ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the consolidated financial statements of Matthews and related notes thereto. In addition, see "Cautionary Statement Regarding Forward-Looking Information" included in Part I of this Annual Report on Form 10-K.
RESULTS OF OPERATIONS:
The Company manages its businesses under three segments: Memorialization, Industrial Technologies and Brand Solutions. The Memorialization segment consists primarily of bronze and granite memorials and other memorialization products, caskets, cremation-related products, and cremation and incineration equipment primarily for the cemetery and funeral home industries. The Industrial Technologies segment includes the design, manufacturing, service and sales of high-tech custom energy storage solutions; product identification and warehouse automation technologies and solutions, including order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products; and coating and converting lines for the packaging, pharma, foil, décor and tissue industries. The Brand Solutions segment consists of brand management, pre-media services, printing plates and cylinders, imaging services, digital asset management, merchandising display systems, and marketing and design services primarily for the consumer goods and retail industries. On May 1, 2025, the Company contributed its SGK Business to a newly-formed entity, Propelis, in exchange for a 40% ownership interest in Propelis and other consideration. Propelis is a leading global provider of brand solutions. Following the completion of this transaction, the Company's Brand Solutions segment consists of its cylinders business, and its 40% ownership interest in Propelis. Activity prior to May 1, 2025 for the SGK Business is included within the consolidated financial statements of the Company. As of May 1, 2025 the SGK Business has been deconsolidated from the financial statements and is now accounted for as part of the Company's equity-method investment in Propelis. The Company recognizes its portion of the earnings or losses for its equity-method investment in Propelis on a three-month lag to ensure consistency and timely filing of the Company's financial statements. Consequently, in fiscal 2025, the Company's portion of earnings for its equity-method investment in Propelis only includes the months of May and June 2025. See Notes 8, "Investments" and 23, "Acquisitions and Divestitures" in Item 8 - "Financial Statements and Supplementary Data" for further information with respect to the Company's sale of its interest in the SGK Business.
The Company's primary measure of segment profitability is adjusted earnings before interest, income taxes, depreciation and amortization ("adjusted EBITDA"). Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results. These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition and divestiture costs, gains and losses on divestitures, enterprise resource planning ("ERP") integration costs, and strategic initiatives and other charges. This presentation is consistent with how the Company's chief operating decision maker (the “CODM”), identified as the Company’s President and Chief Executive Officer, evaluates the results of operations and makes strategic and resource allocation decisions about the business. For these reasons, the Company believes that adjusted EBITDA represents the most relevant measure of segment profit and loss.
In addition, the CODM manages and evaluates the operating performance of the segments, as described above, on a pre-corporate cost allocation basis. Accordingly, for segment reporting purposes, the Company does not allocate corporate costs to its reportable segments. Corporate costs include management and administrative support to the Company, which consists of certain aspects of the Company’s executive management, legal, compliance, human resources, information technology (including operational support) and finance departments. These costs are included within "Corporate and Non-Operating" in the following table to reconcile to consolidated adjusted EBITDA and are not considered a separate reportable segment. Management does not allocate non-operating items such as investment income, other income (deductions), net and noncontrolling interest to the segments.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued)
The following table sets forth sales and adjusted EBITDA for the Company's Memorialization, Industrial Technologies and Brand Solutions segments for each of the last three fiscal years. Refer to Note 22, "Segment Information" in Item 8 - "Financial Statements and Supplementary Data" for the Company's financial information by segment. Net loss was $24.5 million for the year ended September 30, 2025 compared to a net loss of $59.7 million and net income of $39.1 million for the years ended September 30, 2024 and 2023, respectively. Refer to "Non-GAAP Financial Measures" below for a reconciliation of net (loss) income to adjusted EBITDA.
Years Ended September 30,
(Dollar amounts in thousands)
Sales to external customers:
Memorialization
Industrial Technologies
Brand Solutions
Consolidated Sales
Adjusted EBITDA:
Memorialization
Industrial Technologies
Brand Solutions
Corporate and Non-Operating
Total Adjusted EBITDA (1)
(1) Total Adjusted EBITDA is a non-GAAP financial measure. See the "Non-GAAP Financial Measures" section below.
Comparison of Fiscal 2025 and Fiscal 2024:
Sales for the year ended September 30, 2025 were $1.5 billion, compared to $1.8 billion for the year ended September 30, 2024. The decrease in fiscal 2025 sales reflected a sales reduction of $200.5 million resulting from the divestiture of the Company's interest in the SGK Business on May 1, 2025 (see Acquisitions and Divestitures below). The fiscal 2025 sales decline also reflected lower sales in the Industrial Technologies and Memorialization segments. On a consolidated basis, changes in foreign currency exchange rates were estimated to have a favorable impact of $2.3 million on fiscal 2025 sales compared to the prior year.
Memorialization segment sales for fiscal 2025 were $809.5 million, compared to $829.7 million for fiscal 2024. The sales decrease principally reflected lower unit sales of caskets, bronze and granite memorial products, and cremation equipment, primarily reflecting a decline in U.S. death rates. These declines were partially offset by inflationary price realization and the favorable net impact of recently completed acquisitions and divestitures (see Acquisitions and Divestitures below). Industrial Technologies segment sales for fiscal 2025 were $342.2 million, compared to $433.2 million for fiscal 2024. The decrease in sales reflected lower sales of purpose-built engineered products (primarily energy storage solutions for the electric vehicle market and coating and converting equipment), and reduced product identification sales. The decrease also reflected lower sales of R+S automotive engineering solutions, as the Company has discontinued these product offerings. Fiscal 2025 sales for the Industrial Technologies segment were impacted by customer delays impacting the timing of projects within the energy storage business. The declines in segment sales were partially offset by improved sales of warehouse automation solutions. Changes in foreign currency exchange rates had a favorable impact of $4.4 million on the segment's sales compared to the prior year. In the Brand Solutions segment, sales for fiscal 2025 were $345.9 million, compared to $532.9 million for fiscal 2024. The decrease in sales primarily reflected the divestiture of the Company's interest in the SGK Business on May 1, 2025. Sales for the SGK Business prior to the divestiture (versus the comparable period of the prior year) reflected higher brand sales in the U.S. and Asia-Pacific regions, improved retail-based sales, increased private-label brand sales, and improved price realization to mitigate inflationary cost increases. These increases were partially offset by lower brand sales in Europe and the impact of unfavorable changes in foreign exchange rates. Brand Solutions segment sales also reflected lower sales for the European cylinders (packaging) business, which was not part of the sale of the SGK Business and remains part of the Company. Changes in foreign currency exchange rates had an unfavorable impact of $2.0 million on the segment's sales compared to the prior year.
