What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-01 compared with 2026-02-04 · 83 added, 124 removed, 159 unchanged (57% of the section changed)

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

("Tesla") totaling $9.0 million in fiscal 2026 and $6.9 million in fiscal 2025 (see Legal Matters below).

Selling and administrative expenses included fees for receivables sold under a receivables purchase agreement and factoring arrangement totaling $668,000 in fiscal 2026 and $1.2 million in fiscal 2025.

Fiscal 2026 selling and administrative expenses included $2.3 million of equity-method losses for the Company's equity-method investment in Propelis.

See Note 7, "Investments" in Item 1 - "Financial Statements" for further information.

Fiscal 2025 selling and administrative expenses included $8.7 million of net gains on the sales of certain significant property and other assets.

Selling and administrative expenses also included acquisition integration and related systems-integration costs, and other charges primarily in connection with certain commercial, operational and cost-reduction initiatives totaling $6.1 million in fiscal 2026, compared to $3.1 million in fiscal 2025.

Intangible amortization for the three months ended December 31, 2025 was $3.0 million, compared to $8.6 million for the three months ended December 31, 2024.

The fiscal 2026 decrease in intangible amortization reflected lower amortization following the Company's fiscal 2025 divestiture of its interest in the SGK Business.

During the first quarter of fiscal 2026, the Company recognized $113.2 million of net pre-tax gains on divestitures (see Acquisitions and Divestitures below).

Adjusted EBITDA was $35.2 million for the three months ended December 31, 2025 and $40.0 million for the three months ended December 31, 2024.

Memorialization segment adjusted EBITDA was $38.9 million for the first three months of fiscal 2026 compared to $36.6 million for the first three months of fiscal 2025.

The increase in segment adjusted EBITDA reflected the impact of improved price realization, benefits from productivity initiatives, and the favorable impact of the fiscal 2025 acquisition of The Dodge Company.

These increases were partially offset by the impact of higher material and labor costs.

Adjusted EBITDA for the Industrial Technologies segment was a loss of $4.5 million for the three months ended December 31, 2025 compared to income of $1.8 million for the three months ended December 31, 2024.

The decrease in segment adjusted EBITDA primarily reflected the impact of lower sales and margins on engineered products, and unfavorable sales mix for warehouse automation solutions.

These declines were partially offset by benefits from cost-reduction initiatives.

Adjusted EBITDA for the Brand Solutions segment was $12.7 million for the first three months of fiscal 2026 compared to $12.3 million for the same period a year ago.

The change in segment adjusted EBITDA primarily reflected a reduction of $12.2 million resulting from the fiscal 2025 divestiture of the Company's interest in the SGK Business, offset by the inclusion of the Company's portion (40% ownership interest) of Propelis' adjusted EBITDA, which totaled $12.9 million in fiscal 2026.

See Notes 7, "Investments" and 16, "Acquisitions and Divestitures" in Item 1 - "Financial Statements" for further information.

Interest expense for the first three months of fiscal 2026 was $14.6 million, compared to $15.7 million for the same period during the last fiscal year.

The decrease in interest expense reflected lower average borrowing levels, partially offset by the impact of higher average interest rates in the current fiscal year.

Other income (deductions), net, for the three months ended December 31, 2025 represented an increase in pre-tax income of $1.5 million, compared to an increase in pre-tax income of $4.2 million for the same period last year.

Other income (deductions), net includes investment income, banking-related fees and the impact of currency gains and losses on certain intercompany debt and foreign denominated cash balances.

Fiscal 2026 other income (deductions), net included $1.3 million of paid-in-kind interest income related to the Company's preferred equity investment in Propelis.

Fiscal 2025 other income (deductions), net included loss recoveries totaling $1.2 million which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.

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 $40.8 million, compared to a benefit of $2.4 million 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.

Legal Matters

Refer to Note 18, "Legal Matters" in Item 1 - "Financial Statements" for information regarding the settlement of a contractual licensing matter within the Memorialization segment, and details related to an ongoing dispute with Tesla.

