service and sales of high-tech custom energy storage solutions, and the Company's Brand Solutions segment consists of its 40 % ownership interest in Propelis. Activity prior to May 1, 2025 for the SGK Business is included within the consolidated financial statements of the Company. As of May 1, 2025 the SGK Business has been deconsolidated from the financial statements and is now accounted for as part of the Company's equity-method investment in Propelis. See Notes 7, "Investments" and 16, "Acquisitions and Divestitures" for further information. The Company's primary measure of segment profitability is adjusted earnings before interest, income taxes, depreciation and amortization ("adjusted EBITDA"). Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results. These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition and divestiture costs, gains and losses on divestitures, enterprise resource planning ("ERP") system integration costs, and strategic initiatives and other charges. This presentation is consistent with how the Company's chief operating decision maker (the “CODM”), identified as the Company's President and Chief Executive Officer, evaluates 20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 15. Segment Information (continued) the results of operations versus budgets, forecasts, and historical performance, and makes strategic and resource allocation decisions about the business. For these reasons, the Company believes that adjusted EBITDA represents the most relevant measure of segment profit and loss. In addition, the CODM manages and evaluates the operating performance of the segments, as described above, on a pre-corporate cost allocation basis. Accordingly, for segment reporting purposes, the Company does not allocate corporate costs to its reportable segments. Corporate costs include management and administrative support to the Company, which consists of certain aspects of the Company’s executive management, legal, compliance, human resources, information technology (including operational support) and finance departments. These costs are included within "Corporate and Non-Operating" in the table below which reconciles adjusted EBITDA to income (loss) before income taxes and net income (loss). Management does not allocate non-operating items such as investment income, other income (deductions), net and noncontrolling interest to the segments. Intersegment sales are accounted for at negotiated prices. Segment assets include those assets that are used in the Company's operations within each segment. The following tables present sales and significant expense categories that align with the segment-level information that is regularly provided to the CODM. Information about the Company's reportable segments follows: Three Months Ended December 31, 2025 Memorialization Industrial Technologies Brand Solutions (1) Reportable Segments Total Sales $ 204,175 $ 69,015 $ 11,573 $ 284,763 Cost of sales (2) ( 114,026 ) ( 54,057 ) ( 9,468 ) ( 177,551 ) Gross profit (2) 90,149 14,958 2,105 107,212 Selling expense (2) ( 23,309 ) ( 7,433 ) ( 141 ) ( 30,883 ) Administrative expense (2) ( 27,891 ) ( 11,983 ) ( 4,473 ) ( 44,347 ) Other segment items (3) — — 15,203 15,203 Adjusted EBITDA $ 38,949 $ ( 4,458 ) $ 12,694 $ 47,185 Intersegment sales $ — $ 974 $ 3 $ 977 Depreciation and amortization 8,147 3,478 609 12,234 Total assets 902,399 323,013 304,459 1,529,871 Capital expenditures 4,530 295 187 5,012 Three Months Ended December 31, 2024 Memorialization Industrial Technologies Brand Solutions (1) Reportable Segments Total Sales $ 190,486 $ 80,533 $ 130,823 $ 401,842 Cost of sales (2) ( 108,893 ) ( 57,851 ) ( 97,892 ) ( 264,636 ) Gross profit (2) 81,593 22,682 32,931 137,206 Selling expense (2) ( 18,967 ) ( 7,480 ) ( 7,837 ) ( 34,284 ) Administrative expense (2) ( 26,014 ) ( 13,370 ) ( 12,802 ) ( 52,186 ) Adjusted EBITDA $ 36,612 $ 1,832 $ 12,292 $ 50,736 Intersegment sales $ — $ 310 $ 283 $ 593 Depreciation and amortization 7,202 5,674 8,860 21,736 Total assets 810,454 453,697 493,214 1,757,365 Capital expenditures 4,490 1,382 3,644 9,516 21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 15. Segment Information (continued) (1) Amounts do not include revenue recognized by, costs and expenses attributable to, or assets owned by Propelis, since Propelis is a non-consolidated subsidiary accounted for under the equity-method. (see Note 7, "Investments" for further information). (2) Amounts do not include certain non-cash and/or non-recurring items that do not contribute directly to management's evaluation of its operating results (as described further in the reconciliation of adjusted EBITDA in the table below) and also exclude depreciation, amortization and stock-based compensation expense. (3) The three-months ended December 31, 2025 includes the Company's portion of depreciation, intangible amortization, interest