matw-20230630

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 June 30, 2023

☐ 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)

____________________________________________________________


Pennsylvania						25-0644320
(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 class

Trading Symbol

Name of each exchange on which registered

Class A Common Stock, $1.00 par value

MATW

Nasdaq 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

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 June 30, 2023, shares of common stock outstanding were: Class A Common Stock 30,467,662 shares.

PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollar amounts in thousands)


	June 30, 2023				September 30, 2022
ASSETS
Current assets:
Cash and cash equivalents			$	39,295			$	69,016
Accounts receivable, net			188,262				221,015
Inventories, net			268,599				225,440
Restricted cash, current			—				2,398
Contract assets			45,636				48,210
Other current assets			77,758				62,537

Total current assets			619,550				628,616


Investments			25,228				25,976


Property, plant and equipment, net			273,572				256,065
Operating lease right-of-use assets			74,846				71,974
Deferred income taxes			2,684				3,610
Goodwill			702,916				675,421
Other intangible assets, net			174,954				202,154
Other assets			10,441				18,955

Total assets			$	1,884,191			$	1,882,771

LIABILITIES
Current liabilities:
Long-term debt, current maturities			$	2,941			$	3,277
Current portion of operating lease liabilities			24,152				22,869
Trade accounts payable			111,723				121,359
Accrued compensation			49,089				58,272
Accrued income taxes			3,872				9,277
Contract liabilities			38,404				31,871
Other current liabilities			149,890				164,450

Total current liabilities			380,071				411,375

Long-term debt			772,056				795,291
Operating lease liabilities			53,076				51,445
Deferred income taxes			92,284				92,589
Other liabilities			64,883				44,995
Total liabilities			1,362,370				1,395,695

SHAREHOLDERS' EQUITY
Shareholders' equity-Matthews:
Common stock	$	36,334			$	36,334
Additional paid-in capital	164,640				160,255
Retained earnings	704,366				706,749
Accumulated other comprehensive loss	(163,856)				(190,191)
Treasury stock, at cost	(219,263)				(225,795)
Total shareholders' equity-Matthews			522,221				487,352
Noncontrolling interests			(400)				(276)
Total shareholders' equity			521,821				487,076

Total liabilities and shareholders' equity			$	1,884,191			$	1,882,771

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

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollar amounts in thousands, except per share data)


	Three Months Ended June 30,				Nine Months Ended June 30,
	2023		2022		2023		2022

Sales	$	471,908	$	421,719	$	1,400,728	$	1,305,276
Cost of sales	(333,603)		(300,854)		(973,870)		(928,255)

Gross profit	138,305		120,865		426,858		377,021

Selling expense	(36,345)		(32,157)		(104,323)		(96,281)
Administrative expense	(69,796)		(65,941)		(229,233)		(206,329)
Intangible amortization	(10,640)		(11,804)		(31,499)		(45,303)


Operating profit	21,524		10,963		61,803		29,108


Interest expense	(10,924)		(6,659)		(33,186)		(19,426)
Other income (deductions), net	(2,487)		(389)		(3,038)		(30,864)

Income (loss) before income taxes	8,113		3,915		25,579		(21,182)

Income tax benefit (provision)	558		(1,040)		(4,136)		2,311

Net income (loss)	8,671		2,875		21,443		(18,871)

Net loss attributable to noncontrolling interests	67		18		125		56

Net income (loss) attributable to Matthews shareholders	$	8,738	$	2,893	$	21,568	$	(18,815)

Earnings (loss) per share attributable to Matthews shareholders:
Basic	$	0.28	$	0.09	$	0.70	$	(0.60)

Diluted	$	0.28	$	0.09	$	0.69	$	(0.60)

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

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(Dollar amounts in thousands)



	Three Months Ended June 30,
	Matthews				Noncontrolling Interest				Total
	2023		2022		2023		2022		2023		2022

Net income (loss):	$	8,738	$	2,893	$	(67)	$	(18)	$	8,671	$	2,875
Other comprehensive income (loss) ("OCI"), net of tax:
Foreign currency translation adjustment	923		(19,293)		(31)		15		892		(19,278)
Pension plans and other postretirement benefits	(210)		17		—		—		(210)		17

Unrecognized gain (loss) on cash flow hedges:
Net change from periodic revaluation	2,745		1,223		—		—		2,745		1,223
Net amount reclassified to earnings	(238)		353		—		—		(238)		353
Net change in unrecognized gain on cash flow hedges	2,507		1,576		—		—		2,507		1,576
OCI, net of tax	3,220		(17,700)		(31)		15		3,189		(17,685)
Comprehensive income (loss)	$	11,958	$	(14,807)	$	(98)	$	(3)	$	11,860	$	(14,810)


