matw-20240630

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, 2024

☐ 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, 2024, shares of common stock outstanding were: Class A Common Stock 30,597,624 shares.

PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollar amounts in thousands)


	June 30, 2024				September 30, 2023
ASSETS
Current assets:
Cash and cash equivalents			$	42,745			$	42,101
Accounts receivable, net			192,817				207,526
Inventories, net			248,644				260,409

Contract assets			95,263				74,646
Other current assets			62,610				63,575

Total current assets			642,079				648,257


Investments			26,810				24,988


Property, plant and equipment, net			272,875				270,326
Operating lease right-of-use assets			64,009				71,629
Deferred income taxes			2,075				2,269
Goodwill			706,219				698,109
Other intangible assets, net			134,801				160,478
Other assets			13,009				11,325

Total assets			$	1,861,877			$	1,887,381

LIABILITIES
Current liabilities:
Long-term debt, current maturities			$	5,476			$	3,696
Current portion of operating lease liabilities			23,321				23,983
Trade accounts payable			113,636				114,316
Accrued compensation			47,025				58,872
Accrued income taxes			10,164				12,561
Contract liabilities			31,389				36,935
Other current liabilities			155,141				144,237

Total current liabilities			386,152				394,600

Long-term debt			824,745				786,484
Operating lease liabilities			42,914				50,189
Deferred income taxes			45,164				71,255
Other liabilities			59,210				59,572
Total liabilities			1,358,185				1,362,100

SHAREHOLDERS' EQUITY
Shareholders' equity-Matthews:
Common stock	$	36,334			$	36,334
Additional paid-in capital	155,584				168,211
Retained earnings	699,037				714,727
Accumulated other comprehensive loss	(174,109)				(174,404)
Treasury stock, at cost	(213,201)				(219,200)
Total shareholders' equity-Matthews			503,645				525,668
Noncontrolling interests			47				(387)
Total shareholders' equity			503,692				525,281

Total liabilities and shareholders' equity			$	1,861,877			$	1,887,381

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,
	2024		2023		2024		2023

Sales	$	427,833	$	471,908	$	1,349,042	$	1,400,728
Cost of sales	(295,996)		(333,603)		(936,670)		(973,870)

Gross profit	131,837		138,305		412,372		426,858

Selling expense	(36,012)		(36,345)		(106,460)		(104,323)
Administrative expense	(80,086)		(69,796)		(240,664)		(229,233)
Intangible amortization	(9,037)		(10,640)		(27,791)		(31,499)


Operating profit	6,702		21,524		37,457		61,803


Interest expense	(12,780)		(10,924)		(36,901)		(33,186)
Other income (deductions), net	(974)		(2,487)		(2,732)		(3,038)

(Loss) income before income taxes	(7,052)		8,113		(2,176)		25,579

Income tax benefit (provision)	8,829		558		10,677		(4,136)

Net income	1,777		8,671		8,501		21,443

Net loss attributable to noncontrolling interests	—		67		—		125

Net income attributable to Matthews shareholders	$	1,777	$	8,738	$	8,501	$	21,568

Earnings per share attributable to Matthews shareholders:
Basic	$	0.06	$	0.28	$	0.28	$	0.70

Diluted	$	0.06	$	0.28	$	0.27	$	0.69

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
	2024		2023		2024		2023		2024		2023

Net income (loss):	$	1,777	$	8,738	$	—	$	(67)	$	1,777	$	8,671
Other comprehensive (loss) income ("OCI"), net of tax:
Foreign currency translation adjustment	(970)		923		—		(31)		(970)		892
Pension plans and other postretirement benefits	(234)		(210)		—		—		(234)		(210)

Unrecognized gain (loss) on cash flow hedges:
Net change from periodic revaluation	105		2,745		—		—		105		2,745
Net amount reclassified to earnings	(506)		(238)		—		—		(506)		(238)
Net change in unrecognized (loss) gain on cash flow hedges	(401)		2,507		—		—		(401)		2,507
OCI, net of tax	(1,605)		3,220		—		(31)		(1,605)		3,189
Comprehensive income (loss)	$	172	$	11,958	$	—	$	(98)	$	172	$	11,860


