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, 2022~~March 31, 2023

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from _____ to _____

Commission File No. 0-09115

MATTHEWS INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

____________________________________________________________


Pennsylvania						25-0644320
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

Two Northshore Center, Pittsburgh, PA 15212-5851

(Address of principal executive offices) (Zip Code)

(412) 442-8200

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A Common Stock, $1.00 par value

MATW

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ý

As of ~~June 30, 2022,~~March 31, 2023, shares of common stock outstanding were: Class A Common Stock ~~30,605,547~~30,458,168 shares.

PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollar amounts in thousands)


		June 30, 2022				September 30, 2021					March 31, 2023				September 30, 2022
ASSETS	ASSETS									ASSETS
Current assets:	Current assets:									Current assets:
Cash and cash equivalents	Cash and cash equivalents			$	45,846			$	49,176	Cash and cash equivalents			$	41,916			$	69,016
Accounts receivable, net	Accounts receivable, net			207,503				309,818		Accounts receivable, net			216,140				221,015
Inventories, net	Inventories, net			211,161				189,088		Inventories, net			254,557				225,440
Restricted cash, current	Restricted cash, current			20,297				—		Restricted cash, current			—				2,398
Contract assets										Contract assets			30,430				48,210
Other current assets	Other current assets			113,822				76,083		Other current assets			75,196				62,537

Total current assets	Total current assets			598,629				624,165		Total current assets			618,239				628,616

Restricted cash, non-current				—				19,167

Investments	Investments			23,600				30,438		Investments			23,805				25,976

Property, plant and equipment, net	Property, plant and equipment, net			209,110				223,707		Property, plant and equipment, net			268,247				256,065
Operating lease right-of-use assets	Operating lease right-of-use assets			74,247				80,262		Operating lease right-of-use assets			75,429				71,974
Deferred income taxes	Deferred income taxes			2,740				3,489		Deferred income taxes			2,890				3,610
Goodwill	Goodwill			754,649				773,787		Goodwill			708,767				675,421
Other intangible assets, net	Other intangible assets, net			213,371				261,542		Other intangible assets, net			190,387				202,154
Other assets	Other assets			28,343				15,521		Other assets			9,509				18,955

Total assets	Total assets			$	1,904,689			$	2,032,078	Total assets			$	1,897,273			$	1,882,771

LIABILITIES	LIABILITIES									LIABILITIES
Current liabilities:	Current liabilities:									Current liabilities:
Long-term debt, current maturities	Long-term debt, current maturities			$	3,364			$	4,624	Long-term debt, current maturities			$	2,825			$	3,277
Current portion of operating lease liabilities	Current portion of operating lease liabilities			23,567				25,151		Current portion of operating lease liabilities			23,302				22,869
Trade accounts payable	Trade accounts payable			103,641				112,722		Trade accounts payable			117,911				121,359
Accrued compensation	Accrued compensation			42,540				68,938		Accrued compensation			46,306				58,272
Accrued income taxes	Accrued income taxes			3,260				4,235		Accrued income taxes			5,142				9,277
Contract liabilities										Contract liabilities			23,362				31,871
Other current liabilities	Other current liabilities			133,419				138,555		Other current liabilities			175,593				164,450

Total current liabilities	Total current liabilities			309,791				354,225		Total current liabilities			394,441				411,375

Long-term debt	Long-term debt			772,673				759,086		Long-term debt			775,202				795,291
Operating lease liabilities	Operating lease liabilities			52,966				57,272		Operating lease liabilities			54,561				51,445
Accrued pension				32,721				84,803
Postretirement benefits				17,909				17,958
Deferred income taxes	Deferred income taxes			109,093				97,416		Deferred income taxes			92,090				92,589
Other liabilities	Other liabilities			18,933				24,915		Other liabilities			68,588				44,995
Total liabilities	Total liabilities			1,314,086				1,395,675		Total liabilities			1,384,882				1,395,695

SHAREHOLDERS' EQUITY	SHAREHOLDERS' EQUITY									SHAREHOLDERS' EQUITY
Shareholders' equity-Matthews:	Shareholders' equity-Matthews:									Shareholders' equity-Matthews:
Common stock	Common stock	$	36,334			$	36,334			Common stock	$	36,334			$	36,334
Additional paid-in capital	Additional paid-in capital	156,942				149,484				Additional paid-in capital	159,948				160,255
Retained earnings	Retained earnings	794,581				834,208				Retained earnings	703,102				706,749
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(178,930)				(192,739)				Accumulated other comprehensive loss	(167,076)				(190,191)
Treasury stock, at cost	Treasury stock, at cost	(218,055)				(190,739)				Treasury stock, at cost	(219,615)				(225,795)
Total shareholders' equity-Matthews	Total shareholders' equity-Matthews			590,872				636,548		Total shareholders' equity-Matthews			512,693				487,352
Noncontrolling interests	Noncontrolling interests			(269)				(145)		Noncontrolling interests			(302)				(276)
Total shareholders' equity	Total shareholders' equity			590,603				636,403		Total shareholders' equity			512,391				487,076

Total liabilities and shareholders' equity	Total liabilities and shareholders' equity			$	1,904,689			$	2,032,078	Total liabilities and shareholders' equity			$	1,897,273			$	1,882,771

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

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollar amounts in thousands, except per share data)


		Three Months Ended June 30,				Nine Months Ended June 30,					Three Months Ended March 31,				Six Months Ended March 31,
		2022		2021		2022		2021			2023		2022		2023		2022

Sales	Sales	$	421,719	$	428,380	$	1,305,276	$	1,232,191	Sales	$	479,580	$	444,978	$	928,820	$	883,557
Cost of sales	Cost of sales	(300,854)		(291,122)		(928,255)		(828,424)		Cost of sales	(329,957)		(320,459)		(640,267)		(627,401)

Gross profit	Gross profit	120,865		137,258		377,021		403,767		Gross profit	149,623		124,519		288,553		256,156

Selling expense	Selling expense	(32,157)		(31,463)		(96,281)		(94,618)		Selling expense	(34,539)		(33,381)		(67,978)		(64,124)
Administrative expense	Administrative expense	(65,941)		(73,484)		(206,329)		(213,342)		Administrative expense	(81,516)		(71,819)		(159,437)		(140,388)
Intangible amortization	Intangible amortization	(11,804)		(23,039)		(45,303)		(61,190)		Intangible amortization	(10,517)		(11,953)		(20,859)		(33,499)

Operating profit	Operating profit	10,963		9,272		29,108		34,617		Operating profit	23,051		7,366		40,279		18,145

Investment income		59		959		735		3,005

Interest expense	Interest expense	(6,659)		(6,748)		(19,426)		(21,709)		Interest expense	(12,047)		(6,260)		(22,262)		(12,767)
Other income (deductions), net	Other income (deductions), net	(448)		(2,442)		(31,599)		(6,760)		Other income (deductions), net	1,503		235		(551)		(30,475)

Income (loss) before income taxes	Income (loss) before income taxes	3,915		1,041		(21,182)		9,153		Income (loss) before income taxes	12,507		1,341		17,466		(25,097)

Income tax (provision) benefit	Income tax (provision) benefit	(1,040)		2,325		2,311		(2,627)		Income tax (provision) benefit	(3,382)		(3,277)		(4,694)		3,351

Net income (loss)	Net income (loss)	2,875		3,366		(18,871)		6,526		Net income (loss)	9,125		(1,936)		12,772		(21,746)

Net loss (income) attributable to noncontrolling interests		18		(11)		56		60
Net loss attributable to noncontrolling interests										Net loss attributable to noncontrolling interests	2		31		58		38

Net income (loss) attributable to Matthews shareholders	Net income (loss) attributable to Matthews shareholders	$	2,893	$	3,355	$	(18,815)	$	6,586	Net income (loss) attributable to Matthews shareholders	$	9,127	$	(1,905)	$	12,830	$	(21,708)

Earnings (loss) per share attributable to Matthews shareholders:	Earnings (loss) per share attributable to Matthews shareholders:									Earnings (loss) per share attributable to Matthews shareholders:
Basic	Basic	$	0.09	$	0.11	$	(0.60)	$	0.21	Basic	$	0.30	$	(0.06)	$	0.42	$	(0.68)

Diluted	Diluted	$	0.09	$	0.10	$	(0.60)	$	0.21	Diluted	$	0.29	$	(0.06)	$	0.41	$	(0.68)

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,													Three Months Ended March 31,
		Matthews				Noncontrolling Interest				Total					Matthews				Noncontrolling Interest				Total
		2022		2021		2022		2021		2022		2021			2023		2022		2023		2022		2023		2022

Net income (loss):	Net income (loss):	$	2,893	$	3,355	$	(18)	$	11	$	2,875	$	3,366	Net income (loss):	$	9,127	$	(1,905)	$	(2)	$	(31)	$	9,125	$	(1,936)
Other comprehensive income (loss) ("OCI"), net of tax:	Other comprehensive income (loss) ("OCI"), net of tax:													Other comprehensive income (loss) ("OCI"), net of tax:
Foreign currency translation adjustment	Foreign currency translation adjustment	(19,293)		2,904		15		—		(19,278)		2,904		Foreign currency translation adjustment	4,432		(6,181)		(5)		4		4,427		(6,177)
Pension plans and other postretirement benefits	Pension plans and other postretirement benefits	17		3,328		—		—		17		3,328		Pension plans and other postretirement benefits	(176)		(27)		—		—		(176)		(27)

Unrecognized gain (loss) on derivatives:
Unrecognized (loss) gain on cash flow hedges:														Unrecognized (loss) gain on cash flow hedges:
Net change from periodic revaluation	Net change from periodic revaluation	1,223		(654)		—		—		1,223		(654)		Net change from periodic revaluation	(1,471)		3,538		—		—		(1,471)		3,538
Net amount reclassified to earnings	Net amount reclassified to earnings	353		596		—		—		353		596		Net amount reclassified to earnings	(771)		554		—		—		(771)		554
Net change in unrecognized gain (loss) on derivatives		1,576		(58)		—		—		1,576		(58)
Net change in unrecognized (loss) gain on cash flow hedges														Net change in unrecognized (loss) gain on cash flow hedges	(2,242)		4,092		—		—		(2,242)		4,092
OCI, net of tax	OCI, net of tax	(17,700)		6,174		15		—		(17,685)		6,174		OCI, net of tax	2,014		(2,116)		(5)		4		2,009		(2,112)
Comprehensive (loss) income		$	(14,807)	$	9,529	$	(3)	$	11	$	(14,810)	$	9,540
Comprehensive income (loss)														Comprehensive income (loss)	$	11,141	$	(4,021)	$	(7)	$	(27)	$	11,134	$	(4,048)

Nine Months Ended June 30,
Matthews Noncontrolling Interest Total
2022 2021 2022 2021 2022 2021
Net (loss) income: $ (18,815) $ 6,586 $ (56) $ (60) $ (18,871) $ 6,526
OCI, net of tax:
Foreign currency translation adjustment (27,463) 11,061 23 (2) (27,440) 11,059
Pension plans and other postretirement benefits 34,123 7,707 — — 34,123 7,707
Unrecognized gain on derivatives:
Net change from periodic revaluation 5,636 1,787 — — 5,636 1,787
Net amount reclassified to earnings 1,513 1,845 — — 1,513 1,845
Net change in unrecognized gain on derivatives 7,149 3,632 — — 7,149 3,632
OCI, net of tax 13,809 22,400 23 (2) 13,832 22,398
Comprehensive (loss) income $ (5,006) $ 28,986 $ (33) $ (62) $ (5,039) $ 28,924


	Six Months Ended March 31,
	Matthews				Noncontrolling Interest				Total
	2023		2022		2023		2022		2023		2022

Net income (loss):	$	12,830	$	(21,708)	$	(58)	$	(38)	$	12,772	$	(21,746)
OCI, net of tax:
Foreign currency translation adjustment	24,992		(8,170)		(1)		8		24,991		(8,162)
Pension plans and other postretirement benefits	769		34,106		—		—		769		34,106

Unrecognized (loss) gain on cash flow hedges:
Net change from periodic revaluation	(1,378)		4,413		—		—		(1,378)		4,413
Net amount reclassified to earnings	(1,268)		1,160		—		—		(1,268)		1,160
Net change in unrecognized (loss) gain on cash flow hedges	(2,646)		5,573		—		—		(2,646)		5,573
OCI, net of tax	23,115		31,509		(1)		8		23,114		31,517
Comprehensive income (loss)	$	35,945	$	9,801	$	(59)	$	(30)	$	35,886	$	9,771

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~~six months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ (Unaudited)

(Dollar amounts in thousands, except per share data)

Shareholders' Equity
Common
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
(Loss) Income Treasury
Stock Non-
controlling
Interests Total
Balance,
     September 30, 2021 $ 36,334 $ 149,484 $ 834,208 $ (192,739) $ (190,739) $ (145) $ 636,403
Net loss — — (19,803) — — (7) (19,810)
Minimum pension liability — — — 34,133 — — 34,133
Translation adjustment — — — (1,989) — 4 (1,985)
Fair value of derivatives — — — 1,481 — — 1,481
Total comprehensive income 13,819
Stock-based compensation — 3,709 — — — — 3,709
Purchase of 62,746 shares of treasury stock — — — — (2,435) — (2,435)
Issuance of 174,107 shares of treasury stock — (6,859) — — 6,859 — —
Cancellations of 31,057 shares of treasury stock — 2,091 — — (2,091) — —
Dividends, $0.22 per share — — (6,824) — — — (6,824)
Balance,
     December 31, 2021 $ 36,334 $ 148,425 $ 807,581 $ (159,114) $ (188,406) $ (148) $ 644,672
Net loss — — (1,905) — — (31) (1,936)
Minimum pension liability — — — (27) — — (27)
Translation adjustment — — — (6,181) — 4 (6,177)
Fair value of derivatives — — — 4,092 — — 4,092
Total comprehensive loss (4,048)
Stock-based compensation — 5,222 — — — — 5,222
Purchase of 289,184 shares of treasury stock — — — — (9,703) — (9,703)
Issuance of 45,096 shares of treasury stock — (1,761) — — 1,761 — —
Cancellations of 80 shares of treasury stock — 5 — — (5) — —
Dividends, $0.22 per share — — (7,128) — — — (7,128)
Balance,
     March 31, 2022 $ 36,334 $ 151,891 $ 798,548 $ (161,230) $ (196,353) $ (175) $ 629,015
Net income (loss) — — 2,893 — — (18) 2,875
Minimum pension liability — — — 17 — — 17
Translation adjustment — — — (19,293) — 15 (19,278)
Fair value of derivatives — — — 1,576 — — 1,576
Total comprehensive loss (14,810)
Stock-based compensation — 5,197 — — — — 5,197
Purchase of 704,531 shares of treasury stock — — — — (21,848) — (21,848)
Issuance of 3,830 shares of treasury stock — (146) — — 146 — —
Dividends, $0.22 per share — — (6,860) — — — (6,860)
Divestiture — — — — — (91) (91)
Balance,
     June 30, 2022 $ 36,334 $ 156,942 $ 794,581 $ (178,930) $ (218,055) $ (269) $ 590,603


	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

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY, Continued

for the three and ~~nine~~six months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ (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, 2020 $ 36,334 $ 135,187 $ 859,002 $ (240,719) $ (178,997) $ 626 $ 611,433
Net loss — — (1,758) — — (234) (1,992)
Minimum pension liability — — — 2,124 — — 2,124
Translation adjustment — — — 17,055 — (3) 17,052
Fair value of derivatives — — — 1,035 — — 1,035
Total comprehensive income 18,219
Stock-based compensation — 3,246 — — — — 3,246
Purchase of 162,291 shares of treasury stock — — — — (4,237) — (4,237)
Issuance of 10,300 shares of treasury stock — (407) — — 407 — —
Cancellations of 34,727 shares of treasury stock — 1,982 — — (1,982) — —
Dividends, $0.215 per share — — (6,808) — — — (6,808)
Balance,
     December 31, 2020 $ 36,334 $ 140,008 $ 850,436 $ (220,505) $ (184,809) $ 389 $ 621,853
Net income — — 4,989 — — 163 5,152
Minimum pension liability — — — 2,255 — — 2,255
Translation adjustment — — — (8,898) — 1 (8,897)
Fair value of derivatives — — — 2,655 — — 2,655
Total comprehensive income 1,165
Stock-based compensation — 4,001 — — — — 4,001
Purchase of 6,000 shares of treasury stock — — — — (249) — (249)
Issuance of 17,357 shares of treasury stock — (685) — — 685 — —
Dividends, $0.215 per share — — (7,171) — — — (7,171)
Balance,
     March 31, 2021 $ 36,334 $ 143,324 $ 848,254 $ (224,493) $ (184,373) $ 553 $ 619,599
Net income — — 3,355 — — 11 3,366
Minimum pension liability — — — 3,328 — — 3,328
Translation adjustment — — — 2,904 — — 2,904
Fair value of derivatives — — — (58) — — (58)
Total comprehensive income 9,540
Stock-based compensation — 5,713 — — — — 5,713
Purchase of 45,584 shares of treasury stock — — — — (1,663) — (1,663)
Issuance of 2,045 shares of treasury stock — (78) — — 78 — —
Dividends, $0.215 per share — — (6,877) — — — (6,877)
Balance,
     June 30, 2021 $ 36,334 $ 148,959 $ 844,732 $ (218,319) $ (185,958) $ 564 $ 626,312


	Shareholders' Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Non- controlling Interests		Total
Balance, September 30, 2021	$	36,334	$	149,484	$	834,208	$	(192,739)	$	(190,739)	$	(145)	$	636,403
Net loss	—		—		(19,803)		—		—		(7)		(19,810)
Minimum pension liability	—		—		—		34,133		—		—		34,133
Translation adjustment	—		—		—		(1,989)		—		4		(1,985)
Fair value of cash flow hedges	—		—		—		1,481		—		—		1,481
Total comprehensive income													13,819
Stock-based compensation	—		3,709		—		—		—		—		3,709
Purchase of 62,746 shares of treasury stock	—		—		—		—		(2,435)		—		(2,435)
Issuance of 174,107 shares of treasury stock	—		(6,859)		—		—		6,859		—		—
Cancellations of 31,057 shares of treasury stock	—		2,091		—		—		(2,091)		—		—
Dividends	—		—		(6,824)		—		—		—		(6,824)


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

Balance, March 31, 2022	$	36,334	$	151,891	$	798,548	$	(161,230)	$	(196,353)	$	(175)	$	629,015

