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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
____________________________________________________________
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 2024
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period from _____ to _____

Commission File No. 0-09115
____________________________________________________________
MATTHEWS INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
____________________________________________________________
Pennsylvania25-0644320
(State or other jurisdiction of
 incorporation or organization)
(I.R.S. Employer
Identification No.)

Two Northshore Center, Pittsburgh, PA 15212-5851
(Address of principal executive offices) (Zip Code)

(412) 442-8200
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Common Stock, $1.00 par valueMATWNasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ý No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 ý
Accelerated filer
Non-accelerated filer ☐Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes ☐ No ý

As of March 31, 2024, shares of common stock outstanding were: Class A Common Stock 30,709,859 shares.



PART I ‑ FINANCIAL INFORMATION

Item 1.   Financial Statements

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollar amounts in thousands)
 March 31, 2024September 30, 2023
ASSETS    
Current assets:    
Cash and cash equivalents $45,497  $42,101 
Accounts receivable, net 192,735  207,526 
Inventories, net 253,301  260,409 
Contract assets90,835 74,646 
Other current assets 71,681  63,575 
Total current assets 654,049  648,257 
Investments 26,780  24,988 
Property, plant and equipment, net 277,903  270,326 
Operating lease right-of-use assets65,779 71,629 
Deferred income taxes 2,316  2,269 
Goodwill 707,881  698,109 
Other intangible assets, net 143,884  160,478 
Other assets11,885 11,325 
Total assets $1,890,477  $1,887,381 
LIABILITIES    
Current liabilities:    
Long-term debt, current maturities  $5,419  $3,696 
Current portion of operating lease liabilities23,442 23,983 
Trade accounts payable 107,147  114,316 
Accrued compensation 44,525  58,872 
Accrued income taxes 4,035  12,561 
Contract liabilities35,613 36,935 
Other current liabilities 138,571  144,237 
Total current liabilities 358,752  394,600 
Long-term debt 837,357  786,484 
Operating lease liabilities44,658 50,189 
Deferred income taxes 69,672  71,255 
Other liabilities 70,691  59,572 
Total liabilities 1,381,130  1,362,100 
SHAREHOLDERS' EQUITY    
Shareholders' equity-Matthews:    
Common stock$36,334  $36,334  
Additional paid-in capital150,344  168,211  
Retained earnings705,113  714,727  
Accumulated other comprehensive loss(172,504) (174,404) 
Treasury stock, at cost(209,987) (219,200) 
Total shareholders' equity-Matthews 509,300  525,668 
Noncontrolling interests 47  (387)
Total shareholders' equity 509,347  525,281 
Total liabilities and shareholders' equity $1,890,477  $1,887,381 

The accompanying notes are an integral part of these consolidated financial statements.
2


MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollar amounts in thousands, except per share data)
Three Months Ended
March 31,
Six Months Ended
March 31,
 2024202320242023
Sales$471,223 $479,580 $921,209 $928,820 
Cost of sales(323,041)(329,957)(640,674)(640,267)
Gross profit148,182 149,623 280,535 288,553 
Selling expense(36,004)(34,539)(70,448)(67,978)
Administrative expense(81,891)(81,516)(160,578)(159,437)
Intangible amortization(8,959)(10,517)(18,754)(20,859)
Operating profit21,328 23,051 30,755 40,279 
Interest expense(12,545)(12,047)(24,121)(22,262)
Other income (deductions), net(878)1,503 (1,758)(551)
Income before income taxes7,905 12,507 4,876 17,466 
Income tax benefit (provision)1,122 (3,382)1,848 (4,694)
Net income9,027 9,125 6,724 12,772 
Net loss attributable to noncontrolling interests 2  58 
Net income attributable to Matthews shareholders$9,027 $9,127 $6,724 $12,830 
Earnings per share attributable to Matthews shareholders:
Basic$0.29 $0.30 $0.22 $0.42 
Diluted$0.29 $0.29 $0.22 $0.41 

The accompanying notes are an integral part of these consolidated financial statements.
3


MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(Dollar amounts in thousands)
 Three Months Ended March 31,
 MatthewsNoncontrolling InterestTotal
 202420232024202320242023
Net income (loss):$9,027 $9,127 $ $(2)$9,027 $9,125 
Other comprehensive (loss) income ("OCI"), net of tax:      
Foreign currency translation adjustment(6,026)4,432  (5)(6,026)4,427 
Pension plans and other postretirement benefits(282)(176)  (282)(176)
Unrecognized gain (loss) on cash flow hedges:      
Net change from periodic revaluation1,983 (1,471)  1,983 (1,471)
Net amount reclassified to earnings(499)(771)  (499)(771)
Net change in unrecognized gain (loss) on cash flow hedges1,484 (2,242)  1,484 (2,242)
OCI, net of tax(4,824)2,014  (5)(4,824)2,009 
Comprehensive income (loss)$4,203 $11,141 $ $(7)$4,203 $11,134 

 Six Months Ended March 31,
 MatthewsNoncontrolling InterestTotal
 202420232024202320242023
Net income (loss):$6,724 $12,830 $ $(58)$6,724 $12,772 
OCI, net of tax:      
Foreign currency translation adjustment5,659 24,992 22 (1)5,681 24,991 
Pension plans and other postretirement benefits(362)769   (362)769 
Unrecognized loss on cash flow hedges:      
Net change from periodic revaluation(2,406)(1,378)  (2,406)(1,378)
Net amount reclassified to earnings(991)(1,268)  (991)(1,268)
Net change in unrecognized loss on cash flow hedges(3,397)(2,646)  (3,397)(2,646)
OCI, net of tax1,900 23,115 22 (1)1,922 23,114 
Comprehensive income (loss)$8,624 $35,945 $22 $(59)$8,646 $35,886 
The accompanying notes are an integral part of these consolidated financial statements.

4


MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the three and six months ended March 31, 2024 and 2023 (Unaudited)
(Dollar amounts in thousands, except per share data)
 Shareholders' Equity
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss) Income
Treasury
Stock
Non-
controlling
Interests
Total
Balance,
     September 30, 2023
$36,334 $168,211 $714,727 $(174,404)$(219,200)$(387)$525,281 
Net loss— — (2,303)— — — (2,303)
Minimum pension liability— — — (80)— — (80)
Translation adjustment— — — 11,685 — 22 11,707 
Fair value of cash flow hedges— — — (4,881)— — (4,881)
Total comprehensive income      4,443 
Stock-based compensation— 4,651 — — — — 4,651 
Purchase of 465,953 shares of treasury stock
— — — — (17,185)— (17,185)
Issuance of 678,750 shares of treasury stock
— (25,356)— — 25,356 —  
Dividends— — (8,381)— — — (8,381)
Transactions with non-controlling interest— (412)— — — 412  
Balance,
     December 31, 2023
$36,334 $147,094 $704,043 $(167,680)$(211,029)$47 $508,809 
Net income— — 9,027 — — — 9,027 
Minimum pension liability— — — (282)— — (282)
Translation adjustment— — — (6,026)— — (6,026)
Fair value of cash flow hedges— — — 1,484 — — 1,484 
Total comprehensive income      4,203 
Stock-based compensation— 4,327 — — — — 4,327 
Purchase of 1,029 shares of treasury stock
— — — — (35)— (35)
Issuance of 28,878 shares of treasury stock
— (1,077)— — 1,077 —  
Dividends— — (7,957)— — — (7,957)
Balance,
     March 31, 2024
$36,334 $150,344 $705,113 $(172,504)$(209,987)$47 $509,347 

5


MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY, Continued
for the three and six months ended March 31, 2024 and 2023 (Unaudited)
(Dollar amounts in thousands, except per share data)




