What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-06 compared with 2025-04-30 · 82 added, 143 removed, 158 unchanged (59% of the section changed)

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

Sales for the six months ended March 31, 2025 were $829.5 million, compared to $921.2 million for the six months ended March 31, 2024.

The decrease in fiscal 2025 sales reflected lower sales in the Industrial Technologies and Memorialization segments, and increased sales in the SGK Brand Solutions segment.

On a consolidated basis, changes in foreign currency exchange rates were estimated to have an unfavorable impact of $5.7 million on fiscal 2025 sales compared to the prior year.

Memorialization segment sales for the first six months of fiscal 2025 were $396.1 million, compared to $430.2 million for the first six months of fiscal 2024.

The sales decrease principally reflected lower unit sales of caskets, bronze and granite memorial products, and cremation equipment, primarily reflecting a decline in U.S.

These declines were partially offset by improved price realization.

Industrial Technologies segment sales were $161.4 million for the first six months of fiscal 2025, compared to $227.5 million for the first six months of fiscal 2024.

The decrease in sales reflected lower sales of purpose-built engineered products (primarily energy storage solutions for the electric vehicle market and coating and converting equipment) and reduced sales of warehouse automation solutions.

The decrease also reflected lower sales of R+S automotive engineering solutions, as the Company has discontinued these product offerings.

Fiscal 2025 sales for the Industrial Technologies segment were impacted by slower market conditions for the warehouse automation business, and customer delays impacting the timing of projects within the energy storage business.

Changes in foreign currency exchange rates had an unfavorable impact of $1.9 million on the segment's sales compared to the prior year.

In the SGK Brand Solutions segment, sales for the first six months of fiscal 2025 were $272.0 million, compared to $263.5 million for the first six months of fiscal 2024.

The increase in sales reflected higher brand sales in the Asia-Pacific region, improved retail-based sales, increased private-label brand sales, and improved price realization to mitigate inflationary cost increases.

These increases were partially offset by lower brand sales in Europe, lower sales of cylinder (packaging) products in Europe, and the impact of unfavorable changes in foreign exchange rates.

Changes in foreign currency exchange rates had an unfavorable impact of $3.2 million on the segment's sales compared to the prior year.

Gross profit for the six months ended March 31, 2025 was $269.8 million, compared to $280.5 million for the same period a year ago.

Consolidated gross profit as a percent of sales was 32.5% and 30.5% for the first six months of fiscal 2025 and fiscal 2024, respectively.

The decrease in gross profit reflected the impact of lower sales, higher material and labor costs, and lower margins on engineered products.

These decreases were partially offset by the impact of improved price realization, and benefits from the realization of productivity improvements and other cost-reduction initiatives.

Gross profit also included acquisition integration costs and other charges primarily in connection with cost-reduction initiatives totaling $338,000 and $5.9 million for the six months ended March 31, 2025 and 2024, respectively.

Selling and administrative expenses for the six months ended March 31, 2025 were $245.3 million, compared to $231.0 million for the first six months of fiscal 2024.

Consolidated selling and administrative expenses, as a percent of sales, were 29.6% for the six months ended March 31, 2025, compared to 25.1% for the same period last year.

Selling and administrative expenses in fiscal 2025 reflected higher compensation costs, offset by benefits from ongoing cost-reduction initiatives.

Fiscal 2025 selling and administrative expenses included $11.5 million of expenses related to the pending divestiture of the Company's interest in the SGK Brand Solutions business (See Acquisitions and Divestitures below), $4.9 million of costs related to the Company's 2025 contested proxy, $8.7 million of net gains on the sales of certain significant property and other assets, and a $2.1 million loss on a small divestiture in the Industrial Technologies segment.

Selling and administrative expenses included legal costs related to an ongoing dispute in the Company's energy storage business totaling $8.6 million in fiscal 2025 and $5.0 million in fiscal 2024 (see Legal Matter below).

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 $7.1 million in fiscal 2025, compared to $5.8 million in fiscal 2024.

Intangible amortization for the six months ended March 31, 2025 was $12.9 million, compared to $18.8 million for the six months ended March 31, 2024.

