Ladies and gentlemen, thank you for standing by. Welcome to the Matthews First Quarter Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Chief Financial Officer, Steve Nicola. Please go ahead.

Thank you. Good morning, I'm Steve Nicola, Chief Financial Officer of Matthews. Also on the call this morning is Joe Bartolacci, our company's President and CEO. Today's conference call has been scheduled for 1 hour and will be available for replay at approximately 11:00 a.m. today. To access the replay, dial 1 (320) 365-3844 and enter the access code 277189. The replay will be available until 11:59 p.m., February 1, 2013. We have posted on our website, which is www.matw.com, the first quarter earnings release and financial information we will discuss this morning. On the top of our homepage, under the Investor tab, click on Investor News to access the earnings release. For the quarterly financial data, click on Financial Reports to access the information under the section Matthews International Quarterly Reports. The documents are presented in a PDF file format. Before beginning the discussion, at the advice of legal counsel, I have been advised to read the following disclaimer as it pertains to forward-looking statements. Any forward-looking statements in connection with this discussion are being made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties that may cause the company's actual results in future periods to be materially different from management's expectations. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove correct. Factors that could cause the company's results to differ from those discussed today are set forth in the company's annual report on Form 10-K and other periodic filings with the SEC. In addition, please note that the balance sheet, income statement and cash flow information provided today are preliminary data, since our annual report on Form…

Thank you, Steve. Our first quarter of fiscal 2013 was pretty much in line with our internal expectations. Better-than-expected results in the Memorialization group was offset by slightly less-than-expected results from our Brand Solutions business. However, the first quarter marked the end of our significant challenges with our SAP implementation in our Cemetery Products division. We can now begin to focus on improving the results of that division and capitalizing what we continue to believe has been a good investment. Our employees in that division have worked hard through some challenging times, and we appreciate those efforts. One of the key efforts that we have underway in that division is a return to normalcy in the workforce. If you recall, during our last call, we have accrued a charge in fiscal 2012, which was associated with our plan to adjust our workforce to normal. This plan was to reduce our operating cost by about $9.5 million on an annualized basis. We are on track to achieve most of those savings by the end of the third quarter. Also during the quarter, we continue our efforts of strategic sourcing and believe this effort will begin to yield results in the third and fourth quarter and well into year 2014. Also on track, pulling our e-Services offering by the beginning of the third quarter and believe this to be a significant contributor to our plans to become more efficient throughout our organization while giving our customers a better experience of doing business with Matthews. We have great hopes for this investment. Unfortunately, however, we are still operating in difficult economies. Europe continues to be a challenge and the first quarter results of our Brand Solutions segment was materially impacted by this economy. On a positive note, our backlog in many of our European businesses appear stronger and we expect the group to perform more in line with our expectations during the balance of the year. Moreover, 2 recent acquisitions in this group will help offset the softness we feel in the European market while continuing to position our Fulfillment business to be a unique competitor in this market. In all, we feel very positive about our prospect for the balance of the year particularly with the list of projects and ideas we have for improving our business. We have to execute but we fully expect the results of our efforts to benefit us for years to come. With that, we remain confident with our guidance but prudent with our forecast. With that, we'll open it up for questions.

At this time, we would like to open the call to questions. [Operator Instructions]

[Operator Instructions] And our first question will come from the line of Daniel Moore from CJS Securities.

What were casketed death rates in the quarter and have you seen any impact yet or do you anticipate any impact yet from the reports of the increase and influence of the early flu season on death rates, in casketed death rates as we go out over the next couple of quarters?

Well, Dan, as approximate amount, in the first quarter, we saw a relatively flat casketed death rate. Death rates did improve versus prior years. We have not seen what I would call significant increases yet. Our volumes in January seemed to sustain that kind of increase year-over-year. Many of the improvements you're seeing in our results, however, really are internal improvements, as well as better realization on pricing and mix through the marketing efforts that we put into place.

