# Matthews International Corp: Form 10-Q for the period ended Jun 30, 2024

- Company: [Matthews International Corp](/companies/matw.md) (CIK 63296)
- Form: 10-Q
- Filed: 2024-08-02
- Accepted by EDGAR: Aug 2, 2024, 12:01 ET
- Period: 2024-06-30
- Accession: 0000063296-24-000063
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/63296/000006329624000063/matw-20240630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/63296/000006329624000063/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-04-01 to 2024-06-30 | $427.8m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Revenue | 9 months, 2023-10-01 to 2024-06-30 | $1.35bn | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2024-04-01 to 2024-06-30 | $296.0m | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2023-10-01 to 2024-06-30 | $936.7m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2024-04-01 to 2024-06-30 | $131.8m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-10-01 to 2024-06-30 | $412.4m | us-gaap:GrossProfit |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | $6.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-10-01 to 2024-06-30 | $37.5m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-04-01 to 2024-06-30 | $12.8m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 9 months, 2023-10-01 to 2024-06-30 | $36.9m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | −$8.8m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-10-01 to 2024-06-30 | −$10.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | $1.8m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-10-01 to 2024-06-30 | $8.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | $0.06 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-10-01 to 2024-06-30 | $0.27 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | $0.06 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-10-01 to 2024-06-30 | $0.28 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 31,228,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-10-01 to 2024-06-30 | 31,223,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-10-01 to 2024-06-30 | $43.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-10-01 to 2024-06-30 | $33.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2023-10-01 to 2024-06-30 | $24.1m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2023-10-01 to 2024-06-30 | $20.5m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-06-30 | $42.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-06-30 | $642.1m | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $1.86bn | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $386.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-06-30 | $1.36bn | us-gaap:Liabilities |
| Long-term debt | at 2024-06-30 | $824.7m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-06-30 | $5.5m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-06-30 | $503.6m | us-gaap:StockholdersEquity |
| Shares outstanding | at 2024-06-30 | 30,597,624 shares | dei:EntityCommonStockSharesOutstanding |

## Management's discussion and analysis

As filed, 6,410 characters.

Solutions segment, sales for the first nine months of fiscal 2024 were $396.9 million, which was relatively unchanged from $397.4 million for the first nine months of fiscal 2023. Lower retail-based sales, lower brand sales in Europe, and the impact of unfavorable changes in foreign exchange rates were substantially offset by higher brand sales in the Asia-Pacific region, increased sales of cylinder (packaging) products in Europe, and improved price realization. Changes in foreign currency exchange rates had an unfavorable impact of $2.9 million on the segment's sales compared to the prior year.

Gross profit for the nine months ended June 30, 2024 was $412.4 million, compared to $426.9 million for the same period a year ago. Consolidated gross profit as a percent of sales was 30.6% and 30.5% for the first nine months of fiscal 2024 and fiscal 2023, respectively. The decrease in gross profit reflected the impact of lower sales, lower margins on engineered products, and higher material and labor costs. These decreases were partially offset by improved margins on product identification sales and cylinder (packaging) products, and benefits from the realization of productivity improvements and other cost-reduction initiatives. Gross profit also included acquisition integration costs and other charges primarily in connection with cost-reduction initiatives totaling $9.2 million and $6.1 million for the nine months ended June 30, 2024 and 2023, respectively.

Selling and administrative expenses for the nine months ended June 30, 2024 were $347.1 million, compared to $333.6 million for the first nine months of fiscal 2023. Consolidated selling and administrative expenses, as a percent of sales, were 25.7% for the nine months ended June 30, 2024, compared to 23.8% for the same period last year. Selling and administrative expenses included acquisition integration and related systems-integration costs, and other charges primarily in connection with certain commercial, operational and cost-reduction initiatives totaling $9.1 million in fiscal 2024, compared to $10.8 million in fiscal 2023. Fiscal 2024 selling and administrative expenses also included $8.1 million of legal costs related to an ongoing dispute in the Company's energy storage business (see Legal Matter below). Selling and administrative expenses in fiscal 2024 also reflected the impact of higher compensation, partially offset by benefits from ongoing cost-reduction initiatives. Intangible amortization for the nine months ended June 30, 2024 was $27.8 million, compared to $31.5 million for the nine months ended June 30, 2023.