 Shareholders' Equity
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss) Income
Treasury
Stock
Non-
controlling
Interests
Total
Balance,
     September 30, 2022
$36,334 $160,255 $706,749 $(190,191)$(225,795)$(276)$487,076 
Net income (loss)— — 3,703 — — (56)3,647 
Minimum pension liability— — — 945 — — 945 
Translation adjustment— — — 20,560 — 4 20,564 
Fair value of cash flow hedges— — — (404)— — (404)
Total comprehensive income      24,752 
Stock-based compensation— 4,334 — — — — 4,334 
Purchase of 89,025 shares of treasury stock
— — — — (2,451)— (2,451)
Issuance of 245,006 shares of treasury stock
— (9,154)— — 9,154 —  
Cancellations of 34,327 shares of treasury stock
— 1,958 — — (1,958)—  
Dividends— — (8,794)— — — (8,794)
Balance,
     December 31, 2022
$36,334 $157,393 $701,658 $(169,090)$(221,050)$(328)$504,917 
Net income (loss)— — 9,127 — — (2)9,125 
Minimum pension liability— — — (176)— — (176)
Translation adjustment— — — 4,432 — (5)4,427 
Fair value of cash flow hedges— — — (2,242)— — (2,242)
Total comprehensive income      11,134 
Stock-based compensation— 4,278 — — — — 4,278 
Purchase of 7,606 shares of treasury stock
— — — — (288)— (288)
Issuance of 46,069 shares of treasury stock
— (1,723)— — 1,723 —  
Dividends— — (7,683)— — — (7,683)
Transactions with noncontrolling interests— — — — — 33 33 
Balance,
     March 31, 2023
$36,334 $159,948 $703,102 $(167,076)$(219,615)$(302)$512,391 

The accompanying notes are an integral part of these consolidated financial statements.
6


MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands)
Six Months Ended
March 31,
 20242023
Cash flows from operating activities:  
Net income$6,724 $12,772 
Adjustments to reconcile net income to net cash flows from operating activities:  
Depreciation and amortization46,784 47,877 
Stock-based compensation expense8,978 8,612 
Deferred tax provision29 268 
Gain on sale of assets, net(316) 
Defined benefit plan settlement losses 1,271 
Defined benefit plan settlement payments (24,242)
Proceeds from the settlement of cash flow hedges 10,474 
Changes in working capital items(35,609)(10,885)
Decrease in other assets11,724 3,298 
Decrease in other liabilities(7,782)(2,083)
Other operating activities, net(691)(2,651)
Net cash provided by operating activities29,841 44,711 
Cash flows from investing activities:  
Capital expenditures(24,033)(23,772)
Acquisitions, net of cash acquired(5,825)(7,586)
Other investing activities, net95 155 
Net cash used in investing activities(29,763)(31,203)
Cash flows from financing activities:  
Proceeds from long-term debt491,142 414,843 
Payments on long-term debt(449,509)(441,963)
Purchases of treasury stock(17,220)(2,739)
Dividends(16,691)(14,126)
Payments of debt issuance costs(4,704) 
Other financing activities (914)
Net cash provided by (used in) financing activities3,018 (44,899)
Effect of exchange rate changes on cash300 1,893 
Net change in cash and cash equivalents3,396 (29,498)
Cash and cash equivalents at beginning of year42,101 71,414 
Cash and cash equivalents at end of period$45,497 $41,916 

The accompanying notes are an integral part of these consolidated financial statements.
7


MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2024
(Dollar amounts in thousands, except per share data)


Note 1.   Nature of Operations

Matthews International Corporation ("Matthews" or the "Company"), founded in 1850 and incorporated in Pennsylvania in 1902, is a global provider of memorialization products, industrial technologies and brand solutions. The Company manages its businesses under three segments: Memorialization, Industrial Technologies and SGK Brand Solutions. Memorialization products consist primarily of bronze and granite memorials and other memorialization products, caskets, cremation-related products, and cremation and incineration equipment primarily for the cemetery and funeral home industries. Industrial Technologies includes the design, manufacturing, service and distribution of high-tech custom energy storage solutions; product identification and warehouse automation technologies and solutions, including order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products; and coating and converting lines for the packaging, pharma, foil, décor and tissue industries. SGK Brand Solutions consists of brand management, pre-media services, printing plates and cylinders, imaging services, digital asset management, merchandising display systems, and marketing and design services primarily for the consumer goods and retail industries.

The Company has facilities in North America, Europe, Asia, Australia, and Central and South America.


Note 2.   Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information for commercial and industrial companies and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three and six months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2024. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2023. The consolidated financial statements include all domestic and foreign subsidiaries in which the Company maintains an ownership interest and has operating control and any variable interest entities for which the Company is the primary beneficiary.  Investments in certain companies over which the Company exerts significant influence, but does not control the financial and operating decisions, are accounted for as equity method investments. Investments in certain companies over which the Company does not exert significant influence are accounted for as cost method investments. All intercompany accounts and transactions have been eliminated. The Company applies highly inflationary accounting for subsidiaries when the cumulative inflation rate for a three-year period meets or exceeds 100 percent.