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,					Six Months Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net (loss) income		$	(18,871)	$	6,526
Adjustments to reconcile net (loss) income to net cash flows from operating activities:
Net income (loss)						Net income (loss)	$	12,772	$	(21,746)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:						Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	80,163		97,919		Depreciation and amortization	47,877		57,225
Stock-based compensation expense	Stock-based compensation expense	14,128		12,960		Stock-based compensation expense	8,612		8,931
Deferred tax (benefit) provision		(2,712)		967
Gain on sale of assets, net		(514)		(641)
Deferred tax provision (benefit)						Deferred tax provision (benefit)	268		(16)

Other investment loss (gain)		213		(1,336)
Pension settlement loss		30,856		—

Asset write-downs	Asset write-downs	10,017		—		Asset write-downs	—		10,486
Defined benefit plan settlement losses						Defined benefit plan settlement losses	1,271		30,856
Defined benefit plan settlement payments						Defined benefit plan settlement payments	(24,242)		(35,706)
Proceeds from the settlement of cash flow hedges						Proceeds from the settlement of cash flow hedges	10,474		—
Changes in working capital items	Changes in working capital items	(8,393)		(7,513)		Changes in working capital items	(10,885)		18,842
Decrease in other assets	Decrease in other assets	14,923		2,632		Decrease in other assets	3,298		5,823
Decrease in other liabilities	Decrease in other liabilities	(44,837)		(6,064)		Decrease in other liabilities	(2,083)		(6,265)

Other operating activities, net	Other operating activities, net	9,394		1,407		Other operating activities, net	(2,651)		4,293

Net cash provided by operating activities	Net cash provided by operating activities	84,367		106,857		Net cash provided by operating activities	44,711		72,723

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(40,597)		(24,495)		Capital expenditures	(23,772)		(28,096)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	—		(15,623)		Acquisitions, net of cash acquired	(7,586)		—
Proceeds from sale of assets		395		2,211

Proceeds from sale of investments	Proceeds from sale of investments	3,127		15,000		Proceeds from sale of investments	—		3,127
Purchases of investments		(2,198)		—
Other investing activities		344		—

Other investing activities, net						Other investing activities, net	155		230

Net cash used in investing activities	Net cash used in investing activities	(38,929)		(22,907)		Net cash used in investing activities	(31,203)		(24,739)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from long-term debt	Proceeds from long-term debt	565,408		385,065		Proceeds from long-term debt	414,843		342,847
Payments on long-term debt	Payments on long-term debt	(551,645)		(434,089)		Payments on long-term debt	(441,963)		(353,385)

Purchases of treasury stock	Purchases of treasury stock	(33,986)		(6,149)		Purchases of treasury stock	(2,739)		(12,138)
Dividends	Dividends	(20,812)		(20,856)		Dividends	(14,126)		(13,952)
Acquisition holdback and contingent consideration payments	Acquisition holdback and contingent consideration payments	(613)		(1,556)		Acquisition holdback and contingent consideration payments	—		(613)
Other financing activities	Other financing activities	(2,128)		(2,245)		Other financing activities	(914)		(1,434)

Net cash used in financing activities	Net cash used in financing activities	(43,776)		(79,830)		Net cash used in financing activities	(44,899)		(38,675)

Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(3,862)		776		Effect of exchange rate changes on cash	1,893		(1,580)

Net change in cash, cash equivalents and restricted cash	Net change in cash, cash equivalents and restricted cash	(2,200)		4,896		Net change in cash, cash equivalents and restricted cash	(29,498)		7,729
Cash, cash equivalents and restricted cash at beginning of year	Cash, cash equivalents and restricted cash at beginning of year	68,343		41,334		Cash, cash equivalents and restricted cash at beginning of year	71,414		68,343
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	66,143	$	46,230	Cash, cash equivalents and restricted cash at end of period	$	41,916	$	76,072

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, 2022~~March 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 3three segments: Memorialization, Industrial Technologies and SGK Brand Solutions. Effective in the first quarter of fiscal 2022, the Company transferred its surfaces and engineered products businesses from the SGK Brand Solutions segment to the Industrial Technologies segment. This business segment change is consistent with internal management structure and reporting changes effective for fiscal 2022. Prior periods were revised to reflect retrospective application of this segment realignment. 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 ~~marking, coding~~solutions, product identification and ~~industrial~~warehouse automation technologies and solutions, ~~and~~including order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products. Brand solutions consists of brand management, pre-media services, printing plates and cylinders, imaging services, digital asset management, merchandising display systems, and marketing and design services primarily for the consumer goods and retail industries.

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

Note 2. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information for commercial and industrial companies and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the ~~nine~~six months ended ~~June 30, 2022~~March 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, ~~2022.~~2023. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, ~~2021.~~2022. The consolidated financial statements include all domestic and foreign subsidiaries in which the Company maintains an ownership interest and has operating control and any variable interest entities for which the Company is the primary beneficiary. Investments in certain companies over which the Company exerts significant influence, but does not control the financial and operating decisions, are accounted for as equity method investments. Investments in certain companies over which the Company does not exert significant influence are accounted for as cost method investments. All intercompany accounts and transactions have been eliminated. The Company applies highly inflationary accounting for subsidiaries when the cumulative inflation rate for a three-year period meets or exceeds 100 percent.

Effective April 1, 2022, the Company applies highly inflationary accounting to its Turkish subsidiaries. Under highly inflationary accounting, the financial statements of these subsidiaries are remeasured into the Company's reporting currency (U.S. dollar) and exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in current earnings, rather than accumulated other comprehensive loss on the Consolidated Balance Sheets, until such time as the applicable economy is no longer considered highly inflationary. As of ~~June~~March 31, 2023 and September 30, 2022, the Company had net monetary assets related to its Turkish subsidiaries of ~~$6,829.~~$6,600 and $5,022, respectively. For the three and ~~nine~~six months ended ~~June 30, 2022,~~March 31, 2023, exchange losses related to highly inflationary accounting totaled ~~$1,245~~$160 and $1,248, respectively, and were included in the Consolidated Statements of Income within other income (deductions), net.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 2. Basis of Presentation (continued)

New Accounting Pronouncements:

Issued

In October 2021, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2021-08, Business Combinations (Topic 805) which improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract asset/liability, and payment terms and their effect on subsequent revenue recognized by the acquirer. This ASU is effective for the Company beginning in interim periods starting in fiscal 2024. While the impact of this ASU is dependent on the nature of any future transactions, the Company currently does not expect this ASU to have a significant impact on its consolidated financial statements.

In September 2022, the FASB issued ASU No. 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50) which enhances the transparency of supplier finance programs by addressing disclosure requirements. Specifically, the amendment requires disclosure of key program terms, amounts outstanding, balance sheet presentation, and a rollforward of amounts outstanding during the annual period. The ASU will be effective beginning in the first quarter of fiscal 2024, except for the rollforward requirement, which is effective in fiscal year 2025. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.

Note 3. Revenue Recognition

The Company delivers a variety of products and services through its business segments. The Memorialization segment produces and delivers 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 designs, manufactures, services and distributes high-tech custom energy storage ~~marking, coding~~solutions, product identification and ~~industrial~~warehouse automation technologies and solutions, ~~and~~including order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products. The SGK Brand Solutions segment delivers 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 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~~six months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ 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,
2022 2021 2022 2021 2022 2021 2022 2021
North America $ 191,495 $ 168,652 $ 39,736 $ 35,909 $ 68,008 $ 73,831 $ 299,239 $ 278,392
Central and South America — — — — 1,472 1,225 1,472 1,225
Europe 9,175 13,072 37,119 44,335 54,046 69,923 100,340 127,330
Australia 2,488 2,613 — — 2,797 3,352 5,285 5,965
Asia — — 1,588 1,588 13,795 13,880 15,383 15,468
Total Sales $ 203,158 $ 184,337 $ 78,443 $ 81,832 $ 140,118 $ 162,211 $ 421,719 $ 428,380


		Memorialization				Industrial Technologies				SGK Brand Solutions				Consolidated					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,					Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,
		2022		2021		2022		2021		2022		2021		2022		2021			2023		2022		2023		2022		2023		2022		2023		2022
North America	North America	$	593,901	$	529,229	$	110,869	$	95,804	$	211,278	$	210,515	$	916,048	$	835,548	North America	$	211,878	$	205,655	$	41,835	$	34,768	$	62,324	$	69,080	$	316,037	$	309,503
Central and South America	Central and South America	—		—		—		—		3,615		3,919		3,615		3,919		Central and South America	—		—		—		—		995		1,123		995		1,123
Europe	Europe	32,613		36,174		115,285		100,129		175,900		198,132		323,798		334,435		Europe	8,462		11,924		81,970		41,611		52,941		60,852		143,373		114,387
Australia	Australia	7,354		7,665		—		—		8,352		10,289		15,706		17,954		Australia	2,549		2,425		—		—		2,216		2,687		4,765		5,112
Asia	Asia	—		—		4,774		4,605		41,335		35,730		46,109		40,335		Asia	—		—		1,709		1,775		12,701		13,078		14,410		14,853
Total Sales	Total Sales	$	633,868	$	573,068	$	230,928	$	200,538	$	440,480	$	458,585	$	1,305,276	$	1,232,191	Total Sales	$	222,889	$	220,004	$	125,514	$	78,154	$	131,177	$	146,820	$	479,580	$	444,978

Revenue from products or services provided to customers over time accounted for approximately 13% of revenue for both the three months ended June 30, 2022 and 2021, and 11% and 10% of revenue for the nine months ended June 30, 2022 and 2021, respectively. ~~As of~~ ~~June 30, 2022~~ ~~and September 30, 2021, the Company had contract assets of $25,059 and $23,998, respectively, that were recorded in~~ ~~other current assets~~ ~~within the Consolidated Balance Sheets. As of~~ ~~June 30, 2022~~ ~~and September 30, 2021, the Company had contract liabilities of $13,025 and $19,752, respectively, that were recorded in~~ ~~other current liabilities~~ ~~within the Consolidated Balance Sheets.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 3. Revenue Recognition (continued)


	Memorialization				Industrial Technologies				SGK Brand Solutions				Consolidated
	Six Months Ended March 31,				Six Months Ended March 31,				Six Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023		2022		2023		2022		2023		2022
North America	$	407,077	$	402,406	$	77,975	$	71,133	$	129,904	$	143,270	$	614,956	$	616,809
Central and South America	—		—		—		—		2,332		2,143		2,332		2,143
Europe	16,825		23,438		153,271		78,166		101,458		121,854		271,554		223,458
Australia	5,489		4,866		—		—		4,515		5,555		10,004		10,421
Asia	—		—		3,411		3,186		26,563		27,540		29,974		30,726
Total Sales	$	429,391	$	430,710	$	234,657	$	152,485	$	264,772	$	300,362	$	928,820	$	883,557

Revenue from products or services provided to customers over time accounted for approximately 13%and 9% of revenue for the three months ended March 31, 2023 and 2022, respectively, and 13%and 11% of revenue for the six months ended March 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:


		June 30, 2022								September 30, 2021									March 31, 2023								September 30, 2022
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:	Assets:																	Assets:
Derivatives (1)	Derivatives (1)	$	—	$	18,941	$	—	$	18,941	$	—	$	209	$	—	$	209	Derivatives (1)	$	—	$	10	$	—	$	10	$	—	$	14,421	$	—	$	14,421
Equity and fixed income mutual funds		—		5,543		—		5,543		—		6,936		—		6,936

Life insurance policies	Life insurance policies	—		4,437		—		4,437		—		4,626		—		4,626		Life insurance policies	—		4,540		—		4,540		—		4,439		—		4,439
Total assets at fair value	Total assets at fair value	$	—	$	28,921	$	—	$	28,921	$	—	$	11,771	$	—	$	11,771	Total assets at fair value	$	—	$	4,550	$	—	$	4,550	$	—	$	18,860	$	—	$	18,860

Liabilities:	Liabilities:																	Liabilities:
Derivatives (1)	Derivatives (1)	$	—	$	—	$	—	$	—	$	—	$	2,232	$	—	$	2,232	Derivatives (1)	$	—	$	6,511	$	—	$	6,511	$	—	$	—	$	—	$	—
Total liabilities at fair value	Total liabilities at fair value	$	—	$	—	$	—	$	—	$	—	$	2,232	$	—	$	2,232	Total liabilities at fair value	$	—	$	6,511	$	—	$	6,511	$	—	$	—	$	—	$	—

(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, 2022~~March 31, 2023 and September 30, ~~2021.~~2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 5. Inventories

Inventories consisted of the following:


		June 30, 2022		September 30, 2021			March 31, 2023		September 30, 2022
Raw materials	Raw materials	$	48,945	$	37,673	Raw materials	$	67,449	$	52,586
Work in process	Work in process	79,192		75,997		Work in process	110,508		94,804
Finished goods	Finished goods	83,024		75,418		Finished goods	76,600		78,050
		$	211,161	$	189,088		$	254,557	$	225,440

Note 6. Investments

Non-current investments consisted of the following:


		June 30, 2022		September 30, 2021			March 31, 2023		September 30, 2022
Equity and fixed income mutual funds		$	—	$	6,936

Life insurance policies	Life insurance policies	4,437		4,626		Life insurance policies	$	4,540	$	4,439
Equity-method investments	Equity-method investments	345		458		Equity-method investments	341		2,729
Other (primarily cost-method) investments	Other (primarily cost-method) investments	18,818		18,418		Other (primarily cost-method) investments	18,924		18,808
		$	23,600	$	30,438		$	23,805	$	25,976

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

~~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, 2022~~March 31, 2023 and September 30, ~~2021~~2022 consisted of the following:


		June 30, 2022		September 30, 2021			March 31, 2023		September 30, 2022
Revolving credit facilities	Revolving credit facilities	$	447,223	$	350,597	Revolving credit facilities	$	452,471	$	480,107
Securitization facility		—		95,990

2025 Senior Notes	2025 Senior Notes	298,200		297,796		2025 Senior Notes	298,231		297,961

Other borrowings	Other borrowings	24,394		10,150		Other borrowings	21,057		13,434
Finance lease obligations	Finance lease obligations	6,220		9,177		Finance lease obligations	6,268		7,066
Total debt	Total debt	776,037		763,710		Total debt	778,027		798,568
Less current maturities	Less current maturities	(3,364)		(4,624)		Less current maturities	(2,825)		(3,277)
Long-term debt	Long-term debt	$	772,673	$	759,086	Long-term debt	$	775,202	$	795,291

The Company has a domestic credit facility with a syndicate of financial institutions that includes a $750,000 senior secured revolving credit facility, which matures in March 2025. A portion of the revolving credit facility (not to exceed $350,000) can be drawn in foreign currencies. In March 2023, an amendment to the domestic credit facility implemented SOFR as the replacement of LIBOR as the benchmark interest rate under the facility. The Company accounted for the change in reference rate as a non-substantial modification. Borrowings under the revolving credit facility now bear interest at SOFR, plus a 0.10% per annum rate spread adjustment, plus a factor ranging from 0.75% to 2.00% (1.25% at March 31, 2023) based on the Company's secured leverage ratio. Previously, borrowings under the revolving credit facility bore interest at LIBOR plus a factor ranging from 0.75% to 2.00% ~~(1.00% at June 30, 2022)~~ based on the Company's secured leverage ratio. The secured leverage ratio is defined as net secured indebtedness divided by EBITDA (earnings before interest, income taxes, depreciation and amortization) as defined within the domestic credit facility agreement. The Company is required to pay an annual commitment fee ranging from 0.15% to 0.30% (based on the Company's leverage ratio) of the unused portion of the revolving credit facility. The Company incurred debt issuance costs in connection with the domestic credit facility. Unamortized costs were~~$1,674~~ $1,218 and ~~$2,182~~$1,522 at ~~June 30, 2022~~March 31, 2023 and September 30, ~~2021,~~2022, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 7. Debt and Financing Arrangements (continued)

The domestic credit facility requires the Company to maintain certain leverage and interest coverage ratios. A portion of the facility (not to exceed ~~$35,000)~~$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, 2022~~March 31, 2023 and September 30, ~~2021~~2022 were ~~$436,254~~$451,501 and ~~$349,780,~~$472,057, respectively. The weighted-average interest rate on the outstanding borrowings for the domestic credit facility (including the effects of interest rate ~~swaps~~swaps) at March 31, 2023 and ~~Euro denominated borrowings) at June 30,~~ 2022 was5.17% and ~~2021 was 1.92% and 1.94%~~1.89%, respectively.

The Company has ~~$300,000~~$299,625 of 5.25% senior unsecured notes due December 1, 2025 (the "2025 Senior Notes"). The 2025 Senior Notes bear interest at a rate of 5.25% per annum with interest payable semi-annually in arrears on June 1 and December 1 of each year. The Company's obligations under the 2025 Senior Notes are guaranteed by certain of the Company's direct and indirect wholly-owned subsidiaries. The Company is subject to certain covenants and other restrictions in connection with the 2025 Senior Notes. The Company incurred direct financing fees and costs in connection with the 2025 Senior Notes. Unamortized costs were $~~1,800~~1,394 and ~~$2,204~~$1,664 at ~~June 30, 2022~~March 31, 2023 and September 30, ~~2021,~~2022, respectively.

The Company and certain of its domestic subsidiaries sell, on a continuous basis without recourse, their trade receivables to Matthews Receivables Funding Corporation, LLC (“Matthews RFC”), a wholly-owned bankruptcy-remote subsidiary of the Company. In March 2022, Matthews RFC entered into a receivables purchase agreement (“RPA”) to sell up to $125,000 of receivables to certain purchasers (the “Purchasers”) on a recurring basis in exchange for cash (referred to as “capital” within the RPA) equal to the gross receivables transferred. The parties intend that the transfers of receivables to the Purchasers constitute purchases and sales of receivables. Matthews RFC has guaranteed to each Purchaser the prompt payment of sold receivables, and has granted a security interest in its assets for the benefit of the Purchasers. Under the RPA, which matures in March 2024, each Purchaser’s share of capital accrues yield at a floating rate plus an applicable margin. The Company is the master servicer under the RPA, and is responsible for administering and collecting receivables.

The proceeds of the RPA are classified as operating activities in the Company’s Consolidated Statements of Cash Flows. Cash received from collections of sold receivables may be used to fund additional purchases of receivables on a revolving basis, or to reduce all or any portion of the outstanding capital of the Purchasers. ~~Gross receivables sold and cash collections reinvested under the RPA program were $247,221 and $147,220 for the nine months ended June 30, 2022, respectively.~~ 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~~March 31, 2023 and September 30, 2022, the amount sold to the Purchasers was ~~$100,001,~~$108,600 and $96,590, respectively, which was derecognized from the Consolidated Balance Sheets. As collateral against sold receivables, Matthews RFC maintains a certain level of unsold receivables, which was ~~$39,707~~$41,830 and $44,262 as of ~~June~~March 31, 2023 and September 30, ~~2022.~~2022, respectively.