Gross profit for the year ended September 30, 2025 was $507.6 million, compared to $529.7 million for fiscal 2024. The decrease in gross profit reflected a reduction of $51.2 million resulting from the divestiture of the Company's interest in the
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued)
SGK Business. The gross profit decline also reflected the impact of lower sales, higher material and labor costs, and a $5.6 million loss on the sale of certain property and other assets. These decreases were partially offset by the impact of improved price realization, benefits from the realization of productivity improvements and other cost-reduction initiatives, and the favorable net impact of recently completed acquisitions and divestitures within the Memorialization segment. Gross profit also included acquisition integration costs and other charges primarily in connection with cost-reduction initiatives totaling $4.6 million and $39.2 million in fiscal 2025 and 2024, respectively.
Selling and administrative expenses for the year ended September 30, 2025 were $467.2 million, compared to $488.3 million for fiscal 2024. Consolidated selling and administrative expenses, as a percent of sales, were 31.2% for fiscal 2025, compared to 27.2% in fiscal 2024. Selling and administrative expenses in fiscal 2025 reflected benefits from ongoing cost-reduction initiatives, and a $30.4 million reduction in selling and administrative expenses from the divestiture of the Company's interest in the SGK Business, partially offset by higher compensation costs. Fiscal 2025 selling and administrative expenses included $5.1 million of costs related to the Company's 2025 contested proxy, $8.7 million of net gains on the sales of certain significant property and other assets, $3.5 million of accelerated stock-based compensation costs related to the Company's divestiture of its interest in the SGK Business, $8.0 million of expense related to the settlement of a contractual licensing matter within the Memorialization segment (see Legal Matters below) and a $2.1 million loss on a small divestiture in the Industrial Technologies segment. Selling and administrative expenses included legal costs related to an ongoing dispute with Tesla totaling $22.2 million in fiscal 2025 and $12.4 million in fiscal 2024 (see Legal Matters below). Selling and administrative expenses included fees for receivables sold under a receivables purchase agreement and factoring arrangement totaling $3.9 million in fiscal 2025 and $4.8 million in fiscal 2024. Selling and administrative expenses included non-cash impairment charges for the write-down of certain net assets held-for-sale totaling $7.9 million and $13.7 million in fiscal 2025 and 2024, respectively. Refer to Note 25, "Asset Write-downs" in Item 8 - "Financial Statements and Supplementary Data" for further details. 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 $11.5 million in fiscal 2025, compared to $19.7 million in fiscal 2024. Intangible amortization for the year ended September 30, 2025 was $20.1 million, compared to $37.0 million for fiscal 2024. The fiscal 2025 decrease in intangible amortization reflected certain intangible assets reaching the end of their amortizable lives, and lower amortization following the Company's divestiture of its interest in the SGK Business. During fiscal 2025, the Company recognized a $55.1 million pre-tax gain on the sale of its interest in the SGK Business (see Acquisitions and Divestitures below). During fiscal 2024, the Company recorded a goodwill write-down of $16.7 million related to the Surfaces and Engineering reporting unit within the Industrial Technologies segment. Refer to Note 24, "Goodwill and Other Intangible Assets" in Item 8 - "Financial Statements and Supplementary Data" for further details.
Adjusted EBITDA for fiscal 2025 was $187.5 million, compared to $205.2 million for fiscal 2024. Memorialization segment adjusted EBITDA for fiscal 2025 was $169.5 million, compared to $162.6 million for fiscal 2024. The increase in segment adjusted EBITDA reflected the impact of improved price realization, benefits from productivity initiatives, and the favorable net impact of recent acquisitions and divestitures. These increases were partially offset by the impact of lower unit sales, and higher material and labor costs. Adjusted EBITDA for the Industrial Technologies segment for fiscal 2025 was $27.9 million, compared to $39.7 million in fiscal 2024. The decrease in segment adjusted EBITDA primarily reflected the impact of lower sales of engineered products, partially offset by benefits from cost-reduction initiatives. Adjusted EBITDA for the Brand Solutions segment for fiscal 2025 was $40.3 million, compared to $61.6 million for fiscal 2024. The decrease in segment adjusted EBITDA primarily reflected a reduction of $28.6 million resulting from the 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 $7.5 million in fiscal 2025. See Notes 8, "Investments" and 23, "Acquisitions and Divestitures" in Item 8 - "Financial Statements and Supplementary Data" for further information with respect to the Company's sale of its interest in the SGK Business. Adjusted EBITDA for the SGK Business prior to the divestiture (versus the comparable period of the prior year) reflected the impact of higher labor costs, partially offset by the impact of improved price realization and benefits from cost-reduction initiatives. Brand Solutions segment adjusted EBITDA also reflected declines for the European cylinders (packaging) business, which was not part of the sale of the SGK Business and remains part of the Company.