expense, and other items incurred by Propelis (see Note 7, "Investments" for further information with respect to the equity-method investment in Propelis). A reconciliation of adjusted EBITDA to income (loss) before income taxes and net income (loss) follows: Three Months Ended December 31, 2025 2024 Reportable Segments Adjusted EBITDA $ 47,185 $ 50,736 Corporate and Non-Operating ( 11,947 ) ( 10,713 ) Acquisition and divestiture related items (1)** ( 1,118 ) ( 577 ) Strategic initiatives and other items (2)**† ( 15,250 ) ( 615 ) Gain on divestitures, net 113,209 — Highly inflationary accounting losses (primarily non-cash) (3) ( 16 ) ( 191 ) Stock-based compensation ( 4,407 ) ( 4,979 ) Non-service pension and postretirement expense (4) ( 38 ) ( 133 ) Depreciation and amortization * ( 12,696 ) ( 22,504 ) Interest expense, including RPA and factoring financing fees (5) ( 15,301 ) ( 16,854 ) Propelis depreciation, amortization, interest and other items (6) ( 15,203 ) — Income (loss) before income taxes 84,418 ( 5,830 ) Income tax (provision) benefit ( 40,789 ) 2,358 Net income (loss) $ 43,629 $ ( 3,472 ) (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. Also includes legal costs related to an ongoing dispute with Tesla, which totaled $ 8,997 and $ 6,867 for the three months ended December 31, 2025 and 2024, respectively (see Note 18, "Legal Matters"). Fiscal 2025 includes net gains on the sales of certain significant property and other assets of $ 8,702 for the three months ended December 31, 2024. Fiscal 2025 also includes loss recoveries totaling $ 1,170 for the three months ended December 31, 2024 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 certain Turkish subsidiaries which were recently divested (see Note 2, "Basis of Presentation"). (4) Non-service pension and postretirement expense includes interest cost, expected return on plan assets, amortization of actuarial gains and losses, curtailment gains and losses, and settlement gains and losses. These benefit cost components are excluded from adjusted EBITDA since they are primarily influenced by external market conditions that impact investment returns and interest (discount) rates. Curtailment gains and losses and settlement gains and losses are excluded from adjusted EBITDA since they generally result from certain non-recurring events, such as plan amendments to modify future benefits or settlements of plan obligations. The service cost and prior service cost components of pension and postretirement expense are included in the calculation of adjusted EBITDA, since they are considered to be a better reflection of the ongoing service-related costs of providing these benefits. Please note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans. (5) Includes fees for receivables sold under the RPA and factoring arrangements totaling $ 668 and $ 1,172 for the three months ended December 31, 2025 and 2024, respectively. (6) Represents the Company's portion of depreciation, intangible amortization, interest expense, and other items incurred by Propelis (see Note 7, "Investments" for further information with respect to the equity-method investment in Propelis). * Depreciation and amortization was $ 8,147 and $ 7,202 for the Memorialization segment, $ 3,478 and $ 5,674 for the Industrial Technologies segment, $ 609 and $ 8,860 for the Brand Solutions segment, and $ 462 and $ 768 for Corporate and Non-Operating, for the three months ended December 31, 2025 and 2024, respectively. ** Acquisition and divestiture costs, ERP system integration costs, and strategic initiatives and other charges were $ 69 and $ 1,303 for the Memorialization segment, $ 10,353 and $ 4,119 for the Industrial Technologies segment, $ 3,493 and $ 714 for the Brand Solutions segment, and charges of $ 2,453 and income of $ 4,944 for Corporate and Non-Operating, for the three months ended December 31, 2025 and 2024, respectively. † Strategic initiatives and other items includes charges for exit and disposal activities (including severance and other employee termination benefits) totaling expenses of $ 1,523 and $ 313 for the three months ended December 31, 2025 and 2024, respectively, Refer to Note 10, "Restructuring" for further details. 