Effective April 1, 2022, the Company has applied highly inflationary accounting to its Turkish subsidiaries. Under highly inflationary accounting, the financial statements of these subsidiaries are remeasured into the Company's reporting currency (U.S. dollar) and exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in current earnings, rather than accumulated other comprehensive loss on the Consolidated Balance Sheets, until such time as the applicable economy is no longer considered highly inflationary. As of March 31, 2024 and September 30, 2023, the Company had net monetary assets related to its Turkish subsidiaries of $4,612 and $4,271, respectively. Exchange losses related to highly inflationary accounting totaled $390 and $710 for the three and six months ended March 31, 2024, respectively, and $160 and $1,248 for the three and six months ended March 31, 2023, respectively. Such amounts were included in the Consolidated Statements of Income within other income (deductions), net.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.





8


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 2.   Basis of Presentation (continued)

New Accounting Pronouncements:

Issued

In December 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740) which enhances the transparency and decision usefulness of income tax disclosures including rate reconciliations and income taxes paid among other tax disclosures. The ASU is effective for annual periods for the Company beginning in fiscal year 2026. The Company is in the process of assessing the impact this ASU will have on its consolidated financial statements.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) which improves financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities, including enhanced disclosures about significant segment expenses. The ASU is effective for annual periods for the Company beginning in fiscal year 2025, and interim periods beginning in fiscal year 2026. The Company is in the process of assessing the impact this ASU will have on its consolidated financial statements.

In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements. The amendments in this update affect the presentation and disclosure of a variety of topics in the Codification, and align them with the Securities and Exchange Commission ("SEC") regulations. The effective date of the amendments of this ASU will be determined for each individual disclosure based on the effective date of the SEC’s removal of the related disclosure from Regulation S-X or Regulation S-K. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, then this ASU will not become effective. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.

Adopted

In September 2022, the FASB issued ASU No. 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50) which enhances the transparency of supplier finance programs by addressing disclosure requirements. Specifically, the amendment requires disclosure of key program terms, amounts outstanding, balance sheet presentation, and a rollforward of amounts outstanding during the annual period. The adoption of this ASU in the first quarter of fiscal 2024 had no material impact on the Company's consolidated financial statements.

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 Company is not a party to the agreements between the suppliers and the financial institutions and has no economic interest in a supplier's decision to sell a receivable. The range of payment terms negotiated with a supplier is consistent, irrespective of whether a supplier participates in the Program. 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 $4,670 and $3,027 at March 31, 2024 and September 30, 2023, respectively.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) which improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract asset/liability, and payment terms and their effect on subsequent revenue recognized by the acquirer. The adoption of this ASU in the first quarter of fiscal 2024 had no material impact on the Company's consolidated financial statements.

9


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 3.   Revenue Recognition

The Company disaggregates revenue from contracts with customers by geography, as it believes geographic regions best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Disaggregated sales by segment and region for the three and six months ended March 31, 2024 and 2023 were as follows:

 MemorializationIndustrial TechnologiesSGK Brand SolutionsConsolidated
Three Months Ended March 31,Three Months Ended March 31,Three Months Ended March 31,Three Months Ended March 31,
20242023202420232024202320242023
North America$212,053 $211,878 $32,817 $41,835 $63,152 $62,324 $308,022 $316,037 
Central and South America    1,308 995 1,308 995 
Europe7,907 8,462 81,579 81,970 52,731 52,941 142,217 143,373 
Australia2,196 2,549   2,153 2,216 4,349 4,765 
Asia  1,740 1,709 13,587 12,701 15,327 14,410 
Total Sales$222,156 $222,889 $116,136 $125,514 $132,931 $131,177 $471,223 $479,580 


 MemorializationIndustrial TechnologiesSGK Brand SolutionsConsolidated
Six Months Ended March 31,Six Months Ended March 31,Six Months Ended March 31,Six Months Ended March 31,
20242023202420232024202320242023
North America$409,218 $407,077 $65,956 $77,975 $125,872 $129,904 $601,046 $614,956 
Central and South America    2,562 2,332 2,562 2,332 
Europe15,878 16,825 158,355 153,271 102,863 101,458 277,096 271,554 
Australia5,131 5,489   4,324 4,515 9,455 10,004 
Asia  3,199 3,411 27,851 26,563 31,050 29,974 
Total Sales$430,227 $429,391 $227,510 $234,657 $263,472 $264,772 $921,209 $928,820 

Revenue from products or services provided to customers over time accounted for approximately 18% and 13% of revenue for the three months ended March 31, 2024 and 2023, respectively and 19% and 13% of revenue for the six months ended March 31, 2024 and 2023, respectively.


