Q4 2019 Earnings Call
Greetings and think you're standing by your costs will begin <unk>.
Momentarily we thank you for your patience that you. Please remain on the line.
[music].
Greetings and thank you for standing by your costs will begin momentarily. We thank you for your patience that I could you. Please remain on the line.
[music].
Greetings and welcome to the Stonemor Inc. fourth quarter full year earnings release Conference calls.
During the presentation, all participants will be listen only mode.
Afterwards, we will conduct a question answer session.
Time, if you have a question. Please press the one followed by the for all your telephone.
If it anytime during the conference you need to reach an operator, Please press star zero.
A reminder, this conference is being recorded Thursday April 2nd.
I wasn't in 20.
Ill turn the conference over to Keith Trust, Vice President of financial planning and analysis. Please go ahead.
Thank you.
Good afternoon. Thank you again for joining us on the Stonemor conference call to discuss our 2019 fourth quarter and full year financial results.
Our press release was submitted at market close and it looks like it posted to the wire service about a minute ago. So you should be able to grab it yeah.
It also find a full release on our website at Www Dot Stonemor Dot com.
With us on the call. This afternoon, our Joe Redling, President and Chief Executive Officer, and Jeffrey de Giovanni Senior Vice President and Chief Financial Officer.
Before we begin I would like to remind everyone that this conference call will include certain forward looking statements within the meaning of the private Securities Litigation Reform Act 1995, Oh.
All statements that address operating performance events or developments that we expect or anticipate to occur in the future are forward looking statements.
These forward looking statements are based on management's good faith beliefs and assumptions.
Our management believes that these forward looking statements are reasonable however, you should not place undue reliance on any such forward looking statements because such statements speak only as of today's date.
We do not undertake any obligation to publicly update or revise any forward looking statements whether as a result at new information future events or otherwise except as required by law.
In addition forward looking statements are subject to certain risks and uncertainties that could cause actual results events and developments to differ materially from our historical experience and our present expectations or projections.
These risks and uncertainties include but are not limited to those described in the reports, which we filed with the FCC.
With that I'll now turn the call over to Joe Redling, we'll take it from here.
Thank you Keith.
Good afternoon, everyone and thank you for joining us today.
Ordinarily we utilize this time to do with deep dive in our fourth quarter results and full year results. Clearly these are no ordinary types.
With that in mind and wanted to start with an update on what steps Stonemor just taking as we addressed this public health crisis.
Our operations are deemed essentially by the state and local governments in which we operate.
And we agree that we serve a critical role and serving our families and communities that goes far beyond the services in burials we performed.
We must remain operational and we must continue to serve our families and communities the up much.
Vacuum dedication, while also being responsible stewards for public health sake.
In order to ensure the welding of aren't fully then our families. We provided every employee in the company with detailed health and safety materials, including industry specific CDC Cobiz 19.
Direction for working with the seat that May have been in fact it.
We're working with state local officials to ensure that are essential services and continue to operate.
We have communicated with every employee.
They should stay home if they are symptomatic.
<unk> come in contact with someone who is symptomatic, whereas tested positive.
We have also extended our sick leave policies to ensure that any one of our employees if in fact it.
Directly caring for someone in fact, it or direct into quarantine by medical professionals will continue getting paid beyond the standard sick leave limitation.
At all our locations we are practicing social discussing and are encouraging our families to do the same.
It is an emotional and stressful time for those families and social distancing it'd be difficult.
We have provided guidance and training to our employees on how to best handle any situation, where social distancing is not being appropriately observed.
Again, we are working with local governments and law enforcement and then efforts keep our employees families into you didn't say.
Our marketing and sales team is quickly responded to sales challenges we have experienced over the last two weeks like implementing several virtual meeting tools across several web based platforms to ensure that we are there for our customers and are able to service their needs in a safe and productive manner.
All ourselves Council has had been trained on these new tools and as of last week.
25% to 30% of our customer meetings and sales appointments.
I've taken place virtual and we're hoping to see that number increase response from our customers had very positive as they appreciate our flexibility and view the virtual options as being safe and effective.
Most of our locations have also started providing like video streaming services, so that family and friends and that virtually during their time with me.
We have had a number of Cobiz 19, Becton service that our locations. Our teams are working with the families to ensure that everything is handled appropriately and respectfully regardless. Our teams have also increased the cleaning and sanitizing and our locations, including third party between them when Cobiz 19 positive yes had been.
At our properties.
Right now our biggest need.
And struggle is similar to that of our health care.
The need for personal protective equipment like lots and masks.
Our workers cannot perform many of their essential services like in bombing impressed without these tools.
We are working diligently with our traditional vendors and identifying new suppliers to secure those materials. While also making sure that we are not pulling away needed materials from frontline health workers.