The fiscal 2025 decrease in intangible amortization primarily reflected certain intangible assets within the SGK Brand Solutions segment reaching the end of their amortizable lives.

Adjusted EBITDA was $91.4 million for the six months ended March 31, 2025 and $102.3 million for the six months ended March 31, 2024.

Memorialization segment adjusted EBITDA was $81.7 million for the first six months of fiscal 2025 compared to $83.3 million for the first six months of fiscal 2024.

The decrease in segment adjusted EBITDA reflected the impact of lower unit sales, and higher material and labor costs.

These decreases were partially offset by the impact of improved price realization, benefits from productivity initiatives, and the favorable impact of a recent divestiture, which generated operating losses in the prior year.

Adjusted EBITDA for the Industrial Technologies segment was $7.9 million for the six months ended March 31, 2025 compared to $19.7 million for the six months ended March 31, 2024.

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

These decreases were partially offset by benefits from cost-reduction initiatives and lower performance-based compensation compared to fiscal 2024.

Adjusted EBITDA for the SGK Brand Solutions segment was $27.9 million for the first six months of fiscal 2025 compared to $28.3 million for the same period a year ago.

The decrease in

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

segment adjusted EBITDA primarily reflected the impact of higher labor costs, partially offset by the impact of improved price realization and benefits from cost-reduction initiatives.

Interest expense for the first six months of fiscal 2025 was $31.5 million, compared to $24.1 million for the same period last year.

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

Other income (deductions), net, for the six months ended March 31, 2025 represented an increase in pre-tax income of $2.5 million, compared to a decrease in pre-tax income of $1.8 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.

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 six months of fiscal 2025 represented a benefit of $5.1 million, compared to a benefit of $1.8 million for the first six months of fiscal 2024.

The difference between the Company’s consolidated income taxes for the first six months of fiscal 2025 compared to the same period for fiscal 2024 resulted from a consolidated pre-tax loss in fiscal 2025 compared to consolidated pre-tax income in fiscal 2024.

The Company’s fiscal 2025 six-month effective tax rate varied from the U.S.

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

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

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

Refer to Note 17, "Legal Matter" in Item 1 - "Financial Statements" for details related to an ongoing dispute with Tesla.

NON-GAAP FINANCIAL MEASURES:

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

The Company uses 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, 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, 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

June 30, Nine Months Ended

2025 2024 2025 2024

(Dollar amounts in thousands)

Net (loss) income $ (8,916) $ 9,027 $ (12,388) $ 6,724

Income tax benefit (2,728) (1,122) (5,086) (1,848)

(Loss) income before income taxes (11,644) 7,905 (17,474) 4,876

Net income $ 15,387 $ 1,777 $ 2,999 $ 8,501

Income tax provision (benefit) 43,477 (8,829) 38,391 (10,677)

Income (loss) before income taxes 58,864 (7,052) 41,390 (2,176)

Interest expense, including RPA and factoring financing fees (1)

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10,315 6,246 16,303 17,128

Gain on sale of SGK Business (57,103) — (57,103) —

Highly inflationary accounting losses (primarily non-cash) (4)

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Total Adjusted EBITDA $ 44,550 $ 44,746 $ 135,987 $ 147,028

(1) Includes fees for receivables sold under the RPA and factoring arrangements totaling $1.1 million and $1.2 million for the three months ended March 31, 2025 and 2024, respectively, and $2.3 million and $2.4 million for the six months ended March 31, 2025 and 2024, respectively.

(2) Includes certain non-recurring items associated with recent acquisition and divestiture activities and also includes a loss of $2.1 million for the three and six months ended March 31, 2025 related to the divestiture of a business in the Industrial Technologies segment (See Note 15, "Acquisitions and Divestitures" in Item 1 - "Financial Statements and Supplementary Data").

Fiscal 2025 also includes costs related to the pending sale of the Company's interest in the SGK Brand Solutions business which totaled $10.6 million for the three months ended March 31, 2025 and $11.5 million for the six months ended March 31, 2025.