22 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 16. Acquisitions and Divestitures Fiscal 2026: In December 2025, the Company completed the sale of its interests in Matthews Automation Solutions, LLC, a Delaware limited liability company and wholly-owned subsidiary of Matthews, and certain related assets to Duravant LLC. The total consideration was approximately $ 232,000 , representing cash consideration of $ 225,400 plus the assumption of certain liabilities related to the business, subject to adjustment based on a number of factors, including, but not limited to, indemnification obligations and the final determinations of the total adjusted consideration (based on an agreed enterprise value of $ 230 million, plus cash, less debt and transaction expenses and subject to a customary net working capital adjustment measured against a target amount). The transaction resulted in a pre-tax gain of $ 148,304 ($ 108,276 after-tax). As of the date of the disposal transaction, the divested business had current assets and non-current assets of $ 21,381 and $ 62,174 , respectively, and current liabilities and non-current liabilities of $ 19,612 and $ 3,067 , respectively. Income (loss) before income taxes for the divested business was a loss of $ 926 and income of $ 200 for the three-month periods ended December 31, 2025 and 2024, respectively. In December 2025, the Company completed the sale of its European roto-gravure packaging and tooling and flexographic print businesses to the local management of those businesses. Total consideration from these divestitures is $ 41,009 , consisting of $ 13,658 of cash, $ 7,753 of deferred purchase price, principally due within 180 days of closing, seller financing of $ 7,660 , and liabilities assumed by the buyers (principally assumed debt and pension obligations) of $ 11,938 , and the transactions resulted in a pre-tax loss of $ 35,095 ($ 35,981 after-tax). In connection with the sale of the European roto-gravure packaging and tooling and flexographic print businesses, the Company has agreed to provide certain limited administrative services for the respective buyers under short-term transitional services agreements. In October 2025, the Company completed a small acquisition within the Industrial Technologies segment for a purchase price of $ 524 . The preliminary purchase price allocation was not finalized as of December 31, 2025 and remains subject to change as the Company obtains additional information related to working capital and other intangibles assets. Fiscal 2025: In May 2025, the Company acquired The Dodge Company ("Dodge") within the Memorialization segment for a purchase price of $ 55,624 (net of cash acquired). Dodge is a leading supplier of embalming chemicals and supplies in North America and sells a variety of other related products to funeral homes. Annual sales for this business were approximately $ 43,000 prior to the acquisition. The preliminary purchase price allocation was not finalized as of December 31, 2025 and remains subject to change as the Company obtains additional information related to working capital and other intangibles assets. On May 1, 2025, the Company contributed its SGK Business to a newly-formed entity, Propelis, in exchange for 40 % of the common equity of Propelis, a $ 50,000 preferred equity investment in Propelis, and cash proceeds of $ 228,004 (net of $ 22,996 of divested cash). The Company retained its European cylinders (packaging) business and other related investments following the completion of this transaction. The Company recognized a gain on sale of the SGK Business totaling $ 55,139 ($ 6,158 after-tax) during fiscal 2025. In October 2024, the Company completed a small acquisition within the Memorialization segment for a purchase price of $ 2,218 . The Company finalized the allocation of the purchase price in the fourth quarter of fiscal 2025, resulting in no significant adjustments. During the first quarter of fiscal 2025, the Company completed a small divestiture within the Memorialization segment. The net assets for this business were fully written-down in fiscal 2024 in anticipation of the disposal transaction. 23 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 17. Goodwill and Other Intangible Assets A summary of the carrying amount of goodwill attributable to each segment as well as the changes in such amounts are as follows: Memorialization Industrial Technologies Brand Solutions Consolidated Net goodwill at September 30, 2025 $ 387,537 $ 100,024 $ — $ 487,561 Additions — 1,331 — 1,331 Divestitures — ( 57,471 ) — ( 57,471 ) Translation and other adjustments 63 310 — 373 Net goodwill at December 31, 2025 $ 387,600 $ 44,194 $ — $ 431,794 The net goodwill balances at December 31, 2025 and September 30, 2025 included $ 45,673 of accumulated impairment losses. Accumulated impairment losses at December 31, 2025 and September 30, 2025 were $ 5,000 and $ 39,867 for the Memorialization and Industrial Technologies segments, respectively. In fiscal 2026, additions reflect a small acquisition in the Industrial Technologies segment, and divestitures reflect the sale of the warehouse automation business. The Company performed its annual impairment review of goodwill and indefinite-lived intangible assets in the second quarter of fiscal 2025 (January 1, 2025) and determined that the estimated fair values for all goodwill reporting units exceeded their carrying values, and, therefore, no impairment charges were necessary at such time. The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of