Nine Months Ended September 30, 2018 Compared to Nine Months Ended September 30, 2017
Funeral home merchandise revenues were $19.5 million for the nine months ended September 30, 2018, a decrease of $1.6 million from
$21.2 million for the nine months ended September 30, 2017. The decrease was primarily due to the impact of divested properties combined with a return to a normal level of cancellations as there was a release of the cancellation reserve in
the prior year that did not recur in the current period, and a decrease in
pre-need
casket revenues.
Funeral home
services revenues were $21.8 million for the nine months ended September 30, 2018, a decrease of $4.1 million from $25.9 million for the nine months ended September 30, 2017. The decrease was due to a decrease in insurance
commissions resulting from shifting focus to
pre-need
trusting, the impact of divested properties, a return to a normal level of cancellations as there was a release of the cancellation reserve in the prior
year that did not recur in the current period, the adoption of ASC 606, a decrease in services, and a decrease in investment income.
Funeral home
expenses were $35.9 million for the nine months ended September 30, 2018, a decrease of $3.9 million from $39.8 million for the nine months ended September 30, 2017. The decrease was due to lower insurance operation expenses
resulting from lower commission expense related to a decline in insurance sales, changes in the compensation plan, and more closely integrating the operations with those of the funeral homes. This decrease was combined with the impact of divested
locations, lower costs of merchandise, a decrease in depreciation and amortization due to the completion of two
non-compete
agreements and a decrease in advertising expenses. Partially offsetting these
decreases were increases in payroll and employee benefits.
Corporate Overhead
Corporate overhead was $12.9 million for the three months ended September 30, 2018, an increase of $1.0 million from $11.9 million for the
three months ended September 30, 2017. The increase was primarily due to increases in professional fees primarily resulting from legal and consulting fees related to the potential Conversion. This increase was partially offset by a decrease in
payroll and related costs, and a decrease in acquisition expenses resulting from less merger and acquisition activity.
Corporate overhead was
$39.9 million for the nine months ended September 30, 2018, an increase of $0.8 million from $39.1 million for the nine months ended September 30, 2017. The increase was primarily due to increase in stock compensation, legal
fees, payroll and related costs, advertising, and a decrease in
non-recurring
rebates and discounts. The increases were partially offset by a decrease in professional fees resulting from the completion of a
review of our deferred contracts in the prior year, combined with a decrease in acquisition expenses resulting from less merger and acquisition activity, and a decrease in recruiting costs resulting from less turnover in management.
Corporate Depreciation and Amortization
Depreciation and amortization expense was relatively consistent with the prior period, with $0.2 million for the three months ended September 30,
2018, compared to $0.3 million for the three months ended September 30, 2017.
Depreciation and amortization expense was $0.7 million for
the nine months ended September 30, 2018, compared to $0.9 million for the nine months ended September 30, 2017. The decrease was due to depreciation booked in the first quarter of 2017 related to the implementation of internally
developed software.
Other Gains and Losses
Other gains, net were $0.7 million for the three months ended September 30, 2018 and related to the sale of a funeral home and an unused cemetery
building. Other gains, net were $0.3 million for the three months ended September 30, 2017 and related to a gain from the sale of a granite business.
Other losses, net were $4.5 million for the nine months ended September 30, 2018, an increase of $3.8 million from other losses, net of
$0.7 million for the nine months ended September 30, 2017. The other losses, net for the nine months ended September 30, 2018 consisted primarily of an impairment charge in the first quarter of 2018 related to damaged merchandise of
approximately $5.0 million, partially offset by the aforementioned $0.7 million gain during the third quarter of 2018. The other losses, net for the nine months ended September 30, 2017, related to a $1.4 million loss on
impairment of long-lived assets, partially offset by a $0.3 million gain from the sale of a funeral home business and a separate funeral home building during the second quarter of 2017, as well as the aforementioned $0.3 million gain
during the third quarter of 2017.
56