Recapping FY 2021 with the public companies

When you read this it will already be May 2022 and we will be two-thirds of the way into the 2nd Quarter of most company’s 2022 business year.  As a matter of fact, the reports of January thru March have already started to roll out as Matthews International provided us information on the January thru March period just last week.  We will be reporting on that later this week.

However, I was asked by some in the death care business to give my brief reflections on reports that were given out in 2022’s First Quarter that related to the financial results of the funeral home companies as of the end of 2021.  In a brief nutshell, here are my observations for the already reported on 2021 results of the public companies that deal with consumer funeral homes and/or cemeteries.

It would probably be hard to relate revenues of the public funeral home/cemetery companies to past years without allowing some type of mention that 2021 was a Covid-19 death year.  When it is all said and done, the pandemic in 2021 probably brought at least 10-15% more deaths to the United States than a “normal” mortality year.  And, that increase is certainly reflected in the financial numbers presented by the public companies and needs to be a reflective point when looking at year to year comparable financial numbers.

Here is an interesting point to note about the size of our death care public companies that we are comparing.  Service Corporation International (SCI) shows its size when you realize that its 2021 revenue came in at $4.143 billion. . . an increase of $632 million over their 2020 revenue.  That $632 million increase in revenue is almost twice the size of the 2021 Total Revenue of their nearest (according to financials from Seeking Alpha) competitor Carriage Services whose total revenue in 2021 was $375.9 million.

Here are the reported 2021 revenues according to Seeking Alpha for the five publicly traded consumer funeral home companies ( the number in parentheses indicates the increased percentage over 2020 revenues:

  • Service Corporation International – $4.143 Billion     (+18.0%)
  • Carriage Services – $375.9 million     (+14.1%)
  • StoneMor LLC – $322.8 million     (+36.9%)
  • Park Lawn Corporation – $287.0 million     (+15.1%)
  • Security National Financial Corporation (Mortuary/Cemetery Division) – $27.2 million    (+29.5%)

**To be fair in reporting, the entire revenue for SNFC as a company was $470.7 million.  That includes all divisions of the company, the indicated amount above represents only the Mortuary/Cemetery division.

Funeral Director Daily take:  Here are some quick thoughts I have on the 2021 Annual Financial Reports of these companies:

  • All figured out a way to serve clientele and serve customers while being stretched because of Covid-related deaths and a perceived shortage of staffing.

I think all now have the financial ability and will be aiming for growth by hunting for acquisitions of “Fit”.  By “Fit” I mean:

  • StoneMor will look on the East Coast
  • Security National will look in the West and Rocky Mountain regions
  • Carriage, Park Lawn, and SCI will look all over North America for the proper sized mortuaries and for those that “fit” into their clustered areas

 

  • The cash-flow generated by really good financials in 2021 will fuel acquisition growth, stock buy-backs, and capital improvement ability at all of the entities.
  • StoneMor, Carriage Services, SCI, and Park Lawn management all look pretty smart by making sure that they re-financed debt at lower interest rates during 2020 and 2021.
  • The “Canary in the Coal Mine” for a potential lower number of deaths is the British report that deaths in the First Quarter of 2022 are less than the deaths Great Britain had in the 1st Quarter (pre-Covid) of 2019.  Even with the advent of the Baby Boomer deaths being right upon us, the United States may see a lower number of deaths for the next couple of years because of the expected Covid “pull forward” death hypothesis.
  • Funeral homes may find themselves in difficult Catch-22 situation going forward. . . . Inflation may cause wages and expenses to rise at the exact same time they are trying to keep a semblance of higher priced traditional funeral choices alive.  The inflation may cause higher consumer prices which in turn will, theoretically, cause more consumers to choose a lower priced alternative.  A real profit-squeeze for funeral operators could ensue.

Disclaimer:  The author of this article holds stock positions in the following companies — Service Corporation International, StoneMor, Park Lawn Corporation, and Security National Financial Corporation.

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