December 31, 2025 and September 30, 2025, respectively. Carrying Amount Accumulated Amortization Net December 31, 2025 Indefinite-lived trade names $ 30,540 $ — $ 30,540 Definite-lived trade names 28,729 ( 19,940 ) 8,789 Customer relationships 135,713 ( 87,025 ) 48,688 Copyrights/patents/other 20,935 ( 15,190 ) 5,745 $ 215,917 $ ( 122,155 ) $ 93,762 September 30, 2025 : Indefinite-lived trade names $ 30,540 $ — $ 30,540 Definite-lived trade names 31,673 ( 22,393 ) 9,280 Customer relationships 165,477 ( 105,876 ) 59,601 Copyrights/patents/other 20,776 ( 14,239 ) 6,537 $ 248,466 $ ( 142,508 ) $ 105,958 The net change in intangible assets during the three months ended December 31, 2025 primarily reflected the divestitures of the warehouse automation and European roto-gravure packaging and tooling and flexographic print businesses, the impact of foreign currency fluctuations during the period and additional amortization. Amortization expense on intangible assets was $ 2,966 and $ 8,608 for the three-month periods ended December 31, 2025 and 2024, respectively. The fiscal 2026 decrease in intangible amortization reflected lower amortization following the Company's fiscal 2025 divestiture of its interest in the SGK Business. Amortization expense is estimated to be $ 7,639 for the remainder of fiscal 2026, $ 6,710 in 2027, $ 5,222 in 2028, $ 4,543 in 2029 and $ 4,159 in 2030. 24 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued (Dollar amounts in thousands, except per share data) Note 18. Legal Matters On October 7, 2024, the United States District Court for the Northern District of California granted the Company’s motion to compel arbitration in response to a complaint filed by Tesla on June 14, 2024 against the Company in the Northern District of California, Civil Action No. 5:24-cv-03615 (N.D. Cal.), which alleged trade secret misappropriation under the Defend Trade Secrets Act (the "DTSA") and the California Uniform Trade Secrets Act (the "CUTSA"), breach of contract and unfair business practices. Given the Court’s favorable ruling, the matter filed by Tesla has been effectively stayed pending arbitration, which Tesla has initiated. The Company maintains the claims alleged in the complaint are without merit and continues to vigorously defend itself against the allegations in confidential arbitration. In addition, on February 13, 2025, Tesla filed another additional complaint against the Company in the United States District Court for the Northern District of California alleging, in part, claims related to correction of inventorship, breach of contract, promissory estoppel and quasi-contract/restitution arising from and/or related to various U.S. patents and provisional patents, including but not limited to U.S. Patent No. 12,136,727. Similar to the prior matter, this case has also recently been compelled to confidential arbitration by the United States District Court for the Northern District of California. The Company maintains the claims are without merit and intends to vigorously defend itself against the allegations if the matter is reinitiated by Tesla in confidential arbitration. The Company is also defending a separate new confidential arbitration demand, initiated by Tesla on September 8, 2025, which alleges claims for breach of express warranty, declaratory relief, and breach of contract. The arbitration demand seeks declaratory relief and actual damages, plus interest and costs. An estimate of the possible loss or range of loss related to the foregoing matters cannot be made at this time given the continued lack of specificity in the pending proceedings and/or the applicable pleadings. In light of the substantial harm caused to the Company by Tesla's actions, the Company is now pursuing counterclaims against Tesla. On October 1, 2025, Judge Edward Davila, a federal court judge from the United States District Court for the Northern District of California, issued an opinion and order granting Matthews’ petition to confirm a prior confidential arbitration award, and rejected Tesla’s motion to vacate that same arbitration award. Tesla has appealed Judge Davila’s ruling to the United States Court of Appeals for the Ninth Circuit. Finally, in October 2025, the Company finalized a confidential settlement agreement resolving claims of alleged copyright infringement arising from a legacy licensing arrangement within the Company's Memorialization segment. The settlement amount of $ 8,000 , which was accrued and recognized as a component of administrative expense for the period ended September 30, 2025, and was paid during the first quarter of fiscal 2026. The Company denies fault or wrongdoing in the matter arising from this licensing dispute. Note 19. Related Party Transactions In connection with the sale of the Company's interest in the SGK Business, the Company has agreed to provide certain administrative services for