What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-07 compared with 2026-05-01 · 140 added, 69 removed, 173 unchanged (55% of the section changed)

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

of productivity improvements and other cost-reduction initiatives, and the favorable impact of the fiscal 2025 acquisition of The Dodge Company.

Gross profit also included acquisition integration costs and other charges primarily in connection with cost-reduction initiatives totaling $7.2 million and $3.9 million for the nine months ended June 30, 2026 and 2025, respectively.

Selling and administrative expenses for the nine months ended June 30, 2026 were $310.1 million, compared to $343.6 million for the same period last year.

Consolidated selling and administrative expenses, as a percent of sales, were 39.3% for the nine months ended June 30, 2026, compared to 29.1% for the same period last year.

Selling and administrative expenses reflected benefits from ongoing cost-reduction initiatives, and a reduction in selling and administrative expenses from the fiscal 2025 divestiture of the Company's interest in the SGK Business of $43.8 million in fiscal 2026 and $12.1 million in fiscal 2025.

Fiscal 2026 selling and administrative expenses included $17.2 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.

During the first nine months of fiscal 2026, the Company recognized $109.5 million of net pre-tax gains on divestitures (see Acquisitions and Divestitures below).

During the third quarter of fiscal 2025, the Company recognized $57.1 million pre-tax gain on the sale of its interest in the SGK Business, and during the second quarter of fiscal 2025, the Company recognized a $2.1 million loss on a small divestiture in the Industrial Technologies segment.

(See Acquisitions and Divestitures below).

Fiscal 2025 selling and administrative expenses included, $8.7 million of net gains on the sales of certain significant property and other assets, and $3.5 million of accelerated stock based compensation costs related to the Company's divestiture of its interest in the SGK Business.

Selling and administrative expenses included litigation costs related to an ongoing dispute with Tesla, Inc.

("Tesla") totaling $18.9 million in fiscal 2026 and $14.4 million in fiscal 2025 (see Legal Matters below).

Selling and administrative expenses included activist shareholder/contested proxy costs totaling $2.4 million in fiscal 2026 and $5.1 million in fiscal 2025.

Selling and administrative expenses included fees for receivables sold under a receivables purchase agreement and factoring arrangement totaling $1.4 million in fiscal 2026 and $3.3 million in fiscal 2025.

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 $10.1 million in fiscal 2026, compared to $8.0 million in fiscal 2025.

Intangible amortization for the nine months ended June 30, 2026 was $8.1 million, compared to $16.4 million for the nine months ended June 30, 2025.

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

Adjusted EBITDA for the nine months ended June 30, 2026 was $115.0 million, compared to $136.0 million for the nine months ended June 30, 2025.

Memorialization segment adjusted EBITDA was $130.0 million for the first nine months of fiscal 2026, compared to $124.5 million for the first nine 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, labor, and other production costs.

Adjusted EBITDA for the Industrial Technologies segment was a loss of $13.2 million for the nine months ended June 30, 2026 compared to income of $16.9 million for the nine months ended June 30, 2025.

The decrease in segment adjusted EBITDA reflected the impact of lower sales and margins on engineered products, lower product identification margins, the impact of divesting the Company's warehouse automation business in December 2025, and unfavorable sales mix for warehouse automation solutions for the fiscal 2026 period prior to the divestiture.

These declines were partially offset by benefits from cost-reduction initiatives and lower performance-based compensation compared to fiscal 2025.

Adjusted EBITDA for the Brand Solutions segment was $32.0 million for the first nine months of fiscal 2026, compared to $32.9 million for the same period a year ago.

The decrease in segment adjusted EBITDA primarily reflected a reduction of $33.7 million resulting from the fiscal 2025 divestiture of the Company's interest in the SGK Business, partially offset by the inclusion of the Company's portion (40% ownership interest) of Propelis' adjusted EBITDA, which totaled $32.4 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 nine months of fiscal 2026 was $35.1 million, compared to $47.4 million for the same period during the last fiscal year.

The decrease in interest expense reflected lower average borrowing levels and lower average interest rates in the current fiscal year.

During the second quarter of fiscal 2026, the Company recognized $16.3 million of debt extinguishment charges in connection with the redemption of the Company's 2027 Senior Secured Notes (see Liquidity and Capital Resources below).

