Matthews International Corp: Form 10-Q for the period ended Jun 30, 2026

of productivity improvements and other cost-reduction initiatives, and the favorable impact of the fiscal 2025 acquisition of The Dodge Company. Gross profit also included acquisition integration costs and other charges primarily in connection with cost-reduction initiatives totaling $7.2 million and $3.9 million for the nine months ended June 30, 2026 and 2025, respectively.

Selling and administrative expenses for the nine months ended June 30, 2026 were $310.1 million, compared to $343.6 million for the same period last year. Consolidated selling and administrative expenses, as a percent of sales, were 39.3% for the nine months ended June 30, 2026, compared to 29.1% for the same period last year. Selling and administrative expenses reflected benefits from ongoing cost-reduction initiatives, and a reduction in selling and administrative expenses from the fiscal 2025 divestiture of the Company's interest in the SGK Business of $43.8 million in fiscal 2026 and $12.1 million in fiscal 2025. Fiscal 2026 selling and administrative expenses included $17.2 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. During the first nine months of fiscal 2026, the Company recognized $109.5 million of net pre-tax gains on divestitures (see Acquisitions and Divestitures below). During the third quarter of fiscal 2025, the Company recognized $57.1 million pre-tax gain on the sale of its interest in the SGK Business, and during the second quarter of fiscal 2025, the Company recognized a $2.1 million loss on a small divestiture in the Industrial Technologies segment. (See Acquisitions and Divestitures below). Fiscal 2025 selling and administrative expenses included, $8.7 million of net gains on the sales of certain significant property and other assets, and $3.5 million of accelerated stock based compensation costs related to the Company's divestiture of its interest in the SGK Business. Selling and administrative expenses included litigation costs related to an ongoing dispute with Tesla, Inc. ("Tesla") totaling $18.9 million in fiscal 2026 and $14.4 million in fiscal 2025 (see Legal Matters below). Selling and administrative expenses included activist shareholder/contested proxy costs totaling $2.4 million in fiscal 2026 and $5.1 million in fiscal 2025. Selling and administrative expenses included fees for receivables sold under a receivables purchase agreement and factoring arrangement totaling $1.4 million in fiscal 2026 and $3.3 million in fiscal 2025. Fiscal 2025 selling and administrative expenses included, $8.7 million of net gains on the sales of certain significant property and other assets, and $3.5 million of accelerated stock based compensation costs related to the Company's divestiture of its interest in the SGK Business. 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 $10.1 million in fiscal 2026, compared to $8.0 million in fiscal 2025. Intangible amortization for the nine months ended June 30, 2026 was $8.1 million, compared to $16.4 million for the nine months ended June 30, 2025. The fiscal 2026 decrease in intangible amortization primarily reflected lower amortization following the Company's fiscal 2025 divestiture of its interest in the SGK Business.

Adjusted EBITDA for the nine months ended June 30, 2026 was $115.0 million, compared to $136.0 million for the nine months ended June 30, 2025. Memorialization segment adjusted EBITDA was $130.0 million for the first nine months of fiscal 2026, compared to $124.5 million for the first nine 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, labor, and other production costs. Adjusted EBITDA for the Industrial Technologies segment was a loss of $13.2 million for the nine months ended June 30, 2026 compared to income of $16.9 million for the nine months ended June 30, 2025. The decrease in segment adjusted EBITDA reflected the impact of lower sales and margins on engineered products, lower product identification margins, the impact of divesting the Company's warehouse automation business in December 2025, and unfavorable sales mix for warehouse automation solutions for the fiscal 2026 period prior to the divestiture. These declines were partially offset by benefits from cost-reduction initiatives and lower performance-based compensation compared to fiscal 2025. Adjusted EBITDA for the Brand Solutions segment was $32.0 million for the first nine months of fiscal 2026, compared to $32.9 million for the same period a year ago. The decrease in segment adjusted EBITDA primarily reflected a reduction of $33.7 million resulting from the fiscal 2025 divestiture of the Company's interest in the SGK Business, partially offset by the inclusion of the Company's portion (40% ownership interest) of Propelis' adjusted EBITDA, which totaled $32.4 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 nine months of fiscal 2026 was $35.1 million, compared to $47.4 million for the same period during the last fiscal year. The decrease in interest expense reflected lower average borrowing levels and lower average interest rates in the current fiscal year. During the second quarter of fiscal 2026, the Company recognized $16.3 million of debt extinguishment charges in connection with the redemption of the Company's 2027 Senior Secured Notes (see Liquidity and Capital Resources below). Other income (deductions), net, for the nine months ended June 30, 2026 represented an increase in pre-tax income of $3.0 million, compared to $2.0 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 $3.4 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 $1.7 million which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.

There have been no material changes in the Company’s market risk during the three and nine months ended June 30, 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 June 30, 2026. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 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 June 30, 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.