Stewart Enterprises CEO "encouraged" by May activity
Stewart Enterprises, Inc. (Nasdaq:STEI) CEO Thomas Crawford said that the funeral services company’s sales of cemetery burial plots for anticipated funerals, or pre-need property sales, during May were “relatively positive.” Crawford said Stewart’s pre-need funeral sales are holding steady compared with 2007. The company’s pre-need funeral sales have declined 8% during the first six months of 2008 compared with 2007. Crawford made the comments during a midday Tuesday conference call.
“It’s still early but we’re encouraged by what we see,” Crawford said.
CFO Thomas Kitchen said the typical contract length for pre-need funeral sales is 10 to 12 years. Kitchen was responding to an analyst’s question about the time it takes for pre-need sales to impact Stewart’s bottom line. Pre-need property, or cemetery plot, sales generally hit the bottom line sooner than pre-need funeral sales, Kitchen said.
“The Florida [contracts] are usually shorter than that but if you look at Texas, it tends to be even longer than the 10 to 12 years,” Kitchen said. “It could be as high as 15 years. It will vary, depending on the individual markets.”
Crawford said the firm has about $24 million in order backlog for its cemetery segment.
Stewart said early Tuesday that its second-quarter earnings from continuing operations rose slightly to $13.9 million, or $0.15 per share, compared with $13.8 million, or $0.13 per share, a year earlier. The firm’s adjusted earnings for the quarter totaled $14.1 million, or $0.15 per share, from $12.5 million, or $0.12 per share, during the year-earlier quarter. The results topped Wall Street’s expectation of earning $0.13 per share.
“Business remains strong and we continue to make improvements across the company to further realize synergies and strengthen our business,” Kitchen said.
For the three months ended April 30, Stewart’s revenue declined to $136.8 million from $137 million during the same period of 2007. Wall Street analysts, on average, anticipated revenue of $137.1 million for the second quarter.
“We believe we had a very strong second quarter. We have rolled out our new and enhanced funeral packages and are now offering more value-added options to families,” Crawford said. “We’ve already experienced growth in our average revenue from new packages and we believe that we will continue to see that throughout the remainder of the year.”
Quarterly costs and expenses declined 3% to $101.2 million, compared with $104.3 million a year earlier. Crawford said Stewart Enterprises has also rolled out an initiative to streamline business processes, designed to “eliminate waste and strengthen efficiency within our organization, and also to operate with a leaner organization as well.”
Gross profit during the quarter rose to $35.6 million from a year-earlier $32.8 million.
“We are clearly focused on growing our business organically and we believe we have significant opportunities to improve our earnings and cash flow,” the chief executive said.
Stewart owns and operates 221 funeral homes and 139 cemeteries in the United States and Puerto Rico.
In Tuesday afternoon trading, STEI is up 1.80% to $6.79.