10


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 4.   Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  A three level fair value hierarchy is used to prioritize the inputs used in valuations, as defined below:
Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2:
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3:
 Unobservable inputs for the asset or liability.

The fair values of the Company's assets and liabilities measured on a recurring basis are categorized as follows:
 March 31, 2024September 30, 2023
 Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:        
Derivatives (1)
$ $1,889 $ $1,889 $ $4,006 $ $4,006 
Equity and fixed income mutual funds 1,466  1,466  699  699 
Life insurance policies 4,825  4,825  4,926  4,926 
Total assets at fair value$ $8,180 $ $8,180 $ $9,631 $ $9,631 
Liabilities:        
Derivatives (1)
$ $5,198 $ $5,198 $ $2,766 $ $2,766 
Total liabilities at fair value$ $5,198 $ $5,198 $ $2,766 $ $2,766 
(1) Interest rate swaps and cross currency swaps are valued based on observable market swap rates and are classified within Level 2 of the fair value hierarchy.

The carrying values for other financial assets and liabilities approximated fair value at March 31, 2024 and September 30, 2023.


Note 5.   Inventories

Inventories consisted of the following:
 March 31, 2024September 30, 2023
Raw materials$71,068 $70,451 
Work in process103,060 108,400 
Finished goods79,173 81,558 
 $253,301 $260,409 


Note 6.     Investments

Non-current investments consisted of the following:
 March 31, 2024September 30, 2023
Equity and fixed income mutual funds$1,466 $699 
Life insurance policies4,825 4,926 
Equity-method investments332 323 
Other (primarily cost-method) investments20,157 19,040 
 $26,780 $24,988 

11


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 7.   Debt and Financing Arrangements

Long-term debt at March 31, 2024 and September 30, 2023 consisted of the following:
 March 31, 2024September 30, 2023
Revolving credit facilities$511,057 $463,168 
2025 Senior Notes298,362 298,500 
Other borrowings17,200 19,241 
Finance lease obligations16,157 9,271 
Total debt842,776 790,180 
Less current maturities(5,419)(3,696)
Long-term debt$837,357 $786,484 

The Company has a domestic credit facility with a syndicate of financial institutions that was amended and restated in January 2024. The amended and restated loan agreement includes a $750,000 senior secured revolving credit facility, which matures in January 2029, subject to the terms and conditions of the amended facility. A portion of the revolving credit facility (not to exceed $350,000) can be drawn in foreign currencies. Borrowings under the revolving credit facility bear interest at the Secured Overnight Financing Rate ("SOFR"), plus a 0.10% per annum rate spread adjustment, plus a factor ranging from 1.00% to 2.00% (1.50% at March 31, 2024) based on the Company's leverage ratio. The leverage ratio is defined as total indebtedness divided by EBITDA (earnings before interest, income taxes, depreciation and amortization) as defined within the domestic credit facility agreement. The Company is required to pay an annual commitment fee ranging from 0.15% to 0.30% (based on the Company's leverage ratio) of the unused portion of the revolving credit facility. The Company incurred new debt issuance costs of $4,704 in connection with the amended and restated agreement, which were deferred and are being amortized over the term of the facility. Unamortized costs were $5,363 and $949 at March 31, 2024 and September 30, 2023, respectively.

The domestic credit facility requires the Company to maintain certain leverage and interest coverage ratios. A portion of the facility (not to exceed $55,000) is available for the issuance of trade and standby letters of credit. Outstanding U.S. dollar denominated borrowings on the revolving credit facility at March 31, 2024 and September 30, 2023 were $447,949 and $405,000, respectively. Outstanding Euro denominated borrowings on the revolving credit facility at March 31, 2024 and September 30, 2023 were €55.0 million ($59,370) and €55.0 million ($58,168), respectively. The weighted-average interest rate on the outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps and Euro denominated borrowings) at March 31, 2024 and 2023 was 4.89% and 5.17%, respectively.

