They missed by a penny due to issues with the bateville division. Below are 2 paragraphs from the news release concerning batesville:
Batesville revenue dropped 3% to $146 million primarily due to an estimated 5% decrease in North American burials. The decline in burials was driven by an estimated 2% decline in North American deaths compared to the same quarter last year. Burial volume was also impacted by the rate at which consumers opted for cremation.
Consolidated gross profit margin in the third quarter was 38.1% compared to 40.8% in the prior year. The decrease was largely driven by Batesville as they experienced declines in volume and average selling price as well as short-term transition costs including those related to a manufacturing shift consolidation. On an adjusted basis, which excludes restructuring charges at both business platforms, the consolidated gross profit margin was 38.6%.
I feel like there is something needing to be said, but don't know what it is. I do appreciate the way you provided a URL for the company's earnings announcement which made it so easy to go back and review it. Thank you.
I am neither surprised or disappointed by the earnings of this quarter. Well, mildly disappointed by only 5% organic growth in the process equipment group. The 53% looked wonderful until one realized that we'd bought those sales. Still, I thought our CEO was straightforward in reporting the facts and that pleases me. I continue to expect Process Equipment to hold earnings near $2 a share and as the market becomes expectant of that security, a higher PE may become justified. Right now there is just too much chance for unexpected negative results as Batesville declines and we are not real sure what process equipment will do.
My major concern continues to be just how talented and efficient our management really is. Expenses need to go down in process equipment as the work becomes routinized. Or perhaps there are major new materials or markets to be penetrated (that seems to be the current emphasis--I think I reported that one of the leaders of HI was working in Switzerland or Austria or someplace developing markets when I visited the annual meeting. And, of course, we know that European sales are a bit expensive right now.
I continue to add to my position when the price gets down on hopes for process equipment primarily. I might be getting just a tad impatient--nah, not really. But as someone else pointed out, getting PE straightened out and predictable is much more important to me than buying more companies at this point. They can obfuscate the results forever spending money counterproductively and I won't necessarily be able to see it. It takes time for the real results to show up--the world does not need another conglomerate IMO. Even though HI needs another business to grow.
Even though the Batesville division slipped this quarter, I still see this as a long-term buy. I think the demographics and the aging baby boomers with the awful diets and unhealthy lifestyles will eventually lead to revenue gains for this company.
Not trying to be dire here or critical of them, but it is a large demographic that will eventually convert to revenues.
Short-term blips in the meantime are just that. Would love to see Hilelnbrand pay down their debt in the meantime before pursuing other acquisitions, unless a great situation presents itself.