MATW - Earnings call transcript Q4 2019 | Matthews International Corporation

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Operator

Greetings and welcome to the Matthews International Corporation Fourth Quarter Fiscal 2019 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. of for Director International Senior Wilson, Corporate Matthews Development Corporation. Bill you. Thank

begin. You may

Bill Wilson

Bill us morning Thank and Chief XXXX Officer. fourth is International you, Chief earnings and everyone This welcome Steve Melissa. Financial Good Executive and Officer; to Nicola, Bartolacci, are today Joe the and Matthews call. Wilson President with our quarter

night. on of that Presentation the Investors and financial release we I start, earnings the can call would Before our Investors in were for like our posted also our section in www.matw.com, to last the remind you accessed website, disclosures be website. section

a SEC. that other to connection the with the filings could Form results to cause As Act those Private this pursuant provisions statements on XX-K, Harbor and Reform made the the today in of company's being any forth reminder, from are set Safe Securities company's the differ forward-looking Factors discussion discussed report XXXX. in annual periodic Litigation are of with

be located metrics In connection In reconciliation and you today's disclaimer metrics. these we also our read and consider please tables any website. materials carefully included non-GAAP forward-looking and information, read to will presentation non-GAAP with statements disclosure addition, on the you our as encourage discussing financial in financial

over I'll turn now Steve. And the to call

Steven Nicola

Thank to you, turn Bill. Good slide four. morning. Please

our million year, XXXX year this ago. fiscal the brand business and for in U.S. the of client the sales loss company $XXX quarters in significant the in the of quarter, compared account fourth unfavorable changes foreign currency of fourth to was the year. exchange a rates, For $XXX Consistent by quarter significantly fiscal affected our reported early comparability consolidated million sales previous with consolidated a

significant by were for the segment. projects sales in several addition, quarter also our Industrial Technologies in In impacted current delays

quarter private-label impacted current the segment in Memorialization market favorably sales consolidated brand and were the higher by growth for sales. sales However,

income compared goodwill a the share of for $X.XX current non-GAAP from basis, loss per of The share loss quarter a a current noncash last On year. write-down. recorded to for the $X.XX resulted the company quarter per

quarter, strategic initiated structure the a we following SGK of segment. Solutions commercial third of our As operations, announced several the including Brand and operational within its company the review

review and the expected the to operating noncash the the segment impact related of future Imaging within Brand on approximately projections, goodwill structure valuation and company the a of Solutions on this million. $XX Graphics recorded reassessed reporting unit write-down of SGK Based related

were in primarily quarter income $X.XX $X.X a XXXX On consolidated for decrease fourth current to per the quarter. earnings and reflected compared the lower sales non-GAAP decline The year. adjusted fiscal the operating basis, share last for

Please of impact five. compared account sales and year-to-date turn slide the last billion to consolidated $X.XX billion sales unfavorably million. headwinds by an currency significant basis, affected brand year. to estimated $XX $X.X loss previously were our The reported a On client combined

and and However, primarily despite U.K., segment fiscal current in year, of year's acquisition partial particularly increase XXXX last memorial of for cremation sales an year, an last reflecting sales sales, Memorialization year decline Granite estimated in higher the the & higher the than U.S. were incineration Bronze. the deaths product in for equipment Star casketed benefit

of were In offset primarily business fiscal Warehouse for market in were and the conditions increases addition, challenging year the the brand segment. the grow. automation year-to-date These brand label end higher basis, delays year. Technologies sales brand to private current U.S. fiscal on Industrial continued year European a increased current and sales by project the impact for

current share from in $XX of loss of $X.XX share reported a quarter. company year to the or approximately for write-down The last of the for income share resulted year basis, compared the loss GAAP the per a $X.XX XX, September fiscal per million ended On per XXXX the $X.XX goodwill fourth year.