In early March we conducted a successful stress tests of our back office infrastructure and access to ensure that our corporate and regional support teams could perform their duties remotely.
And support the field organization.
To support social dispensing and keeping our employees as safe as possible, our corporate and regional support teams have switched.
100% work from home environment on March 13th.
And quite frankly, we haven't Mississippi, we're continuing to provide the sport to all our locations and we continue to continue to execute on our key strategic initiatives.
Finally in Jeff will talk in more detail on these measures as we consider the potential financial impacts of this pandemic, we have taken necessary and proactive steps to provide financial flexibility as we navigate these uncertain times.
And we recently announced we executed an amendment on our senior notes that amend several of our covenant.
Typically providing more cushion on our operating cash flow related covenants and additional cushion on our asset coverage covenant.
As part of the terms of that and then we are also initiating an equity raise a $17 million through a rights offering.
Which has been backstopped by our largest shareholder.
Collectively this will improve the liquidity profile of the company during this period of uncertainty.
I'd like to thank both our debt and equity partners for their continued confidence in support.
Our response and our vision.
Despite the changing environment around our team is focused and committed on executing against the key operating initiatives that we discussed previously.
And our last call in October I highlighted my four key priorities for closing out 2019, and looking ahead to 20 Twond.
Those priorities haven't changed.
First was our commitment to a C corp conversion by yearend.
As you know that goal was accomplished.
Secondly, I stated that our goal was to finalize asset divestitures in Q1 to 2020 to optimize our footprint de leverage and increased liquidity.
Jeff will provide additional details on our divestiture status.
We recently announced the signing of several asset purchase agreements in the state of California, which will allow stonemor to completely exited state.
This was a major milestone for us and is a step into right direction. The first the best search or was the 33 million cash sell Oh, Mott, our largest and most profitable location in California.
This transaction signed in December and close the first week of January.
The second transaction, which region recently signed in March I suspect it could close tomorrow.
It wasn't a $42 million sale of all of that and coma, California.
25 million to cash in 17 million and then assume land purchase.
Actively those two deals have resulted in nearly $51 million in debt reduction.
Lastly, we also announced and $7.1 million deal for the remaining properties in California.
That will be closing during the second quarter.
We continue to engage in additional divestiture opportunities on TV and we'll keep you informed as we continue our process.
Third priority that I highlighted continued to improve efficiencies and reduce costs through our phase two operational improvement plan.
We have made significant progress on that front since our last update now the clear view into increased cost reductions that are well above the 30 million dollar in annualized savings. We previously quoted on past calls.
I will highlight several of the key areas in a few minutes.
And lastly, we are always focused on continuing improvement in sales productivity.
With a goal of returning to sales growth in 2020.
Well 2019 with a tough year from sales perspective, we are focused on rebuilding ourselves culture to drive sales improvement across all our locations and sustaining growth.
2019 was clearly a year of transition.
As we drove major changes across key areas of capital structure leadership organizational structure and sales strategy and productivity.
We entered 2020 anticipating a true year of transformation, both from a sales and profitability standpoint.
While cobot 19 is clearly an unexpected and challenging new development.
We remain focused on continuing that transformation.
From a sales perspective, we have developed and implemented new training and Onboarding program.
We drove a high level of compliance in our CRM and restructured reporting to more accurately manage sales productivity productive productivity real time.
Those tools for servers well in this new paradigm.
And I'm happy to report that all those efforts we're working.
And during the first two and a half months of Q1 2020 sales were trending up and gaining momentum in fact.
Early March we were achieving double digit sales growth versus last year, and we're right on plan for our internal targets and our stated goal to return to sales growth in 20 Twond.
And that performance was with quite a bit of disruption occurring on the west coast as we've managed through the divestiture process.
But as you would expect as cobot 19 rapidly advance.
And many of our states have four stay at home regulations, we have seen a decline in current sales trends specifically, our pre need sales have declined approximately 30% versus prior year in the last two weeks.
I believe this is related to the initial orders to self isolate as we saw a surge in appointment cancellations.
We are watching this very carefully and we'll adjust sales and marketing related expenses.
As we learn more about.
Any longer term impacts of cold would probably at 19, whether positive or negative to the sales process.
The video conferencing and virtual meeting that we implemented immediately as we realize the severity of the crisis have clearly mitigated.
The downside.
Even with the impact from Kobin 19, we expect to finish the first quarter 2020.
Up mid single digits ahead of prior year.
While it would be premature to provide any guidance on future ourselves.
We have mitigated customer cancellations with virtual meetings to a large degree and we are seeing stability in appointment counts in close rates.
We do not believe this temporary shortfall in pre need sales will have any material impact on cash flows in the near term.
Jeff will discuss our liquidity outlook in cash position in more detail in a minute.