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


	Six Months Ended March 31, 2023		Six Months Ended March 31, 2022
Gross receivables sold	$	201,115	$	121,616
Cash collections reinvested	(189,105)		(46,615)
Net cash proceeds received	$	12,010	$	75,001

During the second quarter of fiscal 2023, the Company, through its U.K. subsidiary, entered into a non-recourse factoring arrangement. In connection with this arrangement, the Company periodically sells trade receivables to a third-party purchaser in exchange for cash. These transfers of financial assets are recorded at the time the Company surrenders control of the assets. As these transfers qualify as true sales under the applicable accounting guidance, the receivables are de-recognized from the Company's Consolidated Balance Sheets upon transfer. The principal amount of receivables sold under this arrangement was $16,950 during the six months ended March 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.

1112

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 7. Debt and Financing Arrangements (continued)

~~Previously, the~~The Company, ~~had~~through certain of its European subsidiaries, has a ~~$115,000 accounts receivable securitization~~credit facility ~~(the "Securitization Facility")~~ with ~~certain financial institutions that matured in March 2022.~~a European bank, which is guaranteed by Matthews. The ~~Securitization Facility did not qualify~~maximum amount of borrowing available under this facility is €10.0 million ($10,879). The facility also provides €16.0 million ($17,406) for ~~sale treatment. Accordingly, the trade receivables~~bank guarantees. This facility has no stated maturity date and related debt obligations remained on the Company's Consolidated Balance Sheet. Borrowings under the Securitization Facility were based on LIBOR plus 0.75% and the Company was required to pay an annual commitment fee ranging from 0.25% to 0.35% of the unused portion of the Securitization Facility.is available until terminated. Outstanding borrowings under the ~~Securitization Facility~~ credit facility totaled €0.9 million ($970) and €8.2 million ($8,050)at March 31, 2023 and September 30, ~~2021 totaled $95,990.~~ 2022, respectively.~~At June 30, 2021, the~~The weighted-average interest rate on outstanding borrowings under this facility was ~~0.85%.~~5.17% and 2.25% at March 31, 2023 and 2022, respectively.

Other borrowings totaled$21,057 and $13,434 at March 31, 2023 and September 30, 2022, respectively. The weighted-average interest rate on all other borrowings was 3.01% and 1.92% at March 31, 2023 and 2022, respectively.

As of March 31, 2023 and September 30, 2022, the fair value of the Company's long-term debt, including current maturities, which is classified as Level 2 in the fair value hierarchy, approximated the carrying value included in the Consolidated Balance Sheets. The Company was in compliance with all of its debt covenants as of March 31, 2023.

Note 8. Derivatives and Hedging Instruments

The Company operates internationally and utilizes certain derivative financial instruments to manage its foreign currency, debt and interest rate exposures. At March 31, 2023 and September 30, 2022, derivative instruments were reflected on a gross-basis in the consolidated balance sheets as follows:


Derivatives:	March 31, 2023				September 30, 2022
	Interest Rate Swaps		Cross- Currency Swaps		Interest Rate Swaps		Cross- Currency Swaps
Current assets:
Other current assets	$	2	$	—	$	3,358	$	—
Long-term assets:
Other assets	8		—		7,341		3,722
Current liabilities:
Other current liabilities	(751)		—		—		—
Long-term liabilities:
Other liabilities	(2,653)		(3,107)		—		—
Total derivatives	$	(3,394)	$	(3,107)	$	10,699	$	3,722

The following table presents information related to interest rate ~~contracts~~swaps entered into by the Company and designated as cash flow hedges:


		June 30, 2022			September 30, 2021				March 31, 2023			September 30, 2022
Pay fixed swaps - notional amount		$	125,000		$	250,000
Net unrealized gain (loss)		$	7,407		$	(2,062)
Notional amount								Notional amount	$	175,000		$	125,000

Weighted-average maturity period (years)	Weighted-average maturity period (years)	3.1			2.2			Weighted-average maturity period (years)	4.9			3.1
Weighted-average received rate	Weighted-average received rate	1.79		%	0.08		%	Weighted-average received rate	4.81		%	3.14		%
Weighted-average pay rate	Weighted-average pay rate	1.04		%	1.34		%	Weighted-average pay rate	3.83		%	1.04		%

The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate. In order to transition the Company's swaps from LIBOR-based to SOFR-based rates, the LIBOR-based swaps were settled during the second quarter of fiscal 2023, resulting in cash proceeds of $10,474. Concurrently, the Company entered into new interest rate swaps with SOFR-based rates with a notional amount of $175,000. 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 an unrealized gain net of unrealized losses of $7,407 ($5,591~~after tax) at June 30, 2022 and an unrealized loss net of unrealized gains of $2,062 ($1,558 after tax) at September 30, 2021, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI"). Assuming market rates remain constant with the rates at June 30, 2022, a~~gain (net of tax) of approximately $1,638 included in AOCI is expected to be recognized in earnings over the next twelve months.~~

~~At June 30, 2022 and September 30, 2021, the interest rate swap contracts were reflected on a gross-basis in the Consolidated Balance Sheets as follows:~~

Derivatives June 30, 2022 September 30, 2021
Current assets:
Other current assets $ 2,169 $ 31
Long-term assets:
Other assets 5,238 139
Current liabilities:
Other current liabilities — (1,922)
Long-term liabilities:
Other liabilities — (310)
Total derivatives $ 7,407 $ (2,062)

~~The losses recognized on derivatives were as follows:~~

Derivatives in Cash Flow Hedging Relationships Location of Loss Recognized in Income on Derivatives Amount of Loss Recognized in Income on Derivatives Amount of Loss Recognized in Income on Derivatives
Three Months Ended
June 30, Nine Months Ended
June 30,
2022 2021 2022 2021
Interest rate swaps Interest expense $ (470) $ (790) $ (2,006) $ (2,444)

1213

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note ~~7. Debt~~8. Derivatives and ~~Financing Arrangements~~Hedging Instruments (continued)

The ~~Company recognized~~fair value of the ~~following gains (losses) in AOCI:~~
Derivatives in Cash Flow Hedging Relationships Amount of Gain
Recognized in AOCI on Derivatives Location of Loss Reclassified From AOCI into Income (Effective Portion*) Amount of Loss
Reclassified from
AOCI into Income
(Effective Portion*)
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Interest rate swaps $ 5,636 $ 1,787 Interest expense $ (1,513) $ (1,845)
* There is no ineffective portion or amounts excluded from effectiveness testing.

~~The Company, through certain~~interest rate swaps reflected a net unrealized loss of ~~its European subsidiaries, has a credit facility with a European bank, which is guaranteed by Matthews. The maximum amount~~$3,394 ($2,537 after tax) at March 31, 2023 and an unrealized gain of ~~borrowing available under this facility is €25.0 million~~$10,699 ($26,128), which includes €8.0 million ($8,361) for bank guarantees. In the first quarter of fiscal 2022, the Company extended this facility to a current maturity of December 2022 and the Company intends to continue to extend this facility. Outstanding borrowings under the credit facility totaled €10.5 million ($10,969) and €0.7 million ($817)7,937 after tax) at ~~June~~September 30, 2022, ~~and September 30, 2021, respectively.The weighted-average interest rate on outstanding borrowings under this facility was 2.25% at June 30, 2022 and 2021.~~

~~Other borrowings totaled $24,394 and $10,150 at June 30, 2022 and September 30, 2021, respectively. Other borrowings at June 30, 2022~~that is included ~~$3,389~~in shareholders' equity as part of ~~collateralized borrowings~~accumulated other comprehensive income (loss) ("AOCI"). Unrecognized gains of $10,474 ($7,829 after tax) related to the terminated LIBOR-based swaps were also included in ~~connection~~AOCI as of March 31, 2023. Assuming market rates remain constant with the ~~RPA arrangement discussed above. The weighted-average interest rate on all other borrowings was 1.90% and 2.19%~~rates at ~~June 30, 2022 and 2021, respectively.~~March 31, 2023, a gain (net of tax) of approximately $2,952 included in AOCI is expected to be recognized in earnings over the next twelve months.

The Company has a U.S. Dollar/Euro cross currency swap with a notional amount of ~~$94,464~~$81,392, as of ~~June~~March 31, 2023 and September 30, 2022, which has been designated as a net investment hedge of foreign operations. The swap contract matures in September ~~2028.~~2027. The Company assesses hedge effectiveness for this contract based on changes in fair value attributable to changes in spot prices. A ~~gain~~loss of ~~$8,708~~$2,323 (net of income taxes of ~~$2,826)~~$784) and a gain of ~~$29~~$2,782 (net of income taxes of ~~$10)~~$940), which represented effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at ~~June 30, 2022~~March 31, 2023 and September 30, ~~2021,~~2022, respectively. Income of~~$428~~ $309 and ~~$1,213,~~$581, which represented the recognized portion of the fair value of cross currency swaps excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of interest expense for the three and ~~nine~~six months ended ~~June 30, 2022,~~March 31, 2023, respectively. ~~At June 30, 2022~~Income of $420 and ~~September 30, 2021,~~$785, which represented the ~~swap, which is included in other assets in the Consolidated Balance Sheets, totaled $11,534 and $39, respectively.~~

~~The Company enters into certain derivative contracts in accordance with its risk management strategy that do not meet the criteria for hedge accounting but which have the economic impact~~recognized portion of ~~largely mitigating foreign currency exposure. Changes in~~ the fair value of ~~these economic hedges are recorded~~cross currency swaps excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of ~~other income (deductions), net. During~~interest expense for the ~~third quarter of fiscal~~three and six months ended March 31, 2022, respectively. At March 31, 2023 and September 30, 2022, the Company entered into a three-year U.S. Dollar/Euro cross currency swap with a notional amount of $52,765, which did not meet the criteria for hedge accounting. An unrealized gain of $495 related to this swapswaps totaled $3,107 and $3,722, respectively, and was included in other accrued liabilities and other assets in the Consolidated Balance ~~Sheet at June 30, 2022.~~Sheets, respectively.

~~As of June 30, 2022~~Refer to Note 12, "Accumulated Other Comprehensive Income" for further details regarding amounts recorded in AOCI and September 30, 2021, 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~~Statements of ~~its debt covenants as of June 30, 2022.~~Income (Loss) related to derivatives.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued~~

~~(Dollar amounts in thousands, except per share data)~~

Note 8.9. 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 ~~June 30, 2022, 215,618~~March 31, 2023, 486,503 shares have been issued under the 2017 Equity Incentive Plan. ~~789,015~~1,041,615 time-based restricted share units, ~~946,212~~1,313,162 performance-based restricted share units, and 75,000 stock options have been granted under the 2017 Equity Incentive Plan. ~~1,503,012~~1,811,152 of these share-based awards are outstanding as of ~~June 30, 2022.~~March 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 ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ stock-based compensation cost totaled ~~$5,197~~$4,278 and ~~$5,713,~~$5,222, respectively. For the ~~nine-month~~six-month periods ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ stock-based compensation cost totaled ~~$14,128~~$8,612 and ~~$12,960,~~$8,931, respectively. The associated future income tax benefit recognized for stock-based compensation was ~~$1,282~~$1,057 and ~~$1,467~~$1,278 for the three-month periods ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, and ~~$2,970~~$1,608 and ~~$2,443~~$1,688 for the ~~nine-month~~six-month periods ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

With respect to the restricted share grants, generally one-half of the shares vest on the third anniversary of the grant, one-quarter of the shares vest in one-third increments upon the attainment of pre-defined levels of adjusted earnings per share, and the remaining one-quarter of the shares vest in one-third increments upon attainment of pre-defined levels of appreciation in the market value of the Company's Class A Common Stock. Additionally, restricted shares cannot vest until the first anniversary of the grant date. Unvested restricted shares generally expire on the earlier of ~~three~~ or five years from the date of grant, upon employment termination, or within specified time limits following voluntary employment termination (with the consent of the Company), retirement or death. The Company issues restricted shares from treasury shares.

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 ~~42%~~43% 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.

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 shares and restricted share units for the ~~nine~~six months ended ~~June 30, 2022~~March 31, 2023 were as follows:


		Shares /Units	Weighted- average Grant-date Fair Value			Shares /Units	Weighted- average Grant-date Fair Value
Non-vested at September 30, 2021		1,083,365	$	34.07
Non-vested at September 30, 2022					Non-vested at September 30, 2022	1,459,233	$	33.78
Granted	Granted	670,317	37.88		Granted	618,050	27.69
Vested	Vested	(167,031)	41.76		Vested	(201,153)	35.05
Expired or forfeited	Expired or forfeited	(122,448)	47.72		Expired or forfeited	(139,978)	40.78
Non-vested at June 30, 2022		1,464,203	$	33.80
Non-vested at March 31, 2023					Non-vested at March 31, 2023	1,736,152	$	30.90

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 ~~June 30, 2022,~~March 31, 2023, the total unrecognized compensation cost related to all unvested stock-based awards was ~~$21,698~~$26,437 and is expected to be recognized over a weighted average period of ~~2.4~~2.3 years.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued~~

~~(Dollar amounts in thousands, except per share data)~~

~~Note 8. Share-Based Payments (continued)~~

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 ~~2022,~~2023, either cash or shares of the Company's Class A Common Stock with a value equal to $90. The annual retainer fee for fiscal ~~2022~~2023 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 ~~150,000~~300,000 shares of 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 ~~45,191~~49,084 shares and share units had been deferred under the Director Fee Plans as of ~~June 30, 2022.~~March 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 ~~2022.~~2023. As of ~~June 30, 2022, 305,911~~March 31, 2023, 336,127 restricted shares and restricted share units have been granted under the Director Fee Plans, ~~and are outstanding as of June 30, 2022, 132,682~~162,898 of which were issued under the 2019 Director Fee Plan. ~~58,008 restricted shares and~~60,057 restricted share units are unvested at ~~June 30, 2022.~~ March 31, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 9.10. Earnings Per Share Attributable to Matthews' Shareholders

The information used to compute earnings (loss) per share attributable to Matthews' common shareholders was as follows:


		Three Months Ended June 30,				Nine Months Ended June 30,					Three Months Ended March 31,				Six Months Ended March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income (loss) attributable to Matthews shareholders	Net income (loss) attributable to Matthews shareholders	$	2,893	$	3,355	$	(18,815)	$	6,586	Net income (loss) attributable to Matthews shareholders	$	9,127	$	(1,905)	$	12,830	$	(21,708)

Weighted-average shares outstanding (in thousands):	Weighted-average shares outstanding (in thousands):									Weighted-average shares outstanding (in thousands):
Basic shares	Basic shares	31,244		31,656		31,531		31,683		Basic shares	30,778		31,692		30,741		31,695
Effect of dilutive securities	Effect of dilutive securities	308		537		—		435		Effect of dilutive securities	401		—		330		—
Diluted shares	Diluted shares	31,552		32,193		31,531		32,118		Diluted shares	31,179		31,692		31,071		31,695

Dividends declared per common share										Dividends declared per common share	$	0.23	$	0.22	$	0.46	$	0.44

Anti-dilutive securities excluded from the dilution calculation were insignificant for the three and ~~nine~~six months ended ~~June 30, 2022.~~March 31, 2023. 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.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued~~

~~(Dollar amounts in thousands, except per share data)~~

Note ~~10.~~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 June 30,									Three months ended March 31,
		Pension				Other Postretirement					Pension				Other Postretirement
		2022		2021		2022		2021			2023		2022		2023		2022

Service cost	Service cost	$	4	$	2,020	$	42	$	50	Service cost	$	31	$	5	$	19	$	41
Interest cost *	Interest cost *	48		1,560		102		94		Interest cost *	105		48		161		103
Expected return on plan assets *	Expected return on plan assets *	—		(2,761)		—		—		Expected return on plan assets *	—		—		—		—
Amortization:	Amortization:									Amortization:
Prior service credit	Prior service credit	(66)		(46)		(91)		(91)		Prior service credit	—		(66)		(91)		(91)
Net actuarial loss *	Net actuarial loss *	88		2,730		—		—		Net actuarial loss *	(6)		91		(177)		—
Curtailment gain *		—		(220)		—		—
Prior service cost write-off *		—		526		—		—

Net benefit cost	Net benefit cost	$	74	$	3,809	$	53	$	53	Net benefit cost	$	130	$	78	$	(88)	$	53


		Nine months ended June 30,									Six months ended March 31,
		Pension				Other Postretirement					Pension				Other Postretirement
		2022		2021		2022		2021			2023		2022		2023		2022

Service cost	Service cost	$	389	$	6,216	$	124	$	150	Service cost	$	88	$	385	$	38	$	82
Interest cost *	Interest cost *	1,086		4,654		308		282		Interest cost *	248		1,038		322		206
Expected return on plan assets *	Expected return on plan assets *	(1,042)		(8,286)		—		—		Expected return on plan assets *	—		(1,042)		—		—
Amortization:	Amortization:									Amortization:
Prior service credit	Prior service credit	(85)		(104)		(273)		(273)		Prior service credit	—		(19)		(182)		(182)
Net actuarial loss *	Net actuarial loss *	380		8,774		—		—		Net actuarial loss *	(16)		292		(354)		—
Settlement loss *		30,856		—		—		—
Curtailment gain *		—		(220)		—		—
Prior service cost write-off *		—		526		—		—
Settlement losses *										Settlement losses *	1,271		30,856		—		—

Net benefit cost	Net benefit cost	$	31,584	$	11,560	$	159	$	159	Net benefit cost	$	1,591	$	31,510	$	(176)	$	106
* Non-service components of pension and postretirement expense are included in other income (deductions), net.	* Non-service components of pension and postretirement expense are included in other income (deductions), net.									* Non-service components of pension and postretirement expense are included in other income (deductions), net.

Benefit payments under the Company's principal defined benefit retirement plan ("DB Plan") were made from plan assets, while benefit payments under the supplemental retirement plan ~~and~~were made from the Company's operating funds. Benefit payments under the Company's postretirement benefit plan are made from the Company's operating funds.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 11. Pension and Other Postretirement Benefit Plans (continued)

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 six months ended March 31, 2023. This amount represents the immediate recognition of the deferred AOCI balances related to the SERP and ORRP. During the second quarter of fiscal 2023, the remaining funds held in a rabbi trust associated with the SERP were transferred to the Company. Consequently, these amounts are no longer classified as restricted cash.