following Act. the balances, This year $X.XX the new of per estimated by and impacted last Jobs deferred XXXX. for prior $X.XX significant recorded was Cuts the the tax net repatriation an benefit significant than the impact from amortization transition higher comparability was fiscal tax. benefit income fiscal was a Tax tax share reduction per $XX.X factors; The in in year share; quarter intangible share U.S. company's earnings company's had XXXX per million the first, or law tax expense year-over-year second, addition, first of immediate fiscal In the

segment, quarter. within increased the compared rates trade interest In XXXX expense year And segment's with year, primarily accelerated December of operating part $X.X and fiscal our of XXXX commercial during basis, our bond connection offer. to Solutions full fourth third, share we amortization the reflecting year-to-date SGK $X.XX the changes the names million in to structure Brand on certain a average last per or interest higher due the

adjusted For resulted year per consolidated last a related adjusted in million EBITDA. sales freight fiscal decline costs. for $X.XX was EBITDA to and compared from and reflecting XX, The year, decline quarter XXXX the were $X.XX ended $XX lower XXXX, on sales and non-GAAP September ago. Adjusted principally earnings $XX compared fourth million to share material the year the impact primarily higher

the performance-related reflected for acquisition, ended synergy $XXX consolidated sales September of company's material compared higher the costs. and impacts which were fiscal XXXX, million XX, year containment costs, ongoing the was to compensation by $XXX lower offset million the last EBITDA initiatives, The impact decrease cost and of partially realization and year. Adjusted approximately freight primarily lower including

million compared reflects $XXX,XXX fiscal quarter for XXXX XXXX. fourth to value of fiscal for certain changes in benefit XXXX, the Investment held a XX, year for plans. the company's ago. income to was of the the year $X.X income investments $X.X ended September trust income in Investment primarily compared for $XXX,XXX the Investment was million

was current interest expense to the Interest a the for last XXXX reflecting for year decline in fourth to relative quarter a ago, average $XX.X compared quarter fourth fiscal rates $X.X quarter the million year. million

effective of expense Interest $XXX year XXXX, for debt basis, shifted to year bond under euro-based, on dollar-based its due During ended year, credit the approximately September lowering quarter, cost. million average compared the the December last part XXXX XXXX revolving to XX, from $XX.X higher facility third interest $XX fiscal a interest the offering. million company in reflecting full million approximated primarily rates to the

income represented and for pretax quarter of same $X.X for for year and a decrease net pretax Other compared ended million $X.X XX, the $XXX,XXX quarter year. a in million ended September decrease year. million of in income to Other deductions XXXX the of last income September XXXX to $X.X represented income deductions net the compared income XX, last

include pension of the portion income deductions Other costs. nonservice and

$X.X of last year. million year to was pension September For $X.X XXXX, million XX, ended compared nonservice the the portion cost

income year-to-date In included gains and million on investment addition, fourth loss current for Fiscal sale quarter year a assets. cost-method the the on the of $X.X XXXX million cost-method other amounts a related investments. certain of included and $X.X

of expense XXXX, XXXX Consolidated of September a compared last compared income ended for for the September taxes expense $XXX,XXX benefit of $X.X months $X.X for taxes million last to XX, was was the income XX, million year. year $X.X ended million same benefit quarter of the to three year. Consolidated a

significant were current which tax impacted Fiscal the fiscal reflected for recorded tax income fiscal Income a tax substantially transition U.S. of goodwill company's first is repatriation year balances, and significant a by the quarter result Cuts purposes. benefit in non-deductible reduction a taxes net of write-down, deferred XXXX for of Act. the the Jobs as impact law new in The an tax. and had the immediate estimated Tax significantly quarter the

fiscal XX% Excluding impact effective in its estimated these rate significant the XXXX. periods, approximately consolidated for and impacts, both at XX% discrete fiscal to items XXXX other of in the company compared

of our million SGK Please fiscal the turn to Brand review year ago. quarter segment a $XXX slide $XXX results. to begin were compared for segment, XXXX million a sales six Solutions to fourth In the

unfavorable XX, ended $XXX driven segment year. to the were previously Solutions disclosed September year mainly brand XXXX, account declines $XXX were SGK million for the the rate currency The sales and million client changes loss. compared last by For Brand

last in loss by million the an had currency impacted client to and $XX rates year, unfavorably impact million. Compared account $XX changes approximately foreign sales of unfavorable exchange