Other income (deductions), net, for the nine months ended June 30, 2026 represented an increase in pre-tax income of $3.0 million, compared to $2.0 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 $3.4 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 $1.7 million which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.

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

Income tax provisions for the Company's interim periods are based on the effective income tax rate expected to be applicable for the full year.

The Company's consolidated income taxes for the first nine months of fiscal 2026 represented an expense of $34.6 million, compared to $38.4 million for the first nine months of fiscal 2025.

The difference between the Company’s consolidated income taxes for the first nine months of fiscal 2026 compared to the same period for fiscal 2025 resulted from lower consolidated pre-tax income in fiscal 2026 compared to fiscal 2025, less discrete tax expense related to the divestiture of the Company's warehouse automation and European roto-gravure packaging and tooling and flexographic print businesses compared to the fiscal 2025 SGK Business divestiture, and other fiscal 2025 net discrete tax benefit exceeding other fiscal 2026 net discrete tax benefit.

The Company’s fiscal 2026 nine 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, discrete tax benefit related to investment related items, net discrete tax expense related to the completion of prior year tax returns, 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 nine 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, discrete tax related to the sale of the Company's interest in the SGK Business, 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.

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.

In addition, adjusted EBITDA does not include depreciation, intangible amortization, interest expense and other items incurred by Propelis.

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

June 30, Nine Months Ended

2026 2025 2026 2025

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Net (loss) income $ (23,689) $ 15,387 $ (1,894) $ 2,999

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

Income tax provision 46 43,477 34,618 38,391

(Loss) income before income taxes (23,643) 58,864 32,724 41,390

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15,333 10,315 36,977 16,303

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

Gain on divestitures, net (234) (57,103) (109,498) (55,031)

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

— 325 16 1,036

Stock-based compensation 5,054 8,841 14,597 19,838

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(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 $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.

(2) Includes fees for receivables sold under the RPA and factoring arrangements totaling $380,000 and $1.0 million for the three months ended June 30, 2026 and 2025, respectively, and $1.4 million and $3.3 million for the nine months ended June 30, 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 $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.

Also includes litigation costs related to an ongoing dispute with Tesla, which totaled $7.8 million and $5.8 million for the three months ended June 30, 2026 and 2025, respectively, and $18.9 million and $14.4 million for the nine months ended June 30, 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 $207,000 for the three months ended June 30, 2025 and $5.1 million for the nine months ended June 30, 2025.

Fiscal 2025 includes net gains on the sales of certain significant property and other assets of $8.7 million for the nine months ended June 30, 2025.

Fiscal 2025 also includes loss recoveries totaling $538,000 for the three months ended June 30, 2025 and $1.7 million for the nine months ended June 30, 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 $8.0 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.

* Depreciation and amortization was $8.0 million and $7.4 million for the Memorialization segment, $3.1 million and $5.5 million for the Industrial Technologies segment, and $564,000 and $596,000 for Corporate and Non-Operating, for the three months ended June 30, 2026 and 2025, respectively.

Depreciation and amortization was $24.2 million and $21.8 million for the Memorialization segment, $9.5 million and $16.8 million for the Industrial Technologies segment, $609,000 and $15.9 million for the Brand Solutions segment, and $1.5 million and $2.1 million for Corporate and Non-Operating, for the nine months ended June 30, 2026 and 2025, respectively.

Depreciation and amortization was $2.4 million for the Brand Solutions segment for the three months ended June 30, 2025.

** Acquisition costs, ERP system integration costs, and strategic initiatives and other charges were $1,000 and $552,000 for the Memorialization segment, $13.2 million and $9.1 million for the Industrial Technologies segment, $126,000 and $1.7 million for the Brand Solutions segment, and $2.3 million and income of $10.5 million for Corporate and Non-Operating, for the three months ended June 30, 2026 and 2025, respectively.

Acquisition costs, ERP system integration costs, and strategic initiatives and other charges were $450,000 and $4.3 million for the Memorialization segment, $26.3 million and $13.4 million for the Industrial Technologies segment, $3.6 million and $2.8 million for the Brand Solutions segment, and $8.2 million and $631,000 for Corporate and Non-Operating, for the nine months ended June 30, 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 $6.7 million and $2.4 million for the three months ended June 30, 2026 and 2025, respectively, and expenses of $9.0 million and $1.1 million for the nine months ended June 30, 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 $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 cash used in operating activities was $69.5 million for the first nine months of fiscal 2026, compared to $33.9 million for the first nine months of fiscal 2025.

