Finance

StoneMor reports Year End 2019 results, signs agreement

Foundation Partners why I partnered

On April 2 StoneMor Inc., the cemetery and funeral home operator based in Trevose, Pennsylvania, reported their 2019 year end financial results.  StoneMor, who operates 90 funeral homes and 320 cemeteries in 27 states and Puerto Rico, is the 2nd largest funeral home/cemetery operator in North America by revenue.

You can access the 2019 Year End financial press release here.

For the full year StoneMor reports that their revenue dropped about 8% to $289.5 million from 2018’s $316.5 million.  The company reported an Operating Loss on that revenue for 2019 of $41.8 million as compared to an an operating loss of $43.8 million for 2018.  When you add in the loss that the company took on its recapitalization to a C-corporation, goodwill,  and debt financing the overall net loss for the company in 2019 was $151.9 million.

In its multiple year effort to regenerate growth in the company, StoneMor also sold properties in California and expects to “finalize additional transactions during the 2nd and 3rd quarters of 2020.”

In the StoneMor press release, President and CEO Joe Redling is quoted, “We are starting to see the impact of our company-wide cost reduction initiatives take hold and we expect to benefit much more significantly from these action in future years.”

StoneMor announces agreement:  StoneMor Inc. also announced a unique Master Services Agreement (MSA) on April 2.  On that day they announced that they had entered into an agreement with Moon Landscaping to “develop, implement and provide all manner of property management and operational services at most of the funeral homes, cemeteries, and other properties owned and managed by StoneMor.  You can read that press release here.

According to the press release, “Under the terms of the MSA, Moon will hire all of StoneMor’s grounds and maintenance employees at the serviced locations and will perform all functions currently handled by those employees, including, but not limited to, landscaping, openings and closings, burials, installations, routine maintenance and janitorial services. ”

Funeral Director Daily take:  From our point of view the MSA with Moon Landscaping is interesting.  While it will no doubt give some financial certainty on what StoneMor will pay for those services going forward, it remains to be seen if the work quality of a contractor will be up to the specifications that a cemetery or funeral home may desire.  And, if they are not, what leverage will StoneMor have to improve that quality when the workers are no longer their employees?

On another aspect of StoneMor, it is interesting for us at Funeral Director Daily to note the final revenue numbers for StoneMor in 2019 and how they compare to their peers at Service Corporation International (SCI), Carriage Services, and Park Lawn Corporation.  We published this article back in January 2020 and made some predictions on what we might see as to the shuffle in revenue rank of death care public funeral home companies when the year end results came out.

To that end, we predicted that StoneMor, in trying to “right-size” their company, may lose annual revenue.  We also predicted that Park Lawn Corporation, with their aggressive acquisition moves in 2019 would greatly increase their revenue.

As you may know, SCI is by revenue, virtually ten times larger than the other three  big public death care companies — Carriage Services, Park Lawn Corporation, and StoneMor.  However, the 2019 numbers have now brought those three into close size proximity that we anticipate will change with the 2020 numbers.

Here is the Top 4 Public Death Care Company revenues in 2019 (2018 numbers also)

  1. SCI – $3.29 billion.  Up from $3.19 billion in 2018.  Up 1.2%
  2. StoneMor Inc. – $289.5 million.  Down from $316 million in 2018.  Down 8%
  3. Carriage Services – $274 million. Up from $267 million in 2018.  Up 2.6%
  4. Park Lawn Corporation – $244 million.  Up from $161 million in 2018.  Up 51.5%.

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