Finance

StoneMor reports 1st Quarter. . . Axar talks continue

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Here’s what StoneMor Inc. CEO Joe Redling had to say about the company’s 1st Quarter of 2022 during the company’s earnings call on May 12 which you can access here, “During the first quarter, we achieve(d) 4% year-over-year growth in our pre-need sales production.  And this is against the first quarter of 2021. That was up 45% against the first quarter of 2020. We achieved this growth through a concentrated sales effort, including a focus on volume and pricing optimization.

On the at-need side, our sales production was flat versus the first quarter of 2021, despite a 2% decline in all deaths, according to the CDC’s preliminary data for the first quarter. Last year, during our first quarter call, we told you that the first quarter of 2021 in terms of sales production was the strongest first quarter in company history. And that March of 2021 was the largest sales production month in company history.

I’m pleased to report that we can once again say we achieved record sales production levels, again in the first quarter of 2022 have the increase 2.5% compared to the first quarter of 2021 and March 2022 exceeding last year’s performance and once again recording the largest sales production month in StoneMor’s history.”

While CEO Redling sounds very optimistic about a quarter that had revenue grow from $78.3 million in 1Q21 to $81.0 million in 1Q22, it should also be pointed out that the expense side of the equation brought Cemetery segment operating income down $3.6 million to $8.0 million for the quarter as compared to $11.7 million in 1Q21.

Also Funeral Home operating income dropped about $300,000 from the same period of 2021.  And, the 1Q22 showed a company wide  operating loss of $2.7 million as compared to and operating income of $3.6 million in 1Q21.   You can see a press release from StoneMor on the First Quarter of 2022 here.

In other news reported in the earnings call we learned:

  • Cemetery revenues, which comprise 86% of StoneMor revenues, were up approximately 3.8% for the quarter from $67 million in 1Q21 to about $69.5 million in 1Q22.
  • Funeral Home revenues, which comprise about 14% of StoneMor revenues, were slightly up in 1Q22 to $11.5 million from $11.3 million in 1Q21.
  • During the 1st Quarter of 2022 StoneMor ended its relationship with Moon Landscaping and is in the process of taking back maintenance and lawn care duties at their cemetery locations.
  • From an expense standpoint, the company noted a $9 million increase for the quarter “driven largely by maintenance and related costs associated with our cemeteries.”

In the earnings call CFO Jeffrey DiGiovanni made the following comment:  “While we experienced certain challenges on expenses, particularly related to maintenance, our strong sales production performance has allowed us to see continued growth and adjusted EBITDA, and we remain on target for our key value generation metrics.”

Finally, an update was included in the 1Q22 Financial Results press release in regard to the “strategic alternative” inquiry made by Axar Capital Management to StoneMor Inc. back in September 2021.  As you may know, Axar Capital Management, according to that September 27, 2021 press release, owns “approximately 75% of the Company’s outstanding common stock”.

Axar Capital Management has inquired about “strategic alternatives that may be beneficial to the Company and its various stakeholders”.  Here’s an excerpt from the May 12 earnings press release:   “. . . .regarding a transaction in which Axar would acquire the shares of the Company that are not owned by Axar or its affiliates but, as had also been previously reported, those negotiations had been tabled in light of the work undertaken by the Conflicts Committee with respect to the independent review of certain investments by our trusts in which Axar had an interest. The Conflicts Committee and Axar recently resumed active negotiations and those negotiations are continuing, but they have not come to agreement on any price that Axar would pay for such shares or on certain other terms of any transaction. There can be no assurance that any agreement with respect to a take-private transaction will be executed or that this or any other transaction will be approved or consummated. . . . “

According to the May 12 press release StoneMor Inc. owns and operates 304 cemeteries and 72 funeral homes in 24 states and Puerto Rico.

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