The Company has $299,217 of 5.25% senior unsecured notes due December 1, 2025 (the "2025 Senior Notes"). The 2025 Senior Notes bear interest at a rate of 5.25% per annum with interest payable semi-annually in arrears on June 1 and December 1 of each year. The Company's obligations under the 2025 Senior Notes are guaranteed by certain of the Company's direct and indirect wholly-owned subsidiaries. The Company is subject to certain covenants and other restrictions in connection with the 2025 Senior Notes. The Company incurred direct financing fees and costs in connection with the 2025 Senior Notes. Unamortized costs were $855 and $1,125 at March 31, 2024 and September 30, 2023, 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 $125,000 of receivables to certain purchasers (the “Purchasers”) on a recurring basis in exchange for cash (referred to as “capital” within the RPA) equal to the gross receivables transferred. The parties intend that the transfers of receivables to the Purchasers constitute purchases and sales of receivables. Matthews RFC has guaranteed to each Purchaser the prompt payment of sold receivables, and has granted a security interest in its assets for the benefit of the Purchasers. Under the RPA, each Purchaser’s share of capital accrues yield at a floating rate plus an applicable margin. The Company is the master servicer under the RPA, and is responsible for administering and collecting receivables. The RPA, which had a maturity date of March 2024, was amended in March 2024 to extend the maturity date to March 2026.
12


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 7.   Debt and Financing Arrangements (continued)

The proceeds of the RPA are classified as operating activities in the Company’s Consolidated Statements of Cash Flows. Cash received from collections of sold receivables may be used to fund additional purchases of receivables on a revolving basis, or to reduce all or any portion of the outstanding capital of the Purchasers. The fair value of the sold receivables approximated book value due to their credit quality and short-term nature, and as a result, no gain or loss on sale of receivables was recorded. As of March 31, 2024 and September 30, 2023, the amount sold to the Purchasers was $109,900 and $101,800, 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 $51,819 and $57,897 as of March 31, 2024 and September 30, 2023, respectively.

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

Six Months Ended
March 31, 2024
Six Months Ended
March 31, 2023
Gross receivables sold
$194,116 $201,115 
Cash collections reinvested
(186,016)(189,105)
Net cash proceeds received$8,100 $12,010 

In March 2023, the Company, through its U.K. subsidiary, entered into 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 $34,993 and $16,950 during the six months ended March 31, 2024 and 2023, 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, 2024 and September 30, 2023, the amount of factored receivables that remained outstanding was $15,411 and $18,045, respectively.

The Company, through certain of its European subsidiaries, has a credit facility with a European bank, which is guaranteed by Matthews. The maximum amount of borrowing available under this facility is €10.0 million ($10,795). The facility also provides €18.5 million ($19,970) for bank guarantees.  This facility has no stated maturity date and is available until terminated. Outstanding borrowings under the credit facility totaled €3.5 million ($3,738) at March 31, 2024. There were no outstanding borrowings under the credit facility at September 30, 2023. The weighted-average interest rate on outstanding borrowings under this facility was 6.11% and 5.17% at March 31, 2024 and 2023, respectively.

Other borrowings totaled $17,200 and $19,241 at March 31, 2024 and September 30, 2023, respectively. The weighted-average interest rate on all other borrowings was 2.55% and 3.01% at March 31, 2024 and 2023, respectively.

As of March 31, 2024 and September 30, 2023, the fair value of the Company's long-term debt, including current maturities, which is classified as Level 2 in the fair value hierarchy, approximated the carrying value included in the Consolidated Balance Sheets. The Company was in compliance with all of its debt covenants as of March 31, 2024.
13


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 8.   Derivatives and Hedging Activities

The Company operates internationally and utilizes certain derivative financial instruments to manage its foreign currency, debt and interest rate exposures. At March 31, 2024 and September 30, 2023, derivative instruments were reflected on a gross-basis in the consolidated balance sheets as follows:
Derivatives:March 31, 2024September 30, 2023
Interest Rate SwapsCross- Currency SwapsInterest Rate SwapsCross- Currency Swaps
Current assets:  
Other current assets$472 $ $920 $ 
Long-term assets:  
Other assets1,417  3,086  
Current liabilities:  
Other current liabilities(31)   
Long-term liabilities:  
Other liabilities(91)(5,076) (2,766)
Total derivatives$1,767 $(5,076)$4,006 $(2,766)