	Nine Months Ended June 30,
	Matthews				Noncontrolling Interest				Total
	2024		2023		2024		2023		2024		2023

Net income (loss):	$	8,501	$	21,568	$	—	$	(125)	$	8,501	$	21,443
OCI, net of tax:
Foreign currency translation adjustment	4,689		25,915		22		(32)		4,711		25,883
Pension plans and other postretirement benefits	(596)		559		—		—		(596)		559

Unrecognized (loss) gain on cash flow hedges:
Net change from periodic revaluation	(2,301)		1,367		—		—		(2,301)		1,367
Net amount reclassified to earnings	(1,497)		(1,506)		—		—		(1,497)		(1,506)
Net change in unrecognized loss on cash flow hedges	(3,798)		(139)		—		—		(3,798)		(139)
OCI, net of tax	295		26,335		22		(32)		317		26,303
Comprehensive income (loss)	$	8,796	$	47,903	$	22	$	(157)	$	8,818	$	47,746

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, 2024 and 2023 (Unaudited)

(Dollar amounts in thousands, except per share data)


	Shareholders' Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Non- controlling Interests		Total
Balance, September 30, 2023	$	36,334	$	168,211	$	714,727	$	(174,404)	$	(219,200)	$	(387)	$	525,281
Net loss	—		—		(2,303)		—		—		—		(2,303)
Minimum pension liability	—		—		—		(80)		—		—		(80)
Translation adjustment	—		—		—		11,685		—		22		11,707
Fair value of cash flow hedges	—		—		—		(4,881)		—		—		(4,881)
Total comprehensive income													4,443
Stock-based compensation	—		4,651		—		—		—		—		4,651
Purchase of 465,953 shares of treasury stock	—		—		—		—		(17,185)		—		(17,185)
Issuance of 678,750 shares of treasury stock	—		(25,356)		—		—		25,356		—		—

Dividends	—		—		(8,381)		—		—		—		(8,381)

Transactions with non-controlling interest	—		(412)		—		—		—		412		—
Balance, December 31, 2023	$	36,334	$	147,094	$	704,043	$	(167,680)	$	(211,029)	$	47	$	508,809
Net income	—		—		9,027		—		—		—		9,027
Minimum pension liability	—		—		—		(282)		—		—		(282)
Translation adjustment	—		—		—		(6,026)		—		—		(6,026)
Fair value of cash flow hedges	—		—		—		1,484		—		—		1,484
Total comprehensive income													4,203
Stock-based compensation	—		4,327		—		—		—		—		4,327
Purchase of 1,029 shares of treasury stock	—		—		—		—		(35)		—		(35)
Issuance of 28,878 shares of treasury stock	—		(1,077)		—		—		1,077		—		—

Dividends	—		—		(7,957)		—		—		—		(7,957)


Balance, March 31, 2024	$	36,334	$	150,344	$	705,113	$	(172,504)	$	(209,987)	$	47	$	509,347
Net income	—		—		1,777		—		—		—		1,777
Minimum pension liability	—		—		—		(234)		—		—		(234)
Translation adjustment	—		—		—		(970)		—		—		(970)
Fair value of cash flow hedges	—		—		—		(401)		—		—		(401)
Total comprehensive income													172
Stock-based compensation	—		5,331		—		—		—		—		5,331
Purchase of 114,666 shares of treasury stock	—		—		—		—		(3,305)		—		(3,305)
Issuance of 2,431 shares of treasury stock	—		(91)		—		—		91		—		—

Dividends	—		—		(7,853)		—		—		—		(7,853)


Balance, June 30, 2024	$	36,334	$	155,584	$	699,037	$	(174,109)	$	(213,201)	$	47	$	503,692

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY, Continued

for the three and nine months ended June 30, 2024 and 2023 (Unaudited)

(Dollar amounts in thousands, except per share data)