Interest expense for fiscal 2025 was $62.9 million, compared to $50.5 million in fiscal 2024. The increase in interest expense reflected higher average interest rates, partially offset by a decrease in average borrowing levels in the current fiscal year. Other income (deductions), net for the year ended September 30, 2025 represented an increase in pre-tax income of $3.7 million, compared to a decrease in pre-tax income of $6.8 million in fiscal 2024. 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. Other income (deductions), net included currency losses associated with highly inflationary accounting for the Company's subsidiaries in Turkey totaling $1.1 million and $1.0 million in fiscal years 2025 and 2024, respectively (see Note 2, "Summary of Significant Accounting Policies" in Item 8 - "Financial Statements and Supplementary Data" for further details). Fiscal 2025 other income (deductions), net included $2.1 million of paid-in-kind interest income related to the Company's preferred equity investment in Propelis. Fiscal 2025 other income (deductions), net also included loss
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued)
recoveries totaling $1.7 million which were related to a previously disclosed theft of funds by a former employee initially identified in fiscal 2015. Fiscal 2024 other income (deductions), net included a non-cash impairment charge of $3.1 million for the write-down of a cost-method investment (see Note 8, "Investments" in Item 8 - "Financial Statements and Supplementary Data" for further details).
The Company's consolidated income taxes for the year ended September 30, 2025 were an expense of $40.7 million, compared to a benefit of $10.0 million for fiscal 2024. The difference between the Company's consolidated income taxes for fiscal 2025 compared to fiscal 2024 partially resulted from the Company's fiscal 2025 pre-tax consolidated income position compared to a pre-tax consolidated loss for fiscal 2024. The fiscal 2025 tax rate included charges related to changes in the realizability of certain foreign deferred tax assets. These changes included both current year foreign net operating losses requiring a full valuation allowance as well as other changes in realizability of certain foreign net operating losses from prior years. The fiscal 2025 consolidated income before income taxes also reflected impacts related to the divestiture of the Company's interest in the SGK Business, the write down of certain net assets held-for-sale that were non-deductible for tax purposes, tax associated with the sale of certain foreign assets not offset by losses, and top-up tax related to the OECD Pillar Two global minimum tax. Additionally, the fiscal 2025 tax rate benefited from research and development and foreign tax credits. The fiscal 2024 effective tax rate benefited from research and development and foreign tax credits, and changes in realizability of certain foreign deferred tax assets due to the utilization of foreign tax net operating losses with a valuation allowance. The fiscal 2024 effective tax rate was negatively impacted by share-based compensation.
Legal Matters
Refer to Note 20, "Commitments and Contingent Liabilities" in Item 8 - "Financial Statements and Supplementary Data," for information regarding the settlement of a contractual licensing matter within the Memorialization segment, and details related to an ongoing dispute with Tesla.
Related Party Transactions
Refer to Note 26, "Related Party Transactions" in Item 8 - "Financial Statements and Supplementary Data" for information regarding transactions with Propelis.
Comparison of Fiscal 2024 and Fiscal 2023:
For a comparison of the Company's results of operations for the fiscal years ended September 30, 2024 and September 30, 2023, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation" of the Company's annual report on Form 10-K for the fiscal year ended September 30, 2024 filed with the SEC on November 22, 2024.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued)
NON-GAAP FINANCIAL MEASURES:
Included in this report are measures of financial performance that are not defined by GAAP. The Company uses certain non-GAAP financial measures to assist in comparing its performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the Company’s core operations including acquisition and divestiture costs, gains and losses on divestitures, ERP integration costs, strategic initiative and other charges (which includes non-recurring charges related to certain commercial and operational initiatives and exit activities), stock-based compensation and the non-service portion of pension and postretirement expense. Management believes that presenting non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items that management believes do not directly reflect the Company's core operations, (ii) permits investors to view performance using the same tools that management uses to budget, forecast, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating the Company’s results. The Company believes that the presentation of these non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provided herein, provides investors with an additional understanding of the factors and trends affecting the Company’s business that could not be obtained absent these disclosures.
The Company believes that adjusted EBITDA provides relevant and useful information, which is used by the Company’s management in assessing the performance of its business. Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results. These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition and divestiture costs, gains and losses on divestitures, ERP integration costs, and strategic initiatives and other charges. Adjusted EBITDA provides the Company with an understanding of earnings before the impact of investing and financing charges and income taxes, and the effects of certain acquisition and divestiture costs, gains and losses on divestitures, and ERP integration costs, and items that do not reflect the ordinary earnings of the Company’s operations. This measure may be useful to an investor in evaluating operating performance. It is also useful as a financial measure for lenders and is used by the Company’s management to measure business performance. Adjusted EBITDA is not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to net income or other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of the Company's liquidity. The Company's definition of adjusted EBITDA may not be comparable to similarly titled measures used by other companies.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued)
The reconciliation of net income to adjusted EBITDA is as follows:
Years Ended September 30,
(Dollar amounts in thousands)
Net (loss) income
Income tax provision (benefit)
Income (loss) before income taxes
Net loss attributable to noncontrolling interests
Propelis depreciation, amortization, interest and other items (1)
Interest expense, including Receivables Purchase Agreement ("RPA") and factoring financing fees (2)
Depreciation and amortization *
Acquisition and divestiture related items (3) **
Strategic initiatives and other charges (4)**†
Gain on sale of SGK Business
Highly inflationary accounting losses (primarily non-cash) (5)
Goodwill and asset write-downs (6)
Stock-based compensation
Non-service pension and postretirement expense (7)
Total Adjusted EBITDA
(1) Represents the Company's portion of depreciation, intangible amortization, interest expense, and other items incurred by Propelis (see Note 8, "Investments" in Item 8 - "Financial Statements and Supplementary Data" 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 $3.9 million, $4.8 million and $4.0 million for the fiscal years ended September 30, 2025, 2024 and 2023, respectively.
(3) Includes certain non-recurring items associated with recent acquisition and divestiture activities and also includes a loss of $2.1 million for the fiscal year ended September 30, 2025 related to the divestiture of a business in the Industrial Technologies segment (See Note 23, "Acquisitions and Divestitures" in Item 8 - "Financial Statements and Supplementary Data"). Fiscal 2023 includes a gain of $1.8 million related to the divestiture of a business in the Industrial Technologies segment.