The following table presents information related to interest rate swaps entered into by the Company and designated as cash flow hedges:
March 31, 2024September 30, 2023
Notional amount$175,000 $175,000 
Weighted-average maturity period (years)3.64.1
Weighted-average received rate5.33 %5.32 %
Weighted-average pay rate3.83 %3.83 %

The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate. The interest rate swaps have been designated as cash flow hedges of future variable interest payments which are considered probable of occurring.  Based on the Company's assessment, all of the critical terms of each of the hedges matched the underlying terms of the hedged debt and related forecasted interest payments, and as such, these hedges were considered highly effective.

The fair value of the interest rate swaps reflected a net unrealized gain of $1,767 ($1,319 after tax) at March 31, 2024 and $4,006 ($2,991 after tax) at September 30, 2023, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI"). Unrecognized gains of $5,775 ($4,316 after tax) and $8,084 ($6,041 after tax) related to previously terminated LIBOR-based swaps were also included in AOCI as of March 31, 2024 and September 30, 2023, respectively. Assuming market rates remain constant with the rates at March 31, 2024, a gain (net of tax) of approximately $2,896 included in AOCI is expected to be recognized in earnings over the next twelve months.

The Company has a U.S. Dollar/Euro cross currency swap with a notional amount of $81,392, as of March 31, 2024 and September 30, 2023, which has been designated as a net investment hedge of foreign operations. The swap contract matures in September 2027. The Company assesses hedge effectiveness for this contract based on changes in fair value attributable to changes in spot prices. A loss of $3,790 (net of income taxes of $1,286) and a loss of $2,065 (net of income taxes of $701), which represented effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at March 31, 2024 and September 30, 2023, respectively. Income of $327 and $586, which represented the recognized portion of the fair value of cross currency swaps excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of interest expense for the three and six months ended March 31, 2024, respectively.
Income of $309 and $581, which represented the recognized portion of the fair value of cross currency swaps excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of interest expense for the three and six months ended March 31, 2023, respectively. At March 31, 2024 and September 30, 2023, the swap totaled $5,076 and $2,766, respectively, and was included in other accrued liabilities in the Consolidated Balance Sheets.
14


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 8.   Derivatives and Hedging Activities (continued)

The Company uses certain foreign currency debt instruments as net investment hedges of foreign operations with a notional amount of €55.0 million ($59,370) as of March 31, 2024. Currency losses of $1,991 (net of income taxes of $675), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at March 31, 2024.

Refer to Note 12, "Accumulated Other Comprehensive Income" for further details regarding amounts recorded in AOCI and the Consolidated Statements of Income (Loss) related to derivatives.


Note 9.   Share-Based Payments

The Company maintains an equity incentive plan (as amended and restated, the "2017 Equity Incentive Plan") that provides for grants of stock options, restricted shares, restricted share units ("RSUs"), stock-based performance units and certain other types of stock-based awards. Under the 2017 Equity Incentive Plan, which has a ten-year term from the date the Company's Board of Directors approved of the amendment and restatement of the 2017 Equity Incentive Plan, the maximum number of shares available for grants or awards is an aggregate of 3,450,000 (subject to adjustment upon certain events such as stock dividends or stock splits), following the amendment and restatement of the 2017 Equity Incentive Plan at the Company's 2022 Annual Shareholder Meeting. At March 31, 2024, 1,178,558 shares have been issued under the 2017 Equity Incentive Plan. 1,233,583 time-based RSUs, 1,579,514 performance-based RSUs, and 75,000 stock options have been granted under the 2017 Equity Incentive Plan. 1,720,892 of these share-based awards are outstanding as of March 31, 2024.  The 2017 Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors. The number of shares issued under performance-based RSUs may be up to 200% of the number of performance-based RSUs, based on the satisfaction of specific criteria established by the plan administrator.

For the three-month periods ended March 31, 2024 and 2023, stock-based compensation cost totaled $4,327 and $4,278, respectively. For the six-month periods ended March 31, 2024 and 2023, stock-based compensation totaled $8,978 and $8,612, respectively. The associated future income tax benefit recognized for stock-based compensation was $1,093 and $1,057 for the three-month periods ended March 31, 2024 and 2023, respectively, and $1,778 and $1,608 for the six-month periods ended March 31, 2024 and 2023, respectively.

