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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 December 31, 2023
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 December 31, 2023, shares of common stock outstanding were: Class A Common Stock 30,682,010 shares.



PART I ‑ FINANCIAL INFORMATION

Item 1.   Financial Statements

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollar amounts in thousands)
 December 31, 2023September 30, 2023
ASSETS    
Current assets:    
Cash and cash equivalents $37,921  $42,101 
Accounts receivable, net 216,402  207,526 
Inventories, net 257,836  260,409 
Contract assets79,067 74,646 
Other current assets 66,837  63,575 
Total current assets 658,063  648,257 
Investments 25,224  24,988 
Property, plant and equipment, net 281,839  270,326 
Operating lease right-of-use assets66,604 71,629 
Deferred income taxes 2,396  2,269 
Goodwill 708,961  698,109 
Other intangible assets, net 151,342  160,478 
Other assets8,696 11,325 
Total assets $1,903,125  $1,887,381 
LIABILITIES    
Current liabilities:    
Long-term debt, current maturities  $4,948  $3,696 
Current portion of operating lease liabilities23,409 23,983 
Trade accounts payable 97,340  114,316 
Accrued compensation 44,277  58,872 
Accrued income taxes 7,523  12,561 
Contract liabilities34,300 36,935 
Other current liabilities 137,406  144,237 
Total current liabilities 349,203  394,600 
Long-term debt 857,423  786,484 
Operating lease liabilities45,685 50,189 
Deferred income taxes 71,730  71,255 
Other liabilities 70,275  59,572 
Total liabilities 1,394,316  1,362,100 
SHAREHOLDERS' EQUITY    
Shareholders' equity-Matthews:    
Common stock$36,334  $36,334  
Additional paid-in capital147,094  168,211  
Retained earnings704,043  714,727  
Accumulated other comprehensive loss(167,680) (174,404) 
Treasury stock, at cost(211,029) (219,200) 
Total shareholders' equity-Matthews 508,762  525,668 
Noncontrolling interests 47  (387)
Total shareholders' equity 508,809  525,281 
Total liabilities and shareholders' equity $1,903,125  $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
December 31,
 20232022
Sales$449,986 $449,240 
Cost of sales(317,633)(310,310)
Gross profit132,353 138,930 
Selling expense(34,444)(33,439)
Administrative expense(78,687)(77,921)
Intangible amortization(9,795)(10,342)
Operating profit9,427 17,228 
Interest expense(11,576)(10,215)
Other income (deductions), net(880)(2,054)
(Loss) income before income taxes(3,029)4,959 
Income tax benefit (provision)726 (1,312)
Net (loss) income(2,303)3,647 
Net loss attributable to noncontrolling interests 56 
Net (loss) income attributable to Matthews shareholders$(2,303)$3,703 
(Loss) earnings per share attributable to Matthews shareholders:
Basic$(0.07)$0.12 
Diluted$(0.07)$0.12 

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 December 31,
 MatthewsNoncontrolling InterestTotal
 202320222023202220232022
Net (loss) income:$(2,303)$3,703 $ $(56)$(2,303)$3,647 
Other comprehensive income (loss) ("OCI"), net of tax:      
Foreign currency translation adjustment11,685 20,560 22 4 11,707 20,564 
Pension plans and other postretirement benefits(80)945   (80)945 
Unrecognized (loss) gain on cash flow hedges:      
Net change from periodic revaluation(4,389)93   (4,389)93 
Net amount reclassified to earnings(492)(497)  (492)(497)
Net change in unrecognized loss on cash flow hedges(4,881)(404)  (4,881)(404)
OCI, net of tax6,724 21,101 22 4 6,746 21,105 
Comprehensive income (loss)$4,421 $24,804 $22 $(52)$4,443 $24,752 
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 months ended December 31, 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, 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 

 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 

The accompanying notes are an integral part of these consolidated financial statements.
5


MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands)
Three Months Ended
December 31,
 20232022
Cash flows from operating activities:  
Net (loss) income$(2,303)$3,647 
Adjustments to reconcile net (loss) income to net cash flows from operating activities:  
Depreciation and amortization23,523 23,729 
Stock-based compensation expense4,651 4,334 
Deferred tax benefit(1)(46)
Gain on sale of assets, net(87)(17)
Defined benefit plan settlement losses 1,271 
Defined benefit plan settlement payments (24,242)
Changes in working capital items(51,640)(43,152)
Decrease in other assets5,888 1,524 
(Decrease) increase in other liabilities(4,068)545 
Other operating activities, net(3,229)(3,817)
Net cash used in operating activities(27,266)(36,224)
Cash flows from investing activities:  
Capital expenditures(14,073)(12,398)
Acquisitions, net of cash acquired (1,759)
Other investing activities, net(113)4 
Net cash used in investing activities(14,186)(14,153)
Cash flows from financing activities:  
Proceeds from long-term debt274,275 240,826 
Payments on long-term debt(211,696)(208,104)
Purchases of treasury stock(17,185)(2,451)
Dividends(9,280)(7,003)
Other financing activities (946)
Net cash provided by financing activities36,114 22,322 
Effect of exchange rate changes on cash1,158 1,757 
Net change in cash and cash equivalents(4,180)(26,298)
Cash and cash equivalents at beginning of year42,101 71,414 
Cash and cash equivalents at end of period$37,921 $45,116 

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


MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
December 31, 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; 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 months ended December 31, 2023 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 December 31, 2023 and September 30, 2023, the Company had net monetary assets related to its Turkish subsidiaries of $4,917 and $4,271, respectively. For the three months ended December 31, 2023 and December 31, 2022, exchange losses related to highly inflationary accounting totaled $320 and $1,088, respectively, 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.






7


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 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 $3,314 and $3,027 at December 31, 2023 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.

8


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 months ended December 31, 2023 and 2022 were as follows:

 MemorializationIndustrial TechnologiesSGK Brand SolutionsConsolidated
Three Months Ended December 31,Three Months Ended December 31,Three Months Ended December 31,Three Months Ended December 31,
20232022202320222023202220232022
North America$197,165 $195,199 $33,139 $36,140 $62,720 $67,580 $293,024 $298,919 
Central and South America    1,254 1,337 1,254 1,337 
Europe7,971 8,363 76,776 71,301 50,132 48,517 134,879 128,181 
Australia2,935 2,940   2,171 2,299 5,106 5,239 
Asia  1,459 1,702 14,264 13,862 15,723 15,564 
Total Sales$208,071 $206,502 $111,374 $109,143 $130,541 $133,595 $449,986 $449,240 

Revenue from products or services provided to customers over time accounted for approximately 19% and 13% of revenue for the three months ended December 31, 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:
 December 31, 2023September 30, 2023
 Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:        
Derivatives (1)
$ $548 $ $548 $ $4,006 $ $4,006 
Equity and fixed income mutual funds 713  713  699  699 
Life insurance policies 5,038  5,038  4,926  4,926 
Total assets at fair value$ $6,299 $ $6,299 $ $9,631 $ $9,631 
Liabilities:        
Derivatives (1)
$ $8,712 $ $8,712 $ $2,766 $ $2,766 
Total liabilities at fair value$ $8,712 $ $8,712 $ $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 December 31, 2023 and September 30, 2023.

9


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 5.   Inventories

Inventories consisted of the following:
 December 31, 2023September 30, 2023
Raw materials$72,355 $70,451 
Work in process107,825 108,400 
Finished goods77,656 81,558 
 $257,836 $260,409 


Note 6.     Investments

Non-current investments consisted of the following:
 December 31, 2023September 30, 2023
Equity and fixed income mutual funds$713 $699 
Life insurance policies5,038 4,926 
Equity-method investments350 323 
Other (primarily cost-method) investments19,123 19,040 
 $25,224 $24,988 