	Shareholders' Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Non- controlling Interests		Total
Balance, September 30, 2022	$	36,334	$	160,255	$	706,749	$	(190,191)	$	(225,795)	$	(276)	$	487,076
Net income (loss)	—		—		3,703		—		—		(56)		3,647
Minimum pension liability	—		—		—		945		—		—		945
Translation adjustment	—		—		—		20,560		—		4		20,564
Fair value of cash flow hedges	—		—		—		(404)		—		—		(404)
Total comprehensive income													24,752
Stock-based compensation	—		4,334		—		—		—		—		4,334
Purchase of 89,025 shares of treasury stock	—		—		—		—		(2,451)		—		(2,451)
Issuance of 245,006 shares of treasury stock	—		(9,154)		—		—		9,154		—		—
Cancellations of 34,327 shares of treasury stock	—		1,958		—		—		(1,958)		—		—
Dividends	—		—		(8,794)		—		—		—		(8,794)


Balance, December 31, 2022	$	36,334	$	157,393	$	701,658	$	(169,090)	$	(221,050)	$	(328)	$	504,917
Net income (loss)	—		—		9,127		—		—		(2)		9,125
Minimum pension liability	—		—		—		(176)		—		—		(176)
Translation adjustment	—		—		—		4,432		—		(5)		4,427
Fair value of cash flow hedges	—		—		—		(2,242)		—		—		(2,242)
Total comprehensive income													11,134
Stock-based compensation	—		4,278		—		—		—		—		4,278
Purchase of 7,606 shares of treasury stock	—		—		—		—		(288)		—		(288)
Issuance of 46,069 shares of treasury stock	—		(1,723)		—		—		1,723		—		—

Dividends	—		—		(7,683)		—		—		—		(7,683)
Transactions with noncontrolling interests	—		—		—		—		—		33		33
Balance, March 31, 2023	$	36,334	$	159,948	$	703,102	$	(167,076)	$	(219,615)	$	(302)	$	512,391
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

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,
	2024		2023
Cash flows from operating activities:
Net income	$	8,501	$	21,443
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	70,441		71,813
Stock-based compensation expense	14,309		13,635
Deferred tax (benefit) provision	(24,269)		680
(Gain) loss on sale of assets, net	(453)		594




Defined benefit plan settlement losses	—		1,271
Defined benefit plan settlement payments	—		(24,242)
Proceeds from the settlement of cash flow hedges	—		10,474
Changes in working capital items	(29,154)		(16,131)
Decrease in other assets	14,490		4,313
Decrease in other liabilities	(12,334)		(4,748)
Other operating activities, net	1,805		(2,196)

Net cash provided by operating activities	43,336		76,906

Cash flows from investing activities:
Capital expenditures	(33,180)		(37,107)
Acquisitions, net of cash acquired	(5,825)		(15,341)


Purchases of investments	(825)		(1,536)
Other investing activities, net	1,199		267




Net cash used in investing activities	(38,631)		(53,717)

Cash flows from financing activities:
Proceeds from long-term debt	714,414		612,052
Payments on long-term debt	(686,634)		(643,494)

Purchases of treasury stock	(20,525)		(2,818)
Dividends	(24,063)		(21,184)
Payments of debt issuance costs	(4,704)		—
Proceeds from net investment hedge	17,416		—
Other financing activities	—		(913)

Net cash used in financing activities	(4,096)		(56,357)

Effect of exchange rate changes on cash	35		1,049

Net change in cash and cash equivalents	644		(32,119)
Cash and cash equivalents at beginning of year	42,101		71,414
Cash and cash equivalents at end of period	$	42,745	$	39,295

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, 2024

(Dollar amounts in thousands, except per share data)

Note 1. Nature of Operations

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

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

Note 2. Basis of Presentation

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

Effective April 1, 2022, the Company has applied highly inflationary accounting to its Turkish subsidiaries. Under highly inflationary accounting, the financial statements of these subsidiaries are remeasured into the Company's reporting currency (U.S. dollar) and exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in current earnings, rather than accumulated other comprehensive loss on the Consolidated Balance Sheets, until such time as the applicable economy is no longer considered highly inflationary. As of June 30, 2024 and September 30, 2023, the Company had net monetary assets related to its Turkish subsidiaries of $6,701 and $4,271, respectively. Exchange losses related to highly inflationary accounting totaled $185 and $895 for the three and nine months ended June 30, 2024, respectively, and $1,826 and $3,074 for the three and nine months ended June 30, 2023, respectively. Such amounts were included in the Consolidated Statements of Income within other income (deductions), net.

