Latest / On Deathcare / Selected Court Order, Matthews Rightsizing & Seattle Rebuild

Transcript

Selected Court Order, Matthews Rightsizing & Seattle Rebuild · On Deathcare

• 0:04
  SPEAKER_00: Hi, I am Tony Russo from On Deathcare,
• 0:07
  SPEAKER_00: and this is The Rest, your weekly rundown of news from around funeral service.
• 0:12
  SPEAKER_00: Got a bunch of cool stuff to go over this week.
• 0:15
  SPEAKER_00: Last week, Friday came like a hell of stories, and I'm going to touch on a bunch of them.
• 0:21
  SPEAKER_00: But before I do,
• 0:22
  SPEAKER_00: I want to take this opportunity,
• 0:24
  SPEAKER_00: as always, to To thank my paid subscribers for their support.
• 0:28
  SPEAKER_00: You guys are the ones that make this possible.
• 0:30
  SPEAKER_00: You guys are the ones that make me feel like I owe this.
• 0:33
  SPEAKER_00: And I'm glad because I really like doing it.
• 0:37
  SPEAKER_00: If you would like to become a subscriber, paid or not, I would genuinely appreciate it.
• 0:42
  SPEAKER_00: You will get notifications of all my stories as they come out.
• 0:45
  SPEAKER_00: And you can do that.
• 0:47
  SPEAKER_00: All of the subscriptions matter a lot to me, your attention and your appreciation and when it's
• 1:04
  SPEAKER_00: Given so far, it's been great.
• 1:06
  SPEAKER_00: Your criticism is really important to me.
• 1:08
  SPEAKER_00: So please keep up the feedback.
• 1:10
  SPEAKER_00: I love being kept honest and I love doing this job.
• 1:15
  SPEAKER_00: It's just so, so fascinating.
• 1:18
  SPEAKER_00: So anyway, let's get into it.
• 1:21
  SPEAKER_00: I actually have a little bit of breaking news about the selected debacle.
• 1:28
  SPEAKER_00: I don't know.
• 1:30
  SPEAKER_00: I don't know what to call it, but it looks like the voting is going to be put on hold.
• 1:36
  SPEAKER_00: If you are hearing this before nine o'clock or so in the morning,
• 1:40
  SPEAKER_00: you may be hearing this first selected,
• 1:43
  SPEAKER_00: as I understand it,
• 1:45
  SPEAKER_00: will be notified this morning,
• 1:48
  SPEAKER_00: Tuesday, October 6th, as this podcast comes out, that it has to stop the vote.
• 1:56
  SPEAKER_00: That it started without presenting the members with all of the information they require.
• 2:05
  SPEAKER_00: It really does hurt the membership.
• 2:07
  SPEAKER_00: And I think it's a genuine shame.
• 2:11
  SPEAKER_00: But it doesn't have to be anymore because today the lawyers representing some of
• 2:17
  SPEAKER_00: the selected members who wanted to see what they were voting on
• 2:22
  SPEAKER_00: before they were forced to vote on it filed a formal complaint with
• 2:26
  SPEAKER_00: the Summit County Court of Common Pleas.
• 2:30
  SPEAKER_00: And they were issued a temporary restraining order.
• 2:36
  SPEAKER_00: And that's in Ohio where Selected has a significant amount of business.
• 2:41
  SPEAKER_00: And so they will have 14 days,
• 2:44
  SPEAKER_00: Selected will, to produce all of the things that were asked of them.
• 2:48
  SPEAKER_00: These are documents that they have decided are secret and something that
• 2:53
  SPEAKER_00: the membership cannot receive.
• 2:55
  SPEAKER_00: ...Be allowed to see.
• 2:58
  SPEAKER_00: When they released a letter of intent a couple weeks ago that said that
• 3:02
  SPEAKER_00: the NFDA effectively could shut down selected independent funeral homes
• 3:07
  SPEAKER_00: on January 1st, 2027...
• 3:12
  SPEAKER_00: There was that they thought that that would be enough to satisfy everyone,
• 3:16
  SPEAKER_00: but it was not because it's not all of the information.
• 3:19
  SPEAKER_00: And so now when they release all the information,
• 3:22
  SPEAKER_00: which they must in order to proceed with the vote,
• 3:26
  SPEAKER_00: as I understand it, members will have 30 days to review.