Every morning, we discuss sales performance to make sure that we're pushing right buttons and doing the right things to provide the critical services for our family.
As this crisis shift as it seems to do Dallas, we want to make sure that we are being responsive to the changing environment.
Before I turn the call over to Jeff I want to provide more information on the operational improvements and cost reduction initiatives.
$30 million and cost reduction was a target that we highlighted in previous calls.
With most of those savings in the areas of corporate overhead procurement and field operations.
Up identified in our implementing initiatives that will allow us to exceed that target.
Now I'd like to share some detail on the key projects that will make that savings goal of reality.
Early on in our process. We were focused on quick cost savings you consolidated and de layered reporting structures and caught unnecessary spending.
As we realized the second phase of our process. We are focused on transformative initiatives that drive cost savings through more efficient and effective operation.
This is beneficial on two fronts.
First we have an immediate impact on reducing costs.
But equally as important we are improving operational systems and processes that will enable much more efficient operations going forward and eliminates administrative inefficiencies.
Allowing our field management to focus on our core priority serving family and driving sale.
With that in mind that first major transformational initiatives and the one I'm probably most excited about we have entered into a strategic partnership agreement with Moon landscaping to provide outsource maintenance and landscaping services for all Stonemor profit.
Clearly this category represents our largest expense line and after a thorough review we have decided to embrace this unique outsourcing model in partnership with move.
We have already completed a multi state pilot program, which moving took on 100% responsibility for all maintenance and landscaping services that take place within our locations. This isn't just cutting the grass and trimming the trees, they're performing opening and closing.
Since they hired all of our employees in the pilot locations, it's been a seamless transition.
This is a win win for all parties.
Our valued and experience maintenance employees are all immediately transfer to move so we maintain that level of experience and reliability, while our employees Bennett from benefit from being part of one of the leading landscape companies in the country.
Stonemor will realize.
Significant annual cost savings of between 10, and 15%, while improving professional oversight and accountability for our properties.
We realized this is an innovative approach for the industry, but we believe it is truly transformational on many levels.
We'll be rolling out the same program in stages in the coming month and expect similar positive experiences to our pilot locations.
With maintenance being handled by industry experts and allows our field and corporate leadership team to focus on customer service and building a consistent and performance based sales culture at each and every property.
Leveraging our scale with the right strategic partner with a common vision will result in a very successful partnership and we are well on our way with strong early successes.
We've also undertaken the path of modernizing our technology and communication platform.
In in past years as property were acquired.
There weren't any plans to integrate and utilize technology and software platforms to standardize and streamline operations and administration procedures.
As a result.
We were left with antiquated systems that are both costly to maintain and inefficient.
We are investing in enhance internet access and a single cloud based communication platform.
And that will allow all of our locations the access that they need to operate efficient efficiently and communicate effectively.
And all this Adam materially lower cost than our current list of providers that were typically sourced locally.
Again, we have leveraged our scale to consolidate to select a number of nationally recognized vendor that will result in significant cost savings and a much improved technology stack to support all field operation.
Directly related to this much needed technology upgrade the last major initiative that I want to discusses the pending company companywide launch of Cooper, a leading business spend management software.
We've been working closely with consultants from KPMG launch the platform, which will bring new levels of control visibility and cost savings to our overall purchasing process by implementing new procurement standards.
While achieving significant efficiency.
It's hard to believe but due to lack of investments in this area in the past. The company has on average managed 11000 separate invoice each month in a very limited control environment, and only minimal controls over purchasing processes and vendors.
I'm very excited to move Stonemor into digital age and yes, it's long overdue.
The Cooper software platform will ensure standardization across our portfolio, while eliminating waste unnecessary spend.
We expect to be fully operational by the end of Q2.
I expect to have all key cost savings initiatives fully operational by Q3, and we will start realizing material savings in the fourth quarter of this year.
In addition, given the new challenges and uncertainties ahead regarding cobot 19, we will continue to evaluate our cost structure and moved quickly to adapt to this new reality.
We believe we are well positioned to weather the storm and exit this period, and even stronger and more resilient company.
At this point I'll turn the call over to Jeff to briefly discuss Q4 and full year financials.
And provide additional details on the debt amendment, the equity raise divestitures and overall liquidity.
Thanks, Joe Good afternoon, everyone.
This is certainly a little time, okay. Anyone is wondering we are practicing social assistance.
And our each doing this call from our individual hopes.
29, he was a truly a year transition for some more in the first half the year, we restructured our field operations in sales organization, while also completing the recapitalization of our debt structure.
At the year came to the clothes, we completed a rights offering and convert it to a C corp, but those transitions behind us we're now moving onto our transformation initiatives that you mentioned.
