Ladies and gentlemen, thank you for standing by, and welcome to the Matthews International's Third Quarter Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the conference over to our host, Chief Financial Officer, Mr. Steve Nicola. Please go ahead, sir.

Thank you, Brad. 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 around 11:00 a.m. today. To access the replay, dial 1 (320) 365-3844 and enter the access code 297220. The replay will be available until 11:59 p.m., August 2, 2013. We have posted on our website, which is www.matw.com, the third quarter earnings release and financial information we will discuss this morning. You can find the earnings release on the face of our homepage. And for the quarterly financial data under the Investor tab at the top of the homepage, click on Financial Reports to access the information, under the section Matthews International Quarterly Reports. These documents are presented in a PDF file format. Before beginning the discussion, at the advice of legal counsel, I've been advised to read the following disclaimer, as it pertains to forward-looking statements. Any forward-looking statements in connection with the 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 quarterly…

Thank you, Steve. Good morning. Our third quarter results were in line with our expectations. Continued strong performance from our Funeral Home Products division was buttressed by good performance from our recent acquisitions and our European gravure businesses to help us achieve our results. As we stated last quarter, our Cemetery Products division has returned to normalcy, as evidenced by its performance, net of unusual items, during the quarter and have begun the process of improving its results. We still have a lot to do to improve performance in this division and in others, but we are past the challenges imposed by our ERP. As we have communicated during our quarters -- during prior quarters, we continue to have higher-than-normal labor costs and other inefficiencies in the Cemetery Products division largely due to the continuation of our lean transformation for this segment of our business. Our lean transformation is expected to bring operating costs in this segment in-line over the next 12 to 18 months, allowing us to work toward our long-term margin goals for this division. Furthermore, as we have committed, our Evantage web-based ordering solution will begin beta test this quarter and should be available for the market by the end of the year. We continue to believe that Evantage will drive value and margin improvements for both us and our customers in the Bronze portion of our business, solidifying our leading position in this industry. In the Funeral Home Products division, we continue to see an increase into the casket and death rates, which, coupled with good price management and mix, delivered another strong quarter for this division. This division deserves great credit for its results as we continue to see good asset control as well as strong financial performance. Our Cremation division had strong domestic performance,…

[Operator Instructions] Brad?

[Operator Instructions] And our first question is going to come from Daniel Moore with CJS Securities.

Steve, you mentioned that, for the end of the quarter, in the last few weeks, you saw a slowing in the year-over-year increase in death rates. Can you talk about trends there and what you're seeing thus far into fiscal Q4?

Dan, I didn't catch the end of that question, but I got the first part. The -- we did it in our -- the Brand Solutions side of our business, both on the U.S. market and in the Chinese market, we saw some slowing particularly toward the end of the quarter, in the month of June. So we do -- when we talk about the fourth quarter, it just gives us some caution.

Dan, did you ask about death rates?

Death rates, it's about with the trends there are as we look into the first part of Q4.

And well, with respect to death rates, in the last couple of weeks of the quarter, we were still -- we still see data that shows year-over-year death rates higher than a year ago, but the level of increase is not the same that it was in the first couple of quarters in the fiscal year.

Got it. And lastly, do you -- can you give us a sense of the organic growth in the quarter in both Graphics Imaging and Marking and Fulfillment and, if you're willing to sort of look out maybe over the next couple of quarters, what your expectations would be?

I can give you a little bit of a feel for that. We are looking at relatively flat organic growth for the next 12 months, I would suspect, out of some of those businesses. We have some good things going in our Marking and Fulfillment business, but they're going to be a little bit more episodic. And the biggest challenge that we're seeing in the Marking and Fulfillment right now is with our Chinese operations. So at -- on the aggregate, we're seeing a little better volume in the United States, relatively flat in Europe and a decline in our Chinese operations, giving us an -- a relatively flat organic growth year-over-year, we expect, in that portion of the business. On the graphics side of the business, what we're seeing is, continuing to see, strong growth and strong volumes out of our gravure businesses particularly as we integrate our businesses over in Turkey and the other acquisition in Germany. It is somewhat dependent on the tobacco industry, that has been stronger for us than the packaging side of the business. But our packaging businesses in Europe are somewhat subject to the economy over there. We've seen a declining throughout the served markets in the world, flexographic packaging volumes, as some of our brand owners kind of tightened their belt on their marketing expense, still.

And the next question is going to come from Liam Burke with Janney Capital Markets.

Joe, could you give us a sense of how the memorialization piece of the Cremation business did vis-à-vis the system sales for the quarter?

Are you saying -- are you -- specifically with respect to equipment?

Yes. I mean, you said...

So, Cremation equipment sales were up in the United States. We've had pretty good -- we have some great initiatives going on in that part of the business, and our guys down there in Florida have done a wonderful job. Frankly, we're having some challenges with our European businesses. And part of the results that you're seeing is the result of a very large project that we had in Stockholm, Sweden, where we had some challenges with our customer and we had to -- we were forced to take a charge for some -- amounts we thought were do us. We're still struggling a little bit with volumes in Europe, as only -- as several of our competitors have. As we've said before, these are municipalities that buy our equipment over in Europe and there's not a lot of free cash flow over there to be able to be letting contracts. We have a lot of projects bid, and very few are being let these days.

Okay. Just as the rest of the Cremation business involves memorializations and works -- work with the cemeteries, how is that part of the Cremation business, how does that look?