• 3:34
  SPEAKER_00: I'm looking at the date now.
• 3:35
  SPEAKER_00: It looks like the midterm elections and the selected elections are going
• 3:41
  SPEAKER_00: to take place in the same week.
• 3:45
  SPEAKER_00: If everything goes to plan and if they release all
• 3:48
  SPEAKER_00: the information that's requested of them, it's not available.
• 3:53
  SPEAKER_00: Strictly speaking,
• 3:54
  SPEAKER_00: paternal,
• 3:54
  SPEAKER_00: but it's closer to paternal than any,
• 3:57
  SPEAKER_00: you know, 65 year old multiple funeral home owning person wants to be treated.
• 4:06
  SPEAKER_00: And that has been, you know, it's been an issue and it's going to continue to be an issue.
• 4:12
  SPEAKER_00: And the worst part of it is now it's going to cost everybody, everybody money.
• 4:16
  SPEAKER_00: And it doesn't have to.
• 4:18
  SPEAKER_00: So the board is happy to spend the members' money on defending their decision
• 4:25
  SPEAKER_00: in court,
• 4:26
  SPEAKER_00: but not happy to send along what the members have requested so that they can make
• 4:33
  SPEAKER_00: a decision.
• 4:33
  SPEAKER_00: And what, you know, the board seems to think is a slam dunk decision.
• 4:37
  SPEAKER_00: So I feel like if it's that good a deal, then you should tell everyone what's in it.
• 4:43
  SPEAKER_00: But they disagree, which is their right.
• 4:46
  SPEAKER_00: So anyway, I'll probably get something written on this before the week is out.
• 4:51
  SPEAKER_00: But I've got a busy week ahead of me, as do you.
• 4:56
  SPEAKER_00: And we'll see how much we can get done.
• 4:58
  SPEAKER_00: But for now, this is the reporting.
• 5:00
  SPEAKER_00: There is no link in the show notes when there is anything published,
• 5:04
  SPEAKER_00: when the court stuff comes out,
• 5:05
  SPEAKER_00: or if any of the selected board of directors responds to my email.
• 5:10
  SPEAKER_00: I'll be happy to share that with you guys.
• 5:14
  SPEAKER_00: As I mentioned,
• 5:15
  SPEAKER_00: Friday was a very busy news day,
• 5:18
  SPEAKER_00: and I'm still kind of Contending,
• 5:20
  SPEAKER_00: excuse me, with the implications of a lot of the announcements.
• 5:25
  SPEAKER_00: I think the big picture thing is the squeeze that I think we all kind of expected
• 5:32
  SPEAKER_00: for next year is beginning to occur.
• 5:38
  SPEAKER_00: The M&A is not going to be this year what I think we all thought it was at
• 5:43
  SPEAKER_00: the beginning of the year.
• 5:45
  SPEAKER_00: What many of the bigger companies announced this year,
• 5:49
  SPEAKER_00: Service Corporation International,
• 5:51
  SPEAKER_00: for example, has not spent nearly as much money yet as they said they were going to.
• 5:56
  SPEAKER_00: And we'll have a quarterly report in about a month.
• 6:00
  SPEAKER_00: We'll see if it stays that way.
• 6:02
  SPEAKER_00: But for right now,
• 6:03
  SPEAKER_00: it looks like not a pullback,
• 6:06
  SPEAKER_00: but with the interest rate increase, but also the real estate market is bananas.
• 6:11
  SPEAKER_00: And also there is a Some question about whether you need to own a funeral home
• 6:17
  SPEAKER_00: to have a funeral home.
• 6:19
  SPEAKER_00: And all of those things kind of collided in a bunch of different stories on Friday.
• 6:24
  SPEAKER_00: And I guess the first one that's worth talking about is the Park Long acquisition
• 6:29
  SPEAKER_00: of one of the first Wall Trip properties purchased before SCI was SCI.
• 6:35
  SPEAKER_00: It was originally bought in 1960 and SCI sold it to Carriage,
• 6:40
  SPEAKER_00: not Carriage, excuse me, SCI sold it to Park Long last week.
• 6:43
  SPEAKER_00: And Park Lawn promptly closed it down.