And I will certainly dive deeper into some of those items shortly but first I want to briefly discuss 29 key fourth quarter in full year results.
Starting with the fourth quarter results Cemetery segment income was never point 6 million in Q4, 19 decreased 6 million from income of 6.6 million in Q4 18.
This was primarily due to decrease in pre need cemetery sales and a reduction in the number of pre need cemetery contracts that were service in Q4 19.
Funeral home segment income was 1.5 million.
Q over Q2 was flat.
Corporate expenses were 13 million cubic foot 19.
A decrease of 0.4 million for 3% from 13.4 million in Q4 18.
The decrease is primarily due to lower severance expense decreased legal settlements, partially offset by increases in accounting and legal fees related to the rights offering in C Corp conversion transactions.
Now looking at what's the full year results.
Sorry segment income was 7.4 million in 2019, a decrease of 4.8 million for 39% from 12.2 million in 2018.
As mentioned previously we experienced an $8.3 million decrease in the fourth quarter 2019, due to a decrease in pre need cemetery sales and a reduction in the number of pre need cemetery contracts service.
The fourth quarter loss was offset by increases in cemetery segment income through third quarter 2019, a 3.4 million.
You know segment income was 5.9 million in 2019, a decrease of 1 million were 14%.
From 6.9 million.
In 2018, the decrease in segment income was primarily due to declines in revenue recognized some casket sales in that eight services.
Corporate expenses were 51.1 million in 2019, a decrease of 2.2 million were 4% from 53 million in 2018. The decrease is probably don't primarily due to lower payroll, resulting from a reduction in force in the first quarter increased.
Consulting fees related to our six so six implementation.
And it roll off of interim executive fees.
These decreases were partially offset by increased financial advisor fees, it consulting fees and increased dotcom.
Finally, our net loss for 29 key was 151.9 billion.
Parents to a network of 72.7 million.
In 2018.
The increase net losses, primarily related to the C Corp conversion ended June recapitalization.
Including a 72 million dollar increase in interest expense.
An 8.5 million last Monday extinguishment isn't that.
Hey, 20.2 million tax expense related to change impact that it.
In a limitation on our ability to to use and it will carry overs had a 24.9 million impairment of goodwill.
In a time adversity, we remain focused on what we can't control. The continued consistent execution of our transformation initiatives. As you know the divestiture program has been a large part of the transformation initiative that we are currently undertaking.
Even with everything happening, we continue to push forward, but that process. So we delever our balance sheet generate additional liquidity and while also reducing our geographical footprint and improving our operation.
Fishing.
We have completed one to two significant divestitures in the state of California. The second significant divestiture is scheduled to close any day with the remaining assets to be cleat completed within the next 60 days, resulting in a complete exit from the California market.
First transactional assigned in December and closed in early January on Oakmont Cemetery, which wary of 33 million in cash proceeds.
Second.
Transaction, which we announced on March 19th is scheduled to close any day on all of that cemetery and funeral and crematory for 25 million in cash proceeds and also included the assumption of a $17.1 million lot take down agreement.
For a total purchase price of 42.1 million in.
In addition to those transactions, we completed a few smaller.
That's true for cash proceeds of approximately 1.2 million.
These transactions enabled us to do Leah.
Our balance sheet by approximately 52 million, which will save us.
Roughly 3.9 million in cash annual cash interest and another 2.1 billion in Pik interest.
As you may recall in potential calls for us to utilize the first 55 million net proceeds to pay down the debt.
The closing of the remaining California properties for approximately 7.1 million in cash proceeds will push us over that 55 million your threshold.
At which point, 80% of net proceeds to pay down debt and the remaining 20% will be retained by Stonemor and reinvested in our remaining locations.
In addition to the cash savings generated by the reduction of that the exit of the complete the any sizable portion of our Pacific portfolio will also.
The able to seismic reduce.
Regional overhead and back office support with an estimated annual savings in excess of 3 million.
We continue to work with the industry, leading Johnson consulting group to identify additional opportunities that will make sense for still more there has been considerable interest.
Properties across across the country, but we're being selective in our criteria.
In terms of liquidity yesterday, we entered into a and this amendment indenture with respect to our senior Pik Toggle notes due 2024. This time, we covenant and provides us with additional financial flexibility for the next four to six quarters.
That will allow us to continue to manage business effectively and complete the key operation transformational initiatives in light of the new economic reality that we find ourselves in as we navigate this current pandemic.
Our invention provides the three main financial covenants, the first of which is a minimum liquidity, which was not impacted by this amendment.
I think covenant interest coverage ratio, which measures unlevered cash flow from operations.
Against cash interest. This covenant was eliminated for the first three quarters of Twentytwenty instead, we'll be measured against minimum operating cash flow covenant because those quarters. The thirdly covenant is a minimum asset coverage ratio, which measures certain asset levels against the current outstanding debt.