(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 $22.2 million and $12.4 million for the fiscal years ended September 30, 2025 and 2024, respectively (See Note 20, "Commitments and Contingent Liabilities" in Item 8 - "Financial Statements and Supplementary Data" ). Fiscal 2025 includes costs related to the Company's 2025 contested proxy which totaled $5.1 million. Fiscal 2025 includes $8.0 million of expense related to the settlement of a contractual licensing matter within the Memorialization segment (See Note 20, "Commitments and Contingent Liabilities in Item 8 - Financial Statements and Supplementary Data"). Fiscal 2025 includes net gains on the sales of certain significant property and other assets of $3.6 million. Fiscal 2025 and 2023 include loss recoveries totaling $1.7 million and $2.2 million, respectively, 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 the Company's Turkish subsidiaries (see Note 2, "Summary of Significant Accounting Policies" in Item 8 - “Financial Statements and Supplementary Data”).
(6) Fiscal 2025 includes asset write-downs within the Brand Solutions segment of $7.9 million (see Note 25, "Asset Write-Downs" in Item 8 - “Financial Statements and Supplementary Data"). Fiscal 2024 includes goodwill write-downs within the Industrial Technologies segment of $16.7 million (see Note 24, "Goodwill and Other Intangible Assets" in Item 8 - “Financial Statements and Supplementary Data"), asset write-downs within the Memorialization segment of $13.7 million (see Note 25, "Asset Write-Downs" in Item 8 - “Financial Statements and Supplementary Data"), and investment write-downs within Corporate and Non-operating of $3.1 million (see Note 8, "Investments" in Item 8 - “Financial Statements and Supplementary Data").
(7) 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 $30.3 million, $27.8 million, and $23.7 million, for the Memorialization segment, $21.9 million, $23.8 million, and $23.2 million for the Industrial Technologies segment, $16.9 million, $38.7 million, and $44.8 million for the Brand Solutions segment, and $2.6 million, $4.6 million, and $4.8 million for Corporate and Non-Operating, for the fiscal years ended September 30, 2025, 2024, and 2023, respectively.
** Acquisition and divestiture costs, ERP integration costs, and strategic initiatives and other charges were $13.9 million, $3.5 million, and $1.0 million for the Memorialization segment, $27.9 million, $54.4 million, and $4.1 million for the Industrial Technologies segment, $4.0 million, $3.0 million, and $10.9 million for the Brand Solutions segment, and $3.1 million, $10.3 million, and $3.2 million for Corporate and Non-Operating, for the fiscal years ended September 30, 2025, 2024, and 2023, respectively.
† Strategic initiatives and other charges includes charges for exit and disposal activities (including severance and other employee termination benefits) totaling $1.2 million, $45.7 million and $13.2 million in fiscal years 2025, 2024 and 2023, respectively. Refer to Note 13, "Restructuring" in Item 8 - "Financial Statements and Supplementary Data" for further details.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued)
LIQUIDITY AND CAPITAL RESOURCES :
Net cash used in operating activities was $23.6 million for the year ended September 30, 2025, compared to net cash provided by operating activities of $79.3 million and $79.5 million for fiscal years 2024 and 2023, respectively. Operating cash flow for fiscal 2025 principally included net (loss) income adjusted for deferred taxes, depreciation and amortization, stock-based compensation expense, asset write-downs, net gains on divestitures and sales of assets, and other non-cash adjustments, and changes in working capital items. Fiscal 2025 operating cash flow also reflected $8.9 million of non-reimbursed transaction costs related to the sale of the Company's interest in the SGK Business. The change in working capital in fiscal 2025 primarily reflected payments of severance and other employee termination benefits, changes in contract assets and liabilities related to revenue recognized using the over time method, lower accounts receivable and inventory levels, and changes in other accounts. Operating cash flow for fiscal 2024 principally included net (loss) income adjusted for deferred taxes, depreciation and amortization, stock-based compensation expense, goodwill and other asset write-downs, non-cash pension expense, gain on divestitures and sale of assets, and other non-cash adjustments, and changes in working capital items. The change in working capital in fiscal 2024 primarily reflected lower inventory levels, higher accrued compensation related to severance and other employee termination benefits, changes in contract assets and liabilities related to revenue recognized using the over time method, lower trade accounts payable, lower performance-based compensation accruals, and changes in other accounts. Operating cash flow for fiscal 2023 principally included net (loss) income adjusted for deferred taxes, depreciation and amortization, stock-based compensation expense, non-cash pension expense, gain on divestitures and sale of assets, and other non-cash adjustments, and changes in working capital items. Fiscal 2023 operating cash flow also reflected $24.2 million of contributions to fund the settlement of the Company's non-qualified Supplemental Retirement Plan ("SERP") and the defined benefit portion of the Officers Retirement Restoration Plan ("ORRP") obligations, and $10.5 million of proceeds from the settlement of cash flow hedges. The change in working capital in fiscal 2023 primarily reflected higher inventory levels, lower trade accounts payable, and changes in contract assets and liabilities related to revenue recognized using the over time method, partially offset by proceeds from the sale of receivables under a receivables purchase agreement and a non-recourse factoring arrangement (see below for further discussion).
Cash provided by investing activities was $159.6 million for the year ended September 30, 2025, compared to cash used in investing activities of $47.0 million and $58.7 million for fiscal years 2024 and 2023, respectively. Investing activities for fiscal 2025 primarily reflected capital expenditures of $35.8 million, acquisition payments (net of cash acquired or received from sellers) of $55.8 million, proceeds from the sale of assets of $21.3 million, proceeds from sale of the SGK Business, net of divested cash, of $228.0 million, and proceeds from other divestitures of $2.0 million. Investing activities for fiscal 2024 primarily reflected capital expenditures of $45.2 million, acquisition payments (net of cash acquired or received from sellers) of $5.8 million, purchases of investments of $825,000, and proceeds from the sale of assets of $4.2 million. Investing activities for fiscal 2023 primarily reflected capital expenditures of $50.6 million, acquisition payments (net of cash acquired or received from sellers) of $15.3 million , purchases of investments of $1.6 million, proceeds from the sale of assets of $2.1 million, and proceeds from divestitures of $6.7 million .