(1) Includes fees for receivables sold under the RPA and factoring arrangements totaling $1.0 million and $1.2 million for the three months ended June 30, 2025 and 2024, respectively, and $3.3 million and $3.6 million for the nine months ended June 30, 2025 and 2024, respectively.

(2) Includes certain non-recurring items associated with recent acquisition and divestiture activities and also includes a loss of $2.1 million for the nine months ended June 30, 2025 related to the divestiture of a business in the Industrial Technologies segment (See Note 15, "Acquisitions and Divestitures" in Item 1 - "Financial Statements and Supplementary Data").

The fiscal 2025 third quarter amount reflects a reclassification of transaction costs totaling $9.7 million, which have been presented as a component of gain on sale of SGK Business.

(3) 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 $1.8 million and $2.6 million for the three months ended March 31, 2025 and 2024, respectively, and $8.6 million and $5.0 million for the six months ended March 31, 2025 and 2024, respectively (see Note 17, "Legal Matter" 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 legal costs related to an ongoing dispute with Tesla, which totaled $5.8 million and $3.2 million for the three months ended June 30, 2025 and 2024, respectively, and $14.4 million and $8.1 million for the nine months ended June 30, 2025 and 2024, respectively (see Note 17, "Legal Matter" 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.

(4) Represents exchange losses associated with highly inflationary accounting related to the Company's Turkish subsidiaries (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 $7.2 million and $6.9 million for the Memorialization segment, $5.6 million and $5.6 million for the Industrial Technologies segment, $4.7 million and $9.7 million for the SGK Brand Solutions segment, and $699,000 and $1.1 million for Corporate and Non-Operating, for the three months ended March 31, 2025 and 2024, respectively.

Depreciation and amortization was $14.4 million and $13.3 million for the Memorialization segment, $11.3 million and $11.9 million for the Industrial Technologies segment, $13.6 million and $19.2 million for the SGK Brand Solutions segment, and $1.5 million and $2.3 million for Corporate and Non-Operating, for the six months ended March 31, 2025 and 2024, respectively.

** Acquisition costs, ERP system integration costs, and strategic initiatives and other charges were $2.4 million and $1.0 million for the Memorialization segment, $2.3 million and $4.4 million for the Industrial Technologies segment, $416,000 and $358,000 for the SGK Brand Solutions segment, and $16.1 million and $1.2 million for Corporate and Non-Operating, for the three months ended March 31, 2025 and 2024, respectively.

Acquisition costs, ERP system integration costs, and strategic initiatives and other charges were $3.7 million and $1.1 million for the Memorialization segment, $6.4 million and $9.8 million for the Industrial Technologies segment, $1.1 million and $1.2 million for the SGK Brand Solutions segment, and $11.1 million and $2.1 million for Corporate and Non-Operating, for the six months ended March 31, 2025 and 2024, respectively.

† Strategic initiatives and other items includes charges for exit and disposal activities (including severance and other employee termination benefits) totaling $2.5 million of income and $822,000 of expenses for the three months ended March 31, 2025 and 2024, respectively, and $1.3 million of income and $2.8 million of expenses for the six months ended March 31, 2025 and 2024, respectively.

* Depreciation and amortization was $7.4 million and $7.1 million for the Memorialization segment, $5.5 million and $5.8 million for the Industrial Technologies segment, $2.4 million and $9.7 million for the Brand Solutions segment, and $596,000 and $1.1 million for Corporate and Non-Operating, for the three months ended June 30, 2025 and 2024, respectively.

Depreciation and amortization was $21.8 million and $20.4 million for the Memorialization segment, $16.8 million and $17.7 million for the Industrial Technologies segment, $15.9 million and $28.9 million for the Brand Solutions segment, and $2.1 million and $3.4 million for Corporate and Non-Operating, for the nine months ended June 30, 2025 and 2024, respectively.

** Acquisition costs, ERP system integration costs, and strategic initiatives and other charges were $552,000 and $1.1 million for the Memorialization segment, $9.1 million and $4.5 million for the Industrial Technologies segment, $1.7 million and $1.5 million for the Brand Solutions segment, and income of $10.5 million and costs of $1.4 million for Corporate and Non-Operating, for the three months ended June 30, 2025 and 2024, respectively.