quarter, private the unfavorably XXXX quarter conditions the the The reported brand addition, European sales in for in XXXX and label year. the impacted segment fiscal for fourth segment which fourth sales higher later year. market fiscal the current market In fiscal softened

current for million the EBITDA the acquisition results in of year-to-date Converting the Solutions acquired reflected quarter of Brand which a fourth and the Systems, impact was addition, adjusted was to XXXX SGK ago. Frost $XX.X $XX.X quarter November compared In segment XXXX. Fiscal million year

compensation performance-based to The unfavorable year the offset EBITDA adjusted $XXX.X million XXXX $XXX.X September a the year-over-year currency lower year. million -- by product basis primarily Europe on reflected mix partially compared The shift million year last unfavorable year-to-date last and in sales impact $XXX.X XX, segment's of lower changes was and changes ended for costs.

were slide increased to for compared the sales Memorialization XXXX fourth $XXX $XXX September for year approximately million segment year million were fiscal a for XX, ago. turn sales year to products current million and year XXXX to compared of $XXX caskets a ago. approximately Sales a with Please $XXX ended the Memorialization memorial the million quarter compared seven. segment quarter ago.

year-to-date sales fiscal and lower reported a For the basis, sales deaths. segment reflecting estimated year, incineration U.S. casketed products equipment. on and an in the were decline cremation Caskets increased memorial of

addition, acquisition the which of Bronze, In & XXXX. was the the acquired February results Granite included Star of year-to-date current benefit in

in impacted unfavorable segment sales segment had last the and on divestiture same year by the fiscal impact fiscal also a Memorialization of an rates interest $XXX,XXX million, and with business currency first and quarter quarter $X the in pet fourth and changes cremation compared XXXX quarter, Fiscal year. for the during the year-to-date sales of period XXXX respectively controlling the were

fiscal the EBITDA last $XX.X ended segment of compared costs. year adjusted was to ago. $XXX.X million for quarter XX, a year. impact was and Memorialization higher XXXX EBITDA The year material $XXX.X million segment the freight $XX.X Memorialization fourth adjusted XXXX current periods to reflected primarily September million year the million compared for

declines basis, the controlling interest decline on and of the & Star on a casket initiatives, business the offset by year-to-date U.S. The segment's divestiture partially cost Granite the of basis, reduction deaths These pet and casketed including acquisition in year-to-date a sales. Bronze. cremation in on synergies were acquisition a

Please $XXX.X September the Technologies Industrial ago. to slide were $XXX.X XXXX, Sales turn $XX.X for year were XX, $XX.X segment a the to ended the September to Industrial compared XX, year for million year. million compared last segment the Sales eight. for million XXXX Technologies for quarter ended million

fourth partially which identification, last unfavorably offset the warehouse quarter several decline of and by automation for with from attributable for partly to resulted the lower year products from The orders. delays identification sales. impacted product sales, technology customers significant in primarily quarter by were sales increase delays applied the lower current these were year an segment Compared the

fiscal year had million, foreign compared year. respectively $X.X $X.X was fiscal a in the Technologies Changes Industrial for current $X.X to rates million and last and sales the currency ago. for compared $XXX,XXX segment quarter of unfavorable quarter EBITDA year with on fourth segment's Adjusted the million XXXX impacts

for Adjusted the year primarily adjusted EBITDA year-to-date in change. September for EBITDA Industrial million was the segment reflected million The for quarter $XX.X the $XX.X the ago. XX, a the segment's year Technologies with sales compared declines ended periods XXXX and

In for costs the segment's addition, development period. were the product higher project related year-to-date to

for from Please compared fiscal year activities turn operating a $XX.X to ago. million was fourth $XX.X slide XXXX to quarter nine. Cash million flow the

million ended declines XX, the adjusted September and lower reflected respective compared primarily from quarter flow year-to-date $XXX.X of operating was for the year These impact to million. XXXX, $XXX.X the EBITDA period. activities For cash

$XX representing current including the at a debt At current the a reduction the September for debt, XXXX. XX, XX, representing long-term million, portion, reduction fiscal At XXXX, million, September of million. XX, from year approximated balance was $XX outstanding company's XXXX, $XXX September $XXX approximately million of consolidated

outstanding September Approximately XX.X were XX, at million shares XXXX.