	Nine Months Ended June 30,
	Matthews				Noncontrolling Interest				Total
	2023		2022		2023		2022		2023		2022

Net income (loss):	$	21,568	$	(18,815)	$	(125)	$	(56)	$	21,443	$	(18,871)
OCI, net of tax:
Foreign currency translation adjustment	25,915		(27,463)		(32)		23		25,883		(27,440)
Pension plans and other postretirement benefits	559		34,123		—		—		559		34,123

Unrecognized gain (loss) on cash flow hedges:
Net change from periodic revaluation	1,367		5,636		—		—		1,367		5,636
Net amount reclassified to earnings	(1,506)		1,513		—		—		(1,506)		1,513
Net change in unrecognized (loss) gain on cash flow hedges	(139)		7,149		—		—		(139)		7,149
OCI, net of tax	26,335		13,809		(32)		23		26,303		13,832
Comprehensive income (loss)	$	47,903	$	(5,006)	$	(157)	$	(33)	$	47,746	$	(5,039)

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

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

for the three and nine months ended June 30, 2023 and 2022 (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
Net income (loss)	—		—		8,738		—		—		(67)		8,671
Minimum pension liability	—		—		—		(210)		—		—		(210)
Translation adjustment	—		—		—		923		—		(31)		892
Fair value of cash flow hedges	—		—		—		2,507		—		—		2,507
Total comprehensive income													11,860
Stock-based compensation	—		5,023		—		—		—		—		5,023
Purchase of 2,068 shares of treasury stock	—		—		—		—		(79)		—		(79)
Issuance of 11,562 shares of treasury stock	—		(331)		—		—		431		—		100

Dividends	—		—		(7,474)		—		—		—		(7,474)


Balance, June 30, 2023	$	36,334	$	164,640	$	704,366	$	(163,856)	$	(219,263)	$	(400)	$	521,821

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY, Continued

for the three and nine months ended June 30, 2023 and 2022 (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, 2021	$	36,334	$	149,484	$	834,208	$	(192,739)	$	(190,739)	$	(145)	$	636,403
Net loss	—		—		(19,803)		—		—		(7)		(19,810)
Minimum pension liability	—		—		—		34,133		—		—		34,133
Translation adjustment	—		—		—		(1,989)		—		4		(1,985)
Fair value of cash flow hedges	—		—		—		1,481		—		—		1,481
Total comprehensive income													13,819
Stock-based compensation	—		3,709		—		—		—		—		3,709
Purchase of 62,746 shares of treasury stock	—		—		—		—		(2,435)		—		(2,435)
Issuance of 174,107 shares of treasury stock	—		(6,859)		—		—		6,859		—		—
Cancellations of 31,057 shares of treasury stock	—		2,091		—		—		(2,091)		—		—
Dividends	—		—		(6,824)		—		—		—		(6,824)


Balance, December 31, 2021	$	36,334	$	148,425	$	807,581	$	(159,114)	$	(188,406)	$	(148)	$	644,672
Net loss	—		—		(1,905)		—		—		(31)		(1,936)
Minimum pension liability	—		—		—		(27)		—		—		(27)
Translation adjustment	—		—		—		(6,181)		—		4		(6,177)
Fair value of cash flow hedges	—		—		—		4,092		—		—		4,092
Total comprehensive loss													(4,048)
Stock-based compensation	—		5,222		—		—		—		—		5,222
Purchase of 289,184 shares of treasury stock	—		—		—		—		(9,703)		—		(9,703)
Issuance of 45,096 shares of treasury stock	—		(1,761)		—		—		1,761		—		—
Cancellations of 80 shares of treasury stock	—		5		—		—		(5)		—		—
Dividends	—		—		(7,128)		—		—		—		(7,128)

Balance, March 31, 2022	$	36,334	$	151,891	$	798,548	$	(161,230)	$	(196,353)	$	(175)	$	629,015
Net income (loss)	—		—		2,893		—		—		(18)		2,875
Minimum pension liability	—		—		—		17		—		—		17
Translation adjustment	—		—		—		(19,293)		—		15		(19,278)
Fair value of cash flow hedges	—		—		—		1,576		—		—		1,576
Total comprehensive loss													(14,810)
Stock-based compensation	—		5,197		—		—		—		—		5,197
Purchase of 704,531 shares of treasury stock	—		—		—		—		(21,848)		—		(21,848)
Issuance of 3,830 shares of treasury stock	—		(146)		—		—		146		—		—

Dividends	—		—		(6,860)		—		—		—		(6,860)
Divestiture	—		—		—		—		—		(91)		(91)

