More from Laura:

Let’s assume for a moment that the deal with SCI doesn’t go through. What will happen with the company? Will Stewart Enterprises, Inc. continue the profitable, dividend-producing advances they’ve achieved so far this year?

Last week, I drove through neighborhoods still scarred by Hurricane Katrina. My destination was the large office building housing Stewart Enterprises, Inc. in Jefferson, La. My mission: To meet with the top brass of the company… Thomas J. Crawford, President and Chief Executive Officer, and Martin R. de Lauréal, Senior Vice President of Corporate Development and Investor Relations.

Right off the bat, I noticed that the interaction between the two men is dynamic. They appear to compliment each others’ strengths: With 30 years at Stewart, de Lauréal has a historical and reflective viewpoint about the company and its values. Crawford has been with Stewart less than two years and has a more clear and direct business focus.

As de Lauréal phrased it, Crawford has brought “fresh DNA” to the company.

Sound financials

The third quarter for Stewart brought a 12% increase in net earnings. I asked Crawford to elaborate:

“Our indicators were really pretty good on all fronts compared to the same period of the previous year. In a tough environment, we were pleased with what we achieved. As a matter of fact, the margin progression all the way from sales to net income was very strong.”

When asked if a key reason for the company’s success during a volatile economy is the recession-proof nature of the market, the CEO was careful in his response. He said: “The industry is recession-resistant. I don’t know if anything is recession-proof.”

(And certainly, since my meeting with the folks at Stewart, the stock price has dropped over 8% — right along with the markets.)

The main drive to their business is what they term “at need” services that start when a death occurs. And it’s that kind of demand that continues… and will continue… to expand.

Crawford freely admitted that that didn’t mean their business wasn’t affected by the grim economic outlook: Another quick look at Stewart’s 3rd Quarter Financials shows a drop in preneed cemetery sales. To industry outsiders “preneed” services are those arrangements made before necessity dictates.

A recessionary economic environment understandably results in a deferment of funeral services from preneed to “at need”.

Experience matters

But with almost 100 years of doing business under their corporate belt, what survival skills has Stewart picked up along the way?

According to Crawford, the company has continued to build through the years from a very humble origin. He gave credit to Frank B. Stewart Jr., the current Chairman of the Board and grandson of the company’s founder, and his powerful and positive vision of the business.

“Before I came to the company, Stewart Enterprises was the only business in this [death services] sector that I invested my own personal funds in. I liked the people and what they stood for… and I thought they had good basic business principles that would last.”

That doesn’t mean the company hasn’t had its bad spells. They learned a lot from an aggressive acquisition period they went through in the 1990s. The main lesson, that rapid growth has to be managed.

A clear long-term vision

As de Lauréal explained, “The fundamentals are irrefutable… you, me and everybody we know will die. So those needs don’t change if the market’s up or down.

“Because it’s such a long-term business, we take a long-term view. And so it’s not just the next 90-day report card that we’re focused on to drive our decisions.

“We’ve been in the ‘at need’ cemetery business since 1910. We’ve been selling preneed [services] for 65-70 years. Where some of our competitors move in and out of [the different aspects of] the business, we’ve tended to have a more consistent long-term focus.

“And finally, 30 or so years ago we got in the funeral business. We realized that all the consumers know is their loved one died… and they need someone to help them deal with that. They don’t know there is a different business on the funeral side and on the cemetery side. Combining the two just made a whole lot of sense – not to sound crass, but one-stop shopping… it’s convenient.”

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