In the first quarter of fiscal 2022, the Company terminated its DB Plan and made plan contributions totaling $35,706 to fully fund the planned settlement of the DB Plan obligations. Also during the first quarter of fiscal 2022, lump sum distributions of $185,958 were made from the DB Plan to plan participants, and non-participating annuity contracts totaling $56,274 were purchased by the DB Plan for plan participants, resulting in the full settlement of the DB Plan obligations. The settlement of the DB Plan obligations resulted in the recognition of a non-cash charge of $30,856, which has been presented as a component of other income (deductions), net for the ~~nine~~six months ended ~~June 30,~~March 31, 2022. This amount represents the immediate recognition of the remaining portion of the deferred AOCI balances related to the DB Plan.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued~~

~~(Dollar amounts in thousands, except per share data)~~

~~Note 10. Pension and Other Postretirement Benefit Plans (continued)~~

~~Contributions made and anticipated for fiscal year 2022 are as follows:~~

~~Contributions~~

~~Pension~~

~~Other Postretirement~~

~~Contributions during the nine months ended June 30, 2022:~~

~~Principal defined benefit retirement plan~~

~~35,706~~

—

~~Supplemental retirement plan~~

~~575~~

—

~~Other postretirement plan~~

—

~~472~~

~~Additional contributions expected in fiscal 2022:~~

~~Supplemental retirement plan~~

~~185~~

—

~~Other postretirement plan~~

—

~~412~~

Note ~~11.~~12. Accumulated Other Comprehensive Income

The changes in AOCI by component, net of tax, for the three-month periods ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows:


		Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total			Post-retirement benefit plans			Currency translation adjustment		Cash Flow Hedges			Total
Attributable to Matthews:	Attributable to Matthews:											Attributable to Matthews:
Balance, March 31, 2022		$	(1,824)		$	(163,421)	$	4,015		$	(161,230)
Balance, December 31, 2022												Balance, December 31, 2022	$	6,127		$	(182,750)	$	7,533		$	(169,090)
OCI before reclassification	OCI before reclassification	69			(19,293)		1,223			(18,001)		OCI before reclassification	29			4,663		(1,471)			3,221
Amounts reclassified from AOCI	Amounts reclassified from AOCI	(52)		(a)	—		353		(b)	301		Amounts reclassified from AOCI	(205)		(a)	(231)		(771)		(b)	(1,207)
Net current-period OCI	Net current-period OCI	17			(19,293)		1,576			(17,700)		Net current-period OCI	(176)			4,432		(2,242)			2,014
Balance, June 30, 2022		$	(1,807)		$	(182,714)	$	5,591		$	(178,930)
Balance, March 31, 2023												Balance, March 31, 2023	$	5,951		$	(178,318)	$	5,291		$	(167,076)
Attributable to noncontrolling interest:	Attributable to noncontrolling interest:											Attributable to noncontrolling interest:
Balance, March 31, 2022		$	—		$	249	$	—		$	249
Balance, December 31, 2022												Balance, December 31, 2022	$	—		$	259	$	—		$	259
OCI before reclassification	OCI before reclassification	—			15		—			15		OCI before reclassification	—			(5)		—			(5)
Net current-period OCI	Net current-period OCI	—			15		—			15		Net current-period OCI	—			(5)		—			(5)
Balance, June 30, 2022		$	—		$	264	$	—		$	264
Balance, March 31, 2023												Balance, March 31, 2023	$	—		$	254	$	—		$	254


		Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total			Post-retirement benefit plans			Currency translation adjustment		Cash Flow Hedges			Total
Attributable to Matthews:	Attributable to Matthews:											Attributable to Matthews:
Balance, March 31, 2021		$	(78,575)		$	(143,724)	$	(2,194)		$	(224,493)
Balance, December 31, 2021												Balance, December 31, 2021	$	(1,797)		$	(157,240)	$	(77)		$	(159,114)
OCI before reclassification	OCI before reclassification	970			2,904		(654)			3,220		OCI before reclassification	23			(5,864)		3,538			(2,303)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	2,358		(a)	—		596		(b)	2,954		Amounts reclassified from AOCI	(50)		(a)	(317)		554		(b)	187
Net current-period OCI	Net current-period OCI	3,328			2,904		(58)			6,174		Net current-period OCI	(27)			(6,181)		4,092			(2,116)
Balance, June 30, 2021		$	(75,247)		$	(140,820)	$	(2,252)		$	(218,319)
Balance, March 31, 2022												Balance, March 31, 2022	$	(1,824)		$	(163,421)	$	4,015		$	(161,230)
Attributable to noncontrolling interest:	Attributable to noncontrolling interest:											Attributable to noncontrolling interest:
Balance, March 31, 2021		$	—		$	366	$	—		$	366
Balance, December 31, 2021												Balance, December 31, 2021	$	—		$	245	$	—		$	245
OCI before reclassification	OCI before reclassification	—			—		—			—		OCI before reclassification	—			4		—			4
Net current-period OCI	Net current-period OCI	—			—		—			—		Net current-period OCI	—			4		—			4
Balance, June 30, 2021		$	—		$	366	$	—		$	366
Balance, March 31, 2022												Balance, March 31, 2022	$	—		$	249	$	—		$	249

(a) Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note ~~10)~~11).

(b) Amounts were included in interest expense in the periods the hedged item affected earnings (see Note 7)8).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note ~~11.~~12. Accumulated Other Comprehensive Income (continued)

The changes in AOCI by component, net of tax, for the ~~nine-month~~six-month periods ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows:


		Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total			Post-retirement benefit plans			Currency translation adjustment		Cash Flow Hedges			Total
Attributable to Matthews:	Attributable to Matthews:											Attributable to Matthews:
Balance, September 30, 2021		$	(35,930)		$	(155,251)	$	(1,558)		$	(192,739)
Balance, September 30, 2022												Balance, September 30, 2022	$	5,182		$	(203,310)	$	7,937		$	(190,191)
OCI before reclassification	OCI before reclassification	10,810			(27,463)		5,636			(11,017)		OCI before reclassification	232			25,426		(1,378)			24,280
Amounts reclassified from AOCI	Amounts reclassified from AOCI	23,313		(a)	—		1,513		(b)	24,826		Amounts reclassified from AOCI	537		(a)	(434)		(1,268)		(b)	(1,165)
Net current-period OCI	Net current-period OCI	34,123			(27,463)		7,149			13,809		Net current-period OCI	769			24,992		(2,646)			23,115

Balance, June 30, 2022		$	(1,807)		$	(182,714)	$	5,591		$	(178,930)
Balance, March 31, 2023												Balance, March 31, 2023	$	5,951		$	(178,318)	$	5,291		$	(167,076)
Attributable to noncontrolling interest:	Attributable to noncontrolling interest:											Attributable to noncontrolling interest:
Balance, September 30, 2021		$	—		$	241	$	—		$	241
Balance, September 30, 2022												Balance, September 30, 2022	$	—		$	255	$	—		$	255
OCI before reclassification	OCI before reclassification	—			23		—			23		OCI before reclassification	—			(1)		—			(1)
Net current-period OCI	Net current-period OCI	—			23		—			23		Net current-period OCI	—			(1)		—			(1)
Balance, June 30, 2022		$	—		$	264	$	—		$	264
Balance, March 31, 2023												Balance, March 31, 2023	$	—		$	254	$	—		$	254


		Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total			Post-retirement benefit plans			Currency translation adjustment		Cash Flow Hedges			Total
Attributable to Matthews:	Attributable to Matthews:											Attributable to Matthews:
Balance, September 30, 2020		$	(82,954)		$	(151,881)	$	(5,884)		$	(240,719)
Balance, September 30, 2021												Balance, September 30, 2021	$	(35,930)		$	(155,251)	$	(1,558)		$	(192,739)
OCI before reclassification	OCI before reclassification	970			11,061		1,787			13,818		OCI before reclassification	10,741			(7,577)		4,413			7,577
Amounts reclassified from AOCI	Amounts reclassified from AOCI	6,737		(a)	—		1,845		(b)	8,582		Amounts reclassified from AOCI	23,365		(a)	(593)		1,160		(b)	23,932
Net current-period OCI	Net current-period OCI	7,707			11,061		3,632			22,400		Net current-period OCI	34,106			(8,170)		5,573			31,509
Balance, June 30, 2021		$	(75,247)		$	(140,820)	$	(2,252)		$	(218,319)
Balance, March 31, 2022												Balance, March 31, 2022	$	(1,824)		$	(163,421)	$	4,015		$	(161,230)
Attributable to noncontrolling interest:	Attributable to noncontrolling interest:											Attributable to noncontrolling interest:
Balance, September 30, 2020		$	—		$	368	$	—		$	368
Balance, September 30, 2021												Balance, September 30, 2021	$	—		$	241	$	—		$	241
OCI before reclassification	OCI before reclassification	—			(2)		—			(2)		OCI before reclassification	—			8		—			8
Net current-period OCI	Net current-period OCI	—			(2)		—			(2)		Net current-period OCI	—			8		—			8
Balance, June 30, 2021		$	—		$	366	$	—		$	366
Balance, March 31, 2022												Balance, March 31, 2022	$	—		$	249	$	—		$	249

(a) Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note ~~10)~~11).

(b) Amounts were included in interest expense in the periods the hedged item affected earnings (see Note 7)8).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note ~~11.~~12. Accumulated Other Comprehensive Income (continued)

Reclassifications out of AOCI for the three and ~~nine-month~~six-month periods ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows:


		Amount reclassified from AOCI						Amount reclassified from AOCI
Details about AOCI Components	Details about AOCI Components	Three Months Ended June 30, 2022		Nine Months Ended June 30, 2022		Affected line item in the Statement of income	Details about AOCI Components	Three Months Ended March 31, 2023		Six Months Ended March 31, 2023		Affected line item in the Statement of income

Postretirement benefit plans	Postretirement benefit plans						Postretirement benefit plans
Prior service credit (a)	Prior service credit (a)	$	157	$	358		Prior service credit (a)	$	91	$	182
Actuarial losses	Actuarial losses	(88)		(380)		Other income (deductions), net	Actuarial losses	183		370		Other income (deductions), net
Settlement loss	Settlement loss	—		(30,856)		Other income (deductions), net	Settlement loss	—		(1,271)		Other income (deductions), net
		69		(30,878)		Income before income tax (b)		274		(719)		Income before income tax (b)
		(17)		7,565		Income taxes		(69)		182		Income taxes
		$	52	$	(23,313)	Net income		$	205	$	(537)	Net income
Derivatives	Derivatives						Derivatives
Interest rate swap contracts		$	(470)	$	(2,006)	Interest expense
Cash flow hedges							Cash flow hedges	$	1,032	$	1,697	Interest expense
Net investment hedges							Net investment hedges	309		581		Interest expense
		(470)		(2,006)		Income before income tax (b)		1,341		2,278		Income before income tax (b)
		117		493		Income taxes		(339)		(576)		Income taxes
		$	(353)	$	(1,513)	Net income		$	1,002	$	1,702	Net income

Details about AOCI Components Three Months Ended
June 30, 2021 Nine Months Ended
June 30, 2021 Affected line item in the Statement of income
Postretirement benefit plans
Prior service credit (a)
$ 137 $ 377
Actuarial losses (2,730) (8,774) Other income (deductions), net
Prior service cost write-off (526) (526) Other income (deductions), net
(3,119) (8,923)
Income before income tax (b)
761 2,186 Income taxes
$ (2,358) $ (6,737) Net income
Derivatives
Interest rate swap contracts $ (790) $ (2,444) Interest expense
(790) (2,444)
Income before income tax (b)
194 599 Income taxes
$ (596) $ (1,845) Net income




Details about AOCI Components	Three Months Ended March 31, 2022		Six Months Ended March 31, 2022		Affected line item in the Statement of income

Postretirement benefit plans
Prior service credit (a)	$	157	$	201
Actuarial losses	(91)		(292)		Other income (deductions), net
Settlement losses	—		(30,856)		Other income (deductions), net
	66		(30,947)		Income before income tax (b)
	(16)		7,582		Income taxes
	$	50	$	(23,365)	Net income
Derivatives
Cash flow hedges	$	(735)	$	(1,536)	Interest expense
Net investment hedges	420		785		Interest expense
	(315)		(751)		Income before income tax (b)
	78		184		Income taxes
	$	(237)	$	(567)	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 ~~10.~~11.
(b) For pre-tax items, positive amounts represent income and negative amounts represent expense.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note ~~12.~~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 ~~nine~~six months of fiscal ~~2022~~2023 were an expense of $4,694, compared to a benefit of ~~$2,311, compared to an expense of $2,627~~$3,351 for the first ~~nine~~six months of fiscal ~~2021.~~2022. The difference between the Company’s consolidated income taxes for the first ~~nine~~six months of fiscal ~~2022~~2023 compared to the same period for fiscal ~~2021~~2022 primarily resulted from consolidated pre-tax income in fiscal 2023 compared to a ~~consolidated~~ pre-tax loss in fiscal ~~2022 (related to~~2022. The Company’s fiscal 2023 six-month effective tax rate varied from the ~~DB Plan settlement) compared to pre-tax income in fiscal 2021. Additionally, fiscal 2022 included discrete~~U.S. statutory tax ~~expenses related to non-tax deductible asset write-downs in Russia,~~rate of 21.0% primarily due to the full valuation allowance for the Russian entity. Fiscal 2022 discrete tax expenses were partially offset by discrete tax benefits related to the resolution of uncertain tax liabilities. Fiscal 2021 included discrete tax expenses related tostate taxes, foreign ~~operating losses, discrete tax benefits related to the resolution of uncertain tax liabilities, a net operating loss (“NOL”) carryback to tax years where the U.S. federal~~ statutory rate ~~was 35%,~~differentials, tax credits, and ~~additional~~non-tax benefited foreign ~~tax credits.~~losses. The Company’s fiscal 2022 ~~nine month~~six-month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to the non-deductible asset write-downs in Russia, state taxes, foreign statutory rate differentials, and tax credits. The Company’s fiscal 2021 nine month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to discrete tax expenses related to foreign operating losses, discrete tax benefits related to the resolution of uncertain tax liabilities, a NOL carryback to tax years where the U.S. federal statutory rate was 35%, and additional foreign tax credits.

The Company had unrecognized tax benefits (excluding penalties and interest) of ~~$3,046~~$4,529 and ~~$2,807~~$4,123 on ~~June 30, 2022~~March 31, 2023 and September 30, ~~2021,~~2022, respectively, which would impact the annual effective rate at ~~June 30, 2022~~March 31, 2023 and September 30, ~~2021,~~2022, respectively. It is reasonably possible that the amount of unrecognized tax benefits could decrease by approximately ~~$191~~$1,425 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 ~~$701~~$903 and ~~$691~~$876 at ~~June 30, 2022~~March 31, 2023 and September 30, ~~2021,~~2022, respectively. These accruals may potentially be applicable in the event of an unfavorable outcome of uncertain tax positions.

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 ~~June 30, 2022,~~March 31, 2023, the tax years that remain subject to examination by major jurisdictions generally are:


United States – Federal			~~2018~~2019 and forward
United States – State			~~2017~~2018 and forward
Canada			2019 and forward
Germany			2019 and forward
United Kingdom			~~2020~~2021 and forward
Singapore			2018 and forward
Australia			~~2018~~2017 and forward

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note ~~13.~~14. Segment Information

The Company manages its businesses under 3three segments: Memorialization, Industrial Technologies and SGK Brand Solutions. Effective in the first quarter of fiscal 2022, the Company transferred its surfaces and engineered products businesses from the SGK Brand Solutions segment to the Industrial Technologies segment. This business segment change is consistent with internal management structure and reporting changes effective for fiscal 2022. Prior periods were revised to reflect retrospective application of this segment realignment. 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 ~~marking, coding~~solutions, product identification and ~~industrial~~warehouse automation technologies and solutions, ~~and~~including order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products. 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.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued~~

~~(Dollar amounts in thousands, except per share data)~~

~~Note 13. Segment Information (continued)~~

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, 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.

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

Three Months Ended
June 30, Nine Months Ended
June 30,
2022 2021 2022 2021
Sales:
Memorialization $ 203,158 $ 184,337 $ 633,868 $ 573,068
Industrial Technologies 78,443 81,832 230,928 200,538
SGK Brand Solutions 140,118 162,211 440,480 458,585
Consolidated Sales $ 421,719 $ 428,380 $ 1,305,276 $ 1,232,191

Adjusted EBITDA:
Memorialization $ 32,090 $ 36,402 $ 118,404 $ 132,080
Industrial Technologies 11,809 12,173 33,377 23,446
SGK Brand Solutions 14,546 27,025 43,422 67,222
Corporate and Non-Operating (12,421) (15,585) (40,656) (47,030)
Total Adjusted EBITDA $ 46,024 $ 60,015 $ 154,547 $ 175,718
Strategic initiatives and other charges (1)**
(7,290) (7,213) (17,863) (23,498)
Non-recurring / incremental coronavirus disease 2019 ("COVID-19") costs (2)***
(301) (1,993) (2,204) (4,689)
Defined benefit plan termination related items (3)
63 — (284) —
Asset write-downs, net (4)
469 — (10,017) —
Stock-based compensation (5,197) (5,713) (14,128) (12,960)
Non-service pension and postretirement expense (5)
(238) (1,929) (31,588) (5,730)
Depreciation and amortization *
(22,938) (35,389) (80,163) (97,919)
Interest expense (6,659) (6,748) (19,426) (21,709)
Net (loss) income attributable to noncontrolling interests (18) 11 (56) (60)
Income (loss) before income taxes 3,915 1,041 (21,182) 9,153
Income tax (provision) benefit (1,040) 2,325 2,311 (2,627)
Net income (loss) $ 2,875 $ 3,366 $ (18,871) $ 6,526

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note ~~13.~~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 March 31,				Six Months Ended March 31,
	2023		2022		2023		2022
Sales:
Memorialization	$	222,889	$	220,004	$	429,391	$	430,710
Industrial Technologies	125,514		78,154		234,657		152,485
SGK Brand Solutions	131,177		146,820		264,772		300,362
Consolidated Sales	$	479,580	$	444,978	$	928,820	$	883,557


Adjusted EBITDA:
Memorialization	$	48,030	$	42,944	$	87,167	$	86,314
Industrial Technologies	15,565		14,385		27,767		21,568
SGK Brand Solutions	11,020		13,462		23,252		28,876
Corporate and Non-Operating	(16,168)		(15,601)		(30,448)		(28,235)
Total Adjusted EBITDA	$	58,447	$	55,190	$	107,738	$	108,523

RPA and factoring financing fees (1)	(1,090)		—		(1,546)		—
Acquisition and divestiture costs (2)**	(2,852)		—		(4,137)		—
Strategic initiatives and other charges (3)**	(1,280)		(6,750)		(3,040)		(10,573)
Non-recurring / incremental coronavirus disease 2019 ("COVID-19") costs (4)***	—		(1,213)		—		(1,903)
Exchange losses related to highly inflationary accounting (5)	(160)		—		(1,248)		—
Defined benefit plan termination related items (6)	—		79		(21)		(347)
Asset write-downs (7)	—		(10,486)		—		(10,486)
Stock-based compensation	(4,278)		(5,222)		(8,612)		(8,931)

Non-service pension and postretirement expense (8)	(83)		(242)		(1,471)		(31,350)
Depreciation and amortization *	(24,148)		(23,724)		(47,877)		(57,225)
Interest expense	(12,047)		(6,260)		(22,262)		(12,767)
Net loss attributable to noncontrolling interests	(2)		(31)		(58)		(38)
Income (loss) before income taxes	12,507		1,341		17,466		(25,097)
Income tax (provision) benefit	(3,382)		(3,277)		(4,694)		3,351
Net income (loss)	$	9,125	$	(1,936)	$	12,772	$	(21,746)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 14. Segment Information (continued)


(1) Represents fees for receivables sold under the RPA and factoring arrangements (see Note 7, "Debt and Financing Arrangements").
(2)Includes certain non-recurring ~~items~~costs associated with recent acquisition ~~activities, costs associated with global ERP system integration efforts,~~and divestiture activities.
(3) Includes certain non-recurring costs associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels and ~~exchange losses~~costs associated with ~~highly inflationary accounting (see Note 2, "Basis~~global ERP system integration efforts, net of ~~Presentation").~~loss recoveries related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.
~~(2)~~(4) Includes certain non-recurring direct incremental costs (such as costs for purchases of computer peripherals and devices to facilitate working-from-home, additional personal protective equipment and cleaning supplies and services, etc.) incurred in response to COVID-19. This amount does not include the impact of any lost sales or underutilization due to COVID-19.
~~(3)~~(5) Represents exchange losses associated with highly inflationary accounting related to the Company's Turkish subsidiaries (see Note 2, "Basis of Presentation").
(6) Represents items associated with the termination of the Company's DB Plan, supplemental retirement plan and the defined benefit portion of the officers retirement restoration plan.
~~(4)~~(7) Represents asset write-downs ~~net of recoveries~~ within the SGK Brand Solutions segment (see Note ~~15,~~17, "Asset Write-Downs").
~~(5)~~(8) 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.