And the volatility in the investment markets over the last month. This was amended for 2020 to alleviate any potential uncertainty.
In terms of risk on market fluctuations, our trust assets, our diversified in several different buckets with approximately 54% invested in real estate.
Great limited partnerships, 12% holding cash equivalents simple deployed as it later date and 6% fixed income products.
The remaining 28% or very investment funds, primarily fixed income nature.
We continue to work closely with advisors in the Trust committee of aboard managing oversee our investment strategy in order to minimize risk and maximize value.
In consideration of securing this amendment still more is paying a 5 million dollar consent fee.
$25 million, which will be paid in cash and 1.5 data, which we paid in time has increased the principal amount that notes outstanding.
Condition of the amendment acquire still more to raise equity capital of 17 million on or before July 30, Onest 2020 do show Stonewall has agreed to undertake an offering to holders of its common stock of transferable rights with purchase though pro rata share a common stock with an accurate exercise price.
At least 17 million at a price of 73 cents per share. This place with determined by Special Committee with these this in the financial advisor.
The rights that your size period during which the rates will be transferable, who will be open for no less than 20 calendar days to no more than 45 calendar days.
We have also entered into a letter agreement with extra capital management, our largest shareholder.
Under the terms of this letter absolutely committed to purchasing shares of series K preferred stock with an aggregate purchase price of $8.8 million.
They were also exercised that basic rights in the rights offerings by tendering Michelle is a series.
Preferred stock.
Common shares of common stock finally extra has committed.
Your purchasing any Sharon offered in your rights offering for which other stockholders do not exercised was right up to a maximum of an additional $8.2 million.
Those proceeds will be utilized in part to pay the cash he do as part of the amendment, but the balance be utilized nicotine operation of our business collectively that 17, nine an equity raise well count as as a single equity cure pursuant to the terms of our denture, we have a second equity cure permitted.
Neat venture that has not yet been executed upon.
These actions are a testament of the things our lenders and equity partners has and we are pleased.
You have the continued support and appreciate the confidence.
They maintained in the company's future.
We believe the sharpened focus we developed in 2019 to roll strategic performance, but procurement initiatives that Joe discussed and then supplement working capital efficiencies at the helped us to react to that need to prioritize liquidity during coven 19, pandemic that said compared to share.
So as well as our initiatives underway to preserve liquidity until normal operations resumed.
Importantly during this some person.
Every time, we are prioritizing the health and safety of the families. We serve and our team members. We have taken action by moving to virtual sales platform to better serve our customers. During these unforeseen times and our corporate office functions are operating remotely.
Now I'd like to touch.
On the Swift and bold actions, we've taken that contingencies were considered in order to preserve liquidity.
Already discussed a 17 million equity commitment with our largest shareholder and amendment to our indenture to provide additional financial flexibility over the next four to six quarters. In addition, we have significantly curtailed consulting projects he member hiring and non essential operating expenses in.
The short term.
Given that credible fluid and unprecedented situation. We are currently facing we are evaluating additional contingencies to improve liquidity, including pursuing additional curtailment in marketing and certain capital projects.
We believe the aggressive actions we've taken in the contingency plans, we develop provide needed leverage to ensure we have an adequate levels of liquidity navigating our business through this period of uncertainty that's interesting as people are spending more time at home, we've seen an increase in our pre need lead.
Generation.
Certainly good news, but we need additional time to understand the impact of social listening thing in our ability to convert those leads into active sale presentations. We're monitoring Lee conversation on a daily basis, it will make the appropriate adjustments to our market spend as the data indicates.
Since it started to submit that we've been in regular contact with our key vendors in supply chain, everyone is adapting to the new world.
But so far we're not seen any significant stress on our supply chain, perhaps with the exception of securing the necessary pp a materials for employees on the topline.
We are monitored monitoring the impact of various mandates for local state governments to ensure that they don't impact our ability to secure the merchandise and supplies that we need to service our families.
To that end, we're committing direct directly with the state health organization across the country to ensure that we are formed in prepared to assist as needed. Lastly, this is clearly stressful time implemented a revised time policy for 2020 ensure all our employees stay at home when they aren't feeling well preneed.
Self quarantine to keep everyone safe we increased every once in a time by 10 days for the year. This exceeds the standards for Scott prescribed by the federal government, but that.
Thank you for your time today, and I'll turn it back to Joe for closing remarks.
Thank you Jeff.
As you can tell we're managing through a high degree of change both internally driven but also with the ongoing endemic countries is facing.
Coping 19 as impacted everyone and it will continue to do so for the next few months.
I need to thank the team at Stonemor, particularly our field personnel, who are working with our families in our communities.