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

Net changes in working capital items decreased operating cash flow by $46.1 million and $50.6 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 $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.

Cash provided by investing activities was $267.4 million for the nine months ended June 30, 2026, compared to $153.2 million for the nine months ended June 30, 2025.

Investing activities for the first nine months of fiscal 2026 primarily reflected capital expenditures of $13.3 million, acquisitions, net of cash acquired, of $524,000, proceeds from sale of assets of $10.1 million, proceeds from sale of investments of $28.0 million, and proceeds from divestitures (net of divested cash) of $243.6 million.

Investing activities for the first nine months of fiscal 2025 primarily reflected capital expenditures of $26.4 million, acquisitions, net of cash acquired, of $57.8 million, proceeds from sale of assets of $14.9 million, proceeds from sale of the SGK Business, net of divested cash, of $228.0 million, proceeds from other divestitures of $2.0 million, and investments and advances of $7.4 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 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.

Cash used in financing activities for the nine months ended June 30, 2026 was $192.5 million, primarily reflecting repayments, net of proceeds, on long-term debt of $146.4 million, treasury stock purchases of $5.8 million, dividends of $25.6 million, payment of debt redemption premium of $12.9 million, and payment of debt issuance costs of $1.6 million.

Cash used in financing activities for the nine months ended June 30, 2025 was $139.4 million, primarily reflecting repayments, net of proceeds, on long-term debt of $70.3 million, treasury stock purchases of $12.1 million, dividends of $24.7 million, payments, net of proceeds, on net investment hedges of $22.1 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.

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A portion of the revolving credit facility (not to exceed $350.0 million) can be drawn in foreign currencies.

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.

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% (1.75% at June 30, 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.

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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.

Unamortized costs were $4.2 million and $3.9 million at June 30, 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 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.

dollar denominated borrowings on the revolving credit facility at June 30, 2026 and September 30, 2025 were $404.6 million and $384.2 million, respectively.

Outstanding borrowings on the term loan at June 30, 2026 were $134.9 million.

The weighted-

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

average interest rate on outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps) at June 30, 2026 and 2025 was 5.37% and 5.13%, respectively.

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").

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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 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.

As of June 30, 2026 and September 30, 2025, the amount sold to the Purchasers was $52.1 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 $63.5 million and $63.7 million as of June 30, 2026 and September 30, 2025, respectively.

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

Six Months Ended

March 31, 2026 Six Months Ended

March 31, 2025

Nine Months Ended

June 30, 2026 Nine Months Ended

June 30, 2025

(Dollar amounts in thousands)

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(134,729) (242,288)

Net cash (reinvested) received $ (9,800) $ 2,800

Net cash reinvested $ (13,500) $ (10,700)

The Company, through a former U.K.

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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 March 31, 2026.

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

As a result of the sale of the Company's interest in the SGK Business, this arrangement no longer exists for the Company at June 30, 2026.

The principal amount of receivables sold under this arrangement was $45.8 million during the nine months ended June 30, 2025.

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" in Item 1 - "Financial Statements and Supplementary Data" for further information with respect to the sale of the Company's interest in the SGK Business.

See Note 16, "Acquisitions and

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

Divestitures" in Item 1 - "Financial Statements and Supplementary Data" 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 $4.6 million and $6.1 million at March 31, 2026 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 June 30, 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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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.

There were no outstanding borrowings under the credit facility at June 30, 2026.

The weighted-average interest rate on outstanding borrowings under this facility was 4.16% at June 30, 2025.

Other borrowings totaled $7.7 million and $7.2 million at June 30, 2026 and September 30, 2025, respectively.

The weighted-average interest rate on these borrowings was 2.39% and 3.42% at June 30, 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:

March 31, 2026 September 30, 2025

June 30, 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 $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 fair value of the interest rate swaps reflected a net unrealized gain of $837,000 ($627,000 after tax) and a net unrealized loss of $2.3 million ($1.8 million after tax) at June 30, 2026 and September 30, 2025, respectively, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI").

Unrecognized gains of $750,000 ($555,000 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 June 30, 2026 and September 30, 2025, respectively.