Yes, Dan, just to add to that, based on the CDC data that we look at, overall death rates were up a little bit during the quarter but with the impact of cremation, those translated to, call it, relatively flat on the casket and in-ground burial death rate side.

That sounds like it leads to return to normal as far as the operating environment is concerned.

So far. We'll see how the balance of the years were. We have seen continuation of that trend, so our expectation is for a positive year in that -- in those businesses.

Okay. And in kind of drilling down a little bit, but in Cemetery Products, if you add back the unusual items you're a little over 14% operating margins, given the change in mix toward granite, what are your expectations now? Where do you hope to get margins over the next several quarters and where do you think that you should be operating in that segment long term?

In the next several quarter, we expect still to have some challenges as we start to take some of those costs out. If you heard my comments, we have almost $10 million worth of cost expected to come out. Some of that -- a lot of that is in our Bronze business, our memorial products business, but we also have some coming out of our Funeral Home Products businesses as well. So we expect in the mid-term here to see our Cemetery Products gravitate to a higher teen. We take longer term the division still or should approach that low 20s.

Excellent. And one more and I'll jump back in queue. Can you remind us of the expected accretion from Wetzel and Pyramid in your -- embedded in your adjusted EPS guidance for the year?

Steve, could you do that?

Sure, yes. Dan, we haven't disclosed that. I would tell you we discussed the top line, which for the Wetzel acquisition, sales on an annual basis are about $50 million and sales for Pyramid in the mid to high teens on an annual basis and we just purchased those recently, so for the balance of the year, I have no reason to believe that, call it, the 9/12 proportion of that isn't what to expect and that is included in our guidance. And as Joe said, we're just being prudent with maintaining our guidance at this point in time.

We'll go to the line of Jamie Clement with Sidoti. James Clement - Sidoti & Company, LLC: Okay, Graphics margins for the quarter. You all obviously cannot be pleased with them. Obviously, the situation in Europe is rough. But forget about year-over-year comparisons and I know you had a great quarter a year ago. Sequentially, down a lot. Are there actions you can take here over the next couple of quarters to improve margins or you're just going to have to ride out the economy over there?

Well, in fact, Jamie, particularly with our gravure businesses over there, we're pretty comfortable that a lot of the work were shifted from one quarter to the next. So we think, I mean, as you know, a lot of these businesses, especially in the European market have a lot of embedded parts costs. So with the backlog we have, we expect a pretty strong second and third quarter as we move forward. Now granted we still have the economy over there and it's still a little bit of a challenge, but with the gravure business, it's the portion of the business that we have better visibility, just because there are longer lead times. James Clement - Sidoti & Company, LLC: Do you stay -- I mean, in talking with your people over there, I mean, do you think conditions and specifically, I'm talking about Germany, although if you want to talk about some other countries, that's fine but I mean, do you think that the perception of the consumer and the willingness of marketers to kind of -- to spend money got materially worse from the September quarter through the December quarter?

Well, I wouldn't say they got materially worse as much as that -- but we have a typically slow period in the first quarter of our fiscal year because of the Christmas season, a lot of that marketing is done before. But secondly, I mean if you look at it from a comparable basis, we had several million dollar reductions year-over-year in that division. On a relatively fixed cost basis, a lot of that drops to the bottom line. James Clement - Sidoti & Company, LLC: Okay, all right. So this is really -- I mean, this is a question of top line and operating leverage working against you this quarter is what it sounds like.

Yes. I mean, at the end of the day, we don't have a lot of people sitting -- there's not a lot of material cost associated with producing the next reprographic service. So at the end of the day, it's a lot of people. You can't react that quickly but right now, we don't think we have great need to react as our balance all year seems to be pretty strong. James Clement - Sidoti & Company, LLC: Okay. And then follow-up question just on, I think, the death care businesses have been -- those questions have been asked and answered. In the Marking Products business, can you talk about the relative housing exposure on -- that business has? As we think about housing recovery over the next 12 to 24 months, what kind of opportunities do you think you have in that business?