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

Related Party Transactions

Refer to Note 19, "Related Party Transactions" in Item 1 - "Financial Statements" for information regarding transactions with Propelis.

NON-GAAP FINANCIAL MEASURES:

Included in this report are measures of financial performance that are not defined by GAAP.

The Company uses certain non-GAAP financial measures to assist in comparing its 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 including acquisition and divestiture costs, gains and losses on divestitures, ERP system integration costs, strategic initiatives and other charges (which includes non-recurring charges related to certain commercial and operational initiatives and exit activities), stock-based compensation and the non-service portion of pension and postretirement expense.

Management believes that presenting non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items that management believes do not directly reflect the Company's core operations, (ii) permits investors to view performance using the same tools that management uses to budget, forecast, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating the Company’s results.

The Company believes that the presentation of these non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provided herein, provides investors with an additional understanding of the factors and trends affecting the Company’s business that could not be obtained absent these disclosures.

The Company believes that adjusted EBITDA provides relevant and useful information, which is used by the Company’s management in assessing the performance of its business.

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, ERP system integration costs, and strategic initiatives and other charges.

Adjusted EBITDA provides the Company with an understanding of earnings before the impact of investing and financing charges and income taxes, and the effects of certain acquisition and divestiture and ERP system integration costs, and items that do not reflect the ordinary earnings of the Company’s operations.

This measure may be useful to an investor in evaluating operating performance.

It is also useful as a financial measure for lenders and is used by the Company’s management to measure business performance.

Adjusted EBITDA is not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to net income or other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of the Company's liquidity.

The Company's definition of adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

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

The reconciliation of net income to adjusted EBITDA is as follows:

Three Months Ended

March 31, Six Months Ended

2026 2025 2026 2025

(Dollar amounts in thousands)

Net income (loss) $ 43,629 $ (3,472)

Income tax provision (benefit) 40,789 (2,358)

Income (loss) before income taxes 84,418 (5,830)

Net (loss) income $ (21,834) $ (8,916) $ 21,795 $ (12,388)

Income tax (benefit) provision (6,217) (2,728) 34,572 (5,086)

(Loss) income before income taxes (28,051) (11,644) 56,367 (17,474)

Propelis depreciation, amortization, interest and other items (1)

18,776 — 33,979 —

Interest expense, including RPA and factoring financing fees (2)

10,424 17,010 25,725 33,864

Loss on debt extinguishment 16,343 — 16,343 —

Depreciation and amortization *

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Acquisition and divestiture related items (3)**

194 13,701 1,312 14,278

Strategic initiatives and other items (4)**†

Gain on divestitures, net (113,209) —

6,394 5,373 21,644 5,988

(Gain) loss on divestitures, net 3,945 2,072 (109,264) 2,072

Highly inflationary accounting losses (primarily non-cash) (5)

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Non-service pension and postretirement expense (6)

75 133 113 266

Total Adjusted EBITDA $ 44,744 $ 51,414 $ 79,982 $ 91,437

(1) 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).

(2) Includes fees for receivables sold under the RPA and factoring arrangements totaling $668,000 and $1.2 million for the three months ended December 31, 2025 and 2024, respectively.

(2) Includes fees for receivables sold under the RPA and factoring arrangements totaling $382,000 and $1.1 million for the three months ended March 31, 2026 and 2025, respectively, and $1.1 million and $2.3 million for the six months ended March 31, 2026 and 2025, respectively.

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

( 4) 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 $9.0 million and $6.9 million for the three months ended December 31, 2025 and 2024, respectively (see Note 18, "Legal Matters" in Item 1 - "Financial Statements and Supplementary Data").

Fiscal 2025 includes net gains on the sales of certain significant property and other assets of $8.7 million.

Fiscal 2025 also includes loss recoveries totaling $1.2 million 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.