approximately repurchase During September shares fiscal under quarter, XXX,XXX remaining fourth the share XX, purchased the XXX,XXX approximately XXX,XXX approximately the under year-to-date. we repurchase company have XXXX, authorization. program share current and the XXXX shares shares At

to traded Board stock, dividend company's declared share a dividend a the week XXXX. November in of the company's Finally, stockholders of since last publicly in is company payable XXXX. representing XXXX, increase on $X.XX X, XX, record becoming the per The December the common dividend annual XXth

review comment With company's now and will this financial the Joe operations. the concludes that, on

Joseph Bartolacci

you, Thank Good Steve. morning.

due Our of are short up to of the but quarter, control, our fiscal shortfall. our we a expected year to We factors expectations. make had very unable outside fell strong fourth

quarter of continued freight brand the loss are aware, commodity -- to the during the impact account face we increased As a significant and and of costs. you

us prevented specifically pushed Technologies in automation orders challenges from significant several our business But and our into product goals, Industrial our both other off segment, our XXXX. achieving identification businesses in fiscal warehouse were

waste-to-energy significant release relative project quarter incineration several the and Memorialization orders to delays equipment expectations. of addition, in cremation In impacted a our our results fourth

from pluses had some significantly close. -- the a shift our each have a during we our tobacco which and customers guidance general, usually in with lower estimates Finally, business. have results, wins and Historically, some European quarter relatively estimates, reflects quarter brand a surfaces our of significant our enter the have orders products potential losses yielded of we we margin to significant In been in drop portion with our potential will what minuses, and best which deliver. and impacted

however, have Rarely, the strategies. executing and of businesses none had remain our situations quarter. our are issues, strong wins during we expected Despite where we these on significant are realized our

demographic the said we branch business have efficiency related out example, For areas, that to memorialization and face. long believe into which our we mitigate operating we continued its trends will improve

positive Products business, business our our We our environmental of deferral in the business, despite Bronze revenue quarter saw trends business, our that This granite strategy Home several projects. solutions reflects Funeral well. and

results benefit should Our U.K., of the quarter another in commodity costs of however, years business. significant to second freight we we which as believe continued the project and XXXX subsided can associated be recently the to commodity challenged come. half waste-to-energy EBITDA the for From this in first a the have landed well segment perspective, and the ramp-up positive by and waste-to-energy in with costs many be pressures as

the U.S. outside U.K. energy we America creating Our the of well. are waste Latin are efforts in market work interest in as quoting the and as

CPG, our where saw market, we North we together. business, businesses the label when the for In American in our quarter modest consider growth improving and conditions private saw merchandising you brand

a too of a this our historically is declines but innovate to is saw Several and up, our off low launches. begun XXXX. clients to have in call to start some of trend, we early It new revenue largest SKU good of

accounts our that label have focused private new often We in market. Equator, label private the in services having success adding business global significant was spoken to of on retailers, the

set efforts in area continue the results wins strong quarter, to for strong pipeline. this during another up are they Our very show positive XXXX with and and

customers saw and quarter. in brand largest business, the The business our included Cylinders, spending difficult tobacco significantly as a our Engineering quarter a Surfaces curtailed segment, during

In addition, attribute order for economic technical we and rate the the priced cylinders higher European slowed, margin condition. to higher which weaker

to the to of normal order but latter for these the not rate shipped. quarter, seen products have We returned and time produced part in be the in

the brand As business, to we battery where materials, a devices, laminated lithium-ion nonwoven like past, equipment I stated in flooring seeing markets particularly are manufacturing tissues, our production energy cylinder opportunities gravure extend significant including in business, use have Engineered again, Solutions part and storage expertise into the our production. of for we

other well going are the Specifically, report energy the the interest, storage industry for drawing to giving order engineered solutions, significant a XXXX. proud in good our is we industry and for auto as know-how backlog considerable into a strong unique us orders as

successful, if to significant growth. contributor our future business that can every expectation have this a We be

substantially we our revenue base to have we better our with now ERP an initiative investment kicked our capitalize noted off we've aligning that in on the completed by cost have levels. As past, our implementation,