Assuming market rates remain constant with the rates at June 30, 2026, a gain (net of tax) of approximately $845,000 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 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 Losses

Notional Amount Unrealized (Loss) Gain

Recognized in AOCI

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

Swap Currencies Maturity Date June 30, 2026 September 30, 2025 June 30, 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 $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

(1) Total unrealized net losses are presented net of tax of $2,398 and $4,652 as of June 30, 2026 and September 30, 2025, respectively.

On June 25, 2026, the SEK cross currency swap matured and payment of $21.5 million was made on July 1, 2026 by the Company.

The swap represented a partial advance payment, as discussed below, and was included in other current liabilities on the Consolidated Balance Sheet.

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 March 31, 2026 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 June 30, 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, 4,814,491 shares remained available for repurchase as of March 31, 2026.

Under the current authorization, 4,814,087 shares remained available for repurchase as of June 30, 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 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 maintains an At-The-Market equity offering program ("ATM Program") pursuant to which it may issue and sell, from time to time, up to 1,250,000 shares of its Class A Common Stock.

No shares were sold under the ATM Program during the nine months ended June 30, 2026.

As of June 30, 2026, 1,250,000 shares remained available 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 $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.

Consolidated working capital of the Company was $208.6 million at June 30, 2026, compared to $169.7 million at September 30, 2025.

Cash and cash equivalents were $37.6 million at June 30, 2026, compared to $32.4 million at September 30, 2025.

The Company's current ratio was 1.8 at June 30, 2026 and 1.5 at September 30, 2025, respectively.

As of June 30, 2026 and September 30, 2025, the Company had net contract assets for projects recognized using the over time method totaling $98.1 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 June 30, 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 March 31, 2026, 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 June 30, 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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(1) Lease obligations have not been discounted to their present value.

(2) Includes $810 of severance and other employee termination benefit obligations, as well as $4,836 of deferred purchase price and contingent consideration obligations related to acquisitions completed in prior years.

(2) Includes $6,042 of severance and other employee termination benefit obligations, $21,478 related to the timing of the Company's payment of a matured cross-currency swap on July 1, 2026, and $4,736 of deferred purchase price and contingent consideration obligations related to acquisitions completed in prior years.

Unrecognized tax benefits are positions taken, or expected to be taken, on an income tax return that may result in additional payments to tax authorities.

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 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.

As of June 30, 2026, 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.

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

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

The significant factors influencing organic sales growth in the Industrial Technologies segment include economic/industrial market conditions, new product development, and the energy storage market trends.

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.

The Company has experienced, and expects to continue to experience through the balance of fiscal year 2026, delays in the energy storage business.

For the Memorialization segment, the Company expects that sales growth will be influenced by North America death rates and the impact of the increasing trend toward cremation on the segment's product offerings, including caskets, cemetery memorial products and cremation-related products.

The Memorialization segment's profitability has been and may continue to be impacted by rising input costs, including unrefunded tariffs.

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.

Following the completion of this transaction, 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.

Following the completion of this transaction, the SGK Business has been deconsolidated from the financial statements and since May 1, 2025, the Company's interest in such business has been accounted for as part of the Company's equity-method investment in Propelis.

See Notes 7, "Investments" and 16, "Acquisitions and Divestitures" in Item 8 - "Financial Statements and Supplementary Data" for further information.

The underlying business performance for the Company's investment in Propelis will be influenced by global economic conditions, brand innovation, the level of marketing spending by the investee's clients, government regulation, currency fluctuations, and the ability of the investee to effectively integrate and achieve anticipated synergy benefits from the joint venture.

While the anticipated synergy benefits at Propelis are beginning to scale, the timing to realize such synergies may differ from initial forecasts.

The Company, however, continues to believe that Propelis remains on track to deliver a significant portion of the aggregate synergies estimated at the closing of the contribution of the SGK Business to Propelis.

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.

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The Company's strategic alternatives review to enhance shareholder value creation remains ongoing.

The Company also initiated cost reduction programs during the fourth quarter of fiscal 2024, which were primarily focused on the Company's engineering and tooling operations in Europe, as well as the Company's general and administrative functions.

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

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

The Company also initiated cost reduction programs during the fourth quarter of fiscal 2024 and the third quarter of fiscal 2026, which were primarily focused on the Company's engineering and tooling operations in Europe, as well as the Company's general and administrative functions.

The Company continues to review further cost reduction actions.

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 and six months ended March 31, 2026.

There have been no material changes in the Company’s market risk during the three and nine months ended June 30, 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