Note 7.   Debt and Financing Arrangements

Long-term debt at December 31, 2023 and September 30, 2023 consisted of the following:
 December 31, 2023September 30, 2023
Revolving credit facilities$521,071 $463,168 
2025 Senior Notes298,635 298,500 
Other borrowings28,117 19,241 
Finance lease obligations14,548 9,271 
Total debt862,371 790,180 
Less current maturities(4,948)(3,696)
Long-term debt$857,423 $786,484 

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. 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 0.75% to 2.00% (1.25% at December 31, 2023) 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 $795 and $949 at December 31, 2023 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 December 31, 2023 and September 30, 2023 were $454,358 and $405,000, respectively. Outstanding Euro denominated borrowings on the revolving credit facility at December 31, 2023 and September 30, 2023 were €55.0 million ($60,710) 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 December 31, 2023 and 2022 was 5.32% and 4.24%, respectively. The Company amended the domestic credit facility in January 2024. Refer to Note 17, "Subsequent Event" for further details.

10


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

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 $990 and $1,125 at December 31, 2023 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. 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 December 31, 2023 and September 30, 2023, the amount sold to the Purchasers was $101,900 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 $57,459 and $57,897 as of December 31, 2023 and September 30, 2023, respectively.

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

Three Months Ended
December 31, 2023
Three Months Ended
December 31, 2022
Gross receivables sold
$92,809 $106,971 
Cash collections reinvested
(92,709)(89,561)
Net cash proceeds received$100 $17,410 

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 $17,118 during the three months ended December 31, 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 December 31, 2023 and September 30, 2023, the amount of factored receivables that remained outstanding was $16,436 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 ($11,038). The facility also provides €18.5 million ($20,420) for bank guarantees.  This facility has no stated maturity date and is available until terminated. Outstanding borrowings under the credit facility totaled €5.4 million ($6,003) at December 31, 2023. 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 3.96% at December 31, 2023 and 2022, respectively.

Other borrowings totaled $28,117 and $19,241 at December 31, 2023 and September 30, 2023, respectively. The weighted-average interest rate on all other borrowings was 4.20% and 3.09% at December 31, 2023 and 2022, respectively.

11


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

As of December 31, 2023 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 December 31, 2023.

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 December 31, 2023 and September 30, 2023, derivative instruments were reflected on a gross-basis in the consolidated balance sheets as follows:
Derivatives:December 31, 2023September 30, 2023
Interest Rate SwapsCross- Currency SwapsInterest Rate SwapsCross- Currency Swaps
Current assets:  
Other current assets$129 $ $920 $ 
Long-term assets:  
Other assets419  3,086  
Current liabilities:  
Other current liabilities(504)   
Long-term liabilities:  
Other liabilities(1,389)(6,819) (2,766)
Total derivatives$(1,345)$(6,819)$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:
December 31, 2023September 30, 2023
Notional amount$175,000 $175,000 
Weighted-average maturity period (years)3.94.1
Weighted-average received rate5.35 %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 loss of $1,345 ($1,004 after tax) at December 31, 2023 and a net unrealized gain of $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 $6,898 ($5,155 after tax) and $8,084 ($6,041 after tax) related to previously terminated LIBOR-based swaps were also included in AOCI as of December 31, 2023 and September 30, 2023, respectively. Assuming market rates remain constant with the rates at December 31, 2023, a gain (net of tax) of approximately $2,577 included in AOCI is expected to be recognized in earnings over the next twelve months.








12


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)

Note 8.   Derivatives and Hedging Activities (continued)

The Company has a U.S. Dollar/Euro cross currency swap with a notional amount of $81,392, as of December 31, 2023 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 $5,091 (net of income taxes of $1,728) 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 December 31, 2023 and September 30, 2023, respectively. Income of $259 and $272, 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 months ended December 31, 2023 and 2022, respectively.
At December 31, 2023 and September 30, 2023, the swap totaled $6,819 and $2,766, respectively, and was included in other accrued liabilities in the Consolidated Balance Sheets.