Well, I mean, if you take a look at the quarter, in Marking Products, obviously, we are not pleased with our results there either. That was probably our most significant surprise because we thought things were starting to turn around. James Clement - Sidoti & Company, LLC: But you did have a great fourth quarter, so -- I mean, maybe there's some lumpiness there so...

We did. But at the end of the day, I mean, the most profitable product we sell is ink. And the housing market is a great consumer of ink because we mark just about every gypsum board piece in the country, a lot of lumber, a lot of electrical wirings and so forth. So to the extent we see a recovery, the drop through is going to be pretty significant. Now the very, very positive part of it is our sales did not have a significant drop in that division and that's because we sold a lot of equipment. Equipment has lower margins and as a result, we get the lower results that we had. James Clement - Sidoti & Company, LLC: But the more equipment you have installed out there, the more ink that equipment consumes, presumably.

You got it. So that's what we're expecting.

And now we'll go to the line of Liam Burke with Janney Capital Markets.

Joe, could you talk a little bit about the Granite business? It's a nice contributor but it's regional in nature. Could you give us a sense as to how to continue the momentum by offering granite as part of the product mix nationally?

Liam, we actually are pretty excited about the granite offering. This is the first quarter. We bought Everlasting, latter part of last year, and took us good 6 to 8 months to kind of get some of the things integrated particularly in the marketing side. I think we're just starting to see what the benefits are. We've always believed that our sales folks on the ground and our customer relationships would prefer to have another product line in their hand, both in terms of things like private mausoleums and as well as features, let alone the upright tombstones that go into cemeteries we don't have today. We think, at least for now, that we have plenty of penetration opportunities in the regional areas that we operate today. However, you heard me mention about our e-Services offering. The opportunities that present us with these services is not just with respect to our Bronze memorial market. There is nobody with the scale or capacity to do what we've done on the stone side. So we believe, longer term, as we look for good acquisition candidates in the regional markets, as well as just expand organically to grow as we did this quarter, we think there's going to be an opportunity to grow that business. I will caution you though, Liam, this is not the Bronze business. This is not something that has low-20s margins. It is a 10%, 12%, 14% business.

Okay. So I mean, what I'm hearing is you've got penetration in the regions. You're looking to move at a region even through acquisition. Is there any other way you can do it either through joint venture or you partnering with some established locals?

Yes. Well, we can clearly do it that way and what we're hoping to do is also leverage our scale. One of our strategies has been we don't need to own coils [ph]. There's enough stonecutters around the world and we'll capitalize on the labor arbitrage around the world to get the cheapest product. Scale is going to be very helpful to us. So the bigger we get, the better leverage we're going to have in the purchasing side for the stone itself. Couple that with some marketing capabilities coming from our design tools and I think we're in pretty good shape.

Okay. And quickly on Pyramid. You spoke about, well, sitting in the Marking and distribution area of the business, but where do you see the benefits in each of those businesses now that Pyramid has been bought into the fold?

Take a look at our Marking business, that team has done an excellent job of repositioning or actually not repositioning, expanding the position of our business in that field. What we have traditionally been -- as the name used to describe it, a Marking Products industry, so we did in-line industrial marking equipment. With the addition of Lightning Pick a few years ago, IPTI, all picking technologies used for picking products for automated warehousing and logistics, Pyramid, which is a warehouse software management tool, integrates very, very, very nicely to be able to offer a solution to the independent folks around the country who compete with the DAMADICS and some of the other Intelligrated of the world out there. This is an area of our business we intend to continue to grow. We think it is a great opportunity for us to begin to integrate not only a solution that includes warehouse management systems but also integrate our Marking technologies directly into that for a one-stop shop for the solution. We have great hope for this.

Great. And, Steve, very quickly, did you have a share count anywhere?

Actually, we ended up around 27.7 million shares at the end of the quarter.

[Operator Instructions] And we'll go to the line of Scott Blumenthal with Emerald Advisers.

