041419-wsj-biz-cress

Outside corporations are entering the funeral industry in Madison.

Outside corporations are getting into the funeral business in Madison. A Toronto-based company acquired Cress Funeral Service Inc. in February following a Pennsylvania-based limited partnership’s acquisition of four area cemeteries in 2016.

Park Lawn Corp. (PLC) announced on Feb. 20 that it signed an agreement to purchase Cress Funeral Service and its eight funeral homes and two crematoriums for $20.3 million.

The sale was the first in Wisconsin for the rapidly growing PLC. It owns cemeteries, crematoriums and funeral homes in 12 U.S. states after having operations in just four in 2017. They also have properties in five Canadian provinces.

Corporate takeovers of local funeral homes and cemeteries used to mean higher prices and less service, but that’s not the case anymore, according to a national funeral home consultant.

“We saw stuff like that in the 1980s and ‘90s and it killed businesses,” said Dan Isard, the managing partner of Phoenix-based Foresight Companies and a columnist for the National Funeral Directors Association magazine. “There is an importance of pricing in the total decision-making process … like anything there’s a maximum that somebody feels is reasonable to pay for any service.”

Turmoil not anticipated

That’s good news for Madison-area consumers. The average costs in Wisconsin for a traditional funeral ($6,916) and cremation memorial ($3,954) are the lowest among eight states in the Upper Midwest, according to parting.com. But the website’s data shows that Madison has the highest average costs ($7,635 for traditional funeral and $4,510 for cremation memorial) among Wisconsin cities.

Isard expects that few will notice much of a change at Cress after the sale is completed because he isn’t expecting a big staff overhaul.

“Nobody has an abundance of labor so that they say, ‘Oh, we’re buying a funeral home in Madison and we’re going to move 20 guys in from Pittsburgh,’” Isard said.

Park Lawn’s CEO, 42-year-old Andrew Clark, heads a solid management team that has been judicious yet aggressive with its acquisitions, according to Isard. “I find their financials to be impeccable,” Isard said.

A bumpier road

The same can’t be said for StoneMor Partners LP, which bought 16 cemeteries in Wisconsin in August 2016 that included Sunset Memorial Gardens and Highland Memory Gardens in Madison, Roselawn Memorial Park in Monona and Sun Prairie Memorial Garden.

StoneMor, with headquarters in Trevose, Pa., claims on its website that it’s the second-largest network of cemeteries and funeral homes in the country.

But StoneMor’s stock price on the New York Stock Exchange (STON) has fallen 93.2% in a little more than three years to a low of $2.10 on Dec. 31, 2018, due to a series of financial problems and missteps.

Less than one month after it purchased the Wisconsin cemeteries, StoneMor announced that accounting problems were forcing it to restate consolidated financial statements for three fiscal years ending in 2015 and the first two fiscal quarters of 2016. Soon after, the company learned it was under investigation by the Securities and Exchange Commission for possible violations of federal securities laws.

Changes made

StoneMor has made a flurry of changes. Joe Redding, the company’s fourth CEO in less than two years, helped StoneMor in February secure a bank waiver and agree to a financial assistance program for up to $35 million that it hopes will help create some working capital and improve sales.

The company also changed employee compensation plans. That led to an exodus of its sales force nationwide and the company has struggled to replace them, according to Bloomberg.com.

StoneMor’s website is listing eight sales job openings at seven cemeteries in Wisconsin, including sales manager and sales representative positions at Roselawn in Monona and sales rep positions at Sunset Memorial Gardens and Highland Memory Gardens.

Roselawn, which also is seeking a maintenance groundskeeper, has been problematic for StoneMor’s starting almost immediately after the purchase was announced.

In December 2016, the Occupational Safety and Health Administration (OSHA) began investigating Roselawn for safety violations after a complaint was filed.

Five months later, OSHA informed StoneMor’s Wisconsin subsidiary that Roselawn was guilty of three violations. StoneMor Wisconsin LLC was fined $8,259, according to the OSHA website.

In August 2017, a former Roselawn gravedigger sued StoneMor, claiming the company fired him in October 2016 after he told company officials that some of his fellow employees cracked open caskets and busted concrete vaults while operating machinery drunk and stoned.

In a complaint filed in Dane County Circuit Court, Reymond Blazys said one of his co-workers admitted to him that he was drunk after he broke a grave box and casket with a backhoe. All the alleged incidents occurred before StoneMor purchased Roselawn.

StoneMor officials have denied the charges. A jury trial in Dane County Circuit Court has been scheduled for this September, according to online court records.

OSHA also found three safety violations at Roselawn in December 2014 after a complaint was filed five months earlier.

The cemetery’s owner at that time — Wisconsin Cemeteries Holdings, LLC, of Milwaukee — was fined $2,499, according to the OSHA website.

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Rob Schultz has won multiple writing awards at the state and national levels and covers an array of topics for the Wisconsin State Journal in south-central and southwestern Wisconsin.