• 6:47
  SPEAKER_00: They already had a bunch of funeral homes in the area, and they didn't need one more.
• 6:53
  SPEAKER_00: They were able to keep all but one employee.
• 6:57
  SPEAKER_00: One of the great quotes from the locals,
• 6:58
  SPEAKER_00: Story was the former the former manager,
• 7:02
  SPEAKER_00: the former SCI manager has moved over to Park Lawn.
• 7:05
  SPEAKER_00: He's running, you know, one of their nearby properties.
• 7:10
  SPEAKER_00: And what he what he said, I hope they built something useful like a gas station.
• 7:16
  SPEAKER_00: So they're going to they're going to be tearing down
• 7:18
  SPEAKER_00: the building no matter what they want to do.
• 7:20
  SPEAKER_00: They won't be able to do it in the building that's there.
• 7:22
  SPEAKER_00: So they're going to tear it down and put something else up.
• 7:26
  SPEAKER_00: A lot of funeral home demolitions in the last 30-ish days.
• 7:32
  SPEAKER_00: It feels like I reported on several last month and now already one for October.
• 7:38
  SPEAKER_00: And it puts me in the mind of something that we reported on a while ago,
• 7:44
  SPEAKER_00: which was Heritage had said that they're really way more interested in buying
• 7:48
  SPEAKER_00: the businesses than buying the properties.
• 7:53
  SPEAKER_00: As I pointed out in one of my columns,
• 7:56
  SPEAKER_00: Foundation Partners looks like it could be looking to do some similar things.
• 8:02
  SPEAKER_00: They had fired their facilities operations manager,
• 8:06
  SPEAKER_00: and now they have replaced him with a real estate facilities manager who's going
• 8:14
  SPEAKER_00: to be responsible for looking at how much of this property can we sell while keeping
• 8:19
  SPEAKER_00: the business, how much
• 8:22
  SPEAKER_00: What can we keep that's making money?
• 8:24
  SPEAKER_00: What can we get rid of that's not making money?
• 8:27
  SPEAKER_00: And I think that's a question a lot of people are asking.
• 8:31
  SPEAKER_00: One of the real difficulties,
• 8:33
  SPEAKER_00: I think,
• 8:35
  SPEAKER_00: especially for independents who are hoping to stay that way,
• 8:39
  SPEAKER_00: is there's not as much desire for taking over your business.
• 8:46
  SPEAKER_00: Now, SCI called this back in February, I think.
• 8:51
  SPEAKER_00: February or March.
• 8:52
  SPEAKER_00: It was one of the first stories I wrote for On Deathcare was on a presentation that SCI gave.
• 8:57
  SPEAKER_00: I called the story, SCI doesn't want your building just your business.
• 9:02
  SPEAKER_00: And I think that's going to end up being the theme.
• 9:05
  SPEAKER_00: If not of 2026,
• 9:07
  SPEAKER_00: almost certainly of 2027,
• 9:10
  SPEAKER_00: as these consolidators start to find their wheel and spokes turning more into wheels
• 9:17
  SPEAKER_00: where the cremator is.
• 9:18
  SPEAKER_00: So we'll have to see.
• 9:20
  SPEAKER_00: We'll see what happens over the next couple of weeks.
• 9:22
  SPEAKER_00: As I started working this morning, there were a couple announcements about acquisitions.
• 9:27
  SPEAKER_00: So maybe the acquisition market isn't as slow as I thought it was.
• 9:32
  SPEAKER_00: Maybe people are just taking the summer off, but we'll see what happens.
• 9:35
  SPEAKER_00: That announcements are forthcoming.
• 9:38
  SPEAKER_00: Final part of this before I get into some stuff I want to talk about
• 9:42
  SPEAKER_00: with Matthews is that Carriage said that it wasn't going to issue any equity as part
• 9:47
  SPEAKER_00: of its M&A push for lucrative.
• 9:51
  SPEAKER_00: Carlos Quesada,
• 9:52
  SPEAKER_00: the vice chairman of the board,
• 9:55
  SPEAKER_00: president and chief operating officer,
• 9:58
  SPEAKER_00: said, you know, our job is to ensure long term shareholder value.
• 10:04
  SPEAKER_00: But I really kind of read that as preserve shareholder value,
• 10:09
  SPEAKER_00: because I think times could be getting tough.