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

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 Accounting Standards Codification, and align them with the Securities and Exchange Commission ("SEC") regulations. The effective date of the amendments of this ASU will be determined for each individual disclosure based on the effective date of the SEC’s removal of the related disclosure from Regulation S-X or Regulation S-K. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, then this ASU will not become effective. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.

Adopted

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

The Company facilitates a voluntary supply chain finance program (the "Program") to provide certain suppliers with the opportunity to sell receivables due from the Company to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. The Company is not a party to the agreements between the suppliers and the financial institutions and has no economic interest in a supplier's decision to sell a receivable. The range of payment terms negotiated with a supplier is consistent, irrespective of whether a supplier participates in the Program. All outstanding payments owed under the Program are recorded within trade accounts payable in the Consolidated Balance Sheets. The Company accounts for all payments made under the Program as a reduction to operating cash flows in changes in working capital within the Consolidated Statements of Cash Flows. The amounts owed to a participating financial institution under the Program and included in trade accounts payable were $3,868 and $3,027 at June 30, 2024 and September 30, 2023, respectively.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 3. Revenue Recognition

The Company disaggregates revenue from contracts with customers by geography, as it believes geographic regions best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Disaggregated sales by segment and region for the three and nine months ended June 30, 2024 and 2023 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,
	2024		2023		2024		2023		2024		2023		2024		2023
North America	$	192,575	$	197,309	$	33,526	$	43,924	$	62,960	$	63,000	$	289,061	$	304,233
Central and South America	—		—		—		—		1,641		1,342		1,641		1,342
Europe	7,496		8,468		56,558		84,577		50,671		51,532		114,725		144,577
Australia	2,593		2,951		—		—		2,235		2,020		4,828		4,971
Asia	—		—		1,647		2,032		15,931		14,753		17,578		16,785
Total Sales	$	202,664	$	208,728	$	91,731	$	130,533	$	133,438	$	132,647	$	427,833	$	471,908


	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,
	2024		2023		2024		2023		2024		2023		2024		2023
North America	$	601,793	$	604,386	$	99,482	$	121,900	$	188,832	$	192,904	$	890,107	$	919,190
Central and South America	—		—		—		—		4,203		3,674		4,203		3,674
Europe	23,374		25,293		214,913		237,847		153,534		152,990		391,821		416,130
Australia	7,724		8,440		—		—		6,559		6,535		14,283		14,975
Asia	—		—		4,846		5,443		43,782		41,316		48,628		46,759
Total Sales	$	632,891	$	638,119	$	319,241	$	365,190	$	396,910	$	397,419	$	1,349,042	$	1,400,728

Revenue from products or services provided to customers over time accounted for approximately 13% and 17% of revenue for the three months ended June 30, 2024 and 2023, respectively and 17% and 14% of revenue for the nine months ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and September 30, 2023, the Company had net contract assets for projects recognized using the over time method totaling $63,874 and $37,711, respectively, which primarily represent unbilled revenues, net of deferred revenues related to customer deposits and progress billings. Net contract assets at June 30, 2024 predominantly related to ongoing projects with the Company's largest energy storage customer.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 4. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three level fair value hierarchy is used to prioritize the inputs used in valuations, as defined below:



			Level 1:			Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets.
			Level 2:			Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
			Level 3:			Unobservable inputs for the asset or liability.

