Security National reports revenue up, income down in Q1 2020 results

Foundation Partners why I partnered

Back on May 18,2020, Security National Financial Corporation (SNFC) reported its 1st Quarter 2020 results that encompassed the period from January 1, 2020 to March 31, 2020.  The results, which you can see in a press release here, showed that the company increased revenues in the period compared to the prior year’s revenue by 29.2% but after tax earnings dropped 26.2%.  Net earnings per share for the quarter were $0.08 as compared to the 2019 1st Quarter net earnings of $0.11 per share.

Scott M. Quist, the President of SNFC made the following comments:  “The COVID-19 pandemic had a marked influence on our reported Q1 earnings.  Our Mark to Market common stock losses included in our Q1 results were about $2.5 million and were centered in both our Life Insurance and Cemeteries/Mortuaries business segments. . . . . .Absent the Mark to Market losses, operationally our performance would have been in the $4 million range, which would be a significant improvement over 2019.  Thus, even recognizing the decrease in reported net income, I am quite pleased with our Company’s first quarter performance.” 

In a company brochure that you can access here, SNFC describes their company with this paragraph:  “Our company operates three main business segments: life insurance, funeral service and mortgage loans. Our company is designed and structured so each segment relates to the others, and contributes to the profitability of the whole. For example, our cemetery and mortuary operations enjoy a high level of public awareness, assisting in the sales and marketing of our insurance and preneed cemetery and funeral products. Security National Life
Insurance Company in turn invests its assets in high quality mortgage loans. Thus, while each segment is a stand-alone profit center, this horizontal integration is strategically planned to improve profitability. Additionally, our company actively pursues growth through acquisitions of life insurance companies and mortuaries, and through expanding our mortgage operations.”

As we look into the results of the divisions of SNFC for 1Q 2020 we see that the Mortgage division led the way with a 59% increase in sales and brought in earnings before taxes of over $4.4 million.  The Life Insurance segment also increased sales – by over 8% – but showed a net loss before taxes as compared to a gain in 1Q 2019.  This segment is one where the company recognized the “Mark to Market” losses President Quist talked about.  “Mark to Market” deals with accounting methods of valuing positions regardless of whether positions are open or closed during the period. . . so in our opinion is a difficult barometer of of how the operating company is actually doing.

Finally, SNFC’s Cemeteries/Mortuaries division saw its revenue drop almost 8% to a little over $4.0 million in sales as compared to 1Q 2019 sales of over $4.3 million.  Profit of that division fell over a million dollars for the quarter from 1Q 2019’s net earnings of $1.185 million to only $105,000 in 1Q 2020.

Funeral Director Daily take:  Security National Financial Corporation is an interesting company.  Looking at their company brochure you can see how the have made acquisitions to bolster and build their insurance business.  Last year they acquired the Kilpatrick Insurance company which we told you about in this article.  In our opinion, whether it be funeral homes or insurance companies, fairly bought strategic acquisitions can really bolster a company.

SNFC also acknowledges that they use one division of their company to build other divisions. . . sort of feeding off each other.  If that strategy can be accomplished, it provides great synergy for moving forward.

Disclaimer— The writer of this article owns stock in Security National Financial Corporation.

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