Acquisition costs, ERP system integration costs, and strategic initiatives and other charges were $4.3 million and $2.2 million for the Memorialization segment, $15.5 million and $14.3 million for the Industrial Technologies segment, $2.8 million and $2.7 million for the Brand Solutions segment, and $631,000 and $3.5 million for Corporate and Non-Operating, for the nine months ended June 30, 2025 and 2024, respectively.

† Strategic initiatives and other items includes charges for exit and disposal activities (including severance and other employee termination benefits) totaling expenses of $2.4 million and $1.1 million for the three months ended June 30, 2025 and 2024, respectively, and expenses of $1.1 million and $3.9 million for the nine months ended June 30, 2025 and 2024, respectively.

Refer to Note 9, "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 $18.7 million for the first six months of fiscal 2025, compared to net cash provided by operating activities of $29.8 million for the first six months of fiscal 2024.

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

Net cash used in operating activities was $33.9 million for the first nine months of fiscal 2025, compared to net cash provided by operating activities of $43.3 million for the first nine months of fiscal 2024.

Operating cash flow for both periods principally included net income adjusted for depreciation and amortization, stock-based compensation expense, gains (losses) 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 $50.6 million and $29.2 million in fiscal 2025 and fiscal 2024, respectively.

The fiscal 2025 change in working capital principally reflected incentive compensation-related payments, payments of severance and other employee termination benefits, changes in contract assets and liabilities related to revenue recognized using the over time method, and changes in other accounts.

Cash used in investing activities was $3.9 million for the six months ended March 31, 2025, compared to $29.8 million for the six months ended March 31, 2024.

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.

Investing activities for the first six months of fiscal 2024 primarily reflected capital expenditures of $24.0 million, and acquisitions, net of cash acquired, of $5.8 million.

Cash provided by investing activities was $153.2 million for the nine months ended June 30, 2025, compared to cash used in investing activities of $38.6 million for the nine months ended June 30, 2024.

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.

Investing activities for the first nine months of fiscal 2024 primarily reflected capital expenditures of $33.2 million, acquisitions, net of cash acquired, of $5.8 million, and purchases of investments of $825,000.

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 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 provided by financing activities for the six months ended March 31, 2024 was $3.0 million, primarily reflecting proceeds, net of repayments, on long-term debt of $41.6 million, treasury stock purchases of $17.2 million, dividends of $16.7 million, and payments of debt issuance costs of $4.7 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.

Cash used in financing activities for the nine months ended June 30, 2024 was $4.1 million, primarily reflecting proceeds, net of repayments, on long-term debt of $27.8 million, treasury stock purchases of $20.5 million, dividends of $24.1 million, payments of debt issuance costs of $4.7 million, and proceeds from a net investment hedge of $17.4 million.

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

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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 the revolving credit facility bear interest at the Secured Overnight Financing Rate ("SOFR"), plus a 0.10% per annum rate spread adjustment, plus a factor ranging from 1.00% to 2.00% (1.50% at March 31, 2025) based on the Company's leverage ratio.

Borrowings under the revolving credit facility bear interest at the Secured Overnight Financing Rate ("SOFR"), plus a 0.10% per annum rate spread adjustment, plus a factor ranging from 1.00% to 2.00% (1.50% at June 30, 2025) based on the Company's leverage ratio.

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

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The Company incurred debt issuance costs in connection with the amended and restated agreement.

Unamortized costs were $4.4 million and $5.0 million at March 31, 2025 and September 30, 2024, respectively.

Unamortized costs were $4.2 million and $5.0 million at June 30, 2025 and September 30, 2024, 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, 2025 and September 30, 2024 were $495.0 million and $410.5 million, respectively.

There were no outstanding Euro denominated borrowings on the revolving credit facility at March 31, 2025.

dollar denominated borrowings on the revolving credit facility at June 30, 2025 and September 30, 2024 were $380.4 million and $410.5 million, respectively.