The fair values of the Company's assets and liabilities measured on a recurring basis are categorized as follows:


	June 30, 2024								September 30, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Derivatives (1)	$	—	$	2,257	$	—	$	2,257	$	—	$	4,006	$	—	$	4,006
Equity and fixed income mutual funds	—		1,484		—		1,484		—		699		—		699
Life insurance policies	—		4,835		—		4,835		—		4,926		—		4,926
Total assets at fair value	$	—	$	8,576	$	—	$	8,576	$	—	$	9,631	$	—	$	9,631

Liabilities:
Derivatives (1)	$	—	$	21,279	$	—	$	21,279	$	—	$	2,766	$	—	$	2,766
Total liabilities at fair value	$	—	$	21,279	$	—	$	21,279	$	—	$	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 June 30, 2024 and September 30, 2023.

Note 5. Inventories

Inventories consisted of the following:


	June 30, 2024		September 30, 2023
Raw materials	$	68,833	$	70,451
Work in process	102,741		108,400
Finished goods	77,070		81,558
	$	248,644	$	260,409

Note 6. Investments

Non-current investments consisted of the following:


	June 30, 2024		September 30, 2023
Equity and fixed income mutual funds	$	1,484	$	699
Life insurance policies	4,835		4,926
Equity-method investments	333		323
Other (primarily cost-method) investments	20,158		19,040
	$	26,810	$	24,988

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 7. Debt and Financing Arrangements

Long-term debt at June 30, 2024 and September 30, 2023 consisted of the following:


	June 30, 2024		September 30, 2023
Revolving credit facilities	$	498,668	$	463,168


2025 Senior Notes	298,497		298,500

Other borrowings	16,744		19,241
Finance lease obligations	16,312		9,271
Total debt	830,221		790,180
Less current maturities	(5,476)		(3,696)
Long-term debt	$	824,745	$	786,484

The Company has a domestic credit facility with a syndicate of financial institutions that was amended and restated in January 2024. The amended and restated loan agreement includes a $750,000 senior secured revolving credit facility, which matures in January 2029, subject to the terms and conditions of the amended facility. A portion of the revolving credit facility (not to exceed $350,000) can be drawn in foreign currencies. Borrowings under the revolving credit facility bear interest at the Secured Overnight Financing Rate ("SOFR"), plus a 0.10% per annum rate spread adjustment, plus a factor ranging from 1.00% to 2.00% (1.50% at June 30, 2024) based on the Company's leverage ratio. The leverage ratio is defined as total indebtedness divided by EBITDA (earnings before interest, income taxes, depreciation and amortization) as defined within the domestic credit facility agreement. The Company is required to pay an annual commitment fee ranging from 0.15% to 0.30% (based on the Company's leverage ratio) of the unused portion of the revolving credit facility. The Company incurred new debt issuance costs of $4,704 in connection with the amended and restated agreement, which were deferred and are being amortized over the term of the facility. Unamortized costs were $5,063 and $949 at June 30, 2024 and September 30, 2023, respectively.

The domestic credit facility requires the Company to maintain certain leverage and interest coverage ratios. A portion of the facility (not to exceed $55,000) is available for the issuance of trade and standby letters of credit. Outstanding U.S. dollar denominated borrowings on the revolving credit facility at June 30, 2024 and September 30, 2023 were $436,632 and $405,000, respectively. Outstanding Euro denominated borrowings on the revolving credit facility at June 30, 2024 and September 30, 2023 were €55.0 million ($58,947) 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 June 30, 2024 and 2023 was 4.61% and 5.59%, respectively.

The Company has $299,217 of 5.25% senior unsecured notes due December 1, 2025 (the "2025 Senior Notes"). The 2025 Senior Notes bear interest at a rate of 5.25% per annum with interest payable semi-annually in arrears on June 1 and December 1 of each year. The Company's obligations under the 2025 Senior Notes are guaranteed by certain of the Company's direct and indirect wholly-owned subsidiaries. The Company is subject to certain covenants and other restrictions in connection with the 2025 Senior Notes. The Company incurred direct financing fees and costs in connection with the 2025 Senior Notes. Unamortized costs were $720 and $1,125 at June 30, 2024 and September 30, 2023, respectively.