Also includes legal costs related to an ongoing dispute with Tesla, which totaled $2.2 million and $1.8 million for the three months ended March 31, 2026 and 2025, respectively, and $11.2 million and $8.6 million for the six months ended March 31, 2026 and 2025, respectively (see Note 18, "Legal Matters" in Item 1 - "Financial Statements and Supplementary Data") .

Fiscal 2025 includes costs related to the Company's 2025 contested proxy which totaled $4.5 million for the three months ended March 31, 2025 and $4.9 million for the six months ended March 31, 2025.

Fiscal 2025 includes net gains on the sales of certain significant property and other assets of $8.7 million for the six months ended March 31, 2025.

Fiscal 2025 also includes loss recoveries totaling $1.2 million for the six months ended March 31, 2025 which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.

(5) Represents exchange losses associated with highly inflationary accounting related to certain Turkish subsidiaries which were recently divested (see Note 2, "Basis of Presentation" in Item 1 - "Financial Statements and Supplementary Data").

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

* Depreciation and amortization was $8.1 million and $7.2 million for the Memorialization segment, $3.5 million and $5.7 million for the Industrial Technologies segment, $609,000 and $8.9 million for the Brand Solutions segment, and $462,000 and $768,000 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 $69,000 and $1.3 million for the Memorialization segment, $10.4 million and $4.1 million for the Industrial Technologies segment, $3.5 million and $714,000 for the Brand Solutions segment, and charges of $2.5 million and income of $4.9 million for Corporate and Non-Operating, for the three months ended December 31, 2025 and 2024, respectively.

* Depreciation and amortization was $8.0 million and $7.2 million for the Memorialization segment, $3.0 million and $5.6 million for the Industrial Technologies segment, and $501,000 and $699,000 for Corporate and Non-Operating, for the three months ended March 31, 2026 and 2025, respectively.

Depreciation and amortization was $16.2 million and $14.4 million for the Memorialization segment, $6.4 million and $11.3 million for the Industrial Technologies segment, $609,000 and $13.6 million for the Brand Solutions segment, and $1.0 million and $1.5 million for Corporate and Non-Operating, for the six months ended March 31, 2026 and 2025, respectively.

Depreciation and amortization was $4.7 million for the Brand Solutions segment for the three months ended March 31, 2025.

** Acquisition costs, ERP system integration costs, and strategic initiatives and other charges were $380,000 and $2.4 million for the Memorialization segment, $2.7 million and $192,000 for the Industrial Technologies segment, income of $91,000 and charges of $416,000 for the Brand Solutions segment, and $3.6 million and $16.1 million for Corporate and Non-Operating, for the three months ended March 31, 2026 and 2025, respectively.

Acquisition costs, ERP system integration costs, and strategic initiatives and other charges were $449,000 and $3.7 million for the Memorialization segment, $13.1 million and $4.3 million for the Industrial Technologies segment, $3.4 million and $1.1 million for the Brand Solutions segment, and $6.0 million and $11.1 million for Corporate and Non-Operating, for the six months ended March 31, 2026 and 2025, respectively.

† Strategic initiatives and other items includes charges for exit and disposal activities (including severance and other employee termination benefits) totaling expenses of $782,000 and income of $2.5 million for the three months ended March 31, 2026 and 2025, respectively, and expenses of $2.3 million and income of $1.3 million for the six months ended March 31, 2026 and 2025, respectively.

Refer to Note 10, "Restructuring" in Item 1 - "Financial Statements and Supplementary Data" for further details.

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LIQUIDITY AND CAPITAL RESOURCES:

Net cash used in operating activities was $52.0 million for the first three months of fiscal 2026, compared to $25.0 million for the first three months of fiscal 2025.

Operating cash flow for both periods principally included net income (loss) adjusted for deferred taxes, depreciation and amortization, stock-based compensation expense, net gains on divestitures and sales of assets, and other non-cash adjustments, and changes in working capital items.

Net changes in working capital items increased operating cash flow by $1.5 million and decreased operating cash flow by $39.2 million in fiscal 2026 and fiscal 2025, respectively.