Steve, could you tell us -- just a couple of cleanup questions here, any -- should we expect any acquisition related charges to fall into the current quarter or are we done with those, Wetzel and Pyramid related?

I think, you're still going to see a little bit. We just recently completed those acquisitions. So as we start the integration process, there'll still be some cost lingering.

Okay. And did you give us a CapEx estimate for the year or could you?

I didn't earlier but our CapEx estimate right now is about $30 million, to give you a rough number, for the fiscal year.

Okay. And, Joe, since -- I should probably should have asked this first, but kind of following up on the last question that Liam posed to you. I know that you're excited about the Fulfillment business and maybe a gauge of interest that you've seen from some of your customers up until this point in the Fulfillment business?

Well, over the last -- sure, Scott. Over the last several years, the team has done a great job in developing, what I would call a universal controller that will integrate well with all the tools that we are putting into the puzzle right now. That product is called Viacode. Viacode will ultimately be able to control a lot of these things in an integrated fashion from Marking to the distribution function itself. It is unique in the marketplace today and customer interest is high, frankly, now. It's a capital spend so we're tied to the capital spend market in the economies around the world to be able to do that. So interest levels are high. The solutions are visible to our customers and we're getting entrees into customers we have never seen before.

What portion of your current customer base do you believe has this type of solution right now?

That's a hard question to answer, Scott, because we have traditionally operated in a very, very heavy industry market, where a lot of this integrated solution may not be as critical but if you take a look at some of the better warehouse operators whether they be retailers that we're talking to right now or a large CPGs that we also are talking to, those are customers we never had before. They ultimately had products like this in the past from some other supplier but they've never had an integrated solution that we're talking about right now.

So this type of a solution should -- might be of interest to current customers but it should certainly broaden the addressable market for the Marking Products and Fulfillment business in the future.

That's the intent.

All right. And now we'll go to the line of Jason Rodgers from Great Lakes Review.

It's actually Greg Halter here. I was wondering about the charges that you have on the supplemental data, that $3.184 million. Is that the total amount or are there additional items that may be in other pockets of the income statement?

Steve, would you want to take that?

Yes. Greg, that's the amount in total.

All right. And what was the tax impact relative to those charges?

Most of those were domestic charges, so I would just apply our normal tax rate to that.

All right. And, Joe, I think you mentioned there were 2 mergers or acquisitions, I should say, in Europe recently. Are those ones you've already delineated or are these new ones?

No, this is -- Wetzel we acquired essentially towards the end of November, beginning of December. That really was not contributory to the quarter at all. We have a lot of the costs associated with the acquisition in there, that was European. Pyramid, which we acquired, I believe, if I recall correctly, sometime in October, late October, early November was a domestic acquisition but a critical part to our overall strategy.

Okay. So they're not anything that has not been announced.

No.

And relative to casket pricing, I think, normally, prices changes occur early in the year, just wondering what's going on in 2013?

That price increases went out effective October 1. The big change I think, frankly, for the marketplace right now is with a relatively stable death rate, let's put it that way, without the declining that we -- declines we've felt over the last several years, there is probably a little more rationality out there on the pricing side and we're able to bring a little bit of results to our bottom line coupled with some better indexes overall for better products. So we think we're doing -- it's a little better period that we have seen over the last 24 months.

All right. And would you contribute any of that to Aurora being acquired recently and or Batesville, Hillenbrand, I guess, I should say, being -- I don't want to say distracted but they've got some other big acquisitions on their plate that they're working through.

Greg, I wouldn't say that. I'd just attribute it to the fact that we're not all struggling to get the next product off the shelf. I mean, demand is pulling to a level that we expected it to pull rather than a lot less, and everybody trying to meet their numbers.

And one last one. I think I've heard about some lower material costs and I presume that's on the copper side. I'm just wondering if you could provide commentary on copper, where you're bought out and where you see that impacting your cost?

