Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.22.1
Segment Information
 6 Months Ended
Mar. 31, 2022
Segment Reporting [Abstract]  
Segment Information Segment InformationThe Company manages its businesses under three segments: SGK Brand Solutions, Memorialization and Industrial Technologies. Effective in the first quarter of fiscal 2022, the Company transferred its surfaces and engineered products businesses from the SGK Brand Solutions segment to the Industrial Technologies segment. This business segment change is consistent with internal management structure and reporting changes effective for fiscal 2022. Prior periods were revised to reflect retrospective application of this segment realignment. The SGK 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. 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 the design, manufacturing, service and distribution of high-tech custom energy storage, marking, coding and industrial automation technologies and solutions, and order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products.
Note 13.   Segment Information (continued)

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.

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
March 31,		 Six Months Ended
March 31,
  2022 2021 2022 2021
Sales:  
SGK Brand Solutions $ 146,820  $ 146,415  $ 300,362  $ 296,374 
Memorialization 220,004  205,457  430,710  388,731 
Industrial Technologies 78,154  65,282  152,485  118,706 
Consolidated Sales $ 444,978  $ 417,154  $ 883,557  $ 803,811 

Adjusted EBITDA:        
SGK Brand Solutions $ 13,462  $ 18,364  $ 28,876  $ 40,197 
Memorialization 42,944  51,606  86,314  95,678 
Industrial Technologies 14,385  8,277  21,568  11,273 
Corporate and Non-Operating (15,601) (17,307) (28,235) (31,445)
Total Adjusted EBITDA $ 55,190  $ 60,940  $ 108,523  $ 115,703 
Strategic initiatives and other charges (1)**
(6,750) (5,093) (10,573) (16,285)
Non-recurring / incremental coronavirus disease 2019 ("COVID-19") costs (2)***
(1,213) (1,572) (1,903) (2,696)
Defined benefit plan termination related items (3)
79  —  (347) — 
Asset write-downs (4)
(10,486) —  (10,486) — 
Stock-based compensation (5,222) (4,001) (8,931) (7,247)
Non-service pension and postretirement expense (5)
(242) (1,901) (31,350) (3,801)
Depreciation and amortization *
(23,724) (35,179) (57,225) (62,530)
Interest expense (6,260) (7,233) (12,767) (14,961)
Net (loss) income attributable to noncontrolling interests (31) 163  (38) (71)
Income (loss) before income taxes 1,341  6,124  (25,097) 8,112 
Income tax (provision) benefit (3,277) (972) 3,351  (4,952)
Net loss $ (1,936) $ 5,152  $ (21,746) $ 3,160 
Note 13.   Segment Information (continued)
(1) Includes certain non-recurring items associated with recent acquisition activities, costs associated with global ERP system integration efforts, and certain non-recurring costs associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels.
(2) 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.
(3) Represents items associated with the termination of the Company's DB Plan, supplemental retirement plan and the defined benefit portion of the officers retirement restoration plan.
(4) Represents asset write-downs within the SGK Brand Solutions segment (see Note 15, "Asset Write-Downs").
(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 $14,060 and $25,261 for the SGK Brand Solutions segment, $5,803 and $5,709 for the Memorialization segment, $2,531 and $2,880 for the Industrial Technologies segment, and $1,330 and $1,329 for Corporate and Non-Operating, for the three months ended March 31, 2022 and 2021, respectively. Depreciation and amortization was $37,785 and $43,109 for the SGK Brand Solutions segment, $11,613 and $11,178 for the Memorialization segment, $5,184 and $5,620 for the Industrial Technologies segment, and $2,643 and $2,623 for Corporate and Non-Operating, for the six months ended March 31, 2022 and 2021, respectively.
** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $4,475 and $2,865 for the SGK Brand Solutions segment, charges of $516 and income of $335 for the Memorialization segment, charges of $161 and $126 for the Industrial Technologies segment, and $1,598 and $2,437 for Corporate and Non-Operating, for the three months ended March 31, 2022 and 2021, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $5,703 and $7,561 for the SGK Brand Solutions segment, $1,188 and $795 for the Memorialization segment, $193 and $2,785 for the Industrial Technologies segment, and $3,489 and $5,144 for Corporate and Non-Operating, for the six months ended March 31, 2022 and 2021, respectively.
*** Non-recurring/incremental COVID-19 costs were $170 and $297 for the SGK Brand Solutions segment, $579 and $1,240 for the Memorialization segment, $1 and $12 for the Industrial Technologies segment, and $463 and $23 for Corporate and Non-Operating, for the three months ended March 31, 2022 and 2021, respectively. Non-recurring/incremental COVID-19 costs were $390 and $706 for the SGK Brand Solutions segment, $1,043 and $1,890 for the Memorialization segment, $5 and $30 for the Industrial Technologies segment, and $465 and $70 for Corporate and Non-Operating, for the six months ended March 31, 2022 and 2021, respectively.