* Depreciation and amortization was ~~$5,835~~$5,711 and ~~$5,838~~$5,803 for the Memorialization segment, ~~$2,459~~$5,916 and ~~$2,829~~$2,531 for the Industrial Technologies segment, ~~$13,334~~$11,319 and ~~$25,383~~$14,060 for the SGK Brand Solutions segment, and ~~$1,310~~$1,202 and ~~$1,339~~$1,330 for Corporate and Non-Operating, for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. Depreciation and amortization was ~~$17,448~~$11,285 and ~~$17,016~~$11,613 for the Memorialization segment, ~~$7,643~~$11,769 and ~~$8,449~~$5,184 for the Industrial Technologies segment, ~~$51,119~~$22,379 and ~~$68,492~~$37,785 for the SGK Brand Solutions segment, and ~~$3,953~~$2,444 and ~~$3,962~~$2,643 for Corporate and Non-Operating, for the ~~nine~~six months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

** Acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges were ~~$902~~$333 and ~~$484~~$516 for the Memorialization segment, ~~$1,183~~$2,437 and ~~$881~~$161 for the Industrial Technologies segment, ~~$1,970~~$2,610 and ~~$2,909~~$4,475 for the SGK Brand Solutions segment, and ~~$3,235~~income of $1,248 and ~~$2,939~~charges of $1,598 for Corporate and Non-Operating, for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. Acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges were ~~$2,090~~$711 and ~~$1,279~~$1,188 for the Memorialization segment, ~~$1,376~~$3,374 and ~~$3,666~~$193 for the Industrial Technologies segment, ~~$7,673~~$3,131 and ~~$10,470~~$5,703 for the SGK Brand Solutions segment, and ~~$6,724~~income of $39 and ~~$8,083~~charges of $3,489 for Corporate and Non-Operating, for the ~~nine~~six months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

*** Non-recurring/incremental COVID-19 costs were ~~$225 and $1,333~~$579 for the Memorialization segment, $1 ~~and $6~~ for the Industrial Technologies segment, ~~$74 and $638~~$170 for the SGK Brand Solutions segment, and ~~$1 and $16~~$463 for Corporate and Non-Operating, for the three months ended ~~June 30, 2022 and 2021, respectively.~~March 31, 2022. Non-recurring/incremental COVID-19 costs were ~~$1,268 and $3,223~~$1,043 for the Memorialization segment, ~~$6 and $36~~$5 for the Industrial Technologies segment, ~~$464 and $1,344~~$390 for the SGK Brand Solutions segment, and ~~$466 and $86~~$465 for Corporate and Non-Operating, for the ~~nine~~six months ended ~~June 30, 2022 and 2021, respectively.~~March 31, 2022.

Note 15. Acquisitions

Fiscal 2023:

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 transaction closed on March 31, 2023, but was funded subsequent to the balance sheet date on April 3, 2023. The Company recorded a liability of $7,955for amounts due to the seller as of March 31, 2023. The preliminary purchase price allocation was not finalized as of March 31, 2023 and remains subject to change as the Company obtains additional information related to working capital and other assets and liabilities.

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 $2,700 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 preliminary purchase price allocation was not finalized as of March 31, 2023 and remains subject to change as the Company obtains additional information related to working capital, intangible assets, and other assets and liabilities.

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 preliminary purchase price allocations were not finalized as of March 31, 2023 and remain subject to change as the Company obtains additional information related to working capital and other assets and liabilities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 15. Acquisitions (continued)

Fiscal 2022:

In August 2022, the Company acquired German-based engineering firms OLBRICH and R+S Automotive for a purchase price of approximately €43,700 ($44,469) (net of cash acquired) within the Industrial Technologies segment. OLBRICH is a production and intelligent equipment manufacturer, specializing in purpose-built rotary processing equipment, including equipment used in the manufacturing of dry and wet electrodes for lithium-ion batteries used in electric vehicles and components for hydrogen fuel cells and electrolyzers, with additional strong positions in Specialty & Pharma, Packaging and Home & Décor. R+S Automotive is a specialty engineering services provider of automation, plant and tooling concepts for automotive manufacturing companies around the world. Annual sales for these businesses were approximately $140,000 prior to the acquisition. The preliminary purchase price allocation was not finalized as of March 31, 2023 and remains subject to change as the Company obtains additional information related to other assets and liabilities.

Note ~~14.~~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:

Memorialization Industrial Technologies SGK Brand
Solutions Consolidated
Net goodwill at September 30, 2021 $ 366,360 $ 92,577 $ 314,850 $ 773,787
Translation and other adjustments (2,818) (1,050) (15,270) (19,138)
Net goodwill at June 30, 2022 $ 363,542 $ 91,527 $ 299,580 $ 754,649


	Memorialization		Industrial Technologies		SGK Brand Solutions		Consolidated




Net goodwill at September 30, 2022	$	361,782	$	107,022	$	206,617	$	675,421
Additions during period	5,895		6,733		1,311		13,939

Translation and other adjustments	2,652		5,242		11,513		19,407



Net goodwill at March 31, 2023	$	370,329	$	118,997	$	219,441	$	708,767

The net goodwill balances at ~~June 30, 2022~~March 31, 2023 and September 30, ~~2021~~2022 included ~~$178,732~~$261,186 of accumulated impairment losses. Accumulated impairment losses at ~~June 30, 2022~~March 31, 2023 and September 30, ~~2021~~2022 were $5,000, $23,946 and ~~$149,786~~$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 ~~2022~~2023 (January 1, ~~2022)~~2023) and determined that the estimated fair values for all goodwill reporting units exceeded their carrying values, therefore no impairment charges were necessary. The estimated fair value of the Company's SGK Brand Solutions reporting unit ~~(formerly the Graphics Imaging reporting unit)~~ exceeded the carrying value (expressed as a percentage of carrying value) by approximately ~~10%~~9%. The SGK Brand Solutions reporting unit has experienced recent declines, primarily resulting from weakened economic conditions (particularly in Europe) and unfavorable changes in foreign exchange rates. Additionally, recent increases in the cost of certain materials, labor, and other inflationary pressures have had an unfavorable impact on the reporting unit's results of operations. If current projections are not achieved or specific valuation factors outside the ~~Company’s~~Company's control (such as discount rates and continued economic and industry challenges) significantly change, additional goodwill write-downs may be necessary in future periods.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note ~~14.~~16. Goodwill and Other Intangible Assets (continued)

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of ~~June 30, 2022~~March 31, 2023 and September 30, ~~2021,~~2022, respectively.


		Carrying Amount		Accumulated Amortization		Net			Carrying Amount		Accumulated Amortization		Net
June 30, 2022:
March 31, 2023:								March 31, 2023:
Indefinite-lived trade names	Indefinite-lived trade names	$	30,540	$	—	$	30,540	Indefinite-lived trade names	$	30,540	$	—	$	30,540
Definite-lived trade names	Definite-lived trade names	148,414		(116,589)		31,825		Definite-lived trade names	153,635		(120,257)		33,378
Customer relationships	Customer relationships	383,801		(239,677)		144,124		Customer relationships	385,126		(265,651)		119,475
Copyrights/patents/other	Copyrights/patents/other	21,257		(14,375)		6,882		Copyrights/patents/other	22,668		(15,674)		6,994
		$	584,012	$	(370,641)	$	213,371		$	591,969	$	(401,582)	$	190,387
September 30, 2021:
September 30, 2022:								September 30, 2022:
Indefinite-lived trade names	Indefinite-lived trade names	$	30,540	$	—	$	30,540	Indefinite-lived trade names	$	30,540	$	—	$	30,540
Definite-lived trade names	Definite-lived trade names	148,867		(104,211)		44,656		Definite-lived trade names	150,528		(117,572)		32,956
Customer relationships	Customer relationships	388,699		(210,361)		178,338		Customer relationships	380,593		(248,464)		132,129
Copyrights/patents/other	Copyrights/patents/other	23,584		(15,576)		8,008		Copyrights/patents/other	20,878		(14,349)		6,529
		$	591,690	$	(330,148)	$	261,542		$	582,539	$	(380,385)	$	202,154

The net change in intangible assets during the ~~nine~~six months ended ~~June 30, 2022~~March 31, 2023 included the impact of foreign currency fluctuations during the period, additional amortization, and ~~additional amortization.~~additions related to the Eagle acquisition.

Amortization expense on intangible assets was ~~$11,804~~$10,517 and ~~$23,039~~$11,953 for the three-month periods ended ~~June 30,~~March 31, 2023 and 2022, respectively. Amortization expense on intangible assets was $20,859 and ~~2021, respectively. For~~$33,499 for the ~~nine month period~~six-month periods ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021, amortization expense was $45,303 and $61,190,~~ respectively. Amortization expense is estimated to be ~~$11,993~~$21,641 for the remainder of fiscal ~~2022, $41,064 in~~ 2023, ~~$35,505~~$40,271 in 2024, ~~$18,880~~$16,924 in 2025, $15,024 in 2026 and ~~$14,686~~$13,937 in ~~2026.~~2027.

Note ~~15.~~17. Asset Write-Downs

The Company has certain operations in Russia within its SGK Brand Solutions segment. InDuring the second quarter of fiscal 2022, in light of the ~~current~~ war between Russia and Ukraine, and the resulting regional instability and evolving political and economic conditions within the region, the Company evaluated certain of its assets for recoverability and impairment. As a result of this assessment, and due to the uncertainty in projecting future cash flows for the Company's operations in Russia, the Company recorded asset write-downs totaling ~~$10,017 (net of recoveries) during fiscal 2022~~$10,486 to reduce the carrying value of these assets to ~~zero.~~zero during the second quarter of fiscal 2022. Asset write-downs (primarily related to property, plant and equipment) totaling $9,686 and ~~$331~~$800 were reported within cost of sales and administrative expense, respectively, for the ~~nine~~three and six months ended ~~June 30,~~March 31, 2022.

2325

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES:

The following discussion should be read in conjunction with the consolidated financial statements of Matthews International Corporation ("Matthews" or the "Company") and related notes thereto included in this Quarterly Report on Form 10-Q and the Company's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2021.~~2022. Any forward-looking statements contained herein are included pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to be materially different from management's expectations. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove correct. Factors that could cause the Company's results to differ materially from the results discussed in such forward-looking statements principally include changes in domestic or international economic conditions, changes in foreign currency exchange rates, changes in interest rates, changes in the cost of materials used in the manufacture of the Company's products, changes in mortality and cremation rates, changes in product demand or pricing as a result of consolidation in the industries in which the Company operates or other factors such as supply chain disruptions, labor shortages or labor cost increases, changes in product demand or pricing as a result of domestic or international competitive pressures, ability to achieve cost-reduction objectives, unknown risks in connection with the Company's acquisitions, cybersecurity concerns, effectiveness of the Company's internal controls, compliance with domestic and foreign laws and regulations, technological factors beyond the Company's control, impact of pandemics or similar outbreaks or other disruptions to our industries, customers or supply chains, the impact of global conflicts, such as the current war between Russia and Ukraine, and other factors described in Item 1A - "Risk Factors" in this Form 10-Q and Item 1A - "Risk Factors" in the Company's Form 10-K for the fiscal year ended September 30, ~~2021.~~2022. In addition, although the Company does not currently have any customers that would be considered individually significant to consolidated sales, changes in the distribution of the Company's products or the potential loss of one or more of the Company's larger customers are also considered risk factors. Matthews cautions that the foregoing list of important factors is not all inclusive. Readers are also cautioned not to place undue reliance on any forward looking statements, which reflect management's analysis only as of the date of this report, even if subsequently made available by Matthews on its website or otherwise. Matthews does not undertake to update any forward looking statement, whether written or oral, that may be made from time to time by or on behalf of Matthews to reflect events or circumstances occurring after the date of this report.

Included in this report are measures of financial performance that are not defined by generally accepted accounting principles in the United States ("GAAP"). These non-GAAP financial measures assist management in comparing the Company's performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the Company's core operations. For additional information and reconciliations from the consolidated financial statements see "Non-GAAP Financial Measures" below.

RESULTS OF OPERATIONS:

The Company manages its businesses under three segments: Memorialization, Industrial Technologies and SGK Brand Solutions. Effective in the first quarter of fiscal 2022, the Company transferred its surfaces and engineered products businesses from the SGK Brand Solutions segment to the Industrial Technologies segment. This business segment change is consistent with internal management structure and reporting changes effective for fiscal 2022. Prior periods were revised to reflect retrospective application of this segment realignment. 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 ~~marking, coding~~solutions, product identification and ~~industrial~~warehouse automation technologies and solutions, ~~and~~including order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products. 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.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

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 costs, 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.

The following table sets forth the sales and adjusted EBITDA for the Company's three reporting segments for the three and ~~nine-month~~six-month periods ended ~~June 30, 2022~~March 31, 2023 and ~~2021.~~2022. Refer to Note ~~13,~~14, "Segment Information" in Item 1 - "Financial Statements" for the Company's financial information by segment.


		Three Months Ended June 30,				Nine Months Ended June 30,					Three Months Ended March 31,				Six Months Ended March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
Sales:	Sales:	(Dollar amounts in thousands)								Sales:	(Dollar amounts in thousands)
Memorialization	Memorialization	$	203,158	$	184,337	$	633,868	$	573,068	Memorialization	$	222,889	$	220,004	$	429,391	$	430,710
Industrial Technologies	Industrial Technologies	78,443		81,832		230,928		200,538		Industrial Technologies	125,514		78,154		234,657		152,485
SGK Brand Solutions	SGK Brand Solutions	140,118		162,211		440,480		458,585		SGK Brand Solutions	131,177		146,820		264,772		300,362
Consolidated Sales	Consolidated Sales	$	421,719	$	428,380	$	1,305,276	$	1,232,191	Consolidated Sales	$	479,580	$	444,978	$	928,820	$	883,557


Adjusted EBITDA:	Adjusted EBITDA:									Adjusted EBITDA:
Memorialization	Memorialization	$	32,090	$	36,402	$	118,404	$	132,080	Memorialization	$	48,030	$	42,944	$	87,167	$	86,314
Industrial Technologies	Industrial Technologies	11,809		12,173		33,377		23,446		Industrial Technologies	15,565		14,385		27,767		21,568
SGK Brand Solutions	SGK Brand Solutions	14,546		27,025		43,422		67,222		SGK Brand Solutions	11,020		13,462		23,252		28,876
Corporate and Non-Operating	Corporate and Non-Operating	(12,421)		(15,585)		(40,656)		(47,030)		Corporate and Non-Operating	(16,168)		(15,601)		(30,448)		(28,235)
Total Adjusted EBITDA (1)	Total Adjusted EBITDA (1)	$	46,024	$	60,015	$	154,547	$	175,718	Total Adjusted EBITDA (1)	$	58,447	$	55,190	$	107,738	$	108,523

(1) Total Adjusted EBITDA is a non-GAAP financial measure. See the "Non-GAAP Financial Measures" section below.

Sales for the ~~nine~~six months ended ~~June 30, 2022~~March 31, 2023 were ~~$1.31 billion,~~$928.8 million, compared to ~~$1.23 billion~~$883.6 million for the ~~nine~~six months ended ~~June 30, 2021,~~March 31, 2022, representing an increase of ~~$73.1~~$45.3 million. The increase in fiscal ~~2022~~2023 sales reflected higher sales in the ~~Memorialization and~~ Industrial Technologies ~~segments,~~segment, partially offset by lower sales in the SGK Brand Solutions segment. On a consolidated basis, changes in foreign currency exchange rates were estimated to have an unfavorable impact of ~~$32.8~~$27.0 million on fiscal ~~2022~~2023 sales compared to the prior year.