Propelis under a Transitional Services Agreement (the “TSA”). The services provided under the TSA include ERP system access and related information technology support; tax, treasury and accounting support; transactional processing such as, invoicing, collections, cash application, purchasing, payroll and payment processing; and certain other services. The Company receives an administrative support fee from Propelis for providing these ongoing services. Such administrative support fees are intended to approximate the underlying cost of providing such services for Propelis. During the first quarter of fiscal 2026, the Company recognized $ 2,495 of administrative support fees under the TSA, which were included as a component of administrative expense. Sales to and purchase from Propelis were immaterial for the three months ended December 31, 2025. Amounts due from Matthews to Propelis were insignificant as of December 31, 2025. Amounts due to Matthews from Propelis totaled $ 3,971 as of September 30, 2025, which reflected outstanding administrative fees, and net transactional amounts pending settlement under the TSA. Such amounts were included as a component of accounts receivable. Note 20. Subsequent Event On January 22, 2026, subsequent to the date of the balance sheet, the Company redeemed all of its outstanding 2027 Senior Secured Notes. Refer to Note 8, "Debt and Financing Arrangements" for further information. 25 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES: The following discussion should be read in conjunction with the consolidated financial statements of Matthews International Corporation ("Matthews" or the "Company") and related notes thereto included in this Quarterly Report on Form 10-Q and the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2025. Any forward-looking statements contained herein are included pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding the expectations, hopes, beliefs, intentions or strategies of the Company regarding the future, including statements regarding the anticipated benefits and risks associated with the joint venture transaction with Peninsula Parent LLC, d.b.a. Propelis Group ("Propelis") and the timing thereof, and may be identified by the use of words such as “expects,” “believes,” “intends,” “projects,” “anticipates,” “estimates,” “plans,” “seeks,” “forecasts,” “predicts,” “objective,” “targets,” “potential,” “outlook,” “may,” “will,” “could” or the negative of these terms, other comparable terminology and variations thereof. Such forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to be materially different from management's expectations, and no assurance can be given that such expectations will prove correct. Factors that could cause the Company's results to differ materially from the results discussed in such forward-looking statements principally include risks to our ability to achieve the anticipated benefits of the joint venture transaction with Propelis that closed in fiscal year 2025, 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, including changes in costs due to adjustments to tariffs, 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, divestitures, and business combinations, 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 conflicts and related sanctions or trade restrictions involving Venezuela, the Company's plans and expectations with respect to its exploration, and contemplated execution, of various strategies with respect to its portfolio of businesses, the Company's plans and expectations with respect to its Board of Directors, 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, 2025. In addition, although the Company does not currently have any customers that would be considered individually significant to consolidated sales, changes in the distribution of the Company's products or the potential loss of one or more of the Company's larger customers are also considered risk factors. Matthews cautions that the foregoing list of important factors is not all inclusive. Readers are also cautioned not to place undue reliance on any forward looking statements, which reflect management's analysis only as of the date of this report, even if subsequently made available by Matthews on its website or otherwise. Matthews does not undertake to update any forward looking statement, whether written or oral, that may be made from time to time by or on behalf of Matthews to reflect events or circumstances occurring after the date of this report unless required by law. Included in this report are measures of financial performance that are not defined by generally accepted accounting principles in the United States ("GAAP"). These non-GAAP financial measures assist management in comparing the Company's performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the Company's core operations. For additional information and reconciliations from the consolidated financial statements see "Non-GAAP Financial Measures" below. 