Like all companies, we are making deli adjustments due to the effects of cobot 19 pandemic and we know this is the time, our customers need thats more than ever.
We have a tough challenge here, but the important work for our employees are doing cannot be minimized.
Their hard work and dedication will help us pull through.
My team and I.
Our encouraged by their spirit.
And it helps push us forward as we take on the challenges associated with the internal initiatives that we are pursuing.
I'm confident that our teams working together, we'll get through this and we will be stronger and better position to restore our business and this company to growth and reestablish Stonemor is a true leader in the industry.
With that I'd like to open the floor for questions.
Thank you.
And if you like to register a question. Please press the one followed by the four on your telephone keypad right. Now you will hear three tone problem to acknowledge our request.
If your question has been answered and you would like to withdraw your registration. Please press one followed by the Sthree.
One moment please for the first question.
And the first question.
I was from the line of John Kelley with the Brooklyn Group. Please proceed with your question.
Thanks for thanks for taking my during the call I'm, taking your question.
Just a couple of questions operations and one on.
On the stock price, what you're going to operations, Joe I think you mention so the first two and a half months March.
Pre need sales were up double digits.
Yes.
Is that was that kind of your expectation I mean, that's that's terrific performance with putting aside kogas would that has been a fair number two assumed for the full year.
Well we had.
Good question, we we were excited about it January and February very strong.
We had some aggressive internal goals and we reach those goals during that period of time.
We it was our largest growth period.
That we thought we could really have an impact. So we're very encouraged by that I think the we were looking for growth for the full year.
Double digit was was a goal of ours internally and I think.
Right up until that second week of March.
We were heading right for it so.
Again, we don't don't know how the trend will.
Change in the next.
A few weeks.
But we're doing everything we can to serve our customers as Jeff said, it's very interesting that we're seeing some material increases in lead generation on the web.
People have.
They all have a lot reduce their surfing the web and we're seeing very high and increases in click through rates and lead generation. So that's why we moved very quickly on this virtual meeting platform, which is doing very well. So that the question for us now, which can we actually convert those leads to act.
Actual appointments.
And have you know acceptable close rates, but we do feel that.
In this environment.
Vance planning.
I think demand for advanced planning will be high I think it very top of mind question is we need that Evans, we need to have a couple of more weeks under our belt and see how that plays out.
Good. Thank you that and then secondly on the operations.
Can you give us a feel for.
What additional asset sales might be I don't mean piece by piece, but.
If your plans.
Happened this year, what can we expect obviously, we had 49 million dollar deal one deal with California and the yet.
Is it fair to say.
We could get another 50 100 million in the balance for the year or.
Well, given coated which put that aside the sure you know if you back to your original plans do you think we feel right 50 to 100.
Yes, sure Jack So so listen we're very encouraged that we actually got these deals closed in this environment right. So that's that's the first thing. So we had a lot of great fires that were stayed with us and kind of worked through the process.
As Jeff pointed out we have.
We have a ceiling of 155 million in our indenture.
You know, where we get to that number I don't know given this environment. We do have a lot of interested parties and some pretty pretty significant opportunities to pursue here. The next couple of months. So I wouldn't mind getting is close to that number is I can I, just obviously as we deal with potential buyers.
This environment things may change, so we're going to be very aggressive, but again with that keep in mind that we're really trying to maintain sort of oh footprint, that's very efficient so what kind of looking at areas regions and state that we feel our non strategic.
We are still being very aggressive in pursuing that so.
Thats kind of where we're at.
Okay and that's just the last question is really on the stock price and it's a troubling question Chris on the shareholder.
On March nine change for security.
Stonemor announced the California deal with 49 million dollar deal.
During the day of the 19. So this is before you announced it.
Yeah, the stock traded.
Up as high as 28% intra day, two adult 31.
Closed up 15%.
On that day at about $1.20.
Subsequent.
First day of trading after the public announcement.
The stock traded up two cents, so basically it was up 2%.
Today.
Markets up pretty strongly.
Your stock is down 10%.
And it's clear why I think someone was excellent interesting information about maybe the stockpile the a rights offering at 73 cents. So I guess my question is.
Yes, we see.
Just going back to more trade change made inquiries.
Have you guys.
Raise some.
Issues or excuse me some.
Some investigations within the company or your outside investors because.
Good old, saying you know I don't believe acquaintances and this is just wait to coincidental. So.
That said a lot, but I appreciate your thoughts on it because it's extremely troubling to a public shareholders.
Yeah, I appreciate that Jack obviously, I can't control the pricing in the market and.
We saw the same thing in terms of the announcement the stocks been obviously very volatiles for quite some time the same thing happened.
When we announced the first divestiture and stock went up and then people are taking me I think profit taking so.
Mike We Havent had any inquiries at all we stay focused on just kind of running the business.