Memorialization segment sales for the first ~~nine~~six months of fiscal ~~2022~~2023 were ~~$633.9~~$429.4 million, compared to ~~$573.1~~$430.7 million for the first ~~nine~~six months of fiscal ~~2021. The increase in sales predominantly resulted from improved price realization, increased~~2022. Lower unit sales of caskets, ~~and bronze and granite memorial products, and~~reflecting a decrease in coronavirus disease 2019 ("COVID-19") related deaths in fiscal 2023, were substantially offset by improved price realization, higher sales of mausoleums and cremation equipment, and ~~incineration equipment. The increase in sales also reflected~~ benefits from the ~~fiscal 2021~~recent acquisition of ~~a small cemetery products business.~~Eagle Granite Company (see Acquisitions below). Changes in foreign currency exchange rates had an unfavorable impact of ~~$2.8~~$2.2 million on the segment's sales compared to the prior year. Industrial Technologies segment sales were ~~$230.9~~$234.7 million for the first ~~nine~~six months of fiscal ~~2022,~~2023, compared to ~~$200.5~~$152.5 million for the first ~~nine~~six months of fiscal ~~2021.~~2022. The sales increase primarily reflected benefits from the recently completed acquisitions of OLBRICH GmbH ("OLBRICH") and R+S Automotive GmbH ("R+S Automotive") (see Acquisitions below). The increase in sales also reflected higher sales of purpose-built engineered products (primarily energy storage solutions for the electric vehicle market)~~, increased sales of warehouse automation solutions,~~ and higher product identification sales. ~~These increases were partially offset by reduced sales of surfaces products.~~ Changes in foreign currency exchange rates had an unfavorable impact of ~~$9.7~~$8.1 million on the segment's sales compared to the prior year. In the SGK Brand Solutions segment, sales for the first ~~nine~~six months of fiscal ~~2022~~2023 were ~~$440.5~~$264.8 million, compared to ~~$458.6~~$300.4 million for the first ~~nine~~six months of fiscal ~~2021.~~2022. Changes in foreign currency exchange rates had an unfavorable impact of $16.7 million on the segment's sales compared to the prior year. The decrease in sales also reflected lower brand sales in the U.S. and Europe, lower retail-based sales (principally merchandising solutions), and lower sales of cylinder (packaging) products, partially offset by improved price realization.

Gross profit for the six months ended March 31, 2023 was $288.6 million, compared to $256.2 million for the same period a year ago. Consolidated gross profit as a percent of sales was 31.1% and 29.0% for the first six months of fiscal 2023 and fiscal 2022, respectively. The increase in gross profit primarily ~~resulted~~reflected the impact of higher sales (including benefits from ~~unfavorable~~recent acquisitions), and benefits from the realization of productivity improvements and other cost-reduction initiatives. These increases in gross profit were partially offset by the impact of higher material, labor and transportation costs, and lower margins

2527

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

~~changes in foreign currency exchange rates, which had an unfavorable impact of $20.3 million~~ on ~~the segment's sales compared to the prior year. The change in sales also reflected higher retail-based sales (principally merchandising solutions), higher brand sales in the Asia-Pacific market,~~cylinder (packaging) products and increased sales volume for cylinder (primarily packaging) products, partially offset by lower brand sales in the U.S. and Europe. The sales decline in Europe primarily resulted from weakened economic conditions.

Gross profit for the nine months ended June 30, 2022 was $377.0 million, compared to $403.8 million for the same period a year ago. Consolidated gross profit as a percent of sales was 28.9% and 32.8% for the first nine months of fiscal 2022 and fiscal 2021, respectively. The decrease in gross profit primarily reflected the impact of higher material (steel, lumber and bronze ingot), labor and transportation costs, particularly in the Memorialization segment, production inefficiencies related to onsite/remote-work transitions and unfavorable changes in sales mix within the SGK Brand Solutions segment, and lower margins on U.K. ~~based~~ cremation ~~and incineration~~equipment projects. Fiscal 2022 gross profit also included $9.7 million of asset write-downs related to the current war between Russia and Ukraine (see below for further details). These decreases in gross profit were partially offset by the impact of higher sales, benefits from the realization of productivity improvements and other cost-reduction initiatives, and improved margins for surfaces and engineered products within the Industrial Technologies segment. Gross profit also included acquisition integration costs and other charges primarily in connection with cost-reduction initiatives totaling ~~$8.3~~$3.1 million and ~~$15.5~~$6.4 million for the ~~nine~~six months ended ~~June 30,~~March 31, 2023 and 2022, respectively. Fiscal 2022 gross profit included $9.7 million of asset write-downs related to the war between Russia and ~~2021, respectively.~~Ukraine (see below for further details).

Selling and administrative expenses for the ~~nine~~six months ended ~~June 30, 2022~~March 31, 2023 were ~~$302.6~~$227.4 million, compared to ~~$308.0~~$204.5 million for the first ~~nine~~six months of fiscal ~~2021.~~2022. Consolidated selling and administrative expenses, as a percent of sales, were ~~23.2%~~24.5% for the ~~nine~~six months ended ~~June 30, 2022,~~March 31, 2023, compared to ~~25.0%~~23.1% for the same period last year. Fiscal ~~2022~~2023 selling and administrative expenses reflected ~~lower performance-based compensation compared to fiscal 2021 and benefits from ongoing cost-reduction initiatives, which were partially offset by~~ the ~~impacts~~impact of higher salaries and wage rates, ~~and~~ higher travel and entertainment ("T&E") ~~costs. Fiscal 2022~~costs, additional expenses from recently completed acquisitions, and fees associated with a receivables purchase agreement and factoring arrangement (see Liquidity and Capital Resources below). These increases in selling and administrative expenses ~~included $331,000 of asset write-downs (net of recoveries) related to the current war between Russia and Ukraine (see below).~~were partially offset by benefits from ongoing cost-reduction initiatives. Selling and administrative expenses also included acquisition integration and related systems-integration costs, and other charges primarily in connection with cost-reduction initiatives totaling ~~$11.0~~$7.8 million in fiscal ~~2022,~~2023, compared to ~~$13.0~~$6.5 million in fiscal ~~2021.~~2022. Fiscal 2022 selling and administrative expenses included $800,000 of asset write-downs related to the war between Russia and Ukraine (see below). Intangible amortization for the ~~nine~~six months ended ~~June 30, 2022~~March 31, 2023 was ~~$45.3~~$20.9 million, compared to ~~$61.2~~$33.5 million for the ~~nine~~six months ended ~~June 30, 2021.~~March 31, 2022. Fiscal 2022 intangible amortization included ~~$4.0~~$9.5 million of ~~incremental amortization resulting from the fiscal 2021 reduction in useful lives for certain customer relationships. Intangible amortization also included accelerated~~ amortization related to certain trade names that have been discontinued. ~~Amortization for these trade names totaled $9.5 million and $26.0 million for the nine months ended June 30, 2022 and June 30, 2021, respectively.~~

Adjusted EBITDA was ~~$154.5~~$107.7 million for the ~~nine~~six months ended ~~June 30, 2022~~March 31, 2023 and ~~$175.7~~$108.5 million for the ~~nine~~six months ended ~~June 30, 2021.~~March 31, 2022. Memorialization segment adjusted EBITDA was ~~$118.4~~$87.2 million for the first ~~nine~~six months of fiscal ~~2022~~2023 compared to ~~$132.1~~$86.3 million for the first ~~nine~~six months of fiscal ~~2021.~~2022. Fiscal ~~2022~~2023 segment adjusted EBITDA reflected ~~the~~ benefits ~~of higher sales~~from improved price realization and productivity initiatives, which were partially offset by the impact of lower unit sales of caskets, unfavorable changes in sales mix, higher material, labor, transportation and T&E ~~costs.~~costs, and lower margins on certain cremation equipment projects. Adjusted EBITDA for the Industrial Technologies segment was ~~$33.4~~$27.8 million for the ~~nine~~six months ended ~~June 30, 2022~~March 31, 2023 compared to ~~$23.4~~$21.6 million for the ~~nine~~six months ended ~~June 30, 2021. Industrial Technologies~~March 31, 2022. The increase in segment adjusted EBITDA primarily reflected the impact of higher sales ~~improved margins for surfaces and~~of engineered products, ~~and benefits from cost-reduction initiatives, which were~~ partially offset by the impact of higher ~~T&E~~material and labor costs, and ~~increased performance-based compensation compared to fiscal 2021.~~unfavorable contributions from recent acquisitions. Changes in foreign currency exchange rates had an unfavorable impact of ~~$2.0~~$2.3 million on the segment's adjusted EBITDA compared to the prior year. Adjusted EBITDA for the SGK Brand Solutions segment was ~~$43.4~~$23.3 million for the first ~~nine~~six months of fiscal ~~2022~~2023 compared to ~~$67.2~~$28.9 million for the same period a year ago. The decrease in segment adjusted EBITDA primarily reflected the impact of lower sales, ~~production inefficiencies related to onsite/remote-work transitions, unfavorable changes in sales mix, and~~ higher material, labor and T&E ~~costs.~~costs, and lower margins on cylinder (packaging) products. These decreases were partially offset by ~~the impact of~~benefits from cost-reduction initiatives and lower performance-based compensation compared to fiscal ~~2021 and benefits from cost-reduction initiatives.~~2022. Changes in foreign currency exchange rates had an unfavorable impact of ~~$3.5~~$1.3 million on the segment's adjusted EBITDA compared to the prior year.

Investment income was $735,000 for the nine months ended June 30, 2022 and $3.0 million for the nine months ended June 30, 2021. Investment income for both periods primarily reflected changes in the value of investments (primarily marketable securities) held in trust for certain of the Company's benefit plans. Interest expense for the first ~~nine~~six months of fiscal ~~2022~~2023 was ~~$19.4~~$22.3 million, compared to ~~$21.7~~$12.8 million for the same period last year. The ~~decrease~~increase in interest expense reflected ~~a decrease~~an increase in average borrowing levels and ~~lower~~higher average interest rates in the current fiscal year. Other income (deductions), net, for the ~~nine~~six months ended ~~June 30, 2022~~March 31, 2023 represented a decrease in pre-tax income of ~~$31.6 million,~~$551,000, compared to a decrease in pre-tax income of ~~$6.8~~$30.5 million for the same period last year. Other income (deductions), net includes the non-service components of pension and postretirement expense, which totaled ~~$31.6~~$1.5 million and ~~$5.7~~$31.4 million for the ~~nine~~six months ended ~~June 30,~~March 31, 2023 and 2022, ~~and~~

~~Item 2. Management's Discussion~~respectively. Fiscal 2023 non-service pension expense included a $1.3 million non-cash charge resulting from the settlement of the Company's supplemental retirement plan ("SERP") and ~~Analysis~~defined benefit portion of ~~Financial Condition and Results of Operations, Continued~~

~~2021, respectively.~~the officers retirement restoration plan ("ORRP") obligations. Fiscal 2022 non-service pension expense included a $30.9 million non-cash charge resulting from the full settlement of the Company's principal defined benefit retirement plan ("DB Plan") obligations. Refer to Note ~~10,~~11, "Pension and Other Postretirement Benefit Plans" in Item 1 - "Financial Statements" for further details. Other income (deductions), net also includes investment income, banking-related fees and the impact of currency gains and losses on certain intercompany debt and foreign denominated cash balances. Fiscal ~~2022~~2023 other income (deductions), net included $1.2 million of currency losses associated with highly inflationary accounting for the Company's subsidiaries in Turkey (see Note 2, "Basis of Presentation" in Item 1 - "Financial Statements"). Fiscal 2023 other income (deductions), net also included loss recoveries of $2.2 million related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

month effective tax rate varied from the ~~DB Plan settlement) compared to pre-tax income in fiscal 2021. Additionally, fiscal 2022 included discrete~~U.S. statutory tax ~~expenses related to non-tax deductible asset write-downs in Russia,~~rate of 21.0% primarily due to the full valuation allowance for the Russian entity. Fiscal 2022 discrete tax expenses were partially offset by discrete tax benefits related to the resolution of uncertain tax liabilities. Fiscal 2021 included discrete tax expenses related tostate taxes, foreign ~~operating losses, discrete tax benefits related to the resolution of uncertain tax liabilities, a net operating loss (“NOL”) carryback to tax years where the U.S. federal~~ statutory rate ~~was 35%,~~differentials, tax credits, and ~~additional~~non-tax benefited foreign ~~tax credits.~~losses. The Company’s fiscal 2022 ~~nine month~~six-month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to the non-deductible asset write-downs in Russia, state taxes, foreign statutory rate differentials, and tax credits. The Company’s fiscal 2021 nine month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to discrete tax expenses related to foreign operating losses, discrete tax benefits related to the resolution of uncertain tax liabilities, a NOL carryback to tax years where the U.S. federal statutory rate was 35%, and additional foreign tax credits.

Net losses attributable to noncontrolling interests were ~~$56,000~~$58,000 for the ~~nine~~six months ended ~~June 30, 2022~~March 31, 2023 and ~~$60,000~~$38,000 for the ~~nine~~six months ended ~~June 30, 2021.~~March 31, 2022. The net losses attributable to noncontrolling interests primarily reflected losses in less than wholly-owned businesses.

Asset Write-Downs:

The Company has certain operations in Russia within its SGK Brand Solutions segment. InDuring the second quarter of fiscal 2022, in light of the ~~current~~ war between Russia and Ukraine, and the resulting regional instability and evolving political and economic conditions within the region, the Company evaluated certain of its assets for recoverability and impairment. As a result of this assessment, and due to the uncertainty in projecting future cash flows for the Company's operations in Russia, the Company recorded asset write-downs totaling ~~$10.0~~$10.5 million ~~(net of recoveries) during fiscal 2022~~ to reduce the carrying value of these assets to ~~zero.~~zero during the second quarter of fiscal 2022. Asset write-downs (primarily related to property, plant and equipment) totaling $9.7 million and ~~$331,000~~$800,000 were reported within cost of sales and administrative expense, respectively, for the ~~nine~~three and six months ended ~~June 30,~~March 31, 2022.

NON-GAAP FINANCIAL MEASURES:

Included in this report are measures of financial performance that are not defined by GAAP. The Company uses non-GAAP financial measures to assist in comparing its performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the Company’s core operations including acquisition and divestiture costs, ERP integration costs, strategic ~~initiative~~initiatives and other charges (which includes non-recurring charges related to operational initiatives and exit activities), stock-based compensation and the non-service portion of pension and postretirement expense. Management believes that presenting non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items that management believes do not directly reflect the Company's core operations, (ii) permits investors to view performance using the same tools that management uses to budget, forecast, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating the Company’s results. The Company believes that the presentation of these non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provided herein, provides investors with an additional understanding of the factors and trends affecting the Company’s business that could not be obtained absent these disclosures.

~~Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

The Company believes that adjusted EBITDA provides relevant and useful information, which is used by the Company’s management in assessing the performance of its business. Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results. These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges. Adjusted EBITDA provides the Company with an understanding of earnings before the impact of investing and financing charges and income taxes, and the effects of certain acquisition and divestiture and ERP integration costs, and items that do not reflect the ordinary earnings of the Company’s operations. This measure may be useful to an investor in evaluating operating performance. It is also useful as a financial measure for lenders and is used by the Company’s management to measure business performance. Adjusted EBITDA is not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to net income or other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of the Company's liquidity. The Company's definition of adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

~~The reconciliation of net income to adjusted EBITDA is as follows:~~

Three Months Ended
June 30, Nine Months Ended
June 30,
2022 2021 2022 2021
(Dollar amounts in thousands)
Net income (loss) $ 2,875 $ 3,366 $ (18,871) $ 6,526
Income tax provision (benefit) 1,040 (2,325) (2,311) 2,627
Income (loss) before income taxes 3,915 1,041 (21,182) 9,153
Net loss (income) attributable to noncontrolling interests 18 (11) 56 60
Interest expense 6,659 6,748 19,426 21,709
Depreciation and amortization *
22,938 35,389 80,163 97,919
Strategic initiatives and other charges (1)**
7,290 7,213 17,863 23,498
Non-recurring / incremental coronavirus disease 2019 ("COVID-19") costs (2)***
301 1,993 2,204 4,689
Defined benefit plan termination related items (3)
(63) — 284 —
Asset write-downs, net (4)
(469) — 10,017 —
Stock-based compensation 5,197 5,713 14,128 12,960
Non-service pension and postretirement expense (5)
238 1,929 31,588 5,730
Total Adjusted EBITDA $ 46,024 $ 60,015 $ 154,547 $ 175,718

2829

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

The reconciliation of net income to adjusted EBITDA is as follows:


	Three Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023		2022
	(Dollar amounts in thousands)
Net income (loss)	$	9,125	$	(1,936)	$	12,772	$	(21,746)
Income tax provision (benefit)	3,382		3,277		4,694		(3,351)
Income (loss) before income taxes	12,507		1,341		17,466		(25,097)
Net loss attributable to noncontrolling interests	2		31		58		38
Interest expense	12,047		6,260		22,262		12,767
Depreciation and amortization *	24,148		23,724		47,877		57,225
RPA and factoring financing fees (1)	1,090		—		1,546		—
Acquisition and divestiture costs (2)**	2,852		—		4,137		—
Strategic initiatives and other charges (3)**	1,280		6,750		3,040		10,573
Non-recurring / incremental COVID-19 costs (4)***	—		1,213		—		1,903
Exchange losses related to highly inflationary accounting (5)	160		—		1,248		—
Defined benefit plan termination related items (6)	—		(79)		21		347
Asset write-downs (7)	—		10,486		—		10,486
Stock-based compensation	4,278		5,222		8,612		8,931

Non-service pension and postretirement expense (8)	83		242		1,471		31,350
Total Adjusted EBITDA	$	58,447	$	55,190	$	107,738	$	108,523


(1) Represents fees for receivables sold under the RPA and factoring arrangements (see "Liquidity and Capital Resources").
(2)Includes certain non-recurring ~~items~~costs associated with recent acquisition ~~activities, costs associated with global ERP system integration efforts,~~and divestiture activities.
(3) Includes certain non-recurring costs associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels and ~~exchange losses~~costs associated with ~~highly inflationary accounting (see Note 2, "Basis~~global ERP system integration efforts, net of ~~Presentation"~~loss recoveries related to a previously disclosed theft of funds by a former employee initially identified in ~~Item 1 - "Financial Statements").~~fiscal 2015.
~~(2)~~(4) Includes certain non-recurring direct incremental costs (such as costs for purchases of computer peripherals and devices to facilitate working-from-home, additional personal protective equipment and cleaning supplies and services, etc.) incurred in response to COVID-19. This amount does not include the impact of any lost sales or underutilization due to COVID-19.
~~(3)~~(5) Represents exchange losses associated with highly inflationary accounting related to the Company's Turkish subsidiaries (see Note 2, "Basis of Presentation" in Item 1 - "Financial Statements and Supplementary Data").
(6) Represents items associated with the termination of the Company's DB Plan, supplemental retirement plan and the defined benefit portion of the officers retirement restoration plan.
~~(4)~~(7) Represents asset write-downs ~~net of recoveries~~ within the SGK Brand Solutions ~~segment (see Note 15, "Asset Write-Downs" in Item 1 - "Financial Statements").~~segment.
~~(5)~~(8) 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.