• 10:11
  SPEAKER_00: And I think that carriage has this once bitten situation.
• 10:15
  SPEAKER_00: Twice shy approach to let's not overextend ourselves on the eve of what could be
• 10:22
  SPEAKER_00: a really,
• 10:23
  SPEAKER_00: really long cold winter, depending upon how things go in funeral service in general.
• 10:28
  SPEAKER_00: So anyway, there is a link to the relevant press releases in the stores.
• 10:33
  SPEAKER_00: I've got to tell you,
• 10:34
  SPEAKER_00: press releases aren't terribly useful,
• 10:37
  SPEAKER_00: which is why I think it's important to talk about them and see what we can get,
• 10:40
  SPEAKER_00: if we can get behind them, if we can.
• 10:42
  SPEAKER_00: And as always, if you guys have any Insights or comments at all, I would love to hear them.
• 10:47
  SPEAKER_00: You can email me either by responding to the email that this came in or
• 10:51
  SPEAKER_00: by emailing bytonyrusso at gmail.com.
• 10:55
  SPEAKER_00: All right, let's talk about Matthews a little bit.
• 10:59
  SPEAKER_00: As you may have seen elsewhere, Matthews International has right-sized its board of directors.
• 11:07
  SPEAKER_00: Two leaving board members won't be replaced,
• 11:11
  SPEAKER_00: and the board will be down to six members,
• 11:15
  SPEAKER_00: from 10 members,
• 11:16
  SPEAKER_00: excuse me,
• 11:17
  SPEAKER_00: to eight members,
• 11:20
  SPEAKER_00: with the retirement of Morgan K. O'Brien and Catherine E. Dietz.
• 11:26
  SPEAKER_00: My whole question is, has Barrington won and does it matter?
• 11:32
  SPEAKER_00: Many of the requests that activist investor Barrington Capital made have kind of come to pass.
• 11:41
  SPEAKER_00: And as a result, other ones have come to pass, including this kind of right sizing of the board.
• 11:46
  SPEAKER_00: And I don't think this is a win-lose, like hard slash situation.
• 11:56
  SPEAKER_00: Bartolosi, Joe Bartolosi is leaving.
• 11:58
  SPEAKER_00: He is gone.
• 11:59
  SPEAKER_00: And what's interesting about that,
• 12:01
  SPEAKER_00: you know,
• 12:01
  SPEAKER_00: he announced his retirement and,
• 12:04
  SPEAKER_00: you know, I I'm sure that he's looking forward to his retirement.
• 12:09
  SPEAKER_00: But the last time we spoke,
• 12:11
  SPEAKER_00: not he and I,
• 12:12
  SPEAKER_00: the last time he presented When he was representing the most recent earnings call,
• 12:18
  SPEAKER_00: he was talking about, you know, we need to buy another Dodge.
• 12:23
  SPEAKER_00: You know,
• 12:23
  SPEAKER_00: we need another big win in order to keep memorialization as useful as it has been
• 12:30
  SPEAKER_00: because the memorialization kind of saved their bacon in the last quarter
• 12:35
  SPEAKER_00: because Dodge made so much money.
• 12:38
  SPEAKER_00: But one wonders,
• 12:40
  SPEAKER_00: and I think I wrote this in my Sunday column,
• 12:43
  SPEAKER_00: For subscribers,
• 12:44
  SPEAKER_00: so I'm sorry if you're hearing it twice,
• 12:45
  SPEAKER_00: but one wonders, like,
• 12:46
  SPEAKER_00: if Matthews is going long on caskets and embalming fluid,
• 12:53
  SPEAKER_00: they're going to need,
• 12:54
  SPEAKER_00: I think,
• 12:54
  SPEAKER_00: a different piece when push comes to shove, if they're even still applying it.
• 13:00
  SPEAKER_00: Now, I don't know if this was something that Bartolese had considered getting done
• 13:09
  SPEAKER_00: before he left at the end of the year.
• 13:12
  SPEAKER_00: Because they said that they had been and talked to some people so it's possible.
• 13:17
  SPEAKER_00: And I also remember that Barrington was really interested in making sure
• 13:21
  SPEAKER_00: that Matthews continued to focus on its memorialization sector because it was
• 13:29
  SPEAKER_00: the only one that was really turning like these serious kind of profits.