Net cash used in operating activities was $67.4 million for the first six months of fiscal 2026, compared to $18.7 million for the first six months of fiscal 2025.

Operating cash flow for both periods principally included net income (loss) adjusted for deferred taxes, depreciation and amortization, stock-based compensation expense, net gains (losses) on divestitures and sales of assets, and other non-cash adjustments, and changes in working capital items.

Net changes in working capital items decreased operating cash flow by $38.0 million and $43.4 million in fiscal 2026 and fiscal 2025, respectively.

The fiscal 2026 change in working capital principally reflected incentive compensation-related payments, a settlement payment related to a contractual licensing matter (see Legal Matters above), changes in contract assets and liabilities related to revenue recognized using the over time method, increased accrued income taxes primarily related to the warehouse automation divestiture (see Acquisitions and Divestitures below), and changes in other accounts.

Cash provided by investing activities was $237.4 million for the three months ended December 31, 2025, compared to $1.4 million for the three months ended December 31, 2024.

Investing activities for the first three months of fiscal 2026 primarily reflected capital expenditures of $5.3 million, acquisitions, net of cash acquired, of $524,000, proceeds from sale of assets of $3.5 million, and proceeds from divestitures (net of divested cash) of $240.2 million.

Investing activities for the first three months of fiscal 2025 primarily reflected capital expenditures of $9.5 million, acquisitions, net of cash acquired, of $2.2 million, and proceeds from sale of assets of $13.2 million.

Cash provided by investing activities was $239.7 million for the six months ended March 31, 2026, compared to cash used in investing activities of $3.9 million for the six months ended March 31, 2025.

Investing activities for the first six months of fiscal 2026 primarily reflected capital expenditures of $9.3 million, acquisitions, net of cash acquired, of $524,000, proceeds from sale of assets of $3.5 million, proceeds from sale of investments of $3.0 million, and proceeds from divestitures (net of divested cash) of $243.4 million.

Investing activities for the first six months of fiscal 2025 primarily reflected capital expenditures of $18.3 million, acquisitions, net of cash acquired, of $2.2 million, proceeds from sale of assets of $14.6 million, and proceeds from divestiture of $2.0 million.

Capital expenditures reflected reinvestment in the Company's business segments and were made primarily for the purchase of new production machinery, equipment, software and systems, and facilities designed to improve product quality, increase manufacturing efficiency and capacity, lower production costs and meet regulatory requirements.

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The Company expects to generate sufficient cash from operations to fund all anticipated capital spending projects.

Cash used in financing activities for the three months ended December 31, 2025 was $186.6 million, primarily reflecting repayments, net of proceeds, on long-term debt of $172.0 million, treasury stock purchases of $5.2 million, and dividends of $9.5 million.

Cash provided by financing activities for the three months ended December 31, 2024 was $18.4 million, primarily reflecting proceeds, net of repayments, on long-term debt of $31.9 million, treasury stock purchases of $4.3 million, and dividends of $9.2 million.

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 $700.0 million senior secured revolving credit facility, which matures in January 2029, subject to the terms and conditions of the amended facility.

Cash used in financing activities for the six months ended March 31, 2026 was $168.4 million, primarily reflecting repayments, net of proceeds, on long-term debt of $130.4 million, treasury stock purchases of $5.7 million, dividends of $17.5 million, payment of debt redemption premium of $12.9 million, and payment of debt issuance costs of $1.6 million.

Cash provided by financing activities for the six months ended March 31, 2025 was $33.6 million, primarily reflecting proceeds, net of repayments, on long-term debt of $50.2 million, treasury stock purchases of $4.4 million, dividends of $17.0 million, proceeds from net investment hedge of $15.0 million, and $10.2 million of holdback and deferred purchase price payments related to acquisitions from prior years.

The Company has a domestic credit facility with a syndicate of financial institutions that was amended and restated in February 2026 and includes a $700.0 million secured revolving credit facility and a $150.0 million secured amortizing term loan.

The term loan requires scheduled principal payments of $7.5 million per year, payable in quarterly installments.