We business, on facilitated initiative expect reduce back-office functions ERP. costs also back of brand by centralize and we benefit office this our automation capitalize more but to our our to as the the overall

rate run of over an within We of savings expect the annual to initiative deliver million next couple this years. $XX

automation had pushed from into warehouse business of our our customers. above, several discussed XXXX As projects get significant

strong have if -- As had expected. were could released as but a significantly had outperformed business result, the could have year, this a orders a

successfully fourth are contribute quarter. new significantly the accounts, which Industrial As expected product the identification for several of segment, to landed to has the balance

several to pushed accounts slower control. with in in ramp-up than The group large-scale in those often were into market several of not timing and CPG expand is accounts installation our expected orders off Unfortunately, XXXX. the but was continues successfully into installations,

development remain which the With The to with process we confident the revolve new We about in pre-engine delayed products believe issues. through launch regard coming have to segment, remain you issues we as process work and for hope our investment to mostly our is speak will they through we of continue production early to around to our in strategy. some and more resolvable appear Unfortunately, Technologies our our Industrial quarters. produced. full the

the at our remain XXXX, and for growth. we As look we businesses opportunities about positive

Our -- several in are our making guidance, are we assumptions critical. that

expect we foreign rates stable. First, currency remain to exchange

driven that the We had by also the delayed XXXX. expect segments, our modest largely quarter Technologies -- in sales Memorialization orders and we in expected of the fourth our delays growth

large above. business order business the Finally, we equipment referenced expect have storage sales modest growth brand to that by energy our brand also driven -- I

Given XXXX mid-single-digits. will non-GAAP our that grow EPS is in for these fiscal and EBITDA expectations, adjusted our guidance the

you difficult. remind performance delayed expected our projects market to want although operating efforts, the and mid-single-digit than that current might the I you labor from have better increasingly is

a return a a compensation. employees most year awards reflects earned guidance incentive when As result, our fiscal bonus to after no XXXX normal

it With open let's up questions. for that,

Operator

conducting this a Instructions] question-and-answer we'll At you. Thank be session. [Operator time,

line Jason Review. Our first your from Please question of comes Great question. with with the Lakes proceed Rodgers

Jason Rodgers

good Yes, morning.

Joseph Bartolacci

Good morning.

Steven Nicola

Jason. morning Good

Jason Rodgers

delayed do that realize Any you quarter? most and talked those quantify orders expect equipment. about And cremation and first way incineration the for in in The of industrial to the you to those? then

Joseph Bartolacci

orders significant. Well, are the

of occurred in on fourth $XXX,XXX they it the some $X $X.X $X side, million put mean million identification not anywhere the product were the our had equipment of or installations million, delayed quarter. that the I million in of that We which the Let's have to all was in to range at automation that $X to from way. $XXX,XXX cremation range. some would

will that we orders have delivered matter The fact of that are received orders XXXX. the in they be is and

for started warehouse Christmas the business, When we during start orders February. people's in cannot in those won't of warehouses example, quarter, you the season, so we second now first the delivered until January, aren't quarter. in early that beginning even of Some be the

in will XXXX, in So, not quarter. the necessarily first but it be

Jason Rodgers

wonder term, waste as and then I about energy as fiscal And talk longer if market how more then XXXX expectations in see you? revenues the you are far do whole developing market, for what could your you that and

Joseph Bartolacci

a we This is on got early U.K., -- around that's in to greatly the expanding look of from world. cruise some for to we other We the is you into very, a call operator where a something these ship had landing just are these marketplace. an but they islands facilities example, have the very, So, zones day the call cruise ships. very give for going at

So, Each the million. to beginning. go way, time. these grow would And it anywhere be business is the our one why of market can $X over these material say, installations business, our of potential million to is Memorialization continue put for we will material, our part let's from $X to topline and that to

Jason Rodgers

the And competitors is market? is about? to that a you're that it's just in new developing and there aren't maybe such that talk anything market Or doing early it too

Joseph Bartolacci

very There big very of is I size. mean guys our sites. few -- plenty for there there very, produce incineration municipal very, are equipments of players that very, are

anybody just Ours adept smaller generate -- facilities, generally been a towns, be. cremation really may lot our it operate more somewhere has around of not locations, extension They're a smaller, in equipment smaller there. XX,XXX There just business, It's year. an smaller bigger. for whatever tons

Jason Rodgers

you. All right. Thank

Joseph Bartolacci

Sure.