26 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued RESULTS OF OPERATIONS: The Company manages its businesses under three segments: Memorialization, Industrial Technologies and Brand Solutions. The Memorialization segment consists primarily of bronze and granite memorials and other memorialization products, caskets, cremation-related products, and cremation and incineration equipment primarily for the cemetery and funeral home industries. The Industrial Technologies segment includes product identification, and the design, manufacturing, service and sales of high-tech custom energy storage solutions. The segment historically provided 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 Brand Solutions segment historically provided 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. On May 1, 2025, the Company contributed the vast majority of its Brand Solutions segment (the "SGK Business") to a newly-formed entity, Propelis, in exchange for a 40% ownership interest in Propelis and other consideration. Propelis is a leading global provider of brand solutions. In December 2025, the Company sold its European roto-gravure packaging and tooling and flexographic print businesses to the local management of those businesses in exchange for cash and other consideration. On December 31, 2025, the Company sold its warehouse automation business for cash and other consideration. Following the completion of these transactions, the Company's Industrial Technologies segment consists of product identification, and the design, manufacturing, service and sales of high-tech custom energy storage solutions, and the Company's Brand Solutions segment consists of its 40% ownership interest in Propelis. Activity prior to May 1, 2025 for the SGK Business is included within the consolidated financial statements of the Company. As of May 1, 2025 the SGK Business has been deconsolidated from the financial statements and is now accounted for as part of the Company's equity-method investment in Propelis. The Company recognizes its portion of the earnings or losses for its equity-method investment in Propelis on a three-month lag to ensure consistency and timely filing of the Company’s financial statements. Consequently, in fiscal 2026, the Company's portion of earnings for its equity-method investment in Propelis includes the months of July, August and September 2025. See Notes 7, "Investments" and 16, "Acquisitions and Divestitures" in Item 1 - "Financial Statements" for further information. The Company's primary measure of segment profitability is adjusted earnings before interest, income taxes, depreciation and amortization ("adjusted EBITDA"). Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results. These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition and divestiture costs, gains and losses on divestitures, enterprise resource planning ("ERP") system integration costs, and strategic initiatives and other charges. This presentation is consistent with how the Company's chief operating decision maker (the “CODM”), identified as the Company's President and Chief Executive Officer, evaluates the results of operations versus budgets, forecasts, and historical performance, and makes strategic and resource allocation decisions about the business. For these reasons, the Company believes that adjusted EBITDA represents the most relevant measure of segment profit and loss. In addition, the CODM manages and evaluates the operating performance of the segments, as described above, on a pre-corporate cost allocation basis. Accordingly, for segment reporting purposes, the Company does not allocate corporate costs to its reportable segments. Corporate costs include management and administrative support to the Company, which consists of certain aspects of the Company’s executive management, legal, compliance, human resources, information technology (including operational support) and finance departments. These costs are included within "Corporate and Non-Operating" in the following table to reconcile to consolidated adjusted EBITDA and are not considered a separate reportable segment. Management does not allocate non-operating items such as investment income, other income (deductions), net and noncontrolling interest to the segments. The following table sets forth the sales and adjusted EBITDA for the Company's three reporting segments for the three-month periods ended December 31, 2025 and 2024. Refer to Note 15, "Segment Information" in Item 1 - "Financial Statements" for the Company's financial information by segment. Net income was $43.6 million compared to a net loss of $3.5 million for the three months ended December 31, 2025 and 2024, respectively. Refer to "Non-GAAP Financial Measures" below for a reconciliation of net income to adjusted EBITDA. 