* Depreciation and amortization was ~~$5.8~~$5.7 million and $5.8 million for the Memorialization segment, ~~$2.5~~$5.9 million and ~~$2.8~~$2.5 million for the Industrial Technologies segment, ~~$13.3~~$11.3 million and ~~$25.4~~$14.1 million for the SGK Brand Solutions segment, and ~~$1.3~~$1.2 million and $1.3 million for Corporate and Non-Operating, for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. Depreciation and amortization was ~~$17.4~~$11.3 million and ~~$17.0~~$11.6 million for the Memorialization segment, ~~$7.6~~$11.8 million and ~~$8.4~~$5.2 million for the Industrial Technologies segment, ~~$51.1~~$22.4 million and ~~$68.5~~$37.8 million for the SGK Brand Solutions segment, and ~~$4.0~~$2.4 million and ~~$4.0~~$2.6 million for Corporate and Non-Operating, for the ~~nine~~six months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

** Acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges were ~~$902,000~~$333,000 and ~~$484,000~~$516,000 for the Memorialization segment, ~~$1.2~~$2.4 million and ~~$881,000~~$161,000 for the Industrial Technologies segment, ~~$2.0~~$2.6 million and ~~$2.9~~$4.5 million for the SGK Brand Solutions segment, and ~~$3.2~~income of $1.2 million and ~~$2.9~~charges of $1.6 million for Corporate and Non-Operating, for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. Acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges were ~~$2.1 million~~$711,000 and ~~$1.3~~$1.2 million for the Memorialization segment, ~~$1.4~~$3.4 million and ~~$3.7 million~~$193,000 for the Industrial Technologies segment, ~~$7.7~~$3.1 million and ~~$10.5~~$5.7 million for the SGK Brand Solutions segment, and ~~$6.7 million~~income of $39,000 and ~~$8.1~~charges of $3.5 million for Corporate and Non-Operating, for the ~~nine~~six months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

*** Non-recurring/incremental COVID-19 costs were ~~$225,000 and $1.3 million~~$579,000 for the Memorialization segment, $1,000 ~~and $6,000~~ for the Industrial Technologies segment, ~~$74,000 and $638,000~~$170,000 for the SGK Brand Solutions segment, and ~~$1,000 and $16,000~~$463,000 for Corporate and Non-Operating, for the three months ended ~~June 30, 2022 and 2021, respectively.~~March 31, 2022. Non-recurring/incremental COVID-19 costs were ~~$1.3 million and $3.2~~$1.0 million for the Memorialization segment, ~~$6,000 and $36,000~~$5,000 for the Industrial Technologies segment, ~~$464,000 and $1.3 million~~$390,000 for the SGK Brand Solutions segment, and ~~$466,000 and $86,000~~$465,000 for Corporate and Non-Operating, for the ~~nine~~six months ended ~~June~~ March 31, 2022.

30 ~~2022 and 2021, respectively.~~

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

LIQUIDITY AND CAPITAL RESOURCES:

Net cash provided by operating activities was $~~84.4~~44.7 million for the first ~~nine~~six months of fiscal ~~2022,~~2023, compared to ~~$106.9~~$72.7 million for the first ~~nine~~six months of fiscal ~~2021.~~2022. Operating cash flow for both periods principally included net income (loss) ~~income~~ adjusted for deferred taxes, depreciation and amortization, stock-based compensation expense, ~~net losses (gains) related to investments,~~ non-cash pension expense, ~~asset write-downs,~~ other non-cash adjustments, and changes in working capital items. Fiscal ~~2022~~2023 operating cash flow also reflected $24.2 million of contributions to fund the settlement of the Company's SERP and ORRP obligations, and $10.5 million of proceeds from the settlement of cash flow hedges. Fiscal 2022 operating cash flow reflected $35.7 million of ~~DB Plan~~ contributions to fully fund the settlement of the Company's DB Plan obligations. Net changes in working capital items decreased operating cash flow by ~~$8.4~~$10.9 millionand ~~$7.5~~increased operating cash flow by $18.8 million in fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, respectively. The fiscal ~~2022~~2023 change in working capital principally reflected fiscal year-end compensation-related payments and higher inventory levels, partially offset by proceeds from the sale of receivables under a receivables purchase agreement and a non-recourse factoring arrangement (see below for further discussion), ~~offset by increased fiscal year-end compensation-related payments, higher inventory levels reflecting increased commodity costs,~~ and changes in ~~other accounts.~~contract assets and liabilities related to products and services provided to customers over time.

Cash used in investing activities was ~~$38.9~~$31.2 million for the ~~nine~~six months ended ~~June 30, 2022,~~March 31, 2023, compared to ~~$22.9~~$24.7 million for the ~~nine~~six months ended ~~June 30, 2021.~~March 31, 2022. Investing activities for the first ~~nine~~six months of fiscal 2023 primarily reflected capital expenditures of$23.8 million and acquisitions, net of cash acquired, of $7.6 million. Investing activities for the first six months of fiscal 2022 primarily reflected capital expenditures of~~$40.6~~ $28.1 million and proceeds from the sale of investments of$3.1 million, and purchases of investments of $2.2 million. Investing activities for the first nine months of fiscal 2021 reflected capital expenditures of $24.5 million, acquisitions payments (net of cash acquired and holdback amounts) totaling $15.6 million, proceeds from the sale of investments of $15.0 million, and proceeds from the sale of assets of $2.2 $3.1 million.

Capital expenditures reflected reinvestment in the Company's business segments and were made primarily for the purchase of new production machinery, equipment, software and systems, and facilities designed to improve product quality, increase manufacturing efficiency and capacity, lower production costs and meet regulatory requirements. Capital expenditures for the last three fiscal years were primarily financed through operating cash. Capital spending for property, plant and equipment has averaged ~~$35.6~~$43.5 million for the last three fiscal years. Capital spending for fiscal ~~2022~~2023 is currently estimated to be approximately ~~$60 million.~~ $70 million.Capital spending in fiscal 2023 reflects additional capital projects to support new production capabilities and increased efficiencies within the Memorialization and Industrial Technologies segments. The Company expects to generate sufficient cash from operations to fund all anticipated capital spending projects.

Cash used infinancing activities for the ~~nine~~six months ended ~~June 30, 2022~~March 31, 2023 was ~~$43.8~~$44.9 million, primarily reflecting ~~proceeds,~~repayments, net of ~~repayments,~~proceeds, on long-term debt of ~~$13.8~~$27.1 million, treasury stock purchases of ~~$34.0~~$2.7 million, and cash dividends of $14.1 million to the Company's shareholders. Cash used in financing activities for the six months ended March 31, 2022 was $38.7 million, primarily reflecting repayments, net of proceeds, on long-term debt of $10.5 million, treasury stock purchases of $12.1 million, dividends of ~~$20.8~~$14.0 million to the Company's shareholders, and $613,000 of holdback and deferred payments related to acquisitions from prior years. ~~Cash used~~

~~Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

in financing activities for the nine months ended June 30, 2021 was $79.8 million, primarily reflecting repayments, net of proceeds, on long-term debt of $49.0 million, treasury stock purchases of $6.1 million, dividends of $20.9 million to the Company's shareholders, and $1.6 million of holdback and deferred payments related to acquisitions from prior years.

The Company has a domestic credit facility with a syndicate of financial institutions that includes a $750.0 million senior secured revolving credit facility, which matures in March 2025. A portion of the revolving credit facility (not to exceed $350.0 million) can be drawn in foreign currencies. In March 2023, an amendment to the domestic credit facility implemented SOFR as the replacement of LIBOR as the benchmark interest rate under the facility. The Company accounted for the change in reference rate as a non-substantial modification. Borrowings under the revolving credit facility now bear interest at SOFR, plus a 0.10% per annum rate spread adjustment, plus a factor ranging from 0.75% to 2.00% (1.25% at March 31, 2023) based on the Company's secured leverage ratio. Previously, borrowings under the revolving credit facility bore interest at LIBOR plus a factor ranging from 0.75% to 2.00% ~~(1.00%at June 30, 2022)~~ based on the Company's secured leverage ratio. The secured leverage ratio is defined as net secured indebtedness divided by EBITDA (earnings before interest, income taxes, depreciation and amortization) as defined within the domestic credit facility agreement. The Company is required to pay an annual commitment fee ranging from 0.15% to 0.30% (based on the Company's leverage ratio) of the unused portion of the revolving credit facility. The Company incurred debt issuance costs in connection with the domestic credit facility. Unamortized costs were ~~$1.7~~$1.2 million and ~~$2.2~~$1.5 million at ~~June 30, 2022~~March 31, 2023 and September 30, ~~2021,~~2022, respectively.

The domestic credit facility requires the Company to maintain certain leverage and interest coverage ratios. A portion of the facility (not to exceed ~~$35.0~~$55.0 million) 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, 2022~~March 31, 2023 and September 30, ~~2021~~2022 were ~~$436.3~~$451.5 million and ~~$349.8~~$472.1 million, respectively. The weighted-average interest rate on outstanding borrowings for the domestic credit facility (including the effects of interest rate ~~swaps~~swaps) at March 31, 2023 and ~~Euro denominated borrowings) at June 30,~~ 2022 was 5.17% and ~~2021 was 1.92% and 1.94%~~1.89%, respectively.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

The Company has ~~$300.0~~$299.6 million of 5.25% senior unsecured notes due December 1, 2025 (the "2025 Senior Notes"). The 2025 Senior Notes bear interest at a rate of 5.25% per annum with interest payable semi-annually in arrears on June 1 and December 1 of each year. The Company's obligations under the 2025 Senior Notes are guaranteed by certain of the Company's direct and indirect wholly-owned subsidiaries. The Company is subject to certain covenants and other restrictions in connection with the 2025 Senior Notes. The Company incurred direct financing fees and costs in connection with the 2025 Senior Notes. Unamortized costs were ~~$1.8~~$1.4 million and ~~$2.2~~$1.7 million at ~~June 30, 2022~~March 31, 2023 and September 30, ~~2021,~~2022, respectively.

The Company and certain of its domestic subsidiaries sell, on a continuous basis without recourse, their trade receivables to Matthews Receivables Funding Corporation, LLC (“Matthews RFC”), a wholly-owned bankruptcy-remote subsidiary of the Company. In March 2022, Matthews RFC entered into a receivables purchase agreement (“RPA”) to sell up to $125.0 million of receivables to certain purchasers (the “Purchasers”) on a recurring basis in exchange for cash (referred to as “capital” within the RPA) equal to the gross receivables transferred. 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. ~~Gross receivables sold and cash collections reinvested under the RPA program were $247.2 million and $147.2 million for the nine months ended June 30, 2022, respectively.~~ 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~~March 31, 2023 and September 30, 2022, the amount sold to the Purchasers was ~~$100.0~~$108.6 million and $96.6 million, respectively, which was derecognized from the Consolidated Balance Sheets. As collateral against sold receivables, Matthews RFC maintains a certain level of unsold receivables, which was ~~$39.7~~$41.8 million and $44.3 million as of ~~June~~March 31, 2023 and September 30, ~~2022.~~2022, respectively.

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


	Six Months Ended March 31, 2023		Six Months Ended March 31, 2022
	(Dollar amounts in thousands)
Gross receivables sold	$	201,115	$	121,616
Cash collections reinvested	(189,105)		(46,615)
Net cash proceeds received	$	12,010	$	75,001

During the second quarter of fiscal 2023, the Company, ~~had~~through its U.K. subsidiary, entered into a ~~$115.0 million accounts receivable securitization facility (the "Securitization Facility")~~non-recourse factoring arrangement. In connection with ~~certain financial institutions that matured in March 2022. The Securitization Facility did not qualify for sale treatment. Accordingly,~~this arrangement, the Company periodically sells trade receivables ~~and related debt obligations remained on~~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 ~~Sheet. Borrowings~~Sheets upon transfer. The principal amount of receivables sold under this arrangement was $17.0 millionduring the ~~Securitization Facility were based~~six months ended March 31, 2023. The discounts on ~~LIBOR plus 0.75%~~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.

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 ($10.9 million). The facility also provides €16.0 million ($17.4 million) for bank guarantees. This facility has no stated maturity date and ~~the Company was required to pay an annual commitment fee ranging from 0.25% to 0.35% of the unused portion of the Securitization Facility.~~is available until terminated. Outstanding borrowings under the ~~Securitization Facility~~credit facility totaled €0.9 million ($1.0 million) and €8.2 million ($8.1 million) at March 31, 2023 and September 30, ~~2021 totaled $96.0 million. At June 30, 2021, the~~2022, respectively. The weighted-average interest rate on outstanding borrowings under this facility was ~~0.85%.~~5.17% and 2.25% at March 31, 2023 and 2022, respectively.

Other borrowings totaled $21.1 million and $13.4 million at March 31, 2023 and September 30, 2022, respectively. The weighted-average interest rate on these borrowings was 3.01% and 1.92% at March 31, 2023 and 2022, respectively.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

The Company operates internationally and utilizes certain derivative financial instruments to manage its foreign currency, debt and interest rate exposures. The following table presents information related to interest rate ~~contracts~~swaps entered into by the Company and designated as cash flow ~~hedges (dollar amounts in thousands):~~hedges:


		June 30, 2022			September 30, 2021				March 31, 2023			September 30, 2022
Pay fixed swaps - notional amount		$	125,000		$	250,000
Net unrealized gain (loss)		$	7,407		$	(2,062)
									(Dollar amounts in thousands)
Notional amount								Notional amount	$	175,000		$	125,000
Weighted-average maturity period (years)	Weighted-average maturity period (years)	3.1			2.2			Weighted-average maturity period (years)	4.9			3.1
Weighted-average received rate	Weighted-average received rate	1.79		%	0.08		%	Weighted-average received rate	4.81		%	3.14		%
Weighted-average pay rate	Weighted-average pay rate	1.04		%	1.34		%	Weighted-average pay rate	3.83		%	1.04		%

The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate. In order to transition the Company's swaps from LIBOR-based to SOFR-based rates, the LIBOR-based swaps were settled during the second quarter of fiscal 2023, resulting in cash proceeds of $10.5 million. Concurrently, the Company entered into new interest rate swaps with SOFR-based rates with a notional amount of $175.0 million. 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 ana net unrealized ~~gain net~~loss of ~~unrealized losses of $7.4~~$3.4 million ($~~5.6~~2.5 million after tax) at ~~June 30, 2022~~March 31, 2023 and an unrealized ~~loss net~~gain of ~~unrealized gains of $2.1~~$10.7 million ($~~1.6~~7.9 million after tax) at September 30, ~~2021,~~2022, thatis included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI"). Unrecognized gains of $10.5 million ($7.8 million after tax) related to the terminated LIBOR-based swaps were also included in AOCI as of March 31, 2023. Assuming market rates remain constant with the rates at ~~June 30, 2022,~~March 31, 2023, a gain (net of tax) of approximately ~~$1.6~~$3.0 million included in AOCI is expected to be recognized in earnings over the next twelve months.

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 €25.0 million ($26.1 million), which includes €8.0 million ($8.4 million) for bank guarantees. In the first quarter of fiscal 2022, the Company extended this facility to a current maturity of December 2022 and the Company intends to continue to extend this facility.Outstanding borrowings under the credit facility totaled €10.5 million ($11.0 million) and €704,000 ($817,000) at June 30, 2022 and September 30, 2021, respectively. The weighted-average interest rate on outstanding borrowings under this facility was 2.25% at June 30, 2022 and June 30, 2021.

Other borrowings totaled $24.4 million and $10.2 million at June 30, 2022 and September 30, 2021, respectively. Other borrowings at June 30, 2022 included $3.4 million of collateralized borrowings in connection with the RPA arrangement discussed above. The weighted-average interest rate on these borrowings was 1.90% and 2.19% at June 30, 2022 and 2021, respectively.

The Company has a U.S. Dollar/Euro cross currency swap with a notional amount of ~~$94.5~~$81.4 million ~~million~~ as of ~~June~~March 31, 2023 and September 30, 2022, which has been designated as a net investment hedge of foreign operations. The swap contract matures in September ~~2028.~~2027. The Company assesses hedge effectiveness for this contract based on changes in fair value attributable to changes in spot prices. A ~~gain~~loss of ~~$8.7~~$2.3 million (net of income taxes of ~~$2.8 million)~~$784,000) and a gain of ~~$29,000~~$2.8 million (net of income taxes of ~~$10,000)~~$940,000), which represented effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at ~~June 30, 2022~~March 31, 2023 and September 30, ~~2021,~~2022, respectively. Income of ~~$428,000~~$309,000 and ~~$1.2 million,~~ $581,000,which represented the recognized portion of the fair value of cross currency swaps excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of interest expense for the three and ~~nine~~six months ended ~~June 30, 2022,~~March 31, 2023, respectively. ~~At June 30, 2022~~Income of $420,000 and ~~September 30, 2021,~~$785,000, which represented the ~~swap, which is included in other assets in the Consolidated Balance Sheets, totaled $11.5 million and $39,000, respectively.~~

~~The Company enters into certain derivative contracts in accordance with its risk management strategy that do not meet the criteria for hedge accounting but which have the economic impact~~recognized portion of ~~largely mitigating foreign currency exposure. Changes in~~ the fair value of ~~these economic hedges are recorded~~cross currency swaps excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of ~~other income (deductions), net. During~~interest expense for the ~~third quarter of fiscal~~three and six months ended March 31, 2022, respectively. At March 31, 2023 and September 30, 2022, the ~~Company entered into a three-year U.S. Dollar/Euro cross currency swap with a notional amount of $52.8~~swaps totaled $3.1 million ~~which did not meet the criteria for hedge accounting. An unrealized gain of $495,000 related to this swap~~and $3.7 million, respectively, and was included in other accrued liabilitiesand other assets in the Consolidated Balance ~~Sheet at June 30, 2022.~~Sheets, respectively.

~~Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

The Company has a stock repurchase program. The buy-back program is designed to increase shareholder value, enlarge the Company's holdings of its common stock, and add to earnings per share. Repurchased shares may be retained in treasury, utilized for acquisitions, or reissued to employees or other purchasers, subject to the restrictions set forth in the Company's Restated Articles of Incorporation. Under the current authorization, ~~1,602,166~~1,198,211 shares remain available for repurchase as of ~~June 30, 2022.~~March 31, 2023. Refer to Item 2 - "Unregistered Sales of Equity Securities and Use of Proceeds" in Part II - "Other Information" for further details on the Company's repurchases in fiscal 2023.