The balance of the revolving credit facility and the term loan are due on the maturity date of January 31, 2029, subject to the terms and conditions of the amended and restated 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 $350.0 million) 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.

Borrowings under both the revolving credit facility and the term loan bear interest at the Secured Overnight Financing Rate ("SOFR"), plus a 0.10% per annum rate spread adjustment, plus a factor ranging from 1.00% to 2.00% (1.50% at March 31, 2026) 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 $3.6 million and $3.9 million at December 31, 2025 and September 30, 2025, respectively.

The Company incurred debt issuance costs of $1.6 million in connection with the amended and restated agreement, which were deferred and are being amortized over the term of the facility.

Unamortized costs were $4.6 million and $3.9 million at March 31, 2026 and September 30, 2025, respectively.

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

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Outstanding U.S.

dollar denominated borrowings on the revolving credit facility at December 31, 2025 and September 30, 2025 were $214.0 million and $384.2 million, 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.

dollar denominated borrowings on the revolving credit facility at March 31, 2026 and September 30, 2025 were $404.8 million and $384.2 million, respectively.

Outstanding borrowings on the term loan at March 31, 2026 were $148.8 million.

The weighted-average interest rate on outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps) at March 31, 2026 and 2025 was 4.18% and 4.29%, respectively.

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

As of December 31, 2025, the Company had $300.0 million aggregate principal amount of 8.625% senior secured second lien notes due October 1, 2027 (the "2027 Senior Secured Notes").

The Company previously had $300.0 million 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.

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The Company incurred direct financing fees and costs in connection with 2027 Senior Secured Notes.

Unamortized costs related to the Company’s notes were $3.4 million and $3.9 million 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.

Unamortized costs related to the Company’s notes were $3.9 million at September 30, 2025.

In January 2026, 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 $320.9 million, 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 $16.3 million during the second quarter of fiscal 2026.

In connection with this redemption, the Company recognized debt extinguishment charges of $16.3 million during the second quarter of fiscal 2026, which included the write-off of the remaining unamortized direct financing costs of $3.4 million.

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.

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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 $51.0 million and $65.6 million, 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 $73.0 million and $63.7 million as of December 31, 2025 and September 30, 2025, respectively.

As of March 31, 2026 and September 30, 2025, the amount sold to the Purchasers was $55.8 million and $65.6 million, 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 $66.3 million and $63.7 million as of March 31, 2026 and September 30, 2025, respectively.

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

Six Months Ended

March 31, 2026 Six Months Ended

March 31, 2025

(Dollar amounts in thousands)

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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 $21.4 million during the three months ended December 31, 2024.

As a result of the sale of the Company's interest in the SGK Business, this arrangement no longer exists for the Company at March 31, 2026.

The principal amount of receivables sold under this arrangement was $38.8 million during the six months ended March 31, 2025.

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

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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 $5.8 million and $6.1 million at December 31, 2025 and September 30, 2025, respectively.

The amounts owed to a participating financial institution under the Program and included in trade accounts payable were $4.6 million and $6.1 million at March 31, 2026 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.

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

Outstanding borrowings under the credit facility totaled €86,000 ($101,000) and €659,000 ($774,000) 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 $5.4 million and $7.2 million at December 31, 2025 and September 30, 2025, respectively.

The weighted-average interest rate on these borrowings was 1.33% and 2.33% at December 31, 2025 and 2024, respectively.

Outstanding borrowings under the credit facility totaled €659,000 ($774,000) at September 30, 2025.

There were no outstanding borrowings under the credit facility at March 31, 2026.

The weighted-average interest rate on outstanding borrowings under this facility was 4.60% at March 31, 2025.

Other borrowings totaled $6.4 million and $7.2 million at March 31, 2026 and September 30, 2025, respectively.

The weighted-average interest rate on these borrowings was 1.90% and 2.16% at March 31, 2026 and 2025, respectively.

The Company operates internationally and utilizes certain derivative financial instruments to manage its foreign currency, debt and interest rate exposures.