Operator

Thank you.

Dan proceed your with question. the with Moore Please of question next comes Our Securities. CJS from line

Daniel Moore

Good morning.

Joseph Bartolacci

Dan. morning Good

Daniel Moore

million annual achieve. Steve. you cost to of savings projected Can rate and fiscal achieve and to Joe restructuring the as then bucket cost kind exit XXXX maybe help expect from or you $XX overall run the Thanks we frame

there in called QX. I out $XX think was million

that a leave it and Thanks. So, then I'll at follow-up.

Steven Nicola

going amount would as there of was project there come. at project Dan, fourth had were But or yes, to is in the expect, to least the of -- right. Yes. you're through still fair quarter. we We you start cost the achieve the Sure. a as more

significant XXXX. -- benefit we of be realized, of as the particularly say, fact, that realized amount the There not will fiscal implementation I In in stages it. should a get to

would about talk $XX run that run expect the we when at And we rate, rate, end annual I of say, a be fiscal toward XXXX. million to

putting a I'm end in come of if obviously, it, maybe really in, a XXXX $X run But beyond. of million by and a on -- the starts fiscal number to just So, benefit rate the XXXX. lot

Daniel Moore

of corporate-- Timing very bucketing it's whether those, personnel, in is helpful just terms

Joseph Bartolacci

So, you to just give frame. a of kind

kind it, of we is As parts. see this Dan, two

we've to come acquisitions. we million to a the out know, back functions we've it's as you integrate balance It's of those this $XX of into into of office through business about. a is off, businesses $XX The $XX talked of globally million consolidate First there's We And sites. grown time lot $XX to million SGK. back-office three to function. going worth think million as centralized

the an it's into capitalizing we and businesses done what And operate work that able to sites level move currently more load have connect really more offshore from at. world on and to we ERP be system around these

our suggest parts So, not, it's won't move and it's certain currently continuing to but a large a are heavy taking business doing it lift, in I is it sites. we of that the portion of offshore to world

Daniel Moore

Helpful. Perfect.

in Joe, got gave are in areas. actual orders the head terms color, the We've tobacco, switching of you're more in in Brand Any specificity, Solutions. that some seeing fakes in other signs So, past. is orders -- improvement which gears, some you uptick seeing you of appreciated,

a for-- So, sense get trying to

Joseph Bartolacci

some-- had We've Yes.

Daniel Moore

level comfort. Your of

Joseph Bartolacci

here's Well, what know. we do

X on So, operate generally I mean out. that's something weeks we -- about

always quarters, a last years backlog our launches. SKU to some So, I several have information over gives three launches. we at over would -- kind the we quarters the the of last And But look historically that you, as we last as like. are low XX back not significant would us actually, though subscribed is SKU tell of new

a below XX% in trending basis. run are, on cases, about We rate some at

expect will we turn normal. to that So,

more time. business the cost will to take reduce think of sign As happen it's significant. our be in happen this structure, ERP, ultimately that to going We a a that, don't over our but be it'll drop-through to normal, will I think for turns advantage we that as quarter, good continue

Daniel Moore

and in that relative in the that over queue the of terms jump to XXXX, amount Okay. a in but spend good back years, just confidence more new talk then on what I'll for product expectations delays spent Thanks. And achieving generally, had product XXXX? one products. just return investment, the few fiscal we've are your XXXX in given development, your of some maybe, development about And in last try

Joseph Bartolacci

Well, simple let's to a it this I This real participate today is look don't you. billion what for put mean we great is market any extent. we $X.X at. in

we we product So, spent in somewhere the has-- the that Steve we're -- million $XX developing, think range. The we opportunity

Steven Nicola

Cumulatively.

Joseph Bartolacci

in Cumulatively. Yes, not any year.

Daniel Moore

No indeed.