Balance, June 30, 2022	$	36,334	$	156,942	$	794,581	$	(178,930)	$	(218,055)	$	(269)	$	590,603

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

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollar amounts in thousands)


	Nine Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net income (loss)	$	21,443	$	(18,871)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization	71,813		80,163
Stock-based compensation expense	13,635		14,128
Deferred tax provision (benefit)	680		(2,712)
Loss (gain) on sale of assets, net	594		(514)



Asset write-downs	—		10,017
Defined benefit plan settlement losses	1,271		30,856
Defined benefit plan settlement payments	(24,242)		(35,706)
Proceeds from the settlement of cash flow hedges	10,474		—
Changes in working capital items	(16,131)		(8,393)
Decrease in other assets	4,313		14,923
Decrease in other liabilities	(4,748)		(9,131)
Other operating activities, net	(2,196)		9,607

Net cash provided by operating activities	76,906		84,367

Cash flows from investing activities:
Capital expenditures	(37,107)		(40,597)
Acquisitions, net of cash acquired	(15,341)		—

Proceeds from sale of investments	—		3,127
Purchases of investments	(1,536)		(2,198)
Other investing activities, net	267		739




Net cash used in investing activities	(53,717)		(38,929)

Cash flows from financing activities:
Proceeds from long-term debt	612,052		565,408
Payments on long-term debt	(643,494)		(551,645)

Purchases of treasury stock	(2,818)		(33,986)
Dividends	(21,184)		(20,812)
Acquisition holdback and contingent consideration payments	—		(613)
Other financing activities	(913)		(2,128)

Net cash used in financing activities	(56,357)		(43,776)

Effect of exchange rate changes on cash	1,049		(3,862)

Net change in cash, cash equivalents and restricted cash	(32,119)		(2,200)
Cash, cash equivalents and restricted cash at beginning of year	71,414		68,343
Cash, cash equivalents and restricted cash at end of period	$	39,295	$	66,143

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

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2023

(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. 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 nine months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2023. 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, 2022. 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 applies 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 June 30, 2023 and September 30, 2022, the Company had net monetary assets related to its Turkish subsidiaries of $5,387 and $5,022, respectively. For the three and nine months ended June 30, 2023, exchange losses related to highly inflationary accounting totaled $1,826 and $3,074, respectively, and were included in the Consolidated Statements of Income within other income (deductions), net. For the three and nine months ended June 30, 2022, exchange losses related to highly inflationary accounting totaled $1,245 and 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.

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 October 2021, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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. This ASU is effective for the Company beginning in interim periods starting in fiscal 2024. While the impact of this ASU is dependent on the nature of any future transactions, the Company currently does not expect this ASU to have a significant impact on its consolidated financial statements.

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 ASU will be effective beginning in the first quarter of fiscal 2024, except for the rollforward requirement, which is effective in fiscal year 2025. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.

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 nine months ended June 30, 2023 and 2022 were as follows:



	Memorialization				Industrial Technologies				SGK Brand Solutions				Consolidated
	Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,
	2023		2022		2023		2022		2023		2022		2023		2022
North America	$	197,309	$	191,495	$	43,924	$	39,736	$	63,000	$	68,008	$	304,233	$	299,239
Central and South America	—		—		—		—		1,342		1,472		1,342		1,472
Europe	8,468		9,175		84,577		37,119		51,532		54,046		144,577		100,340
Australia	2,951		2,488		—		—		2,020		2,797		4,971		5,285
Asia	—		—		2,032		1,588		14,753		13,795		16,785		15,383
Total Sales	$	208,728	$	203,158	$	130,533	$	78,443	$	132,647	$	140,118	$	471,908	$	421,719

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 3. Revenue Recognition (continued)


	Memorialization				Industrial Technologies				SGK Brand Solutions				Consolidated
	Nine Months Ended June 30,				Nine Months Ended June 30,				Nine Months Ended June 30,				Nine Months Ended June 30,
	2023		2022		2023		2022		2023		2022		2023		2022
North America	$	604,386	$	593,901	$	121,900	$	110,869	$	192,904	$	211,278	$	919,190	$	916,048
Central and South America	—		—		—		—		3,674		3,615		3,674		3,615
Europe	25,293		32,613		237,847		115,285		152,990		175,900		416,130		323,798
Australia	8,440		7,354		—		—		6,535		8,352		14,975		15,706
Asia	—		—		5,443		4,774		41,316		41,335		46,759		46,109
Total Sales	$	638,119	$	633,868	$	365,190	$	230,928	$	397,419	$	440,480	$	1,400,728	$	1,305,276

Revenue from products or services provided to customers over time accounted for approximately 17% and 13% of revenue for the three months ended June 30, 2023 and 2022, respectively, and 14% and 11% of revenue for the nine months ended June 30, 2023 and 2022, respectively.

