Matthews International Corp: Form 10-Q for the period ended Mar 31, 2026

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

(Dollar amounts in thousands)

(1) Represents the Company's portion of depreciation, intangible amortization, interest expense, and other items incurred by Propelis (see Note 7, "Investments" for further information with respect to the equity-method investment in Propelis).

(2) Includes fees for receivables sold under the RPA and factoring arrangements totaling $382,000 and $1.1 million for the three months ended March 31, 2026 and 2025, respectively, and $1.1 million and $2.3 million for the six months ended March 31, 2026 and 2025, respectively.

(3) Includes certain non-recurring items associated with recent acquisition and divestiture activities.

(4) Includes certain non-recurring costs associated with commercial, operational and cost-reduction initiatives, and costs associated with global ERP system integration efforts. Also includes legal costs related to an ongoing dispute with Tesla, which totaled $2.2 million and $1.8 million for the three months ended March 31, 2026 and 2025, respectively, and $11.2 million and $8.6 million for the six months ended March 31, 2026 and 2025, respectively (see Note 18, "Legal Matters" in Item 1 - "Financial Statements and Supplementary Data"). Fiscal 2025 includes costs related to the Company's 2025 contested proxy which totaled $4.5 million for the three months ended March 31, 2025 and $4.9 million for the six months ended March 31, 2025. Fiscal 2025 includes net gains on the sales of certain significant property and other assets of $8.7 million for the six months ended March 31, 2025. Fiscal 2025 also includes loss recoveries totaling $1.2 million for the six months ended March 31, 2025 which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.

(5) Represents exchange losses associated with highly inflationary accounting related to certain Turkish subsidiaries which were recently divested (see Note 2, "Basis of Presentation" in Item 1 - "Financial Statements and Supplementary Data").

(6) 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 $8.0 million and $7.2 million for the Memorialization segment, $3.0 million and $5.6 million for the Industrial Technologies segment, and $501,000 and $699,000 for Corporate and Non-Operating, for the three months ended March 31, 2026 and 2025, respectively. Depreciation and amortization was $16.2 million and $14.4 million for the Memorialization segment, $6.4 million and $11.3 million for the Industrial Technologies segment, $609,000 and $13.6 million for the Brand Solutions segment, and $1.0 million and $1.5 million for Corporate and Non-Operating, for the six months ended March 31, 2026 and 2025, respectively. Depreciation and amortization was $4.7 million for the Brand Solutions segment for the three months ended March 31, 2025.

** Acquisition costs, ERP system integration costs, and strategic initiatives and other charges were $380,000 and $2.4 million for the Memorialization segment, $2.7 million and $192,000 for the Industrial Technologies segment, income of $91,000 and charges of $416,000 for the Brand Solutions segment, and $3.6 million and $16.1 million for Corporate and Non-Operating, for the three months ended March 31, 2026 and 2025, respectively. Acquisition costs, ERP system integration costs, and strategic initiatives and other charges were $449,000 and $3.7 million for the Memorialization segment, $13.1 million and $4.3 million for the Industrial Technologies segment, $3.4 million and $1.1 million for the Brand Solutions segment, and $6.0 million and $11.1 million for Corporate and Non-Operating, for the six months ended March 31, 2026 and 2025, respectively.

† Strategic initiatives and other items includes charges for exit and disposal activities (including severance and other employee termination benefits) totaling expenses of $782,000 and income of $2.5 million for the three months ended March 31, 2026 and 2025, respectively, and expenses of $2.3 million and income of $1.3 million for the six months ended March 31, 2026 and 2025, respectively. Refer to Note 10, "Restructuring" in Item 1 - "Financial Statements and Supplementary Data" for further details.

There have been no material changes in the Company’s market risk during the three and six months ended March 31, 2026. 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 March 31, 2026. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, 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 March 31, 2026 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.

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 and the Middle East, recent labor strikes, political instability, including in Iran, 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.