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

March 31, 2026 September 30, 2025

(Dollar amounts in thousands)

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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 $2.3 million ($1.7 million after tax) and $2.3 million ($1.8 million 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 $1.3 million ($1.0 million after tax) and $1.6 million ($1.2 million 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 $18,000 included in AOCI is expected to be recognized in earnings over the next twelve months.

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

The fair value of the interest rate swaps reflected a net unrealized loss of $820,000 ($621,000 after tax) and $2.3 million ($1.8 million after tax) at March 31, 2026 and September 30, 2025, respectively, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI").

Unrecognized gains of $1.0 million ($757,000 after tax) and $1.6 million ($1.2 million after tax) related to previously terminated London Interbank Offered Rate ("LIBOR") based swaps were also included in AOCI as of March 31, 2026 and September 30, 2025, respectively.

Assuming market rates remain constant with the rates at March 31, 2026, a gain (net of tax) of approximately $392,000 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:

Notional Amount Unrealized Gains (Losses)

Notional Amount Unrealized Losses

Recognized in AOCI

Swap Currencies Maturity Date December 31, 2025 September 30, 2025 December 31, 2025 September 30, 2025

Swap Currencies Maturity Date March 31, 2026 September 30, 2025 March 31, 2026 September 30, 2025

(Dollar amounts in thousands)

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$ (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.

(1) Total unrealized gains (losses) are presented net of tax of $3,376 and $4,652 as of March 31, 2026 and September 30, 2025, respectively.

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

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 $40.2 million at both December 31, 2025 and September 30, 2025, all of which were included in other current liabilities on the Consolidated Balance Sheet.

Outstanding advance payment amounts totaled $40.2 million at both March 31, 2026 and September 30, 2025, all of which were included in other current liabilities on the Consolidated Balance Sheet.

The Company has a stock repurchase program, which is designed to increase shareholder value, enlarge the Company's holdings of its Class A Common Stock, and add to earnings per share.

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On November 21, 2025, the Company announced that its Board of Directors approved the continuation of the stock repurchase program and increased the authorization for stock repurchases by an additional 5,000,000 shares during fiscal year 2025.

Under the current authorization, 4,837,444 shares remained available for repurchase as of December 31, 2025.

Under the current authorization, 4,814,491 shares remained available for repurchase as of March 31, 2026.

Refer to Item 2 - "Unregistered Sales of Equity Securities and Use of Proceeds" in Part II - "Other Information" for further details on the Company's repurchases in fiscal 2026.

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.

For the six months ended March 31, 2026, the Company did not sell any shares of its Class A Common Stock under its ATM Program.

As of September 30, 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.

Consolidated working capital of the Company was $164.3 million at December 31, 2025, compared to $169.7 million at September 30, 2025.

Cash and cash equivalents were $31.4 million at December 31, 2025, compared to $32.4 million at September 30, 2025.

The Company's current ratio was 1.5 at both December 31, 2025 and September 30, 2025, 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 $109.8 million and $99.7 million, 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.

Consolidated working capital of the Company was $186.4 million at March 31, 2026, compared to $169.7 million at September 30, 2025.

Cash and cash equivalents were $36.1 million at March 31, 2026, compared to $32.4 million at September 30, 2025.

The Company's current ratio was 1.6 at March 31, 2026 and 1.5 at September 30, 2025, respectively.

As of March 31, 2026 and September 30, 2025, the Company had net contract assets for projects recognized using the over time method totaling $98.5 million and $99.7 million, respectively, which primarily represent unbilled revenues, net of deferred revenues related to customer deposits and progress billings.

Net contract assets at March 31, 2026 and September 30, 2025 predominantly related to ongoing projects with Tesla.

Unbilled revenues are generally expected to be invoiced upon the attainment of certain contractual conditions and milestones.

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Customer delays within the energy storage business have impacted the timing of projects, and consequently, have resulted in invoicing delays for this business.