Capital expenditures were $35.8 million for the year ended September 30, 2025, compared to $45.2 million and $50.6 million for fiscal years 2024 and 2023, respectively. Capital expenditures in each of the last three fiscal years reflected reinvestments in the Company's business segments and were made primarily for the purchase of new production machinery, equipment, software and systems, and facilities designed to improve product quality, increase manufacturing efficiency, lower production costs and meet regulatory requirements. Capital spending for property, plant and equipment has averaged $43.9 million for the last three fiscal years. Capital expenditures for the last three fiscal years were primarily financed through operating cash. Capital spending for fiscal 2026 is currently estimated to be in the range of approximately $30 million to $40 million. The Company expects to generate sufficient cash from operations to fund all anticipated capital spending projects.
Cash used in financing activities for the year ended September 30, 2025 was $144.3 million, and principally reflected repayments, net of proceeds, on long-term debt of $67.0 million, purchases of treasury stock of $12.2 million, payment of dividends of $32.8 million, payments, net of proceeds, on net investment hedges of $22.1 million (see below), and $10.2 million of holdback and deferred purchase price payments related to acquisitions from prior years. Cash used in financing activities for the year ended September 30, 2024 was $35.0 million, and principally reflected repayments, net of proceeds, on long-term debt of $31.3 million, purchases of treasury stock of $20.6 million, payment of dividends of $31.4 million, payments of debt issuance costs of $10.2 million , and proceeds from net investment hedges of $58.4 million (see below) . Cash used in financing activities for the year ended September 30, 2023 was $50.2 million, and principally reflected repayments, net of proceeds, on long-term debt of $18.2 million, purchases of treasury stock of $2.9 million, and payment of dividends of $28.2 million.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued)
The Company has a domestic credit facility with a syndicate of financial institutions that was amended and restated in September 2024. The amended and restated loan agreement includes a $750.0 million senior secured revolving credit facility, which matures in January 2029, subject to the terms and conditions of the amended facility. The obligations under the domestic credit facility are secured by a first priority lien on substantially all of the assets of the Company and certain of its domestic subsidiaries. A portion of the revolving credit facility (not to exceed $350.0 million ) can be drawn in foreign currencies. Borrowings under the revolving credit facility bear interest at Secured Overnight Financing Rate ("SOFR"), plus a 0.10% per annum rate spread adjustment, plus a factor ranging from 1.00% to 2.00% (1.25% at September 30, 2025) based on the Company's leverage ratio. The leverage ratio is defined as total indebtedness divided by EBITDA (earnings before interest, income taxes, depreciation and amortization) as defined within the domestic credit facility agreement. The Company is required to pay an annual commitment fee ranging from 0.15% to 0.30% (based on the Company's leverage ratio) of the unused portion of the revolving credit facility. The Company incurred debt issuance costs in connection with the amended and restated agreement . Unamortized costs were $3.9 million and $5.0 million at September 30, 2025 and 2024, respectively.
The domestic credit facility requires the Company to maintain certain leverage and interest coverage ratios. A portion of the facility (not to exceed $75.0 million) is available for the issuance of trade and standby letters of credit. Outstanding U.S. dollar denominated borrowings on the revolving credit facility at September 30, 2025 and 2024 were $384.2 million and $410.5 million, respectively. There were no outstanding Euro denominated borrowings on the revolving credit facility at September 30, 2025. Outstanding Euro denominated borrowings on the revolving credit facility at September 30, 2024 were €30.0 million ($33.5 million). The weighted-average interest rate on outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps and Euro denominated borrowings) at September 30, 2025 and 2024 was 3.99% and 4.59%, respectively.
The Company has $300.0 million aggregate principal amount of 8.625% senior secured second lien notes due October 1, 2027 (the "2027 Senior Secured Notes"). The 2027 Senior Secured Notes bear interest at a rate of 8.625% per annum with interest payable semi-annually in arrears on April 1 and October 1 of each year. The Company's obligations under the 2027 Senior Secured Notes are secured by a second priority lien on substantially all of the assets of the Company and certain of its domestic subsidiaries. The Company is subject to certain covenants and other restrictions including cross default provisions in connection with the 2027 Senior Secured Notes. The Company incurred direct financing fees and costs in connection with the 2027 Senior Secured Notes. Unamortized costs related to the Company’s notes were $3.9 million and $5.2 million at September 30, 2025 and 2024, respectively.
The Company and certain of its domestic subsidiaries sell, on a continuous basis without recourse, their trade receivables to Matthews Receivables Funding Corporation, LLC (“Matthews RFC”), a wholly-owned bankruptcy-remote subsidiary of the Company. Matthews RFC has a receivables purchase agreement (“RPA”) to sell up to $75.0 million of receivables to certain purchasers (the “Purchasers”) on a recurring basis in exchange for cash (referred to as “capital” within the RPA) equal to the gross receivables transferred. The parties intend that the transfers of receivables to the Purchasers constitute purchases and sales of receivables. Matthews RFC has guaranteed to each Purchaser the prompt payment of sold receivables, and has granted a security interest in its assets for the benefit of the Purchasers. Under the RPA, each Purchaser’s share of capital accrues yield at a floating rate plus an applicable margin. The Company is the master servicer under the RPA, and is responsible for administering and collecting receivables. The RPA matures in April 2027.
The proceeds of the RPA are classified as operating activities in the Company’s Consolidated Statements of Cash Flows. Cash received from collections of sold receivables may be used to fund additional purchases of receivables on a revolving basis, or to reduce all or any portion of the outstanding capital of the Purchasers. The fair value of the sold receivables approximated book value due to their credit quality and short-term nature, and as a result, no gain or loss on sale of receivables was recorded. As of September 30, 2025, and 2024, the amount sold to the Purchasers was $65.6 million and $96.3 million, respectively which was derecognized from the Consolidated Balance Sheets. As collateral against sold receivables, Matthews RFC maintains a certain level of unsold receivables, which was $63.7 million and $58.2 million as of September 30, 2025 and 2024, respectively.
The following table sets forth a summary of receivables sold as part of the RPA:
For the Year Ended September 30,
(Dollar amounts in thousands)
Gross receivables sold
Cash collections reinvested
Net cash (reinvested) received
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued)
The Company, through its U.K. subsidiary, previously participated in a non-recourse factoring arrangement. In connection with this arrangement, the Company periodically sold trade receivables to a third-party purchaser in exchange for cash. These transfers of financial assets were recorded at the time the Company surrendered control of the assets. As these transfers qualified as true sales under the applicable accounting guidance, the receivables were de-recognized from the Company's Consolidated Balance Sheets upon transfer. As a result of the sale of the Company's interest in the SGK Business, this arrangement no longer exists for the Company at September 30, 2025. The principal amount of receivables sold under this arrangement was $45.8 million and $70.2 million during the fiscal year ended September 30, 2025 and 2024, respectively. The discounts on the trade receivables sold are included within administrative expense in the Consolidated Statements of Income. The proceeds from the sale of receivables are classified as operating activities in the Company's Consolidated Statements of Cash Flows. As of September 30, 2024, the amount of factored receivables that remained outstanding was $15.7 million. See Note 23, "Acquisitions and Divestitures" in Item 8 - "Financial Statements and Supplementary Data" for further information with respect to the sale of the Company's interest in the SGK Business.
The Company facilitates a voluntary supply chain finance program (the "Program") to provide certain suppliers with the opportunity to sell receivables due from the Company to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. The Company is not a party to the agreements between the suppliers and the financial institutions and has no economic interest in a supplier's decision to sell a receivable. The range of payment terms negotiated with a supplier is consistent, irrespective of whether a supplier participates in the Program. All outstanding payments owed under the Program are recorded within trade accounts payable in the Consolidated Balance Sheets. The Company accounts for all payments made under the Program as a reduction to operating cash flows in changes in working capital within the Consolidated Statements of Cash Flows. The amounts owed to a participating financial institution under the Program and included in trade accounts payable were $6.1 million and $3.0 million at September 30, 2025 and 2024, respectively.
The following table summarizes the Program activities for the year ended September 30, 2025.
For the Year Ended
September 30, 2025
(Dollar amounts in thousands)
Outstanding Program payables at September 30, 2024
Obligations added
Obligations settled
Outstanding Program payables at September 30, 2025
The Company, through certain of its European subsidiaries, has a credit facility with a European bank, which is guaranteed by Matthews. The maximum amount of borrowings available under this facility is €6.0 million ($7.0 million). This facility also provides €14.0 million ($16.4 million) for bank guarantees. This facility has no stated maturity date and is available until terminated. Outstanding borrowings under the credit facility totaled at €659,000 ($774,000) at September 30, 2025. There were no outstanding borrowings under the credit facility at September 30, 2024. The weighted-average interest rate on outstanding borrowings under this facility was 4.16% at September 30, 2025.
Other borrowings totaled $7.2 million and $15.6 million at September 30, 2025 and 2024, respectively. The weighted-average interest rate on these borrowings was 2.40% and 2.66% at September 30, 2025 and 2024, respectively.
The Company operates internationally and utilizes certain derivative financial instruments to manage its foreign currency, debt and interest rate exposures. The following table presents information related to interest rate swaps entered into by the Company and designated as cash flow hedges:
September 30, 2025
September 30, 2024
(Dollar amounts in thousands)
Notional amount
Weighted-average maturity period (years)
Weighted-average received rate
Weighted-average pay rate
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued)
The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate. The interest rate swaps have been designated as cash flow hedges of future variable interest payments, which are considered probable of occurring. Based on the Company's assessment, all of the critical terms of each of the hedges matched the underlying terms of the hedged debt and related forecasted interest payments, and as such, these hedges were considered highly effective.
The fair value of the interest rate swaps reflected a net unrealized loss of $2.3 million ($1.8 million after tax) and a net unrealized loss of $2.6 million ($1.9 million after tax) at September 30, 2025 and 2024, respectively, that is included in shareholders' equity as part of accumulated other comprehensive income ("AOCI"). Unrecognized gains of $1.6 million ($1.2 million after tax) and $3.8 million ($2.9 million after tax) related to previously terminated London Interbank Offered Rate ("LIBOR") based swaps were also included in AOCI as of September 30, 2025 and 2024, respectively. Assuming market rates remain constant with the rates at September 30, 2025, a gain (net of tax) of approximately $115,000 included in AOCI is expected to be recognized in earnings over the next twelve months.
The Company utilizes certain cross currency swaps as net investment hedges of foreign operations and assesses effectiveness for these contracts based on changes in fair value attributable to changes in spot prices. The following table presents information related to cross currency swaps entered into by the Company and designated as net investment hedges:
Notional Amount
Unrealized Losses (1)
Swap Currencies
Maturity Date
September 30, 2025
September 30, 2024
September 30, 2025
September 30, 2024
(Dollar amounts in thousands)
USD/EUR
September 2027
USD/SEK
June 2026
USD/SGD
August 2026
USD/EUR
August 2026
(1) Unrealized gains/losses are recognized in AOCI unless a portion of a hedge is ineffective. Ineffectiveness was insignificant for the year ended September 30, 2025.
(2) Total unrealized losses are presented net of tax of $4,652 and $2,156, for the years ended September 30, 2025 and 2024, respectively.