There were no outstanding Euro denominated borrowings on the revolving credit facility at June 30, 2025.

Outstanding Euro denominated borrowings on the revolving credit facility at September 30, 2024 were €30.0 million ($33.5 million).

The weighted-average interest rate on outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps and Euro denominated borrowings) at March 31, 2025 and 2024 was 4.29% and 4.89%, respectively.

The weighted-average interest rate on outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps and Euro denominated borrowings) at June 30, 2025 and 2024 was 4.16% and 4.61%, respectively.

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

The Company has $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 bear 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 beginning on April 1, 2025.

The 2027 Senior Secured Notes bear interest at a rate of 8.625% per annum with interest payable semi-annually in arrears on April 1 and October 1 of each year.

The Company's obligations under the 2027 Senior Secured Notes are secured by a second priority lien on substantially all of the assets of the Company and certain of its domestic subsidiaries.

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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 $4.8 million and $5.2 million at March 31, 2025 and September 30, 2024, respectively.

Unamortized costs related to the Company’s notes were $4.4 million and $5.2 million at June 30, 2025 and September 30, 2024, respectively.

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

Matthews RFC has a receivables purchase agreement (“RPA”) to sell up to $125.0 million of receivables to certain purchasers (the “Purchasers”) on a recurring basis in exchange for cash (referred to as “capital” within the RPA) equal to the gross receivables transferred.

Matthews RFC has a receivables purchase agreement (“RPA”) to sell up to $110.0 million of receivables as of June 30, 2025 to certain purchasers (the “Purchasers”) on a recurring basis in exchange for cash (referred to as “capital” within the RPA) equal to the gross receivables transferred.

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

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

The RPA matures in March 2026.

The RPA will reduce to $75.0 million as of August 1, 2025, and matures in April 2027.

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

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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, 2025 and September 30, 2024, the amount sold to the Purchasers was $99.1 million and $96.3 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 $67.8 million and $58.2 million as of March 31, 2025 and September 30, 2024, respectively.

As of June 30, 2025 and September 30, 2024, the amount sold to the Purchasers was $85.6 million and $96.3 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 $79.5 million and $58.2 million as of June 30, 2025 and September 30, 2024, respectively.

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

Six Months Ended

March 31, 2025 Six Months Ended

March 31, 2024

Nine Months Ended

June 30, 2025 Nine Months Ended

June 30, 2024

(Dollar amounts in thousands)

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(242,288) (287,889)

Net cash proceeds received $ 2,800 $ 8,100

Net cash (reinvested) received $ (10,700) $ 3,300

The Company, through its U.K.

subsidiary, participates in a non-recourse factoring arrangement.

In connection with this arrangement, the Company periodically sells trade receivables to a third-party purchaser in exchange for cash.

These transfers of financial assets are recorded at the time the Company surrenders control of the assets.

As these transfers qualify as true sales under the applicable accounting guidance, the receivables are de-recognized from the Company's Consolidated Balance Sheets upon transfer.

The principal amount of receivables sold under this arrangement was $38.8 million and $35.0 million during the six months ended March 31, 2025 and 2024, respectively.

subsidiary, previously participated in a non-recourse factoring arrangement.

In connection with this arrangement, the Company periodically sold trade receivables to a third-party purchaser in exchange for cash.

These transfers of financial assets were recorded at the time the Company surrendered control of the assets.

As these transfers qualified as true sales under the applicable accounting guidance, the receivables were de-recognized from the Company's Consolidated Balance Sheets upon transfer.

As a result of the sale of the Company's interest in the SGK Business, this arrangement no longer exists for the Company at June 30, 2025.

The principal amount of receivables sold under this arrangement was $45.8 million and $53.1 million during the nine months ended June 30, 2025 and 2024, respectively.

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

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

As of March 31, 2025 and September 30, 2024, the amount of factored receivables that remained outstanding was $16.2 million and $15.7 million, respectively.

As of September 30, 2024, the amount of factored receivables that remained outstanding were $15.7 million.

See Note 15, "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.

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.