The Company uses certain foreign currency debt instruments as net investment hedges of foreign operations with a notional amount of €55.0 million ($60,710) as of December 31, 2023. Currency losses of $1,129 (net of income taxes of $383), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at December 31, 2023.

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, 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 December 31, 2023, 1,175,258 shares have been issued under the 2017 Equity Incentive Plan. 1,233,583 time-based restricted share units, 1,579,514 performance-based restricted share units, and 75,000 stock options have been granted under the 2017 Equity Incentive Plan. 1,812,642 of these share-based awards are outstanding as of December 31, 2023.  The 2017 Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors. The number of shares issued under performance-based restricted share units may be up to 200% of the number of performance-based restricted share units, based on the satisfaction of specific criteria established by the plan administrator.

For the three-month periods ended December 31, 2023 and 2022, stock-based compensation cost totaled $4,651 and $4,334, respectively. The associated future income tax benefit recognized for stock-based compensation was $684 and $551 for the three-month periods ended December 31, 2023 and 2022, 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.

13


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

The transactions for restricted share units for the three months ended December 31, 2023 were as follows:
Restricted Share UnitsWeighted-
average
Grant-date
Fair Value
Non-vested at September 30, 20231,728,697 $30.90 
Granted458,320 40.39 
Vested(446,475)30.06 
Expired or forfeited(2,900)34.83 
Non-vested at December 31, 20231,737,642 $33.61 

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. These options vest in one-third increments annually over three years from the grant date. Unvested stock options expire on the earlier of five years from the date of grant, or upon employment termination, retirement or death. The Company generally settles employee stock option exercises with treasury shares.

As of December 31, 2023, the total unrecognized compensation cost related to all unvested stock-based awards was $31,712 and is expected to be recognized over a weighted average period of 2.3 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 three-month period ended December 31, 2023.

Three Months Ended
December 31, 2023
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 three months ended December 31, 2023 represents an estimate of the average period of time for restricted share units 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 45,493 shares and share units had been deferred under the Director Fee Plans as of December 31, 2023.  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 December 31, 2023, 336,127 restricted shares and restricted share units have been granted under the Director Fee Plans, 162,898 of which were issued under the 2019 Director Fee Plan.  60,057 restricted share units are unvested at December 31, 2023 under the Director Fee Plans.

14


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 10.   Earnings Per Share Attributable to Matthews' Shareholders

The information used to compute (loss) earnings per share attributable to Matthews' common shareholders was as follows:
Three Months Ended
December 31,
 20232022
Net (loss) income attributable to Matthews shareholders$(2,303)$3,703 
Weighted-average shares outstanding (in thousands):  
Basic shares30,915 30,712 
Effect of dilutive securities 241 
Diluted shares30,915 30,953 
Dividends declared per common share$0.24 $0.23 
Anti-dilutive securities excluded from the dilution calculation were insignificant for the three months ended December 31, 2022. During periods in which the Company incurs a net loss, diluted weighted-average shares outstanding are equal to basic weighted-average shares outstanding because the effect of all equity awards is anti-dilutive.


Note 11.   Pension and Other Postretirement Benefit Plans

The Company provides defined benefit pension and other postretirement plans to certain employees. Net periodic pension and other postretirement benefit cost for the plans included the following:

 Three months ended December 31,
 PensionOther Postretirement
 2023202220232022
Service cost$30 $57 $14 $19 
Interest cost *129 143 171 161 
Amortization:    
Prior service credit  (91)(91)
Net actuarial gains *(11)(10)(180)(177)
Settlement losses * 1,271   
Net benefit cost$148 $1,461 $(86)$(88)
* Non-service components of pension and postretirement expense are included in other income (deductions), net.

In the first quarter of fiscal 2023, the Company made lump sum payments totaling $24,242 to fully settle the supplemental retirement plan ("SERP") and defined benefit portion of the officers retirement restoration plan ("ORRP") obligations. The settlement of these plan obligations resulted in the recognition of a non-cash charge of $1,271, which has been presented as a component of other income (deductions), net for the three months ended December 31, 2022. This amount represents the immediate recognition of the deferred AOCI balances related to the SERP and ORRP.