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:


	June 30, 2023								September 30, 2022
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Derivatives (1)	$	—	$	1,734	$	—	$	1,734	$	—	$	14,421	$	—	$	14,421
Equity and fixed income mutual funds	—		693		—		693		—		—		—		—
Life insurance policies	—		5,234		—		5,234		—		4,439		—		4,439
Total assets at fair value	$	—	$	7,661	$	—	$	7,661	$	—	$	18,860	$	—	$	18,860

Liabilities:
Derivatives (1)	$	—	$	4,931	$	—	$	4,931	$	—	$	—	$	—	$	—
Total liabilities at fair value	$	—	$	4,931	$	—	$	4,931	$	—	$	—	$	—	$	—

(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 June 30, 2023 and September 30, 2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 5. Inventories

Inventories consisted of the following:


	June 30, 2023		September 30, 2022
Raw materials	$	69,674	$	52,586
Work in process	118,968		94,804
Finished goods	79,957		78,050
	$	268,599	$	225,440

Note 6. Investments

Non-current investments consisted of the following:


	June 30, 2023		September 30, 2022
Equity and fixed income mutual funds	$	693	$	—
Life insurance policies	5,234		4,439
Equity-method investments	326		2,729
Other (primarily cost-method) investments	18,975		18,808
	$	25,228	$	25,976

During the second quarter of fiscal 2023, the Company purchased the remaining ownership interest in a small Industrial Technologies business, which was previously held as an equity-method investment. See Note 15, "Acquisitions."

Note 7. Debt and Financing Arrangements

Long-term debt at June 30, 2023 and September 30, 2022 consisted of the following:


	June 30, 2023		September 30, 2022
Revolving credit facilities	$	452,691	$	480,107


2025 Senior Notes	298,365		297,961

Other borrowings	17,345		13,434
Finance lease obligations	6,596		7,066
Total debt	774,997		798,568
Less current maturities	(2,941)		(3,277)
Long-term debt	$	772,056	$	795,291

The Company has a domestic credit facility with a syndicate of financial institutions that includes a $750,000 senior secured revolving credit facility, which matures in March 2025. A portion of the revolving credit facility (not to exceed $350,000) can be drawn in foreign currencies. In March 2023, an amendment to the domestic credit facility implemented SOFR as the replacement of LIBOR as the benchmark interest rate under the facility. The Company accounted for the change in reference rate as a non-substantial modification. Borrowings under the revolving credit facility now bear interest at SOFR, plus a 0.10% per annum rate spread adjustment, plus a factor ranging from 0.75% to 2.00% (1.25% at June 30, 2023) based on the Company's secured leverage ratio. Previously, borrowings under the revolving credit facility bore interest at LIBOR plus a factor ranging from 0.75% to 2.00% based on the Company's secured leverage ratio. The secured leverage ratio is defined as net secured indebtedness divided by EBITDA (earnings before interest, income taxes, depreciation and amortization) as defined within the domestic credit facility agreement. The Company is required to pay an annual commitment fee ranging from 0.15% to 0.30% (based on the Company's leverage ratio) of the unused portion of the revolving credit facility. The Company incurred debt issuance costs in connection with the domestic credit facility. Unamortized costs were $1,065 and $1,522 at June 30, 2023 and September 30, 2022, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 7. Debt and Financing Arrangements (continued)

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 June 30, 2023 and September 30, 2022 were $450,329 and $472,057, respectively. The weighted-average interest rate on the outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps) at June 30, 2023 and 2022 was 5.59% and 1.92%, respectively.

The Company has $299,625 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 $1,260 and $1,664 at June 30, 2023 and September 30, 2022, 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. In March 2022, Matthews RFC entered into 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, which matures in March 2024, 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 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 June 30, 2023 and September 30, 2022, the amount sold to the Purchasers was $113,200 and $96,590, 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 $48,501 and $44,262 as of June 30, 2023 and September 30, 2022, respectively.

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


	Nine Months Ended June 30, 2023		Nine Months Ended June 30, 2022
Gross receivables sold	$	301,045	$	247,221
Cash collections reinvested	(284,435)		(147,220)
Net cash proceeds received	$	16,610	$	100,001

During the second quarter of fiscal 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 $36,045 during the nine months ended June 30, 2023. 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 June 30, 2023, the amount of factored receivables that remained outstanding was $15,714.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 7. Debt and Financing Arrangements (continued)

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 ($