Joseph Bartolacci

But to million and we a those presented think it. rate we that opportunity But spent $XX is for of time about have the significant. over costs substantial recover of is period a return

So, as of as about getting product on the about we're rate the not shelf. the are concerned we returns

a here go in out it fail early the We and make want for and also field to mistake don't us. too have

right got we've now. tight had the production we're some -- starts we've So, It's fits on a process pretty on side. and some of

couple will, quarters. in have expect won't next the the you information works, we better that we solution remain of maybe for it if a be believe to several issue. the We return But the or months as confident

that thing that an facility, waste-to-energy R&D but opportunities you we as in mean, lot a project. we We items the also out space know, The the these that an see is call them. solution see don't that should we I on, is The own going storage these are patents R&D energy of project. Dan, should know-how -- and the other you

it's this results not of because we as significant, a yielded have getting out of and the market as things and We big out. frankly, like we other one opportunity of record lot don't that a there. have this track have the as But historically, stuff we're calling not a call

Daniel Moore

of overall just level the spend Steve? And embedded in then the guide,

Steven Nicola

me, again. say that Excuse Dan,

Daniel Moore

embedded that's of level spend guide, all. just EPS R&D The in mid-single-digit the year-over-year,

Steven Nicola

I'd about, to million $X million say, range. $X It's

Daniel Moore

Thank much. you very

Steven Nicola

problem. No

Operator

you. Thank

question next your from line of question. Jamie the Clement proceed Group. Research Buckingham with with comes Our Please

Jamie Clement

good Steve, Joe, morning.

Joseph Bartolacci

morning Good Jamie.

Steven Nicola

Good morning Jamie.

Jamie Clement

Hey.

little Following up a Dan's question. on bit

whether adjusted you residual also residual be? What to we to free or EBITDA buckets but just think ultimate stuff cost As try at strategic cash to looking achieve those acquisition cost flow. just it's the in to cost, might do savings, the XXXX, other look cost integration cash those initiatives, bridge ERP fiscal

Joseph Bartolacci

It's related can million of to going to this. futuristic taking you to be into a residual would can and you call call going it. it with business whatever is has about call acquisition everything state, Most it, be severance to our do -- more achieve that $XX integration, you

system Today, we ERP. had these called after and this that acquisition integrated would ERP we going integrating when time. businesses, If an cost. got have them We we bought would at out back it have we're been as them

Jamie. So, that's how we look at it,

Jamie Clement

Okay.

think things? all-in, I that the all-in Is So, or XXXX. Steve, I -- maybe was in number right, those so $XX million $XX million, all

Steven Nicola

I what Jamie? you're guess achieve, trying I'm not sure to

Jamie Clement

year, acquisition I like -- for at I'm So, just past I'm strategic Yes, cost, flow million. I cash free next year, think, ERP $X.X and initiatives were -- other right? adjusted the looking as this integration, $X.X $XX.X think million; about bridging million; EBITDA to charges, your

think So, so. what million, I million or that's $XX $XX

Steven Nicola

million. those pretax items a Yes, actually, $XX basis, on about would be

Jamie Clement

Okay.

-- So, it. those -- right. it. right, got it, Got got I suppose

Okay.

is a you're pretax on So, $XX million the basis? the and -- saying

Steven Nicola

Correct.

Joseph Bartolacci

Correct.

Jamie Clement

Okay. Cool.

Okay.

very Thank capital And spending? you then much. Okay.

Joseph Bartolacci

XXs. Low

Steven Nicola

year, our a capital I than average. lower expect Yes, -- was our this average. it's to it spending, bit be it little about

So, call it, low XXs.

Joseph Bartolacci

The one support bump new in a of we our customers. year. thing facility Jamie I might tell be that'll in little building bit would in numbers you a are Indonesia in this as tobacco we our have That's there -- is a to

Jamie Clement

mentioned now that Joe, tobacco. And then, you

that Are and for comfort bit over business got little enough in you about think, potentially in You there couple you a improvement Europe. about headwinds stabilization even Obviously, macro more tobacco comfortable Brand with, you in like outlook spoke, for some a of sales in the quarters? example, I broader more Europe. reasonably can your call significant

Joseph Bartolacci

more year we mean in customer we where way some have So, second expect unexpectedly. I see that at -- we visibility be to end or I are, finished I of on. look do so. quarter don't the given some calendar would quarter see this the customers is some expect on into change that to that order we to -- would start one intake the fourth -- quarter have that's to realized I by first it the the that the we visibility start because

Jamie Clement

Yes, I guess, Joe, what I'm at-- getting

Joseph Bartolacci

just I know don't when.