We are relatively -- we're growing little by little, but it's just a smaller business right now from a dollar standpoint. We see the industry as a whole becoming more attuned to memorializing, and the revenue opportunities through cremation. I don't think this is an overnight switch, but I do find many of our customers are starting to focus on ways to generate revenue from that. So it is a welcome change, if you listen to some of our customers finally starting to talk about cremation, niche gardens and how to memorialize the individuals once they past. But it -- today, it's growing but on a small base.

[Operator Instructions] Our next question will come from Jason Rodgers at Great Lakes Review.

It's Greg Halter, on for Jason. Relative to the ERP implementation, have you been able to do away with, if that's the right way to phrase it, the outside help that you were using?

Yes. We are -- we -- where we stand with the ERP implementation: It is operating. We have no external consultants per se helping us with the integration at this point in time. However, as part of our initiatives that we have underway, we've engaged IBM to do some IT outsourcing, and we're about halfway down that path of outsourcing our information technology to IBM. There's still more costs to come out. We think that, over time, that significantly reduces our operating costs as it relates to maintaining and running SAP.

And did you bring any of those people on that would have been consultants, as employees, of Matthews by chance?

No.

Okay. You made some mention about the tobacco packaging business. Are you doing that in the -- in Australia? And what's the status there in the U.S.?

We are doing -- look, a lot of our work, most of our work, is done throughout the European Union and into the Middle East. That was the reason for the acquisition in Turkey. As our tobacco companies move their efforts more and more towards the Middle East where smoking is growing and continues to grow, our facility in Turkey is well positioned to support that. We've had some pretty good success solidifying our positions with some of the key tobacco companies like Philip Morris and others over there as a result of our recent acquisitions. We think, longer term, they will -- that they will take us elsewhere in the world to support them.

[Operator Instructions] And we have a follow-up from Jason Rodgers from Great Lakes Review.

I should've just kept going. Can you give me your thoughts on what you see happening in the merger and acquisition area for Matthews?

Jason (sic) [Greg], as we have been for the last 20 years, we will continue to be active. There's always something in the pipeline. Timing of the -- of those acquisitions is not always in our control. We are -- frankly, we've said this before, one of the reasons for implementing our SAP ERP system is to make us a better operator to be able to integrate into. We're pretty well locked down in trying to integrate those businesses that we have into our existing backbone right now. We will position ourselves for something maybe a little larger as we move forward, but timing is not always in our control, as I said earlier.

Right. And any thoughts on any potential divestitures of units that aren't performing up to par?

There's always consideration, but today we don't have anything that we have on the plate that we're willing to do. We continue to work to improve all our businesses and we see opportunities to do that. And so until we figure out where these businesses can be, I don't think we have great consideration in doing that.

All right. And how is Pyramid Controls doing so far?

Very well. The team seems to be integrating very well. That whole portion of our business, which is the fulfillment side, recognize that what we've done is cobble together some very, very, very good players in the industry. Aggregating them into a single solution for the marketplace is what our objective is, but that will take a little bit of time.

And on your raw materials side, specifically on copper, what kind of coverage do you have there? And it looks like the costs, at least for the copper futures, have come down. I'm just wondering what it is for your Bronze business.

Greg, it's actually -- obviously, that continues to be an important input for our Cemetery Products for our bronze production. To date, those costs, I would tell you, have been -- in terms of what we're paying, have been slightly below where we were last year. We were fortunate last year, even though it was somewhat of a high watermark for us in our bronze costs, we weren't paying the real high cost. So this year, as it's come down, it's benefited us but not to the degree that you see in the Comex pricing. Hopefully, it continues to stay at this point. We see the same forecasts or predictions that you do where you see some services out there that are, in part, calling for lower copper prices longer term. And we will try to be opportunistic in buying out bronze where we can for a few months where we have opportunities to do it. And as we have explained before, unfortunately, there's not a sufficient degree of correlation between bronze and the price of copper for us to try to engage in, in hedging copper, but we'll continue to be opportunistic with our buys as we see the good price points.

And so you're bought out for a few months going forward here currently.

Yes. We're covered for the balance of this year, at least.

Okay. And I think, last time we've talked, you were looking at capital spending to be about $30 million for the year. And based on where you are now, it doesn't look like you'll be that high. Is that the correct assumption?

I would say that's right. I would put that in a range of $25 million to $30 million.

And any thoughts on whether that figures to -- for fiscal '14 will be higher or lower than that $25 million to $30 million?

I don't have a read on that yet, Greg. Our maintenance capital expenditure rate, particularly with some of the recent acquisitions, is just the fact that we're a larger business. I would still put that probably at the higher end of that $25 million to $30 million range on a go-forward basis, but we'll have a better assessment for that in a couple of months.

And one last one. Given the stock price, over $40 here, what are your thoughts on a share repurchase? Is that something you'll continue to do? Or is there a point where you become price conscious and you don't buy back?

Well, I would tell you that we're always price conscious. Internally, we do try to be opportunistic also with our share repurchase program. We look for good price points. We certainly try not to chase the price when it's moving higher. But I would still tell you that we're in the market at these levels. We -- during the last quarter, we were buying back stock, I think, on average somewhere in the $37 to $38 a share range.

[Operator Instructions] And no further questions.

Okay, Brad, thank you. Well, we'd like to thank everyone for participating in the call this morning. And we certainly look forward to our Fourth Quarter Earnings Release and Conference Call in November. Have a good day and a good weekend.

And ladies and gentlemen, this conference will be made available for replay after 11:00 today and running through Friday, August 2, at midnight. You can access the AT&T executive playback service at any time by dialing 1 (320) 365-3844, with the access code 297220. That does conclude our conference for today. Thanks for your participation and for using AT&T Executive Teleconference Service. You may now disconnect.