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

Long-Term Contractual Obligations:

The following table summarizes the Company's contractual obligations at December 31, 2025, and the effect such obligations are expected to have on its liquidity and cash flows in future periods.

The following table summarizes the Company's contractual obligations at March 31, 2026, and the effect such obligations are expected to have on its liquidity and cash flows in future periods.

Payments due in fiscal year:

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Revolving credit facilities $ 404,750 $ — $ — $ 404,750 $ —

2027 Senior Secured Notes (1)

348,347 12,938 335,409 — —

Secured term loan 150,000 1,875 15,000 133,125 —

Finance lease obligations (1)

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Total contractual cash obligations $ 702,195 $ 61,756 $ 73,272 $ 559,007 $ 8,160

(1) In January 2026, subsequent to the date of the balance sheet, the Company redeemed all of the outstanding 2027 Senior Secured Notes using proceeds from recent divestitures, and additional borrowings under the Company’s domestic credit facility (see above for further information).

(1) Lease obligations have not been discounted to their present value.

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If a tax authority agrees with the tax position taken, or expected to be taken, or the applicable statute of limitations expires, then additional payments will not be necessary.

As of December 31, 2025, the Company had unrecognized tax benefits, excluding penalties and interest, of approximately $2.9 million.

The timing of potential future payments related to the unrecognized tax benefits is not presently determinable.

As of March 31, 2026, the Company had unrecognized tax benefits, excluding penalties and interest, of approximately $2.9 million.

The timing of potential future

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

payments related to the unrecognized tax benefits is not presently determinable.

The Company believes that its current liquidity sources, combined with its operating cash flow and borrowing capacity, will be sufficient to meet its capital needs for the foreseeable future.

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Refer to Note 16, "Acquisitions and Divestitures" in Item 1 - "Financial Statements" for further details on the Company's acquisitions and divestitures.

SUBSEQUENT EVENT:

Refer to Note 20, "Subsequent Event" in Item 1 - "Financial Statements" for further details on the Company's subsequent event.

FORWARD-LOOKING INFORMATION:

Management routinely develops and reviews with the Company’s Board of Directors strategic plans with the primary objective of continuous improvement in the Company’s consolidated sales and operating results, with a view towards enterprise-level strategic transactions.

Strategic plans are developed at the business segment level and generally contain strategies for organic

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

growth and acquisitions.

Strategic plans are developed at the business segment level and generally contain strategies for organic growth and acquisitions.

Organic growth primarily reflects the Company’s internal efforts to grow its businesses including commercial activities, cost structure and productivity improvements, new product development, and the expansion into new markets with existing products.

Growth through acquisitions reflects the benefits from acquired businesses and also includes related integration activities to achieve commercial and cost synergy benefits.

The significant factors influencing organic sales growth in the Industrial Technologies segment include economic/industrial market conditions, new product development, and the electric vehicle ("EV") trend.

Sales within this segment are influenced by the timing of work with the Company's largest energy storage customer, which may be impacted by continuing disputes with such customer, as well as the level of advancement by existing and potential new customers towards adopting new production solutions.

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The Matthews Board of Directors has launched a comprehensive review of strategic alternatives for the Company’s entire portfolio of businesses, which was publicly announced in November 2024.

The Board is dedicated to driving long-term value creation, and the strategic alternatives process is a reflection of that commitment.

The Board is dedicated to driving long-term value creation, and the strategic alternatives review process is a reflection of that commitment.

In addition to the divestiture of the Company’s interest in the SGK Business, the Company also recently completed the divestitures of its warehouse automation and European roto-gravure packaging and tooling and flexographic print businesses during the first quarter of fiscal 2026.

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The Company is reviewing further cost reduction actions for fiscal 2026.

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

CRITICAL ACCOUNTING ESTIMATES AND POLICIES:

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Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the Company’s market risk during the three months ended December 31, 2025.

There have been no material changes in the Company’s market risk during the three and six months ended March 31, 2026.

For additional information, see Item 7A - "Quantitative and Qualitative Disclosures About Market Risk" in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis