Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.21.2
Segment Information
 9 Months Ended
Jun. 30, 2021
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 (including energy solutions), 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 13.   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,
  2021 2020 2021 2020
Sales:  
SGK Brand Solutions $ 199,715  $ 165,780  $ 538,879  $ 513,515 
Memorialization 184,337  162,118  573,068  478,342 
Industrial Technologies 44,328  31,524  120,244  107,309 
Consolidated Sales $ 428,380  $ 359,422  $ 1,232,191  $ 1,099,166 

Adjusted EBITDA:        
SGK Brand Solutions $ 33,258  $ 20,846  $ 75,426  $ 61,808 
Memorialization 36,402  37,734  132,080  103,020 
Industrial Technologies 5,940  4,679  15,242  15,205 
Corporate and Non-Operating (15,585) (13,862) (47,030) (41,009)
Total Adjusted EBITDA $ 60,015  $ 49,397  $ 175,718  $ 139,024 
Acquisition related items (1)**
(398) (355) (38) (2,576)
ERP integration costs (2)**
(118) (745) (477) (2,160)
Strategic initiatives and other charges: (3)**
Workforce reductions and related costs (1,826) (776) (10,644) (4,425)
Other cost-reduction initiatives (4,871) (4,743) (12,339) (20,951)
Gain on sale of ownership interest in a subsidiary (4)
—  11,208  —  11,208 
Legal matter reserve (5)
—  (10,566) —  (10,566)
Non-recurring / incremental coronavirus disease 2019 ("COVID-19") costs (6)
(1,993) (1,871) (4,689) (2,534)
Goodwill write-down (7)
—  —  —  (90,408)
Joint Venture depreciation, amortization, interest expense and other charges (8)
—  (2,473) —  (4,732)
Stock-based compensation (5,713) (2,539) (12,960) (7,078)
Non-service pension and postretirement expense (9)
(1,929) (2,227) (5,730) (6,682)
Depreciation and amortization *
(35,389) (30,168) (97,919) (88,418)
Interest expense (6,748) (8,082) (21,709) (26,935)
Net income (loss) attributable to noncontrolling interests 11  (420) (60) (491)
Income (loss) before income taxes 1,041  (4,360) 9,153  (117,724)
Income tax benefit (provision) 2,325  6,209  (2,627) 22,672 
Net income (loss) $ 3,366  $ 1,849  $ 6,526  $ (95,052)
Note 13.   Segment Information (continued)
(1) Includes certain non-recurring items 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 on the sale of an ownership interest 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.
(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.
(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, amortization of actuarial gains and losses, and curtailment 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 are excluded from adjusted EBITDA since they generally result from certain non-recurring events, such as plan amendments to modify future benefits. 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 $26,813 and $21,833 for the SGK Brand Solutions segment, $5,838 and $5,549 for the Memorialization segment, $1,399 and $1,450 for the Industrial Technologies segment, and $1,339 and $1,336 for Corporate and Non-Operating, for the three months ended June 30, 2021 and 2020, respectively. Depreciation and amortization was $72,700 and $65,274 for the SGK Brand Solutions segment, $17,016 and $15,024 for the Memorialization segment, $4,241 and $4,320 for the Industrial Technologies segment, and $3,962 and $3,800 for Corporate and Non-Operating, for the nine months ended June 30, 2021 and 2020, respectively.
** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $3,790 and $1,794 for the SGK Brand Solutions segment, $484 and $697 for the Memorialization segment, and $2,939 and $4,128 for Corporate and Non-Operating, for the three months ended June 30, 2021 and 2020, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $14,135 and $9,058 for the SGK Brand Solutions segment, $1,279 and $1,754 for the Memorialization segment, and $8,084 and $19,032 for Corporate and Non-Operating, for the nine months ended June 30, 2021 and 2020, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $268 for the Industrial Technologies segment, for the nine months ended June 30, 2020.