• 13:33
  SPEAKER_00: So...
• 13:34
  SPEAKER_00: I don't think anyone's against Matthews being in memorialization,
• 13:37
  SPEAKER_00: and I don't even want to hint that that's what I'm taking away from this.
• 13:40
  SPEAKER_00: But it's going to be really interesting to see what happens over the next six months
• 13:45
  SPEAKER_00: as they weather this transition of CEOs.
• 13:48
  SPEAKER_00: They have a smaller board.
• 13:49
  SPEAKER_00: There is no one when Joe Bartolese gets in his car and drives away.
• 13:54
  SPEAKER_00: There will be no one on the Matthews board that is an expert in death care.
• 14:02
  SPEAKER_00: Everyone else is from other industries, big in manufacturing still, which makes perfect sense.
• 14:08
  SPEAKER_00: I did also speak with someone this week who said that casket prices are going up.
• 14:15
  SPEAKER_00: Actually, they said that Batesville prices were going up 8%.
• 14:19
  SPEAKER_00: That is not a number that anyone has confirmed to me.
• 14:22
  SPEAKER_00: I've not spoken with Batesville yet.
• 14:24
  SPEAKER_00: They've not responded, but Matthews did respond.
• 14:27
  SPEAKER_00: The reason I asked Matthews is because, again, it was either Q4 or Q1.
• 14:33
  SPEAKER_00: Matthews was talking about its casket pricing
• 14:37
  SPEAKER_00: and they said they really just follow Batesville,
• 14:38
  SPEAKER_00: that Batesville is the biggest and Batesville kind of sets the tone.
• 14:44
  SPEAKER_00: But since I wrote 8% out loud,
• 14:45
  SPEAKER_00: I've gotten all sorts of different, wrote out loud, you know what I mean.
• 14:49
  SPEAKER_00: Since I said that I heard it was 8%, I've gotten...
• 14:52
  SPEAKER_00: And I think everybody's cool with that, or at least comfortable with that.
• 14:55
  SPEAKER_00: So it'll be interesting to see what happens as casket prices go.
• 15:12
  SPEAKER_00: Go up.
• 15:13
  SPEAKER_00: They may help move the needle a little bit.
• 15:16
  SPEAKER_00: Again, we'll get to meet the new CEO and the next conference call,
• 15:22
  SPEAKER_00: which again, I think is in November.
• 15:24
  SPEAKER_00: So more on that then.
• 15:26
  SPEAKER_00: But for now, again, links to the Matthews press releases on the matter in the show notes.
• 15:34
  SPEAKER_00: Back in the summer of 2025,
• 15:38
  SPEAKER_00: the Columbia Funeral Home and Crematory in South Seattle burned as a result of
• 15:43
  SPEAKER_00: an arson.
• 15:44
  SPEAKER_00: And I've been kind of following the story on and off, and it's a really interesting one.
• 15:50
  SPEAKER_00: Spoilers, the end, it's a big hooray.
• 15:53
  SPEAKER_00: They are going to rebuild.
• 15:55
  SPEAKER_00: But there was a six-month period where they were hoping to move their funeral home
• 16:02
  SPEAKER_00: to And the city of Seattle wouldn't let them move the crematory with it.
• 16:06
  SPEAKER_00: They could use the crematory they had,
• 16:08
  SPEAKER_00: but they couldn't have a new, even more efficient one someplace else.
• 16:13
  SPEAKER_00: And so Russ Weeks, who is the owner, spent a long time saying he was thinking of selling it.
• 16:20
  SPEAKER_00: I don't know if it's the market changes that we've already mentioned or
• 16:24
  SPEAKER_00: if he finally just got the right kind of deal that he was looking for.
• 16:29
  SPEAKER_00: But this week they announced that they would rebuild and would reopen
• 16:34
  SPEAKER_00: in their South Seattle location, which is great.
• 16:37
  SPEAKER_00: I love to see a win when you can get one.
• 16:42
  SPEAKER_00: I think everybody would have preferred it if they were able to reopen
• 16:46
  SPEAKER_00: where they wanted and more in keeping with current trends,
• 16:50
  SPEAKER_00: but that's not the case and that's Not a problem.
• 16:54
  SPEAKER_00: So congratulations to Mr.