15


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 12.   Accumulated Other Comprehensive Income

The changes in AOCI by component, net of tax, for the three-month periods ended December 31, 2023 and 2022 were as follows:
   Post-retirement benefit plansCurrency translation adjustmentCash Flow HedgesTotal
Attributable to Matthews:      
Balance, September 30, 2023 $6,760 $(190,196) $9,032 $(174,404)
OCI before reclassification 131 11,881  (4,389)7,623 
Amounts reclassified from AOCI(211)
(a)
(196)(492)
(b)
(899)
Net current-period OCI(80)
 
11,685 
 
(4,881) 6,724 
Balance, December 31, 2023$6,680 $(178,511) $4,151  $(167,680)
Attributable to noncontrolling interest:       
Balance, September 30, 2023 $ $266  $  $266 
OCI before reclassification  22    22 
Net current-period OCI  22   22 
Balance, December 31, 2023 $ $288  $ $288 

   Post-retirement benefit plansCurrency translation adjustmentCash Flow HedgesTotal
Attributable to Matthews:      
Balance, September 30, 2022 $5,182 $(203,310) $7,937 $(190,191)
OCI before reclassification 203 20,763  93 21,059 
Amounts reclassified from AOCI742 
(a)
(203)(497)
(b)
42 
Net current-period OCI 945 20,560  (404)21,101 
Balance, December 31, 2022 $6,127 $(182,750) $7,533 $(169,090)
Attributable to noncontrolling interest:      
Balance, September 30, 2022 $ $255  $ $255 
OCI before reclassification  4 
 
 4 
Net current-period OCI  4   4 
Balance, December 31, 2022 $ $259 
 
$ $259 
(a) Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note 11).
(b) Amounts were included in interest expense in the periods the hedged item affected earnings (see Note 8).












16


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 12.   Accumulated Other Comprehensive Income (continued)

Reclassifications out of AOCI for the three-month periods ended December 31, 2023 and 2022 were as follows:

 Amount reclassified from AOCI
 
Details about AOCI Components
Three Months Ended December 31, 2023 Three Months Ended December 31, 2022Affected line item in the Statement of income
Postretirement benefit plans       
Prior service credit (a)
$91 $91  
Actuarial losses191 187 Other income (deductions), net
Settlement loss (1,271)Other income (deductions), net
 282 (993)
Income before income tax (b)
 (71)
 
251 Income taxes
 $211 
 
$(742)Net income
Derivatives 
 
     
Cash flow hedges$659 
 
$655 Interest expense
Net investment hedges259 272 Interest expense
 918 927 
Income before income tax (b)
 (230) (227)Income taxes
 $688  $700 Net income
(a) Prior service cost amounts are included in the computation of pension and other postretirement benefit expense, which is reported in both cost of goods sold and selling and administrative expenses. For additional information, see Note 11.
(b) For pre-tax items, positive amounts represent income and negative amounts represent expense.


Note 13.   Income Taxes

Income tax provisions for the Company's interim periods are based on the effective income tax rate expected to be applicable for the full year. The Company's consolidated income taxes for the first three months of fiscal 2024 were a benefit of $726, compared to an expense of $1,312 for the first three months of fiscal 2023. The difference between the Company’s consolidated income taxes for the first three months of fiscal 2024 compared to the same period for fiscal 2023 resulted from a consolidated pre-tax loss in fiscal 2024 compared to pre-tax income in fiscal 2023 as well as a net tax benefit from discrete items. The Company’s fiscal 2024 three 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, and a net discrete tax benefit. The Company’s fiscal 2023 three month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to state taxes, foreign statutory rate differentials, and tax credits.

The Company had unrecognized tax benefits (excluding penalties and interest) of $4,245 and $3,779 on December 31, 2023 and September 30, 2023, respectively, which would impact the annual effective rate at December 31, 2023 and September 30, 2023, respectively. It is reasonably possible that the amount of unrecognized tax benefits could decrease by approximately $2,913 in the next 12 months primarily due to the completion of audits and the expiration of the statute of limitations.