27 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued Three Months Ended December 31, 2025 2024 Sales: (Dollar amounts in thousands) Memorialization $ 204,175 $ 190,486 Industrial Technologies 69,015 80,533 Brand Solutions 11,573 130,823 Consolidated Sales $ 284,763 $ 401,842 Adjusted EBITDA: Memorialization $ 38,949 $ 36,612 Industrial Technologies (4,458) 1,832 Brand Solutions 12,694 12,292 Corporate and Non-Operating (11,947) (10,713) Total Adjusted EBITDA (1) $ 35,238 $ 40,023 (1) Total Adjusted EBITDA is a non-GAAP financial measure. See the "Non-GAAP Financial Measures" section below. Sales for the three months ended December 31, 2025 were $284.8 million, compared to $401.8 million for the three months ended December 31, 2024. The decrease in fiscal 2026 sales reflected a sales reduction of $115.3 million resulting from the divestiture of the Company's interest in the SGK Business on May 1, 2025 (see Acquisitions and Divestitures below). The fiscal 2026 change in sales also reflected higher sales in the Memorialization segment, partially offset by lower sales in the Industrial Technologies segment. On a consolidated basis, changes in foreign currency exchange rates were estimated to have a favorable impact of $2.6 million on fiscal 2026 sales compared to the prior year. Memorialization segment sales for the first three months of fiscal 2026 were $204.2 million, compared to $190.5 million for the first three months of fiscal 2025. The sales increase principally reflected inflationary price realization and the favorable impact of the fiscal 2025 acquisition of The Dodge Company (see Acquisitions and Divestitures below). These increases were partially offset by lower sales of cremation equipment and mausoleums. Industrial Technologies segment sales were $69.0 million for the first three months of fiscal 2026, compared to $80.5 million for the first three months of fiscal 2025. The decrease in sales reflected lower sales of purpose-built engineered products (primarily energy storage solutions for the electric vehicle market and coating and converting equipment), and the impact of divesting the Company's tooling business in December 2025 (see Acquisitions and Divestitures below). These declines were partially offset by increased sales of warehouse automation solutions. Fiscal 2026 sales for the Industrial Technologies segment were impacted by customer delays impacting the timing of projects within the energy storage business. Changes in foreign currency exchange rates had a favorable impact of $2.9 million on the segment's sales compared to the prior year. In the Brand Solutions segment, sales for the first three months of fiscal 2026 were $11.6 million, compared to $130.8 million for the first three months of fiscal 2025. The decrease in sales primarily reflected the divestiture of the Company's interest in the SGK Business on May 1, 2025. Fiscal 2026 segment sales reflected sales for the European cylinders (packaging) business through December 1, 2025, at which time this business was divested (see Acquisitions and Divestitures below). Changes in foreign currency exchange rates had an unfavorable impact of $804,000 on the segment's sales compared to the prior year. Gross profit for the three months ended December 31, 2025 was $99.7 million, compared to $125.7 million for the same period a year ago. The decrease in gross profit reflected a reduction of $26.6 million resulting from the fiscal 2025 divestiture of the Company's interest in the SGK Business. The gross profit decline also reflected the impact of higher material and labor costs, and lower sales and margins on engineered products. These decreases were partially offset by the impact of improved price realization, benefits from the realization of productivity improvements and other cost-reduction initiatives, and the favorable impact of the Dodge acquisition within the Memorialization segment. Gross profit also included acquisition integration costs and other charges primarily in connection with cost-reduction initiatives totaling $1.3 million and $1.1 million for the three months ended December 31, 2025 and 2024, respectively. Selling and administrative expenses for the three months ended December 31, 2025 were $112.4 million, compared to $111.4 million for the same period last year. Consolidated selling and administrative expenses, as a percent of sales, were 39.5% for the three months ended December 31, 2025, compared to 27.7% for the same period last year. Selling and administrative expenses in fiscal 2026 reflected benefits from ongoing cost-reduction initiatives, and an $18.5 million reduction in selling and administrative expenses from the fiscal 2025 divestiture of the Company's interest in the SGK Business, partially offset by higher compensation costs. Selling and administrative expenses included legal costs related to an ongoing dispute with Tesla, 28