With respect to the restricted share unit grants, units generally vest on the third anniversary of the grant date. The number of units that vest depend on certain time and performance thresholds. Such performance thresholds include adjusted earnings per share, return on invested capital, appreciation in the market value of the Company's Class A Common Stock, or other targets established by the Compensation Committee of the Board of Directors. Approximately 40% of the outstanding share units vest based on time, while the remaining vest based on pre-defined performance thresholds. The Company issues common stock from treasury shares once the units become vested.

The transactions for RSUs for the six months ended March 31, 2024 were as follows:
RSUsWeighted-
average
Grant-date
Fair Value
Non-vested at September 30, 20231,728,697 $30.90 
Granted458,320 40.39 
Vested(449,775)30.07 
Expired or forfeited(16,350)35.22 
Non-vested at March 31, 20241,720,892 $33.60 

During the third quarter of fiscal 2021, 75,000 stock options were granted under the 2017 Equity Incentive Plan. The option price for each stock option granted was $41.70, which was equal to the fair market value of the Company's Class A Common Stock on the date of grant. During the second quarter of fiscal 2024, all of these stock options were forfeited in connection with an employee retirement.



15


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 9.   Share-Based Payments (continued)

As of March 31, 2024, the total unrecognized compensation cost related to all unvested stock-based awards was $28,205 and is expected to be recognized over a weighted average period of 2.2 years.

The fair value of certain stock-based awards that are subject to performance conditions are estimated on the date of grant using a binomial lattice valuation model. The following table indicates the assumptions used in estimating the fair value of certain stock-based awards granted during the six-month period ended March 31, 2024.

Six Months Ended
March 31, 2024
Expected volatility31.8 %
Dividend yield2.4 %
Average risk-free interest rate4.7 %
Average expected term (years)3.0

The risk-free interest rate is based on United States Treasury yields at the date of grant. The dividend yield is based on the most recent dividend payment and average stock price over the 12 months prior to the grant date. Expected volatilities are based on the historical volatility of the Company's stock price. The expected term for grants in the six months ended March 31, 2024 represents an estimate of the average period of time for RSUs to vest.

The Company maintains the Amended and Restated 2019 Director Fee Plan, the Amended and Restated 2014 Director Fee Plan and the 1994 Director Fee Plan (collectively, the "Director Fee Plans").  There will be no further fees or share-based awards granted under the Amended and Restated 2014 Director Fee Plan and the 1994 Director Fee Plan.  Under the Amended and Restated 2019 Director Fee Plan, non-employee directors (except for the Chairman of the Board) each receive, as an annual retainer fee for fiscal 2024, either cash or shares of the Company's Class A Common Stock with a value equal to $90.  The annual retainer fee for fiscal 2024 paid to the non-employee Chairman of the Board is $210.  Where the annual retainer fee is provided in shares, each director may elect to be paid these shares on a current basis or have such shares credited to a deferred stock account as phantom stock, with such shares to be paid to the director subsequent to leaving the Board.  The total number of shares of stock that have been authorized to be issued under the Amended and Restated 2019 Director Fee Plan or credited to a deferred stock compensation account for subsequent issuance is 300,000 shares of Class A Common Stock (subject to adjustment upon certain events such as stock dividends or stock splits), following the amendment and restatement of the 2019 Director Fee Plan at the Company's 2023 Annual Shareholder Meeting. The value of deferred shares is recorded in other liabilities.  A total of 50,355 shares and share units had been deferred under the Director Fee Plans as of March 31, 2024.  Additionally, non-employee directors each receive an annual stock-based grant (non-statutory stock options, stock appreciation rights and/or restricted shares or units) with a value of $140 for fiscal 2024.  As of March 31, 2024, 373,471 restricted shares and RSUs have been granted under the Director Fee Plans, 200,242 of which were issued under the 2019 Director Fee Plan.  67,560 RSUs are unvested at March 31, 2024 under the Director Fee Plans.


Note 10.   Earnings Per Share Attributable to Matthews' Shareholders

The information used to compute earnings per share attributable to Matthews' common shareholders was as follows:
Three Months Ended
March 31,
Six Months Ended
March 31,
 2024202320242023
Net income attributable to Matthews shareholders$9,027