And making sure we're delivering on our initiatives so can't really comment on what's happening in it.
Hi, I appreciate that Joe, but part of your responsibility just this information controlling information.
And I've heard so the show up so knutsen should you have company does have responsibility.
I will point out the volume today and that day was a multiple of the prior days and again I'm not the FCC and I'm not but.
In my humble opinion, some unless you control information better somebody who is getting some kind of information that they should but your slide you tend to dish to assess you see hasn't inquired about this they should.
Understood.
Thank you for that and it's to the extent you do any follow up I. Appreciate you could share that with shareholders that I'm asking merits a shareholder.
Sure.
Sure.
And the next question comes from the line of Steven Percoco with Lark Research. Please proceed with your.
Thank you I just have a few questions.
Could you.
Quantify the.
Profit or loss on the properties that you sold in California.
Were they Ah.
I know you said that there is 3 million of overhead, but from an operating income point of view or an EBITDA point of view or they profitable or lossmaking and could you quantify that.
You also I mean, the obviously these sales were accretive I'll, let Jeff jump in here.
We're not trying to share in multiples here.
Out of the confidentiality with our buyers, but where one of the biggest focus as we have here is making sure what everywhere divesting is accretive.
To the business not what we don't want to do it.
Fire sale here, where we're giving up good EBITDA for low multiples so.
These were accretive sales I'll, let Jeff jump in the at any other additional color.
Yeah. Thanks, Joe So really from we really don't disclose performance on any individual locations.
But to Joe's point these were accretive deals, we're still going to the process in booking the transactions. So there will be shown more next quarter with the gain loss. If these will be games of the transaction, but that's all we have about at this point.
Okay, but can you could you clarify are they accretive after the paydown of debt or are they accretive before the pay downs debt.
They were accretive before the pay down a debt.
Okay.
Hi.
Also could you give us any.
Colour on the impact of a.
Covert 19, so far on Youre at need business. I know you you said a that you responded quickly with the.
Video viewing, but I'm wondering if there's a change in the mix of sales.
Hi, RPR people changing the the purchase decisions that they make.
Need or any color that you can give in that regard so far would be helpful.
Yeah, we haven't had enough volume of Cobiz 19 related services. So our at the business is relatively stable as its then.
We don't know.
Literally we've had.
So maybe 10.
So it's too early in its very regional related.
So we'll have to wait and see.
What happens on that front regarding and I'll kind of the economics are little bit trend relating to those.
Those particular paces, but we don't have enough information at this point.
Okay.
Right Thats it from me thank you.
Great. Thank you.
And the next question comes from the line of Richard Elkan with the Opco. Please proceed with your quick.
Hi, Joe Thanks for taking my call a two things just.
Quickly I Didnt hear what she said.
I Didnt.
Here, what you see here, let me turn off the.
I didn't hear what you said was your target amount for your remaining asset sales.
And then I have a real question.
Sure what I said in the previous question that was asked is right now our indenture has a cap of 155 million that we have allowable for divestitures.
Obviously, we have we have still.
Nice gap there to fill out were being aggressive in terms of pursuing that we have a lot of activity going on but as I said earlier.
In this environment the buyer pool may change, so we're tracking that but we're still being very aggressive to take full advantage of the opportunities.
Okay.
And so the difference between what you've received so far and $155 million would be what's left or what you'd like to do.
Yeah that would be the opera I would call that the opportunity range yes.
Okay.
If you were talking about the mood landscaping a deal and you said that.
It would save about 10% to 15% of your cost of doing these things yourself to give a a rough idea of how much that is in dollars.
Yes. So the reason we gave a percentage is obviously with these divestitures that number's going to change right. So as we exited.
The state of California, So I'd, rather not put a number out there because that could change.
But it is literally our largest largest expense line item in the company you imagine 400 properties with.
The amount of maintenance.
So it's it's a it's a significant savings for the company and secondly, the other thing to think about with the outsourcing and I believe were the only competence ever how sorts fully in terms of openings and closings.
There's a lot of indirect benefit here as well when you think about.
Two other key areas, one is capital right, which doesn't and Thats cash.
We haven't huge fleet of equipment, and Backos and mowers and now that were kind of relief from that capital.
Obligation and secondly.
Just from a reinsurance in workers' comp stat standpoint, the our highest risk employee segment is our maintenance people. So there is also benefits all sort of the insurance in the workers comp and all the things that are.
End up you know, adding to our cost. So it's you know it's a pretty that's why I call. It transformative in terms of its not just hey, we're saving money on modeling. It's it's really a big change for the company and I I don't want to minimize the fact that where you know I say all the time without a landscape company really about.