• 16:56
  SPEAKER_00: Weeks.
• 16:56
  SPEAKER_00: Good luck in the rebuilding.
• 16:58
  SPEAKER_00: And I'm looking forward to continuing to cover this as the rebuilding goes on.
• 17:03
  SPEAKER_00: And maybe we'll have a ribbon cutting story before too long.
• 17:08
  SPEAKER_00: But anyway, there's a link to the reporting on that in the show notes.
• 17:13
  SPEAKER_00: And that'll do us for this time.
• 17:16
  SPEAKER_00: I want to remind you guys that I do put out all of the stories that I didn't fit
• 17:21
  SPEAKER_00: into this video on Saturday in a column that I'm calling Beyond the Rest.
• 17:27
  SPEAKER_00: And it should be in your inboxes on Saturday morning.
• 17:30
  SPEAKER_00: So you can, if you're stuck working on the weekend or you've got nothing to do, you can...
• 17:35
  SPEAKER_00: It's a good scrolling kind of...
• 17:40
  SPEAKER_00: I have a story that just came out on a gentleman named Kenneth Johnson.
• 17:58
  SPEAKER_00: Who is a rock star in the waiting for funeral service.
• 18:05
  SPEAKER_00: He's a former combat veteran.
• 18:07
  SPEAKER_00: Well, he's a current veteran, I guess.
• 18:09
  SPEAKER_00: So he's a combat veteran who's in his second year at Worsham.
• 18:13
  SPEAKER_00: And he was the recipient of one of the Funeral Service Foundation scholarships, which...
• 18:21
  SPEAKER_00: This is the type of person I believe that these scholarships were made for.
• 18:25
  SPEAKER_00: He has a really interesting vision for doing a better job at connecting veterans
• 18:31
  SPEAKER_00: with funeral homes.
• 18:33
  SPEAKER_00: I know that there are plenty of programs or at least several programs that do that.
• 18:37
  SPEAKER_00: But his take on it,
• 18:39
  SPEAKER_00: and you can see it in the story, and I'm going to have him actually on the podcast.
• 18:42
  SPEAKER_00: I'll have him on the On Death Care podcast in early November in time for Veterans Day.
• 18:48
  SPEAKER_00: But his take on it is from the perspective of a veteran
• 18:51
  SPEAKER_00: who was having trouble connecting with funeral homes or veterans that he knew
• 18:56
  SPEAKER_00: that he had trouble connecting with funeral homes because there's this,
• 19:02
  SPEAKER_00: especially with small independents who they can't He worries,
• 19:06
  SPEAKER_00: take the chance on paying someone who's not going to work out.
• 19:09
  SPEAKER_00: But there are several programs where the military will pay them
• 19:14
  SPEAKER_00: while they are working,
• 19:16
  SPEAKER_00: and then the GAI bill will pay them while they are in school,
• 19:20
  SPEAKER_00: and that whole time they could be working at an independent funeral home,
• 19:26
  SPEAKER_00: providing the kind of support that smaller firms might need,
• 19:31
  SPEAKER_00: and possibly— You know,
• 19:33
  SPEAKER_00: bringing the potential for succession to a company that might not have a good plan
• 19:41
  SPEAKER_00: but has a good business.
• 19:42
  SPEAKER_00: So make sure you check that out.
• 19:44
  SPEAKER_00: It's on ConnectingDirectors.com.
• 19:47
  SPEAKER_00: I'm not going to put a link in the show notes only because it's not going to go live
• 19:50
  SPEAKER_00: until after this comes out.
• 19:51
  SPEAKER_00: And I don't want you to 404 yourself, but I promise I won't let the story go.
• 19:57
  SPEAKER_00: And even if you don't get a chance to read it,
• 19:58
  SPEAKER_00: like I said, we're going to get a chance to talk about it in November.
• 20:07
  SPEAKER_00: On Deathcare has been, I'm sorry, The Rest has been an On Deathcare production.
• 20:11
  SPEAKER_00: It was written, edited, transmogrified, all the things by me, Tony Russo.
• 20:16
  SPEAKER_00: Anyway, I'm getting a little punchy.
• 20:18
  SPEAKER_00: Let's sign off.
• 20:19
  SPEAKER_00: That'll do it for this time and I will catch you next time.