We are bought out in -- through, probably, end of February, beginning of March. And our guidance anticipates that as well as some prudence on the backside. We just don't know what the balance of the year is going to look like. So we're covered until the end of February, beginning of March right now, maybe a little further than that. But our expectations are that we'll be able -- we're not going to have any great shocks throughout the year that we're not already anticipating.

And now we'll go to the line of Adam Hamill with Gates Capital Management.

Yes. It's actually, Jeff Gates. I have a question. What would organic revenue growth have been during the quarter excluding FX and acquisitions?

Steve, do you have that?

Yes. There was a little bit of organic growth during the quarter. We don't break out the organic versus the nonorganic growth but there was organic growth during the quarter.

And then I'm kind of wondering with pricing, I mean, is the end -- do you expect pricing power to return to Caskets or should we still kind of view this as flat pricing?

I'm sorry, you said it was Adam?

Yes, it's Adam.

It's Jeff Gates.

Okay. Adam, I think the quarter -- I think we should expect what we're seeing right now, I think there's a little bit more rationality out there. We are able to bring a good portion of what our price increase has been to our bottom line and we expect that to continue. And price increases were about 4%, 4.5%.

And more broadly -- I'm sorry, I missed that last part.

Price increase in October was about 4% to 4.5%. We're bringing a lot of that to the bottom line.

Okay. So should we deduce from that, that the incursion of Chinese manufacturers in caskets is -- have they backed off or?

They have had for many, many years a niche. They will continue to have a niche and we don't see them growing beyond where they are right now.

And now we'll go to the line of Daniel Moore with CJS Securities.

Joe, just if you can, as much as possible, elaborate on your confidence in the ERP system now gaining traction? Obviously, you're into some detail but given that it's taking longer than expected, maybe some anecdotal evidence, anything where you can elaborate on that will be very helpful.

Sure. I mean, the ERP, as you heard in my comments earlier, I would tell you that we're past the challenging portion of that implementation. I'd say we have another quarter of some outside assistance in trying to get us to where we would like it to be from an efficacy standpoint. We will continue to tweak and turn it for years to come, frankly. But at that point -- by the end -- this past quarter, I would say the significant challenges are behind us. We are now looking at how do we take what the tools that we put into place and get the greatest use out of it, through automation, through reporting tools, through tracking abilities, through integration with our e-Services, we are finally starting to focus on the benefit that we have anticipated. You also heard me talk about our strategic sourcing efforts which we think or we all greatly hope for although we won't see the benefits of it until the latter part of this year and mostly into 2014. That's accomplished because of our ERP system. The ability to aggregate our spend at least on a domestic basis and then over time also on an international basis, is the benefit of our ERP systems. So I think we've only started to see what the opportunities and the benefits of that system will be. So we're bullish as a result of our ERP system.

I appreciate it. And lastly, the last segment we haven't touched on. In Cremation, you added almost $2 million in revenue and operating income declined a little bit. Can you talk about what's going on in the marketplace there and where you hope to get margins back to?

Yes. Our revenue increases largely were from our European businesses that are struggling to get our cost adjusted in. And frankly, our Italian business is the one that's struggling today, and we have already taken steps in the form of identifying and taking the charge in 2012. But unfortunately, our ability to act quickly is diminished by the laws of operating in Italy. So we will correct those costs. They've already been identified and the charges taken and we expect that to come to a more normal and not be a detractor starting this quarter.

Starting at current quarter.

[Operator Instructions] And there are no more questions on the phone lines.

All right. Well, thank you, John. We'd like to thank everyone for participating in the call this morning and we look forward to our second quarter earnings release and conference call in April. Have a good day.

And ladies and gentlemen, that does conclude your conference for today. This conference will be available for replay after 11:00 a.m. today through 11:59 p.m., Friday, February 1, 2013. You can access the AT&T Teleconference replay system at anytime by dialing (320) 365-3844 and entering the access code 277189. That does conclude your conference for today. Thank you for your participation and for using AT&T executive teleconference. You may now disconnect.