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All outstanding payments owed under the Program are recorded within trade accounts payable in the Consolidated Balance Sheets.

The Company accounts for all payments made under the Program as a reduction to operating cash flows in changes in working capital within the Consolidated Statements of Cash Flows.

The amounts owed to a participating financial institution under the Program and included in trade accounts payable were $4.1 million and $3.0 million at March 31, 2025 and September 30, 2024, respectively.

The Company accounts for

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

all payments made under the Program as a reduction to operating cash flows in changes in working capital within the Consolidated Statements of Cash Flows.

The amounts owed to a participating financial institution under the Program and included in trade accounts payable were $4.4 million and $3.0 million at June 30, 2025 and September 30, 2024, 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 €3.6 million ($3.9 million) at March 31, 2025.

Outstanding borrowings under the credit facility totaled €311,000 ($366,000) at June 30, 2025.

There were no outstanding borrowings under the credit facility at September 30, 2024.

The weighted-average interest rate on outstanding borrowings under this facility was 4.60% and 6.11% at March 31, 2025 and 2024, respectively.

Other borrowings totaled $6.5 million and $15.6 million at March 31, 2025 and September 30, 2024, respectively.

The weighted-average interest rate on these borrowings was 2.16% and 2.55% at March 31, 2025 and 2024, respectively.

The weighted-average interest rate on outstanding borrowings under this facility was 4.16% and 5.88% at June 30, 2025 and 2024, respectively.

Other borrowings totaled $5.8 million and $15.6 million at June 30, 2025 and September 30, 2024, respectively.

The weighted-average interest rate on these borrowings was 3.42% and 2.61% at June 30, 2025 and 2024, 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, 2025 September 30, 2024

June 30, 2025 September 30, 2024

(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 $765,000 ($571,000 after tax) and $2.6 million ($1.9 million after tax) at March 31, 2025 and September 30, 2024, respectively, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI").

Unrecognized gains of $2.3 million ($1.7 million after tax) and $3.8 million ($2.9 million after tax) related to previously terminated London Interbank Offered Rate ("LIBOR") based swaps were also included in AOCI as of March 31, 2025 and September 30, 2024, respectively.

Assuming market rates remain constant with the rates at March 31, 2025, a gain (net of tax) of approximately $755,000 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 loss of $2.2 million ($1.7 million after tax) and $2.6 million ($1.9 million after tax) at June 30, 2025 and September 30, 2024, respectively, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI").

Unrecognized gains of $1.9 million ($1.4 million after tax) and $3.8 million ($2.9 million after tax) related to previously terminated London Interbank Offered Rate ("LIBOR") based swaps were also included in AOCI as of June 30, 2025 and September 30, 2024, respectively.

Assuming market rates remain constant with the rates at June 30, 2025, a gain (net of tax) of approximately $252,000 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.

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Recognized in AOCI

Swap Currencies Maturity Date March 31, 2025 September 30, 2024 March 31, 2025 September 30, 2024

Swap Currencies Maturity Date June 30, 2025 September 30, 2024 June 30, 2025 September 30, 2024

(Dollar amounts in thousands)

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$ (6,379) (1)

(1) Total unrealized gains (losses) are presented net of tax of $621 and $2,156 as of March 31, 2025 and September 30, 2024, respectively.

(1) Total unrealized gains (losses) are presented net of tax of $4,506 and $2,156 as of June 30, 2025 and September 30, 2024, respectively.

In connection with certain of these cross currency swaps, the Company received cash from the counterparties, representing partial advance payments of amounts due under the U.S.

dollar leg of the swaps.

Advance payment amounts totaled $73.4 million at March 31, 2025, of which $32.4 million and $41.0 million were included in other current liabilities and other non-

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

current liabilities on the Consolidated Balance Sheet, respectively.

Advance payment amounts totaled $58.4 million at September 30, 2024, of which $17.4 million and $41.0 million were included in other current liabilities and other non-current liabilities on the Consolidated Balance Sheet, respectively.

Outstanding advance payment amounts totaled $40.2 million at June 30, 2025, of which $17.4 million and $22.8 million were included in other current liabilities and other non-current liabilities on the Consolidated Balance Sheet, respectively.