The Company and certain of its domestic subsidiaries sell, on a continuous basis without recourse, their trade receivables to Matthews Receivables Funding Corporation, LLC (“Matthews RFC”), a wholly-owned bankruptcy-remote subsidiary of the Company. Matthews RFC has a receivables purchase agreement (“RPA”) to sell up to $125,000 of receivables to certain purchasers (the “Purchasers”) on a recurring basis in exchange for cash (referred to as “capital” within the RPA) equal to the gross receivables transferred. The parties intend that the transfers of receivables to the Purchasers constitute purchases and sales of receivables. Matthews RFC has guaranteed to each Purchaser the prompt payment of sold receivables, and has granted a security interest in its assets for the benefit of the Purchasers. Under the RPA, each Purchaser’s share of capital accrues yield at a floating rate plus an applicable margin. The Company is the master servicer under the RPA, and is responsible for administering and collecting receivables. The RPA, which had a maturity date of March 2024, was amended in March 2024 to extend the maturity date to March 2026.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 7. Debt and Financing Arrangements (continued)

The proceeds of the RPA are classified as operating activities in the Company’s Consolidated Statements of Cash Flows. Cash received from collections of sold receivables may be used to fund additional purchases of receivables on a revolving basis, or to reduce all or any portion of the outstanding capital of the Purchasers. The fair value of the sold receivables approximated book value due to their credit quality and short-term nature, and as a result, no gain or loss on sale of receivables was recorded. As of June 30, 2024 and September 30, 2023, the amount sold to the Purchasers was $105,100 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 $52,464 and $57,897 as of June 30, 2024 and September 30, 2023, respectively.

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


	Nine Months Ended June 30, 2024		Nine Months Ended June 30, 2023
Gross receivables sold	$	291,189	$	301,045
Cash collections reinvested	(287,889)		(284,435)
Net cash proceeds received	$	3,300	$	16,610

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 $53,087 and $36,045 during the nine months ended June 30, 2024 and 2023, respectively. The discounts on the trade receivables sold are included within administrative expense in the Consolidated Statements of Income. The proceeds from the sale of receivables are classified as operating activities in the Company's Consolidated Statements of Cash Flows. As of June 30, 2024 and September 30, 2023, the amount of factored receivables that remained outstanding was $16,424 and $18,045, respectively.

The Company, through certain of its European subsidiaries, has a credit facility with a European bank, which is guaranteed by Matthews. The maximum amount of borrowing available under this facility is €10.0 million ($10,718). The facility also provides €18.5 million ($19,828) for bank guarantees. This facility has no stated maturity date and is available until terminated. Outstanding borrowings under the credit facility totaled €2.9 million ($3,088) at June 30, 2024. There were no outstanding borrowings under the credit facility at September 30, 2023. The weighted-average interest rate on outstanding borrowings under this facility was 5.88% and 5.65% at June 30, 2024 and 2023, respectively.

Other borrowings totaled $16,744 and $19,241 at June 30, 2024 and September 30, 2023, respectively. The weighted-average interest rate on all other borrowings was 2.61% and 2.44% at June 30, 2024 and 2023, respectively.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 8. Derivatives and Hedging Activities

The Company operates internationally and utilizes certain derivative financial instruments to manage its foreign currency, debt and interest rate exposures. At June 30, 2024 and September 30, 2023, derivative instruments were reflected on a gross-basis in the consolidated balance sheets as follows:


Derivatives:	June 30, 2024				September 30, 2023
	Interest Rate Swaps		Cross- Currency Swaps		Interest Rate Swaps		Cross- Currency Swaps
Current assets:
Other current assets	$	616	$	—	$	920	$	—
Long-term assets:
Other assets	1,641		—		3,086		—
Current liabilities:
Other current liabilities	—		(17,416)		—		—
Long-term liabilities:
Other liabilities	—		(3,863)		—		(2,766)
Total derivatives	$	2,257	$	(21,279)	$	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:


	June 30, 2024			September 30, 2023
Notional amount	$	175,000		$	175,000

Weighted-average maturity period (years)	3.4			4.1
Weighted-average received rate	5.34		%	5.32		%