Security National after tax earnings decline 121% in 3Q 2022

In the 3rd Quarter of 2022 earnings release for Security National Financial Corporation (SNFC) released earlier this week, Scott M. Quist, the company’s President stated, “2022 is continuing to be a challenging year for our Company due primarily to the dramatic rise in inflation and interest rates, and the dramatic fall in equity values. In the mortgage space, purchase transactions are down roughly 40% YOY and refinance transactions are down roughly 80% YOY. Equity values, as measured by the S&P Index, are down 25% Q3 YTD. That economic backdrop has proven to be challenging.”

Those issues in the company’s Mortgage division led to a company-wide revenue drop of 30.2% when comparing this year’s 3rd Quarter to the 3rd Quarter of 2021.  According to Quist, the company’s after-tax earnings also lagged.  They dropped to a loss of $2.3 million in 3Q 2022 as compared to a profit of $10.7 million in the 3rd Quarter of 2021.

SNFC has three segments to its Utah-based company.  One of those segments being “Cemeteries/Mortuaries”.  The other segments deal with Life Insurance, which includes preneed, and Mortgages, where, as mentioned above, most of the fundamental loss issues occurred in 3Q22 and for the first nine months of 2022.

Not much is mentioned in the 3Q report about the Cemetery/Mortuary division.  In our viewpoint, that segment which Funeral Director Daily and its readers are most concerned with, held its own.  In an environment where deaths in the United States fell by over 14% for the quarter, SNFC’s death care business fell off by less than 1%.  As you can see in the press release, 3Q22 sales dropped slightly to $6.69 million from last year’s 3Q sales of $6.7 million.

It’s probably because of the geographic footprint of the operating sphere of SNFC as to why the total sales did not drop more.  Much of SNFC’s Cemetery/Mortuary division is concentrated in Utah, California, and New Mexico.  Possibly, areas of the country that did not have large pandemic related deaths in the 3rd Quarter of 2021.  Or, since SNFC does not report “Same Store” sales, it could reflect on acquisition businesses since the 3rd Quarter of 2021 also.

For the first nine-months of 2021 the revenue of the Cemetery/Mortuary division was up 4.6%. . . from $20.5 million in 2021 to $21.4 million to date this year.

Earnings before taxes, however, are lagging last year’s results in the Cemetery/Mortuary division.  For the year-to-date those numbers are down 34.4%.  That is probably a sign that like many death care companies, the company’s costs have inflated faster than revenue increases have been implemented.

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