Outstanding advance payment amounts totaled $58.4 million at September 30, 2024, of which $17.4 million and $41.0 million were included in other current liabilities and other non-current liabilities on the Consolidated Balance Sheet, respectively.

During the third quarter of fiscal 2025, certain cross currency swaps were terminated or modified following the sale of the Company's interest in the SGK Business.

The Company made payments totaling $37.1 million in connection with the settlement or modification of these cross currency swap contracts.

The Company previously used certain foreign currency debt instruments as net investment hedges of foreign operations with a notional amount of €30.0 million ($33.5 million) as of September 30, 2024.

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Repurchased shares may be retained in treasury, utilized for acquisitions, or reissued to employees or other purchasers, subject to the restrictions set forth in the Company's Restated Articles of Incorporation.

Under the current authorization, 434,354 shares remained available for repurchase as of March 31, 2025.

Under the current authorization, 48,829 shares remained available for repurchase as of June 30, 2025.

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 2025.

On March 11, 2025, in connection with the filing of an automatic shelf registration statement on Form S-3 pursuant to which the Company re-registered 3,000,000 shares of Class A Common Stock, the Company entered into an Equity Distribution Agreement for an At-The-Market equity offering program ("ATM Program") where 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 March 31, 2025, the Company did not sell any shares of its Class A Common Stock under its ATM Program.

As of March 31, 2025, the Company had 1,250,000 shares remaining for sale under the ATM Program.

For the three months ended June 30, 2025, the Company did not sell any shares of its Class A Common Stock under its ATM Program.

As of June 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 $189.0 million at March 31, 2025, compared to $197.8 million at September 30, 2024.

Cash and cash equivalents were $40.2 million at March 31, 2025, compared to $40.8 million at September 30, 2024.

The Company's current ratio was 1.6 at March 31, 2025 and 1.5 at September 30, 2024, respectively.

Consolidated working capital of the Company was $205.5 million at June 30, 2025, compared to $197.8 million at September 30, 2024.

Cash and cash equivalents were $20.4 million at June 30, 2025, compared to $40.8 million at September 30, 2024.

The Company's current ratio was 1.7 at June 30, 2025 and 1.5 at September 30, 2024, respectively.

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, 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 June 30, 2025, 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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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, 2025, the Company had unrecognized tax benefits, excluding penalties and interest, of approximately $2.0 million.

As of June 30, 2025, the Company had unrecognized tax benefits, excluding penalties and interest, of approximately $2.1 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.

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

REGULATORY MATTERS:

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

Sales within this

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

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.

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.

In January 2025, the Company entered into a definitive contribution agreement (the "Contribution Agreement") to sell its interest in the SGK Brand Solutions business, which is expected to be completed in the third quarter of fiscal 2025, subject to the satisfaction of customary closing conditions (See Note 15, "Acquisitions and Divestitures" in Item 1 – "Financial Statements" for a description of the transactions with respect to the SGK Brand Solutions business).

Upon completion of the transactions specified in the Contribution Agreement, the Company will record its investment and portion of income for the newly formed entity under the equity-method of accounting.

The underlying business performance for this investment 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.

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.

See Notes 6, "Investments" and 15, "Acquisitions and Divestitures" in Item 1 - "Financial Statements" for further information with respect to the Company's sale of its interest in the SGK Business.

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.

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.

In addition to the pending divestiture of the Company’s interest in the SGK Brand Solutions business, the Company expects to announce several additional initiatives over the course of fiscal 2025 that will focus on driving shareholder value.

In addition to the recent divestiture of the Company’s interest in the SGK Business, the Company expects to announce several additional initiatives over the course of fiscal 2025 that will focus on driving shareholder value.

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

These cost reduction programs are expected to be completed by fiscal 2026.

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

CRITICAL ACCOUNTING ESTIMATES AND POLICIES:

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Refer to Note 2, "Basis of Presentation" in Item 1 - "Financial Statements," for further details on recently issued accounting pronouncements.

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, 2025.

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, 2024.

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