Consolidated working capital of the Company was $~~288.8~~223.8 million at ~~June 30, 2022,~~March 31, 2023, compared to ~~$269.9~~$217.2 million at September 30, ~~2021.~~2022. Cash and cash equivalents were ~~$45.8~~$41.9 million at ~~June 30, 2022,~~March 31, 2023, compared to ~~$49.2~~$69.0 million at September 30, ~~2021.~~2022. The Company's current ratio was ~~1.9~~1.6 at ~~June 30, 2022~~March 31, 2023 and ~~1.8~~1.5 at September 30, ~~2021.~~

~~Long-Term Contractual Obligations:~~

~~The following table summarizes the Company's contractual obligations at June 30,~~ 2022, ~~and the effect such obligations are expected to have on its liquidity and cash flows in future periods.~~

Payments due in fiscal year:
Total
2022 (1)
Remainder
2023 to 2024 2025 to 2026 After
2026
Contractual Cash Obligations: (Dollar amounts in thousands)
Revolving credit facilities $ 447,223 $ 10,969 $ — $ 436,254 $ —
2025 Senior Notes 353,326 — 31,500 321,826 —
Finance lease obligations (2)
6,774 805 3,342 1,031 1,596
Non-cancelable operating leases (2)
79,927 6,637 42,371 24,192 6,727
Acquisition (3)
44,940 44,940 — — —
Other 52,972 1,637 40,005 2,088 9,242
Total contractual cash obligations $ 985,162 $ 64,988 $ 117,218 $ 785,391 $ 17,565

~~(1)~~ respectively.~~The Company maintains certain debt facilities with maturity dates of twelve months or less that it intends and has the ability to extend beyond twelve months totaling$11.0 million. These balances have been classified as non-current on the Company's Consolidated Balance Sheet.~~

~~(2)~~ ~~Lease obligations have not been discounted to their present value.~~

~~(3)~~ During the third quarter of fiscal 2022, the Company signed an agreement to acquire German based engineering firms, OLBRICH GmbH (“OLBRICH”) and R+S Automotive GmbH (“R+S Automotive”), for €43 million. The closing of the transaction is expected in the fourth quarter of fiscal 2022.

Benefit payments under the Company's DB Plan were made from plan assets, while benefit payments under the supplemental retirement plan ("SERP") and postretirement benefit plan are made from the Company's operating funds.

In the first quarter of fiscal 2022, the Company terminated its DB Plan and made plan contributions totaling $35.7 million to fully fund the planned settlement of the DB Plan obligations. Also during the first quarter of fiscal 2022, lump sum distributions of $186.0 million were made from the DB Plan to plan participants, and non-participating annuity contracts totaling $56.3 million were purchased by the DB Plan for plan participants, resulting in the full settlement of the DB Plan obligations. The settlement of the DB Plan obligations resulted in the recognition of a non-cash charge of $30.9 million,which has been presented as a component of other income (deductions), net for the nine months ended June 30, 2022. This amount represents the immediate recognition of the remaining portion of the deferred AOCI balances related to the DB Plan.

During the nine months ended June 30, 2022 contributions of $575,000 and $472,000 were made under the SERP and postretirement benefit plan, respectively. The Company currently anticipates contributing an additional $185,000 and $412,000 under the SERP and postretirement benefit plan, respectively, for the remainder of fiscal 2022. The Company also expects to make payments totaling approximately $24.2 million in fiscal 2023 to fully settle the SERP and defined benefit portion of the officers retirement restoration plan obligations. The obligations of the SERP are expected to be funded from an existing rabbi trust. The Company believes that its current liquidity sources, combined with its operating cash flow and borrowing capacity, will be sufficient to meet its capital needs for the foreseeable future.

3233

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

Long-Term Contractual Obligations:

The following table summarizes the Company's contractual obligations at March 31, 2023, and the effect such obligations are expected to have on its liquidity and cash flows in future periods.


	Payments due in fiscal year:
	Total		2023 Remainder		2024 to 2025		2026 to 2027		After 2027
Contractual Cash Obligations:	(Dollar amounts in thousands)
Revolving credit facilities	$	452,471	$	—	$	451,501	$	—	$	970


2025 Senior Notes	345,481		7,875		31,500		306,106		—


Finance lease obligations (1)	6,871		1,151		2,771		1,674		1,275
Non-cancelable operating leases (1)	82,856		12,862		42,280		21,127		6,587
Other (2)	38,741		8,431		15,892		5,963		8,455
Total contractual cash obligations	$	926,420	$	30,319	$	543,944	$	334,870	$	17,287

(1) Lease obligations have not been discounted to their present value.

(2) Includes future expected acquisition related payments (see Acquisitions below).

Benefit payments under the Company's postretirement benefit plan are made from the Company's operating funds.

In the first quarter of fiscal 2023, the Company made lump sum payments totaling $24.2 million to fully settle the SERP and defined benefit portion of the ORRP obligations. The settlement of these plan obligations resulted in the recognition of a non-cash charge of $1.3 million, which has been presented as a component of other income (deductions), net for the six months ended March 31, 2023. This amount represents the immediate recognition of the deferred AOCI balances related to the SERP and ORRP. During the second quarter of fiscal 2023, the remaining funds held in a rabbi trust associated with the SERP were transferred to the Company. Consequently, these amounts are no longer classified as restricted cash.

Unrecognized tax benefits are positions taken, or expected to be taken, on an income tax return that may result in additional payments to tax authorities. If a tax authority agrees with the tax position taken, or expected to be taken, or the applicable statute of limitations expires, then additional payments will not be necessary. As of ~~June 30, 2022,~~March 31, 2023, the Company had unrecognized tax benefits, excluding penalties and interest, of approximately ~~$3.0~~$4.5 million. The timing of potential future payments related to the unrecognized tax benefits is not presently determinable. The Company believes that its current liquidity sources, combined with its operating cash flow and borrowing capacity, will be sufficient to meet its capital needs for the foreseeable future.

REGULATORY MATTERS:

The Company’s operations are subject to various federal, state and local laws and regulations requiring strict compliance, including, but not limited to, the protection of the environment. The Company has established numerous internal compliance programs to further ensure lawful satisfaction of the applicable regulations. In addition, the Company is party to specific environmental matters which include obligations to investigate and mitigate the effects on the environment of certain materials at operating and non-operating sites. The Company is currently performing environmental assessments and remediation at certain sites, as applicable.

ACQUISITIONS:

Refer to Note 15, "Acquisitions" in Item 1 - "Financial Statements" for further details on the Company's acquisitions.

FORWARD-LOOKING INFORMATION:

The Company's current strategy to attain annual operating growth primarily consists of the following: internal growth - which includes organic growth, cost structure and productivity improvements, new product development and the expansion into new markets with existing products - and ~~investments (including~~ acquisitions and related integration ~~activities)~~activities to achieve ~~strategic and~~ synergy benefits.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

The significant factors (excluding acquisitions) influencing sales growth in the Industrial Technologies segment include economic/industrial market conditions, new product development, and the electric vehicles ("EV") and e-commerce ~~trend. Order rates for the Company's~~trends. The Industrial Technologies ~~businesses remained strong through~~segment received over $200 million of new orders during the fiscal ~~2022 third~~2023 first quarter for its energy storage solutions business. The orders have been received from multiple EV, fuel cell, and ~~as a result,~~battery manufacturers and are ~~currently~~ expected to ~~support~~impact the segment’s ~~organic growth objectives for the balance of fiscal 2022 and into next year.~~sales through mid-fiscal 2024. For the Memorialization segment, sales growth will be influenced by North America death rates, and the impact of the increasing trend toward cremation on the segment's product offerings, including caskets, cemetery memorial products and cremation-related products. For the SGK Brand Solutions segment, sales growth will be influenced by global economic conditions, brand innovation, the level of marketing spending by the Company's clients, and government regulation. Due to the global footprint of ~~this segment,~~the Company’s businesses, particularly the Industrial Technologies and SGK Brand Solutions segments, currency fluctuations can also be a significant factor. ~~Additionally, the retail-based businesses in the SGK Brand Solutions segment continue to recover from the unfavorable sales impacts of the pandemic (see below).~~

~~During fiscal 2019, the Company initiated a strategic evaluation to improve profitability and reduce the Company's~~Recent labor cost structure. These actions leveraged the benefit of the Company's new global ERP platform, primarily targeted at the SGK Brand Solutions segment, both operational and commercial structure, and the Company's shared financial servicesincreases, supply chain challenges, and other administrative functions. This evaluation identified opportunities for significant cost structure improvements, which the Company expects to achieve throughout the remainder of fiscal 2022. The Company's strategic review has also resulted in improvements to the commercial structure within the SGK Brand Solutions segment.

On January 30, 2020, the World Health Organization declared an outbreak of COVID-19 to be a Public Health Emergency of International Concern, and subsequently recognized COVID-19 as a global pandemic in March 2020. The Company has experienced some commercial impact and business disruptions in certain segments and geographic locations as a result of COVID-19. Recent impacts have included higher sales volumes for memorialization products and services. Additionally, recent increases in the cost of certain raw materials, labor, and other inflationaryinflation-related impacts are expected to impact the Company's results for the near future. The Company expects to partially mitigate these cost increases through price realization and ~~the~~ cost-reduction ~~initiatives discussed above.~~initiatives.

~~Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

CRITICAL ACCOUNTING POLICIES:

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. Therefore, the determination of estimates requires the exercise of judgment based on various assumptions and other factors such as historical experience, economic conditions, and in some cases, actuarial techniques. Actual results may differ from those estimates. A discussion of market risks affecting the Company can be found in Item 7A - "Quantitative and Qualitative Disclosures about Market Risk" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2021.~~2022.

A summary of the Company's significant accounting policies are included in the Notes to Consolidated Financial Statements and in the critical accounting policies in Management's Discussion and Analysis included in the Company's Annual Report on Form 10-K for the year ended September 30, ~~2021.~~2022. Management believes that the application of these policies on a consistent basis enables the Company to provide useful and reliable financial information about the Company's operating results and financial condition.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Except as set forth in Note 7, "Debt and Financing Arrangements" in Item 1 - "Financial Statements", there~~There have been no material changes in the Company’s market risk during the three and ~~nine~~six months ended ~~June 30, 2022.~~March 31, 2023. For additional information see Item 7A - "Quantitative and Qualitative Disclosures About Market Risk" in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2021.~~2022.

Item 4. Controls and Procedures

The Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are designed to provide reasonable assurance that information required to be disclosed in our reports filed under that Act (the "Exchange Act"), such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission. These disclosure controls and procedures also are designed to provide reasonable assurance that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

Management, under the supervision and with the participation of our Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures in effect as of ~~June 30, 2022.~~March 31, 2023. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of ~~June 30, 2022,~~March 31, 2023, the Company's disclosure controls and procedures were effective to provide reasonable assurance that material information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, and that such information is recorded, summarized and properly reported within the appropriate time period, relating to the Company and its consolidated subsidiaries, required to be included in the Exchange Act reports, including this Quarterly Report on Form 10-Q.

There have been no changes in the Company's internal controls over financial reporting that occurred during the fiscal quarter ended ~~June 30, 2022~~March 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

3436

PART II ‑ OTHER INFORMATION

Item 1. Legal Proceedings

The Company is subject to various legal proceedings and claims arising in the ordinary course of business. Management does not expect that the results of any of these legal proceedings will have a material adverse effect on Matthews' financial condition, results of operations or cash flows.

Item 1A. Risk Factors

~~Except as set forth below, there~~There have been no material changes in our risk factors from those disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2021.~~2022. The risk factors disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2021,~~2022, in addition to the other information set forth in this report, could adversely affect the Company's operating performance and financial condition. Additional risks not currently known or deemed immaterial may also result in adverse effects on the Company.

~~Global conflicts may impact the business of the Company and the markets in which it operates.~~ Global conflicts, such as the war in Ukraine, could impact the Company and its operations in a number of different ways, which are yet to be fully assessed and are therefore uncertain. The Company’s principal concern is for the safety of its employees and other personnel, specifically those who are based in the affected region. The Company has employees who are based in Eastern Europe, including Russia and Ukraine, who may be affected by the ongoing hostilities. The Company additionally has property, plant and equipment in or around the affected region. The continuing impact of this war and the response of the United States and other countries to it by means of trade and economic sanctions, or other actions, is still evolving and unknown; however it could disrupt the Company’s ability to work with certain parties. Similarly, the Company has employees based in the affected region and works with third-party providers from other parts of the world that may be affected by hostilities.

Due to the uncertainty relating to war or similar conflicts, the current war between Russia and Ukraine may adversely affect the Company's business, of which could materially and adversely affect the Company's results of operations. Such risks include, but are not limited to, adverse effects on macroeconomic conditions, including inflation and business and consumer spending; disruptions to the Company's global technology infrastructure, including through cyberattack, ransom attack, or cyber-intrusion; adverse changes in international trade policies and relations; disruptions in global supply chains; exposure to foreign currency fluctuations; and constraints, volatility, or disruption in the capital markets. Similar uncertainties may arise in connection with other ongoing hostilities or future hostilities.

For so long as the hostilities continue, and perhaps even thereafter as the situation unfolds, the Company may see increased volatility in financial markets, which may impact equity markets generally, including the Company’s stock price, and make it more difficult for the Company to raise additional capital at a strategically advantageous time, or for financing to be available upon acceptable terms. All or any of these risks separately, or in combination could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Stock Repurchase Plan

The following table shows the monthly fiscal ~~2022~~2023 stock repurchase activity:
Period Total number of shares purchased Weighted-average price paid per share Total number of shares purchased as part of a publicly announced plan Maximum number of shares that may yet be purchased under the plan
October 2021 — $ — — 2,658,627
November 2021 — — — 2,658,627
December 2021 62,746 38.79 62,746 2,595,881
January 2022 — — — 2,595,881
February 2022 105,035 34.23 105,035 2,490,846
March 2022 184,149 33.17 184,149 2,306,697
April 2022 20,000 32.46 20,000 2,286,697
May 2022 422,736 30.69 422,736 1,863,961
June 2022 261,795 31.42 261,795 1,602,166
Total 1,056,461 $ 32.17 1,056,461


Period	Total number of shares purchased	Weighted-average price paid per share		Total number of shares purchased as part of a publicly announced plan	Maximum number of shares that may yet be purchased under the plan
October 2022	—	$	—	—	1,294,842
November 2022	88,042	27.54		88,042	1,206,800
December 2022	983	27.54		983	1,205,817
January 2023	—	—		—	1,205,817
February 2023	549	37.09		549	1,205,268
March 2023	7,057	37.79		7,057	1,198,211



Total	96,631	$	28.34	96,631

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

Not Applicable.

3637

Item 6. Exhibits and Reports on Form 8-K


(a)	Exhibits

	Exhibit No.	Description	Method of Filing

	3.1	Restated Articles of Incorporation*	Exhibit Number 3.1 to the Annual Report on Form 10-K for the year ended September 30, 1994 (filed in paper format)
	3.2	Restated By-laws of Matthews International Corporation, as amended January 8, 2021*	Exhibit Number 3.1 to the Current Report on Form 8-K filed on January 14, 2021
	10.1	~~Second~~Matthews International Corporation Amended and Restated 2019 Director Fee Plan	Exhibit Number 10.1 to the Current Report on Form 8-K filed on February 17, 2023
	10.2	Fourth Amendment to Third Amended and Restated Loan Agreement	Filed herewith
	31.1	Certification of Principal Executive Officer for Joseph C. Bartolacci	Filed herewith
	31.2	Certification of Principal Financial Officer for Steven F. Nicola	Filed herewith
	32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Joseph C. Bartolacci	Furnished herewith
	32.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Steven F. Nicola	Furnished herewith
	101.INS	XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	Filed herewith
	101.SCH	XBRL Taxonomy Extension Schema	Filed herewith
	101.CAL	XBRL Taxonomy Extension Calculation Linkbase	Filed herewith
	101.DEF	XBRL Taxonomy Extension Definition Linkbase	Filed herewith
	101.LAB	XBRL Taxonomy Extension Label Linkbase	Filed herewith
	101.PRE	XBRL Taxonomy Extension Presentation Linkbase	Filed herewith
	104	Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)	Filed herewith

* Incorporated by reference

3738

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		MATTHEWS INTERNATIONAL CORPORATION
		(Registrant)

Date:	~~July 29, 2022~~April 28, 2023	By: /s/ Joseph C. Bartolacci
		Joseph C. Bartolacci, President
		and Chief Executive Officer


Date:	~~July 29, 2022~~April 28, 2023	By: /s/ Steven F. Nicola
		Steven F. Nicola, Chief Financial Officer
		and Secretary

3839


Derivatives in Cash Flow Hedging Relationships	Location of Loss Recognized in Income on Derivatives	Amount of Loss Recognized in Income on Derivatives				Amount of Loss Recognized in Income on Derivatives


		Three Months Ended June 30,				Nine Months Ended June 30,
		2022		2021		2022		2021
Interest rate swaps	Interest expense	$	(470)	$	(790)	$	(2,006)	$	(2,444)


Derivatives in Cash Flow Hedging Relationships	Amount of Gain Recognized in AOCI on Derivatives				Location of Loss Reclassified From AOCI into Income (Effective Portion*)	Amount of Loss Reclassified from AOCI into Income (Effective Portion*)
	June 30, 2022		June 30, 2021			June 30, 2022		June 30, 2021
Interest rate swaps	$	5,636	$	1,787	Interest expense	$	(1,513)	$	(1,845)
* There is no ineffective portion or amounts excluded from effectiveness testing.




Details about AOCI Components	Three Months Ended June 30, 2021		Nine Months Ended June 30, 2021		Affected line item in the Statement of income

Postretirement benefit plans
Prior service credit (a)	$	137	$	377
Actuarial losses	(2,730)		(8,774)		Other income (deductions), net
Prior service cost write-off	(526)		(526)		Other income (deductions), net
	(3,119)		(8,923)		Income before income tax (b)
	761		2,186		Income taxes
	$	(2,358)	$	(6,737)	Net income
Derivatives
Interest rate swap contracts	$	(790)	$	(2,444)	Interest expense
	(790)		(2,444)		Income before income tax (b)
	194		599		Income taxes
	$	(596)	$	(1,845)	Net income


	Payments due in fiscal year:
	Total		2022 (1) Remainder		2023 to 2024		2025 to 2026		After 2026
Contractual Cash Obligations:	(Dollar amounts in thousands)
Revolving credit facilities	$	447,223	$	10,969	$	—	$	436,254	$	—


2025 Senior Notes	353,326		—		31,500		321,826		—


Finance lease obligations (2)	6,774		805		3,342		1,031		1,596
Non-cancelable operating leases (2)	79,927		6,637		42,371		24,192		6,727
Acquisition (3)	44,940		44,940		—		—		—
Other	52,972		1,637		40,005		2,088		9,242
Total contractual cash obligations	$	985,162	$	64,988	$	117,218	$	785,391	$	17,565