Last Friday, October 27, StoneMor Partners L.P., finally reported its earnings from the 1st Quarter of 2017 which ended on March 31, 2017.  As reported earlier the Partnership is continuing to work on its delayed filing of periodic reports with the SEC.  You can read the full report of last Friday from StoneMor here.

Here are some things that we picked up from reading this report:

• Revenues were up almost $5 million over the same period in 2016.
• Revenues were up even though investment income was down – signaling better operations and better sales in both the Cemetery segment and the Funeral Home segments.
• Net loss, however, was increased to $8.6 million from $6.4 million in the same time period.
• The company reported better working capital that resulted from larger withdrawals from the merchandise trust.  According to the release, the larger withdrawals were the result of increased focus on delivery of pre-need merchandise.

Funeral Director Daily take:  There are some good things to see from the operations statements and, in my opinion, some things that still are not where they should be — like the net loss of $8.6 million.

A couple things that stood out to me was the increased revenue for the quarter.  Cemetery merchandise and services totaled approximately $53 million for the quarter as compared to about $47 million from the year before.  Funeral home revenue totaled about $17.5 million as compared to about $16.2 million in the year before.  That’s a total of about $7.3 million in additional revenue through those lines — an increase of over 11%.  That sales increase is impressive in any funeral service business.  And, if it is a true increase in sales it would be really good news for StoneMor.

What might make it less impressive, however, is their statement that “large withdrawals were the result of increased focus on delivery of pre-need”.  I’m not exactly sure how they “deliver” pre-need merchandise unless it is the completion of pre-sold mausoleums and columbariums or the “sinking” of pre-sold vaults into the ground.  It may be that these processes allow money to flow from trust to operations which would then show up in increased sales.  I don’t know for sure, but am not sure that I truly believe that an 11% increase in sales by StoneMor is possible without this type of procedure.

We will continue to watch and evaluate StoneMor Partners as they move forward.  It appears that they are making moves to improve their efficiencies.  In this press release they are quoted that they own 94 funeral homes.  That is down from their press release of October 6 which mentioned 98 and earlier releases that mentioned 100.  I’ve said before, it would not be surprising if StoneMor moved back to their roots of cemetery operations and ownership by de-leveraging their funeral home portfolio.

If StoneMor owns a mortuary in your business area now might be a great time to make a call if you are inclined to grow your business through acquisition.

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