In connection with certain of these cross currency swaps, the Company received cash from the counterparties, representing partial advance payments of amounts due under the U.S. dollar leg of the swaps. Outstanding advance payment amounts totaled $40.2 million at September 30, 2025, all of which were included in other current liabilities on the Consolidated Balance Sheet. Outstanding advance payment amounts totaled $58.4 million at September 30, 2024, of which $17.4 million and $41.0 million were included in other current liabilities and other non-current liabilities on the Consolidated Balance Sheet, respectively.
During fiscal 2025, certain cross currency swaps were terminated or modified following the sale of the Company's interest in the SGK Business. The Company made payments totaling $37.1 million in connection with the settlement or modification of these cross currency swap contracts.
The Company previously used certain foreign currency debt instruments as net investment hedges of foreign operations with a notional amount of €30.0 million ($33.5 million) as of September 30, 2024. Currency losses of $3.8 million (net of income taxes of $1.1 million), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at September 30, 2024.
The Company has a stock repurchase program. The buy-back program is designed to increase shareholder value, enlarge the Company's holdings of its Class A Common Stock, and add to earnings per share. Repurchased shares may be retained in treasury, utilized for acquisitions, or reissued to employees or other purchasers, subject to the restrictions set forth in the Company's Restated Articles of Incorporation. On November 21, 2025, the Company announced that its Board of Directors approved the continuation of the stock repurchase program and increased the authorization for stock repurchases by an additional 5,000,000 shares during fiscal year 2025. Under the current authorization, 5,043,567 shares remain available for repurchase as of September 30, 2025.
On March 11, 2025, in connection with the filing of an automatic shelf registration statement on Form S-3 pursuant to which the Company re-registered 3,000,000 shares of Class A Common Stock, the Company entered into an Equity Distribution Agreement for an At-The-Market equity offering program ("ATM Program") where the Company may issue and sell, from time
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued)
to time, up to 1,250,000 shares of its Class A Common Stock under the shelf registration. The Company did not sell any shares of its Class A Common Stock under its ATM program during fiscal 2025. As of September 30, 2025, the Company had 1,250,000 shares remaining for sale under the ATM Program. The Company has no near-term intention to utilize the ATM Program.
Consolidated working capital was $169.7 million at September 30, 2025, compared to $197.8 million at September 30, 2024. Cash and cash equivalents were $32.4 million at September 30, 2025, compared to $40.8 million at September 30, 2024. The Company's current ratio was 1.5 at both September 30, 2025 and 2024. As of September 30, 2025 and 2024, the Company had net contract assets for projects recognized using the over time method totaling $99,700 and $64,246, respectively, which primarily represent unbilled revenues, net of deferred revenues related to customer deposits and progress billings. Net contract assets at September 30, 2025 and 2024 predominantly related to ongoing projects with Tesla. Unbilled revenues are generally expected to be invoiced upon the attainment of certain contractual conditions and milestones. The Company continues to perform according to the general terms and conditions of its contractual arrangements with Tesla. Customer delays within the energy storage business have impacted the timing of projects, and consequently, have resulted in invoicing delays for this business.
Long-Term Contractual Obligations:
The following table summarizes the Company's contractual obligations at September 30, 2025, and the effect such obligations are expected to have on its liquidity and cash flows in future periods.
Payments due in fiscal year:
Total
After
Contractual Cash Obligations:
(Dollar amounts in thousands)
Revolving credit facilities
2027 Senior Secured Notes
Finance lease obligations (1)
Non-cancelable operating leases (1)
Cross-currency swaps
Other (2)
Total contractual cash obligations
(1) Lease obligations have not been discounted to their present value.
(2) Includes $1,163 of severance and other employee termination benefit obligations, as well as $5,061 of deferred purchase price and contingent consideration obligations related to acquisitions completed in prior years.
Unrecognized tax benefits are positions taken, or expected to be taken, on an income tax return that may result in additional payments to tax authorities. If a tax authority agrees with the tax position taken, or expected to be taken, or the applicable statute of limitations expires, then additional payments will not be necessary. As of September 30, 2025, the Company had unrecognized tax benefits, excluding penalties and interest, of approximately $3.0 million. The timing of potential future payments related to the unrecognized tax benefits is not presently determinable. The Company believes that its current liquidity sources, combined with its operating cash flow and borrowing capacity, will be sufficient to meet its capital needs for the foreseeable future.
ACQUISITIONS AND DIVESTITURES:
Refer to Note 23, "Acquisitions and Divestitures" in Item 8 - "Financial Statements and Supplementary Data," for further details on the Company's acquisitions and divestitures.
SUBSEQUENT EVENT:
Refer to Note 27, "Subsequent Event" in Item 8 - "Financial Statements and Supplementary Data" for further details on the Company's subsequent event.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued)
FORWARD-LOOKING INFORMATION:
Management routinely develops and reviews with the Company’s Board of Directors strategic plans with the primary objective of continuous improvement in the Company’s consolidated sales and operating results, with a view towards enterprise-level strategic transactions. Strategic plans are developed at the business segment level and generally contain strategies for organic growth and acquisitions. Organic growth primarily reflects the Company’s internal efforts to grow its businesses including commercial activities, cost structure and productivity improvements, new product development, and the expansion into new markets with existing products. Growth through acquisitions reflects the benefits from acquired businesses and also includes related integration activities to achieve commercial and cost synergy benefits.
