Last week death care public company Carriage Services reported 3rd quarter 2018 financial results. It was the 3rd consecutive quarter that the company had came in with a report that was less than what analysts had expected.
If you read the earnings report and the subsequent Call with Analysts that you can read in its entirety here, you will get the feeling that management of Carriage was not happy and are planning to roll up their sleeves and get to work on improving the financial performance of the company.
Here are some of the interesting quotes that we took from management after the transcription of their analyst call.
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From CFO Ben Brink:
“And now for some more color on our current operating trends and where we are as we move forward. Once we review the results through August, it became apparent that operating trends were not improving at the rate we anticipated coming out of the second quarter. The operating team, with Mel’s leadership, conducted an extensive review of our entire Funeral and Cemetery portfolio in order to identify the causes of our underperformance and began to formulate a plan to improve our performance quickly.
This review included a deep analysis of long-term historical operating and financial data for each business along with the corresponding historical standards achievement, which revealed the following: top-performing businesses in our company, of which there are many, were subsidizing underperformance in segments of our portfolio.”
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From SVP and Chief Accounting Officer Viki Blinderman:
“In our same-store funeral segment year-to-date basis, we’ve experienced a 0.6% decline in volume, and the cremation rate has increased only 80 basis points to 52.8%. Same-store funeral revenue, on a year-to-date basis, has decreased 1.2%, and Field EBITDA has declined 5.7%, as our margin has decreased to 180 basis points to 36.9%.
Overall, the decline in funeral home Field EBITDA margins for the first nine months of the year can be attributed to lower contract volume, higher operating expenses, higher salaries and benefit expense as a percentage of revenue and increased health care cost versus prior year.”
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From CEO Mel Payne:
“And the last thing I told our people in this letter, “Don’t worry about the stock price.” Some of you are. It will turn around when our performance turns around and heads up. In the meantime, I will say on this call, which I’m about to say, talk is cheap. Watch what we do.
Now having said that, we will divest some businesses more than one a year. We want to clean out those that are declining, offsetting the winners, but that would – that won’t be a sudden washout like it was in the 2000, 2001, when we had that really deleverage rapidly to save the company. Nothing like that is the case here.
But we’d all – we have some good businesses that have declined. We want to turn them around it, if we can, with the right leadership. And if can’t over time, we will divest.”