The Company classifies interest and penalties on tax uncertainties as a component of the provision for income taxes. Total penalties and interest accrued were $804 and $730 at December 31, 2023 and September 30, 2023, respectively.  These accruals may potentially be applicable in the event of an unfavorable outcome of uncertain tax positions.

17


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 13.   Income Taxes (continued)

The Company is currently under examination in several tax jurisdictions and remains subject to examination until the statute of limitations expires for those tax jurisdictions.  As of December 31, 2023, the tax years that remain subject to examination by major jurisdictions generally are:

United States – Federal2020 and forward
United States – State2019 and forward
Canada2019 and forward
Germany2019 and forward
United Kingdom2022 and forward
Singapore2020 and forward
Australia2018 and forward


Note 14.   Segment Information

The Company manages its businesses under three segments: Memorialization, Industrial Technologies and SGK Brand Solutions. The Memorialization segment consists 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. The Industrial Technologies segment 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. The SGK Brand Solutions segment 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's primary measure of segment profitability is adjusted earnings before interest, income taxes, depreciation and amortization ("adjusted EBITDA"). 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, enterprise resource planning ("ERP") integration costs, and strategic initiatives and other charges. This presentation is consistent with how the Company's chief operating decision maker (the “CODM”) evaluates the results of operations and makes strategic decisions about the business. For these reasons, the Company believes that adjusted EBITDA represents the most relevant measure of segment profit and loss.

In addition, the CODM manages and evaluates the operating performance of the segments, as described above, on a pre-corporate cost allocation basis. Accordingly, for segment reporting purposes, the Company does not allocate corporate costs to its reportable segments. Corporate costs include management and administrative support to the Company, which consists of certain aspects of the Company’s executive management, legal, compliance, human resources, information technology (including operational support) and finance departments. These costs are included within "Corporate and Non-Operating" in the following table to reconcile to consolidated adjusted EBITDA and are not considered a separate reportable segment. Management does not allocate non-operating items such as investment income, other income (deductions), net and noncontrolling interest to the segments.











18


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 14.   Segment Information (continued)

The following table sets forth information about the Company's segments, including a reconciliation of adjusted EBITDA to net income.

Three Months Ended
December 31,
 20232022
Sales: 
Memorialization$208,071 $206,502 
Industrial Technologies111,374 109,143 
SGK Brand Solutions130,541 133,595 
Consolidated Sales$449,986 $449,240 
Adjusted EBITDA:  
Memorialization$36,700 $39,137 
Industrial Technologies9,622 12,202 
SGK Brand Solutions12,893 12,232 
Corporate and Non-Operating(13,733)(14,280)
Total Adjusted EBITDA$45,482 $49,291 
Acquisition and divestiture related items (1)**
(1,237)(1,285)
Strategic initiatives and other charges (2)**
(5,920)(1,781)
Highly inflationary accounting losses (primarily non-cash) (3)
(320)(1,088)
Stock-based compensation (4,651)(4,334)
Non-service pension and postretirement expense (4)
(109)(1,388)
Depreciation and amortization *
(23,523)(23,729)
Interest expense, including RPA and factoring financing fees (5)
(12,751)(10,671)
Net loss attributable to noncontrolling interests (56)
(Loss) income before income taxes(3,029)4,959 
Income tax benefit (provision)726 (1,312)
Net (loss) income$(2,303)$3,647 