Serving our families and trying to help our level of customer service and really becoming a sales organization and this will help us focus on that so so quick answer is we don't really can't I don't want to kind of put the number out there because you know until we get these divestitures sort of locked in I don't want to be stuck with the bigger number.
Okay. So no, but let me just follow up on a little bit. So you does that mean, you're going to you going to sell all those mowers and back codes and all the other equipment you don't need.
We will the Moon is moon has taken those on.
Ross, so they've done that somehow pull inventory of our our products and and they're there there were going to be kind of that's part of the deal I'm there'll be a leasing arrangement for a period of time and then they'll decide what they need to replace on their own done.
Uh huh.
Now when Youre your explaining the talking about this 10% to 15% saving.
You had said that that could change I just didn't understand what what would know what act that or.
Now, let me just be clear I apologize for that the 10% to 15% won't change the actual dollar value if I have.
X number of fewer properties through divestitures for example, we just exited California.
Right. So those maintenance expenses apart there not part of my PML anymore. So there's no savings related to those so the actual is solid gross savings would change based on the level of divestitures, we do going forward.
We can I mean like.
We can provide more.
Details about that as we locked down over the next quarter on on additional divestitures.
Okay is it possible to say on the the deal that closed and maybe the one that's going to close in a few days what that would amount to in dollars.
In terms of maintenance.
Yeah, the 10% to 15% savings Yeah, I would I don't know this specific maintenance expenses that property I'd have to we'd have to go back and look but we could.
We could follow up with you on that just look at the maintenance by we typically don't give individual property information out so that would be difficult for us to do.
Okay, well, maybe I'll check back within a few days whatever you know you have available okay. How helpful.
Thank you very much.
And the next question comes from the line of Mitch Socs with GP Ltd. Please proceed with your question.
Hi, Joe and thanks for taking the call I just had a specific question hi.
I'm watching unfortunately families that are being affected by coated and clearly.
[music].
Many companies in the same industry have you are having to to pivot.
To accommodate.
Families. So from a.
I know you've said there is only 10 or so.
Related coated.
Services that you performed to date.
How are you folks approaching that going forward is it.
Provide video viewing cremations in burials with what small family groups and around that although regrettable there could be a potential increase.
In your business or the rates that you are presently.
Charging going to be discount that at all given the limited services or how are you folks thinking you may approach that.
Yeah. That's a good question I mean, I mean, a lot of lot of this services.
That we provide will be dictated by the local authorities.
It's like for example, last we stay here today, even in a normal burial.
It's only.
Gatherings of 10 people are less and we can't have anyone on site as were lower in the casket. So our people are protected so we already have controls in place and a lot of those are based on direct feedback from from the state.
Authorities for that we will work very closely and adapt with our because our families to make sure. It's been being done respectfully. It has been a challenge I'll be honest in the beginning of this where.
The last thing or grieving family wants to hear that you know they have to limit attendance or they have to let people know lots of calm.
And that's been a difficult.
Issue for our people in the field early on that's actually getting better now because you're seeing literally local law enforcement now.
Breaking up gatherings and literally finding people for gathering above a certain amount. So we have a lot of support there, but we were going to be very flexible with all of our customers. During this time and do whatever we tend to support them.
Okay. I think my more specific question and I know it was a long question is is there any discount being given or is it at the same normal rates and you know leader of families wanted to have a memorial service in your facilities.
You would schedule. It then that's sort of.
Yeah.
It was that.
Yeah, we haven't I mean, we haven't had that kind of volume come in related to Cobiz 19.
Haven't.
We haven't changed our pricing at all at this point.
Obviously as it I think it's more that's more of an economic question as the as people as you look at the level of unemployment is we're going to be very flexible with our people that are on payment plans.
And we're going to work with people financially, obviously that we're going to be very fair. During this period of time, we haven't time created a.
Actual discount for coated 19, I think that would be that would be pretty inappropriate at this point to do that but we will be very flexible with all of our all of our customers.
Yeah I don't think my question was around really saying you would give the if you know a special coated rate to attract customers I think what I was saying what I was I got even articulated well enough is because of the limited services.
Would you be discounting would be yeah quite short.
Of course, I mean, if they're not providing if there you know look one of the things here is what level services look like right. So obviously your pricing is going to be different based on the amount of.
Effort, and and and and costs, we have related to it. So yes, if theres no services the lumpy charges for that I mean, it could be a straight Barry I could be a straight cremation. So of course, we which are our pricing would would change based on the services that are being survive.
Okay that was that was really my other question. So so thank you and I. Appreciate you taking the call you back sorry took me so long to get to your answer.
And there are no further questions at this time I'll now turn the presentation back to Mr. Sean.
Thank you very much and that concludes our call for today.
Thank you and.
Thank you all great restaurateur.
That does conclude todays call. We thank you for your participation ask that you. Please disconnect your lines.
[music].