The significant factors influencing organic sales growth in the Industrial Technologies segment include economic/industrial market conditions, new product development, and the electric vehicles ("EV") and e-commerce trends. Sales within this segment are influenced by the timing of work with the Company's largest energy storage customer, which may be impacted by continuing disputes with such customer, as well as the level of advancement by existing and potential new customers towards adopting new production solutions. For the Memorialization segment, the Company expects that sales growth will be influenced by North America death rates and the impact of the increasing trend toward cremation on the segment's product offerings, including caskets, cemetery memorial products and cremation-related products. On May 1, 2025, the Company contributed its SGK Business to a newly-formed entity, Propelis, in exchange for a 40% ownership interest in Propelis and other consideration. Following the completion of this transaction, the SGK Business has been deconsolidated from the financial statements and is now accounted for as part of the Company's equity-method investment in Propelis. See Notes 8, "Investments" and 23, "Acquisitions and Divestitures" in Item 8 - "Financial Statements and Supplementary Data" for further information with respect to the Company's sale of its interest in the SGK Business. The underlying business performance for the Company's investment in Propelis will be influenced by global economic conditions, brand innovation, the level of marketing spending by the investee's clients, government regulation, currency fluctuations, and the ability of the investee to effectively integrate and achieve anticipated synergy benefits from the joint venture.
The Matthews Board of Directors has launched a comprehensive review of strategic alternatives for the Company’s entire portfolio of businesses, which was publicly announced in November 2024. The Board is dedicated to driving long-term value creation, and the strategic alternatives process is a reflection of that commitment. In addition to the recent divestiture of the Company’s interest in the SGK Business, the Company also announced a proposed transaction for the sale of the Company's Warehouse Automation business (see "Subsequent Event"). The Company's strategic alternatives review to enhance shareholder value creation remains ongoing. The Company also initiated cost reduction programs during the fourth quarter of fiscal 2024, which are primarily focused on the Company's engineering and tooling operations in Europe, as well as the Company's general and administrative functions. The Company is planning further cost reduction actions for fiscal 2026.
CRITICAL ACCOUNTING ESTIMATES AND POLICIES:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Therefore, the determination of estimates requires the exercise of judgment based on various assumptions and other factors such as historical experience, economic conditions, and in some cases, actuarial techniques. Actual results may differ from those estimates. A discussion of market risks affecting the Company can be found in Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," of this Annual Report on Form 10-K.
The Company's significant accounting policies are included in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. Management believes that the application of these policies on a consistent basis enables the Company to provide useful and reliable financial information about the Company's operating results and financial condition. The following accounting policies involve significant estimates, which were considered critical to the preparation of the Company's consolidated financial statements for the year ended September 30, 2025.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS, (continued)
Long-Lived Assets, including Property, Plant and Equipment:
Long-lived assets are recorded at their respective cost basis on the date of acquisition. Depreciation on property, plant and equipment is computed primarily on the straight-line method over the estimated useful lives of the assets. Intangible assets with finite useful lives are amortized over their estimated useful lives. The Company reviews long-lived assets, including property, plant and equipment, and intangibles with finite useful lives, whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets and asset groups is determined by evaluating the estimated undiscounted net cash flows of the operations to which the assets or asset groups relate. An impairment loss would be recognized when the carrying amount of the assets or asset groups exceed the fair value, which is generally based on a discounted cash flow analysis. An asset or asset group considered held-for-sale is reported at the lower of the asset/asset group's carrying amount or fair value, less cost to sell. No impairment charges for property, plant and equipment were recognized during the years presented, except as disclosed in Note 25, “Asset Write-Downs" in Item 8 - "Financial Statements and Supplementary Data."
Goodwill and Indefinite-Lived Intangibles:
Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested annually for impairment, or when circumstances indicate that a possible impairment may exist. In general, when the carrying value of these assets exceeds the implied fair value, an impairment loss must be recognized. A significant decline in cash flows generated from these assets may result in a write-down of the carrying values of the related assets. For purposes of testing goodwill for impairment, the Company uses a combination of valuation techniques, including discounted cash flows and other market indicators. A number of assumptions and estimates are involved in the application of the discounted cash flow model to forecast operating cash flows, including sales volumes and pricing, costs to produce, tax rates, capital spending, working capital changes, and discount rates. The Company estimates future cash flows using volume and pricing assumptions based largely on existing customer relationships and contracts, and operating cost assumptions management believes are reasonable based on historical performance and projected future performance as reflected in its most recent operating plans and projections. The discount rates used in the discounted cash flow analyses are developed with the assistance of valuation experts and management believes the discount rates appropriately reflect the risks associated with the Company's operating cash flows. With respect to goodwill, in order to further validate the reasonableness of the estimated fair values of the reporting units as of the valuation date, a reconciliation of the aggregate fair values of all reporting units to market capitalization is performed using a reasonable control premium.
The Company performed its annual quantitative impairment review of goodwill and indefinite-lived intangible assets in the second quarter of fiscal 2025 (January 1, 2025) and determined that the estimated fair values for all goodwill reporting units and indefinite-lived intangible assets exceeded their carrying values, and, therefore, no impairment charges were necessary at such time.
The Company's Surfaces and Engineering reporting unit experienced declines during the fourth quarter of fiscal 2024, primarily related to the Company's recently acquired (August 2022) Olbrich GmbH business. The Company determined that a triggering event occurred during the fourth quarter of fiscal 2024, resulting in a re-evaluation of the goodwill for the Surfaces and Engineering reporting unit as of September 1, 2024. As a result of this interim assessment, the Company recorded a goodwill write-down totaling $16.7 million during the fiscal 2024 fourth quarter, reducing the amount of goodwill for this reporting unit to zero. The fair value for the reporting unit was determined using level 3 inputs (including estimates of revenue growth, EBITDA contribution and the discount rates) and the income approach valuation methodology which utilizes estimated discounted cash flows of the reporting unit.
Income Taxes:
Deferred tax assets and liabilities are provided for the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Deferred income taxes have not been provided on undistributed earnings of foreign subsidiaries since they have either been previously taxed, or are exempt from tax, or such earnings are considered to be reinvested indefinitely in foreign operations.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
Refer to Note 3, "Accounting Pronouncements" in Item 8 - "Financial Statements and Supplementary Data," for further details on recently issued accounting pronouncements.
