Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.20.2
Segment Information
 9 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
Segment Information Segment Information
The Company manages its businesses under three segments: SGK Brand Solutions, Memorialization and Industrial Technologies. The SGK Brand Solutions segment consists of brand management, pre-media services, printing plates and cylinders, engineered products, imaging services, digital asset management, merchandising display systems, and marketing and design services primarily for the consumer goods and retail industries.  The Memorialization segment consists primarily of bronze and granite memorials and other memorialization products, caskets, and cremation and incineration equipment primarily for the cemetery and funeral home industries.  The Industrial Technologies segment includes marking and coding equipment and consumables, industrial automation products and order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products.

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 costs, ERP integration costs, and strategic initiatives and other charges. This presentation is consistent with how the Company's chief operating decision maker (the “CODM”) evaluates the results of operations and makes strategic decisions about the business. For these reasons, the Company believes that adjusted EBITDA represents the most relevant measure of segment profit and loss.
Note 14.   Segment Information (continued)

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.
 
The following table sets forth information about the Company's segments, including a reconciliation of adjusted EBITDA to net income.
Three Months Ended
June 30,		 Nine Months Ended
June 30,
  2020 2019 2020 2019
Sales:  
SGK Brand Solutions $ 165,780    $ 181,930    $ 513,515    $ 557,881   
Memorialization 162,118    158,217    478,342    474,279   
Industrial Technologies 31,524    39,147    107,309    112,711   
Consolidated Sales $ 359,422    $ 379,294    $ 1,099,166    $ 1,144,871   

Adjusted EBITDA:        
SGK Brand Solutions $ 20,846    $ 29,891    $ 61,808    $ 86,612   
Memorialization 37,734    36,075    103,020    101,361   
Industrial Technologies 4,679    7,278    15,205    15,665   
Corporate and Non-Operating (13,862)   (14,290)   (41,009)   (42,015)  
Total Adjusted EBITDA $ 49,397    $ 58,954    $ 139,024    $ 161,623   
Acquisition costs (1)**
(304)   (2,980)   (2,912)   (8,386)  
ERP integration costs (2)**
(745)   (2,355)   (2,160)   (6,337)  
Strategic initiatives and other charges (3)**
(5,570)   (1,037)   (25,040)   (3,149)  
Gain (loss) on sale of ownership interests in a subsidiary (4)
11,208    —    11,208    (4,465)  
Legal matter reserve (5)
(10,566)   —    (10,566)   —   
Non-recurring / incremental COVID-19 costs (6)
(1,871)   —    (2,534)   —   
Goodwill write-down (7)
—    —    (90,408)   —   
Joint Venture depreciation, amortization, interest expense and other charges (8)
(2,473)   (866)   (4,732)   (866)  
Stock-based compensation (2,539)   (1,156)   (7,078)   (6,169)  
Non-service pension and postretirement expense (9)
(2,227)   (951)   (6,682)   (2,852)  
Depreciation and amortization *
(30,168)   (20,483)   (88,418)   (60,759)  
Interest expense (8,082)   (10,508)   (26,935)   (31,068)  
Net loss attributable to noncontrolling interests (420)   (205)   (491)   (541)  
(Loss) income before income taxes (4,360)   18,413    (117,724)   37,031   
Income tax benefit (provision) 6,209    (3,989)   22,672    (4,429)  
Net income (loss) $ 1,849    $ 14,424    $ (95,052)   $ 32,602   
Note 14.   Segment Information (continued)

(1) Includes certain non-recurring costs associated with recent acquisition activities.
(2) Represents costs associated with global ERP system integration efforts.
(3) Includes certain non-recurring costs associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels. 
(4) Represents a gain (loss) on the sale of ownership interests in a subsidiary within the Memorialization segment.
(5) Represents a reserve established for a legal matter involving a letter of credit for a customer in Saudi Arabia within the Memorialization segment (see Note 7, "Debt").
(6) Includes certain non-recurring direct incremental costs (such as costs for purchases of computer peripherals and devices to facilitate working-from-home, additional personal protective equipment and cleaning supplies and services, etc.) incurred in response to COVID-19. This amount does not include the impact of any lost sales or underutilization due to COVID-19.
(7) Represents the goodwill write-down for two reporting units within the SGK Brand Solutions segment (see Note 16, "Goodwill and Other Intangible Assets").
(8) Represents the Company's portion of depreciation, intangible amortization, interest expense, and other non-recurring charges incurred by non-consolidated subsidiaries accounted for as equity-method investments within the Memorialization segment.
(9) Non-service pension and postretirement expense includes interest cost, expected return on plan assets and amortization of actuarial 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. 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 $21,833 and $12,757 for the SGK Brand Solutions segment, $5,549 and $4,840 for the Memorialization segment, $1,450 and $1,545 for the Industrial Technologies segment, and $1,336 and $1,341 for Corporate and Non-Operating, for the three months ended June 30, 2020 and 2019, respectively. Depreciation and amortization was $65,274 and $37,364 for the SGK Brand Solutions segment, $15,024 and $14,898 for the Memorialization segment, $4,320 and $4,630 for the Industrial Technologies segment, and $3,800 and $3,867 for Corporate and Non-Operating, for the nine months ended June 30, 2020 and 2019, respectively.
** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $1,794 and $449 for the SGK Brand Solutions segment and $4,128 and $5,923 for Corporate and Non-Operating, for the three months ended June 30, 2020 and 2019, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $697 for the Memorialization segment for the three months ended June 30, 2020. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $9,058 and $3,858 for the SGK Brand Solutions segment and $19,032 and $14,014 for Corporate and Non-Operating, for the nine months ended June 30, 2020 and 2019, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $1,754 for the Memorialization segment and $268 for the Industrial Technologies segment, for the nine months ended June 30, 2020.