Matthews International Corp: Form 10-Q for the period ended Dec 31, 2025

Inc. ("Tesla") totaling $9.0 million in fiscal 2026 and $6.9 million in fiscal 2025 (see Legal Matters below). Selling and administrative expenses included fees for receivables sold under a receivables purchase agreement and factoring arrangement totaling $668,000 in fiscal 2026 and $1.2 million in fiscal 2025. Fiscal 2026 selling and administrative expenses included $2.3 million of equity-method losses for the Company's equity-method investment in Propelis. See Note 7, "Investments" in Item 1 - "Financial Statements" for further information. Fiscal 2025 selling and administrative expenses included $8.7 million of net gains on the sales of certain significant property and other assets. Selling and administrative expenses also included acquisition integration and related systems-integration costs, and other charges primarily in connection with certain commercial, operational and cost-reduction initiatives totaling $6.1 million in fiscal 2026, compared to $3.1 million in fiscal 2025. Intangible amortization for the three months ended December 31, 2025 was $3.0 million, compared to $8.6 million for the three months ended December 31, 2024. The fiscal 2026 decrease in intangible amortization reflected lower amortization following the Company's fiscal 2025 divestiture of its interest in the SGK Business. During the first quarter of fiscal 2026, the Company recognized $113.2 million of net pre-tax gains on divestitures (see Acquisitions and Divestitures below).

Adjusted EBITDA was $35.2 million for the three months ended December 31, 2025 and $40.0 million for the three months ended December 31, 2024. Memorialization segment adjusted EBITDA was $38.9 million for the first three months of fiscal 2026 compared to $36.6 million for the first three months of fiscal 2025. The increase in segment adjusted EBITDA reflected the impact of improved price realization, benefits from productivity initiatives, and the favorable impact of the fiscal 2025 acquisition of The Dodge Company. These increases were partially offset by the impact of higher material and labor costs. Adjusted EBITDA for the Industrial Technologies segment was a loss of $4.5 million for the three months ended December 31, 2025 compared to income of $1.8 million for the three months ended December 31, 2024. The decrease in segment adjusted EBITDA primarily reflected the impact of lower sales and margins on engineered products, and unfavorable sales mix for warehouse automation solutions. These declines were partially offset by benefits from cost-reduction initiatives. Adjusted EBITDA for the Brand Solutions segment was $12.7 million for the first three months of fiscal 2026 compared to $12.3 million for the same period a year ago. The change in segment adjusted EBITDA primarily reflected a reduction of $12.2 million resulting from the fiscal 2025 divestiture of the Company's interest in the SGK Business, offset by the inclusion of the Company's portion (40% ownership interest) of Propelis' adjusted EBITDA, which totaled $12.9 million in fiscal 2026. See Notes 7, "Investments" and 16, "Acquisitions and Divestitures" in Item 1 - "Financial Statements" for further information.

Interest expense for the first three months of fiscal 2026 was $14.6 million, compared to $15.7 million for the same period during the last fiscal year. The decrease in interest expense reflected lower average borrowing levels, partially offset by the impact of higher average interest rates in the current fiscal year. Other income (deductions), net, for the three months ended December 31, 2025 represented an increase in pre-tax income of $1.5 million, compared to an increase in pre-tax income of $4.2 million for the same period last year. Other income (deductions), net includes investment income, banking-related fees and the impact of currency gains and losses on certain intercompany debt and foreign denominated cash balances. Fiscal 2026 other income (deductions), net included $1.3 million of paid-in-kind interest income related to the Company's preferred equity investment in Propelis. Fiscal 2025 other income (deductions), net included loss recoveries totaling $1.2 million which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.

Income tax provisions for the Company's interim periods are based on the effective income tax rate expected to be applicable for the full year. The Company's consolidated income taxes for the first three months of fiscal 2026 represented an expense of $40.8 million, compared to a benefit of $2.4 million for the first three months of fiscal 2025. The difference between the Company’s consolidated income taxes for the first three months of fiscal 2026 compared to the same period for fiscal 2025 resulted from consolidated pre-tax income in fiscal 2026 compared to a consolidated pre-tax loss in fiscal 2025, and net discrete tax expense related to the divestiture of the Company's warehouse automation and European roto-gravure packaging and tooling and flexographic print businesses. The Company’s fiscal 2026 three month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to state taxes, tax credits, non-tax benefited foreign losses and discrete tax expense related to the divestiture of the Company's warehouse automation and European roto-gravure packaging and tooling and flexographic print businesses. The Company’s fiscal 2025 three month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to state taxes, tax credits, non-tax benefited foreign losses, and other net discrete tax benefits.

Legal Matters

Refer to Note 18, "Legal Matters" in Item 1 - "Financial Statements" for information regarding the settlement of a contractual licensing matter within the Memorialization segment, and details related to an ongoing dispute with Tesla.

There have been no material changes in the Company’s market risk during the three months ended December 31, 2025. 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, 2025.

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 December 31, 2025. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2025, 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 December 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

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, 2025, 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, 2025, 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.

Part II - Other Information, Continued

Geopolitical instability, labor unrest, and economic disruptions in certain foreign jurisdictions may indirectly affect the Company's operations. Although the Company does not have direct sales, operations, or customers in regions experiencing significant instability, such as Venezuela, recent labor strikes, political instability, and economic conditions in Venezuela may contribute to broader regional or global disruptions, including impacts on international trade relationships, energy markets, currency volatility, or global logistics networks. In addition, changes in diplomatic relationships, foreign policy positions, or international regulatory frameworks involving countries experiencing political or economic instability could result in new or expanded trade restrictions, sanctions, compliance obligations, or logistical challenges imposed by foreign governments, including the United States. Such developments could indirectly affect the availability or cost of certain inputs, transportation services, or third-party suppliers upon which the Company relies. While the Company believes its current supply chain and manufacturing operations are diversified and resilient, it cannot assure investors that future geopolitical developments will not result in increased costs, delays, or other adverse effects on its business, financial condition, or results of operations.