StoneMor, Inc., the Pennsylvania based funeral home and cemetery operator reported their First Quarter of 2020 results last week. These results cover the period from January 1 to March 31, 2020. You can see a summary of the report here.
The company operates 319 cemeteries and 88 funeral homes in the United States and Puerto Rico. In their latest earnings transcript they mentioned that 18% of their revenues come from the funeral home side and 82% of their revenues come from the cemetery side of the business.
StoneMor, Inc. reported the following items in their results:
- Revenues for the 1st Quarter were $71.2 million as compared to $71.5 million in the First Quarter of 2019
- Cemetery segment operating income for 1Q 2020 was $5.2 million compared to $2.8 million for the First Quarter of 2019. That is an increase of $2.4 million.
- Funeral home operating income was $2.0 million in 1Q 2020 compared to $1.5 million in 1Q 2019.
They also announced that they had a net income of $9.0 million compared to last year’s net loss of $22.5 million. However, the net income in 1Q 2020 included the gain on a sale of a business of $24.1 million. The actual “operating loss” for 1Q 2020 was $1.5 million as compared to an operating loss of $9.4 million for the First Quarter of 2019.
Commenting somewhat on the turnaround strategies of StoneMor, CEO Joe Redling made these comments, among others, in the report, ” While this has been a challenging time, our team remains highly productive and committed to servicing our communities at the highest level. The initial impact – particularly in terms of pre-need and at-need sales declines – have been countered with successful adoption of new processes to better serve our customers in this changing environment. Our ability to execute on these initiatives in this challenging environment is a testament to the character and resolve of our greatest organizational asset – our people.”
Funeral Director Daily take: From our point of view, StoneMor has came a long way in the last couple of years. While we don’t believe that, as a company, they are out of the woods yet, we believe that their plans for divestiture of some company assets to both raise cash and lower debt, coupled with some difficult decisions on lowering operating expenses is giving them time to right the ship into a potential profitable going concern moving forward.
In their efforts, they have also had a lot thrown at them that they did not expect, not the least of which is the COVID-19 situation and the revenue reductions that have thrown at almost all death care providers. However, in our opinion, this Q1 2020 report probably provides more optimism that we have seen in the last two years.
While divestitures to raise cash and saving money on expenses are really important to StoneMor, it appears that they have also stemmed the tide of revenue loss in their remaining properties. However, they will have to find a way for that to continue. And, it is clear that COVID-19 and its related revenue issues to the industry may make that more difficult. In StoneMor’s earnings call, which you can access here, in a very transparent way, is how CEO Joe Redling described StoneMor’s revenue quarter:
“As I stated on our last call, we were having strong sales results in the first quarter. With total commissionable sales year-over-year growth of 16% as of March 15th. However, COVID-19’s impact on sales in the final two weeks of March was significant as customer appointments were canceled and sales declined. Clearly that put a strain on Q1s final results. But despite that, we were able to still finish the quarter with 7% growth in same store sales versus prior year.
. . . . . .Since that point, we’ve seen steady increases in sales volume, and are once again trending ahead of prior year’s pace on a week in and week out comparable location basis. . . . .the pre-COVID period, which we define as January 1st to March 15th. At that point, our sales were up to 16% versus the same period in 2019. We were trending toward a very strong quarter. As COVID entered the picture, we saw a steep and immediate decline in our sales results, as StoneMor and the whole country had to adjust to a new normal.
Ultimately, after being up 16%, with just about two weeks to go, we finished 7% up year-over-year, driven by the fall off from COVID, which impacted both pre-need and at-need activity. That downward trend continued into April. During the four week period from March 16th to April 12th, we were down 34% versus the same four week period in 2019. It was across our entire portfolio and impacted both pre-need and at-need sales.
. . . .After April 12th, however we saw two weeks of stabilization where sales production was flat year-over-year and we’re once again seeing sales up double digit for the last two weeks, versus the same two weeks of 2019. We’ve seen this rebound across all of our divisions, and in both pre-need and at-need activity. It’s certainly an encouraging sign for our business, as this trend continues to show positive year-over-year growth.”
This description is very interesting to us and really makes us anxious to look at the funeral and cemetery company reports for the next quarter – that quarter from April 1 through June 30. From Redling’s quote about sales from March 16 to April 12 being down 34% that could make looking at those reports very interesting. Especially if that type of downturn continued into May for some of the companies.
More from the world of Death Care:
- Legal Round-up: Wisconsin court overturns stat-at-home; funeral home faces mutilation charge. . . Risk & Insurance. (scroll down for funeral home article)
- Moose spotted Sunday in Boulder cemetery. Daily Camera (CO)
- Irvine Veterans’ Cemetery loses funding in Governor’s plan. Voice of Orange County (CA)
- Funeral workers say they should be considered essential workers. Don’t have PPE to keep them safe. Video and story. WSB-TV Atlanta (GA)