Matthews International Corp: Form 10-Q for the period ended Jun 30, 2025

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

(Dollar amounts in thousands)

(1) Includes fees for receivables sold under the RPA and factoring arrangements totaling $1.0 million and $1.2 million for the three months ended June 30, 2025 and 2024, respectively, and $3.3 million and $3.6 million for the nine months ended June 30, 2025 and 2024, respectively.

(2) Includes certain non-recurring items associated with recent acquisition and divestiture activities and also includes a loss of $2.1 million for the nine months ended June 30, 2025 related to the divestiture of a business in the Industrial Technologies segment (See Note 15, "Acquisitions and Divestitures" in Item 1 - "Financial Statements and Supplementary Data"). The fiscal 2025 third quarter amount reflects a reclassification of transaction costs totaling $9.7 million, which have been presented as a component of gain on sale of SGK Business.

(3) 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 $5.8 million and $3.2 million for the three months ended June 30, 2025 and 2024, respectively, and $14.4 million and $8.1 million for the nine months ended June 30, 2025 and 2024, respectively (see Note 17, "Legal Matter" in Item 1 - "Financial Statements and Supplementary Data"). Fiscal 2025 includes costs related to the Company's 2025 contested proxy which totaled $207,000 for the three months ended June 30, 2025 and $5.1 million for the nine months ended June 30, 2025. Fiscal 2025 includes net gains on the sales of certain significant property and other assets of $8.7 million for the nine months ended June 30, 2025. Fiscal 2025 also includes loss recoveries totaling $538,000 for the three months ended June 30, 2025 and $1.7 million for the nine months ended June 30, 2025 which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015.

(4) 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").

(5) 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 $7.4 million and $7.1 million for the Memorialization segment, $5.5 million and $5.8 million for the Industrial Technologies segment, $2.4 million and $9.7 million for the Brand Solutions segment, and $596,000 and $1.1 million for Corporate and Non-Operating, for the three months ended June 30, 2025 and 2024, respectively. Depreciation and amortization was $21.8 million and $20.4 million for the Memorialization segment, $16.8 million and $17.7 million for the Industrial Technologies segment, $15.9 million and $28.9 million for the Brand Solutions segment, and $2.1 million and $3.4 million for Corporate and Non-Operating, for the nine months ended June 30, 2025 and 2024, respectively.

** Acquisition costs, ERP system integration costs, and strategic initiatives and other charges were $552,000 and $1.1 million for the Memorialization segment, $9.1 million and $4.5 million for the Industrial Technologies segment, $1.7 million and $1.5 million for the Brand Solutions segment, and income of $10.5 million and costs of $1.4 million for Corporate and Non-Operating, for the three months ended June 30, 2025 and 2024, respectively. Acquisition costs, ERP system integration costs, and strategic initiatives and other charges were $4.3 million and $2.2 million for the Memorialization segment, $15.5 million and $14.3 million for the Industrial Technologies segment, $2.8 million and $2.7 million for the Brand Solutions segment, and $631,000 and $3.5 million for Corporate and Non-Operating, for the nine months ended June 30, 2025 and 2024, respectively.

† Strategic initiatives and other items includes charges for exit and disposal activities (including severance and other employee termination benefits) totaling expenses of $2.4 million and $1.1 million for the three months ended June 30, 2025 and 2024, respectively, and expenses of $1.1 million and $3.9 million for the nine months ended June 30, 2025 and 2024, respectively. Refer to Note 9, "Restructuring" in Item 1 - "Financial Statements and Supplementary Data" for further details.

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, 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, 2024.

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, 2025. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 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 June 30, 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, 2024, except for the updated risk factors 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, 2024, in addition to the other information set forth in this report, including the updated risk factors 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.

The Company's results of operations could be impacted if its investment in Propelis Group (“Propelis”) fails to perform as expected. On May 1, 2025, the Company contributed the vast majority of its Brand Solutions segment to a newly-formed entity, Propelis, in exchange for (i) 40% of the common equity of Propelis, (ii) certain preferred equity interests in Propelis, and (iii) cash consideration. Propelis is unconsolidated with the Company, and the Company is a minority owner therein; as such, the Company is not the ultimate decision-maker with respect to the operations of Propelis or distributions of cash to its unitholders. The Company may realize losses related to its investment in Propelis, which could have a material negative effect on its business, financial condition and results of operations. The Company is subject to customary restrictions on the transfer of its equity interests, limiting the Company's ability to dispose of its equity interests in Propelis. If the Company is unable to manage its interest in Propelis and realize the strategic and financial benefits that it expects, such inability may lead to a material adverse impact on its results of operations.

Changes to U.S. trade policy, including new or increased tariffs and changing import/export regulations, could have a material adverse effect on the Company's operating results. Changes in U.S. or international social, political, regulatory or economic conditions or in laws and policies governing foreign trade, and any potential negative sentiment toward the U.S. as a

Part II - Other Information, Continued

result of such changes, could materially and adversely affect the Company's business. The U.S. has instituted certain changes, and has proposed additional changes, in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S., and other government regulations affecting trade between the U.S. and other countries (such as the European Union, China, Canada and Mexico) where the Company conducts its business. For example, on April 2, 2025, the U.S. government announced a 10% tariff on product imports from almost all countries and individualized higher tariffs on certain other countries. While several tariff announcements have been followed by announcements of limited exemptions and temporary pauses, global trade disruption, significant introductions of trade barriers and bilateral trade frictions, together with any future downturns in the global economy resulting therefrom, could further materially and adversely affect the Company's financial performance.

As a result of policy changes and government proposals, there may be greater restrictions and economic deterrents on international trade. New tariffs and other changes in U.S. trade policy have triggered retaliatory actions by affected countries and may trigger additional retaliatory actions in the future, and foreign governments have instituted or are considering imposing trade sanctions on U.S. goods. Such changes have the potential to adversely impact the U.S. economy, the industries in which the Company operates, and the global demand for its products, and as a result, could have a negative impact on its business, financial condition and results of operations.