Adjusted EBITDA was $147.0 million for the nine months ended June 30, 2024 and $163.9 million for the nine months ended June 30, 2023. Memorialization segment adjusted EBITDA was $122.1 million for the first nine months of fiscal 2024 compared to $127.1 million for the first nine months of fiscal 2023. The decrease in segment adjusted EBITDA reflected the impact of lower unit sales, higher material and labor costs, and lower margins on cremation equipment. These decreases were partially offset by the impact of improved price realization, benefits from productivity initiatives, lower transportation costs, and lower performance-based compensation compared to fiscal 2023. Adjusted EBITDA for the Industrial Technologies segment was $23.8 million for the nine months ended June 30, 2024 compared to $42.8 million for the nine months ended June 30, 2023. The decrease in segment adjusted EBITDA primarily reflected the impact of lower sales, higher labor costs, and lower margins on engineered products. These decreases were partially offset by improved margins on product identification sales, benefits from cost-reduction initiatives, and lower performance-based compensation compared to fiscal 2023. Adjusted EBITDA for the SGK Brand Solutions segment was $44.3 million for the first nine months of fiscal 2024 compared to $39.6 million for the same period a year ago. The increase in segment adjusted EBITDA primarily reflected the impact of improved price realization, benefits from cost-reduction initiatives and improved margins on cylinder (packaging) products, partially offset by the impact of higher labor costs and higher performance-based compensation compared to fiscal 2023.

Interest expense for the first nine months of fiscal 2024 was $36.9 million, compared to $33.2 million for the same period last year. The increase in interest expense reflected higher average interest rates and an increase in average borrowing levels in the current fiscal year. Other income (deductions), net, for the nine months ended June 30, 2024 represented a decrease in pre-tax income of $2.7 million, compared to a decrease in pre-tax income of $3.0 million for the same period last year. Other income (deductions), net includes the non-service components of pension and postretirement expense, which totaled $327,000 and $1.6 million for the nine months ended June 30, 2024 and 2023, 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 defined benefit portion of the officers retirement restoration plan ("ORRP") obligations. Refer to Note 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. Other income (deductions), net included $895,000 and $3.1 million of currency losses associated with highly inflationary accounting for the Company's subsidiaries in Turkey for the nine months ended June 30, 2024 and 2023, respectively (see Note 2, "Basis of Presentation" in Item 1 - "Financial Statements").

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 months of fiscal 2024 represented a benefit of $10.7 million, compared to an expense of $4.1 million for the first nine months of fiscal 2023. The difference between the Company’s consolidated income taxes for the first nine months of fiscal 2024 compared to the same period for fiscal 2023

## Market risk

As filed, 414 characters.

Except as set forth in Note 8, "Derivatives and Hedging Activities" in Item 1 - "Financial Statements", there have been no material changes in the Company’s market risk during the three and nine months ended June 30, 2024. 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, 2023.

## Controls and procedures

As filed, 1,892 characters.

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, 2024. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2024, 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, 2024 that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

## Risk factors

As filed, 3,114 characters.

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, 2023, except for the updated risk factor provided below. The risk factors disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, in addition to the other information set forth in this report, including the updated risk factor below, 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.

**Intellectual property infringement assertions by third parties, including those of Tesla, could result in significant costs and adversely affect the Company's business, financial condition, operating results and reputation.** The Company actively manages its businesses to ensure compliance under contractual commitments with its customers, including matters related to intellectual property rights. While the Company believes it has complied with its obligations in this regard and has not infringed on the intellectual property of third parties, the Company cannot assure that third parties will not assert claims, meritorious or otherwise. For example, while the Company has attempted to work under the terms of its existing contracts with Tesla to affirm the ownership of its intellectual property, in June 2024, Tesla filed a complaint against the Company (the “Tesla Complaint”) alleging trade secret misappropriations under the DTSA and the CUTSA, breach of contract and unfair business practices relating to the Company’s dry battery electrode solutions. The Company cannot predict whether the assertions in the Tesla Complaint or other assertions of third-party intellectual property rights or claims arising from such assertions would substantially adversely affect the Company's business, financial condition and operating results. The defense of these claims, including the Tesla Complaint, and any future infringement claims, whether they are with or without merit or are determined in the Company's favor, may result in costly litigation and diversion of technical and management personnel. Further, an adverse outcome of a dispute, including the dispute with Tesla, may require the Company to pay damages, cease making, licensing, or using products or offering services that are alleged to incorporate the intellectual property of others, expend additional development resources to redesign the Company's offerings, or enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary intellectual property, which may be unavailable on terms acceptable to the Company, or at all. Even if these matters do not result in litigation or are resolved in the Company's favor or without significant

Part II - Other Information, Continued

cash settlements, the time and resources necessary to resolve them could adversely affect the Company's business, reputation, financial condition and operating results.

Filed Aug 2, 2024.
Source: SEC EDGAR, the filing index for accession 0000063296-24-000063. Last ingested by Listed: Nov 6, 2026, 15:19 ET. No prices; not investment advice.