(1) Includes certain non-recurring items associated with recent acquisition and divestiture activities.
(2) Includes certain non-recurring costs associated with commercial, operational and cost-reduction initiatives, and costs associated with global ERP system integration efforts.
(3) Represents exchange losses associated with highly inflationary accounting related to the Company's Turkish subsidiaries (see Note 2, "Basis of Presentation").
(4) Non-service pension and postretirement expense includes interest cost, expected return on plan assets, amortization of actuarial gains and losses, curtailment gains and losses, and settlement gains and losses. These benefit cost components are excluded from adjusted EBITDA since they are primarily influenced by external market conditions that impact investment returns and interest (discount) rates. Curtailment gains and losses and settlement gains and losses are excluded from adjusted EBITDA since they generally result from certain non-recurring events, such as plan amendments to modify future benefits or settlements of plan obligations. The service cost and prior service cost components of pension and postretirement expense are included in the calculation of adjusted EBITDA, since they are considered to be a better reflection of the ongoing service-related costs of providing these benefits. 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.
(5) Includes fees for receivables sold under the RPA and factoring arrangements totaling $1,175 and $456 for the three months ended December 31, 2023 and 2022, respectively.
* Depreciation and amortization was $6,413 and $5,574 for the Memorialization segment, $6,377 and $5,853 for the Industrial Technologies segment, $9,572 and $11,060 for the SGK Brand Solutions segment, and $1,161 and $1,242 for Corporate and Non-Operating, for the three months ended December 31, 2023 and 2022, respectively.
** Acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges were $60 and $378 for the Memorialization segment, $5,367 and $937 for the Industrial Technologies segment, $863 and $521 for the SGK Brand Solutions segment, $867 and $1,230 for Corporate and Non-Operating, for the three months ended December 31, 2023 and 2022, respectively.




19


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 15. Acquisitions and Divestitures

Fiscal 2023:

In September 2023, the Company completed a small divestiture within the Industrial Technologies segment. Net proceeds from the divestiture totaled approximately $6,700, and the transaction resulted in a pre-tax gain of $1,827, which was recorded as a component of administrative expenses in the fourth quarter of fiscal 2023. The transaction also included $2,250 of contingent consideration, which represents the maximum amount the Company could potentially recognize at the resolution of the two-year contingency period.

In March 2023, the Company purchased the remaining ownership interest in a non-consolidated Industrial Technologies subsidiary for $4,759 (net of cash acquired and holdbacks). The Company finalized the allocation of the purchase price in the first quarter of fiscal 2024, resulting in no significant adjustments.

In February 2023, the Company acquired Eagle Granite Company ("Eagle") within the Memorialization segment for a total purchase price of $18,384, consisting of cash of $8,650 (net of cash acquired) and a deferred purchase price amount of $9,734, which is scheduled to be paid to the seller two years from the acquisition date. In addition, the Company recorded a liability of approximately $3,800 for potential future contingent consideration related to certain earnout provisions, which, if owed, is scheduled to be paid to the seller four years from the acquisition date. Eagle serves cemeteries and monument companies with a full complement of granite memorialization products. The Company finalized the allocation of the purchase price in the first quarter of fiscal 2024, resulting in adjustments to certain liability accounts.

During the first fiscal quarter of 2023, the Company completed small acquisitions within the SGK Brand Solutions segment for a combined purchase price of $1,932 (net of cash acquired and holdbacks). The Company finalized the purchase price allocations in the fourth quarter of fiscal 2023, resulting in an immaterial adjustment to certain tax accounts.


Note 16.   Goodwill and Other Intangible Assets

A summary of the carrying amount of goodwill attributable to each segment as well as the changes in such amounts are as follows:
MemorializationIndustrial TechnologiesSGK Brand
Solutions
Consolidated
Net goodwill at September 30, 2023
$366,015 $115,073 $217,021 $698,109 
Translation and other adjustments4,013 931 5,908 10,852 
Net goodwill at December 31, 2023
$370,028 $116,004 $222,929 $708,961 

The net goodwill balances at December 31, 2023 and September 30, 2023 included $261,186 of accumulated impairment losses. Accumulated impairment losses at December 31, 2023 and September 30, 2023 were $5,000, $23,946 and $232,240 for the Memorialization, Industrial Technologies and SGK Brand Solutions segments, respectively.

The Company performed its annual impairment review of goodwill and indefinite-lived intangible assets in the second quarter of fiscal 2023 (January 1, 2023) and determined that the