Jamie Clement

backdrop Yes. a a tobacco No, kind that's at reason is more I'm the despite kind conceivably where situation I comfortable mean, feel -- over I unique there. of of why you getting dicey macro could is, what think, being

Joseph Bartolacci

well is -- about, storage significant us topline project large pretty mean a well as good as opportunity talked a I we that's as mean bottom-line. that I Well, the the as -- think project. that we energy I for and

So, on it's first-of-a-kind we've think some to it. we And it's got a but got legs. project, execute

Jamie Clement

Okay, your very for Terrific. much time. Thanks

Joseph Bartolacci

Jamie. Hi

Steven Nicola

Thanks Jamie.

Operator

you. [Operator Instructions] Thank

next with Nelson with proceed question. the comes line Please Austin from Our your question AIG. of

Austin Nelson

Hi. the question. Thanks for

the looking margins Just transportation the The at material costs. on this performance down higher and are EBITDA year. memorialization

for segment lows, get a all-time in expecting that falling assumes a Just you to trying near sense and that next given year, a growth the Are down steel what are that model come benefit quite just been has bit. in freight that mid-single-digit numbers EBITDA dramatically, or-- has

Joseph Bartolacci

Yes.

Austin Nelson

Yes? Okay.

Joseph Bartolacci

five of through the comments my benefit XXXX, excuse get of process to -- calendar next for I commodity saw our to that that bottom-line. the -- It'll believe, it second and costs. start year in off though, us, latter our of part to works a into towards saw it's me. our be third our Unfortunately so year. quarter we said drop fiscal our we inventory to system, to Austin, about our We a Yes. it mitigating us, six-month of

Austin Nelson

Of XXXX.

were this XXXX we persist, So, we as well? to could -- should benefit see actually a into if

Joseph Bartolacci

from anticipating And opportunity. as we're part our of growth what bottom-line

Austin Nelson

I good. bought one paid generation lower has is pretty debt, the understand you down one. little some just CapEx been then but And some stock. last a still Despite and the year, pressures bit this And Okay. cash back also

Just of your is kind I you the stock boosted where dividend. given and know trading

we to trying do you're cash, to a of you and acquisitions, How think you you've that it additional trying Do now acquisitions? more integrate, and you're leverage -- got approach? I you system to still is about ERP -- get know I the you should slowed want balanced expect use down down. understand

that. understand to Just trying

Joseph Bartolacci

was Austin, standpoint. the terms year unique year, relatively the past cash some this from acquisition of demands a in So, of

pick -- currently you on, to some see the the market. things I are things to don't of opportunity. choose that otherwise that I imminent come have that and trigger know, get As we when lose don't things the pull We to

in you you, see been more you'd in active tell debt the very six on the we buyback. would We'll we near-term, the low XXs, need the stock the are debt. have where repayment. active of stock up to weeks the continuing decide us focused we would would see But XXs, tell the Were be mostly you'll I over I of So, see -- course prices in were down and next not. pay or that whether high stock ends

Austin Nelson

you Thank That's guys. great.

Joseph Bartolacci

You're welcome.

Operator

Mr. final gentlemen, Thank turn ladies And and our to the comments. floor you. this concludes back Wilson session. I'll for question-and-answer any

Bill Wilson

Okay. Thank Matthews. you, today Melissa. us you And for thank joining your and in interest

the remind you rest Thank about look website For our financial and more your you of information enjoy for results. at I'll our additional company company information, to day. our and

Operator

today's concludes Thank teleconference. you. This

time. You may disconnect Thank for participation. at your you lines your this

Matthews International (MATW) 22 Nov 192019 Q4 Earnings call transcript