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Stewart Enterprises (NASDAQ:STEI)

Q3 2011 Earnings Call

September 08, 2011 11:00 am ET

Executives

Thomas Kitchen - Chief Executive Officer, President, Director and Member of Investment Committee

Lewis Derbes - Chief Financial Officer, Senior Vice President and Treasurer

Analysts

James Clement - Sidoti & Company, LLC

John Ransom - Raymond James & Associates, Inc.

Robert Willoughby

Albert Rice - Susquehanna Financial Group, LLLP

Operator

Good day, and welcome to the Stewart Enterprises Incorporated Third Quarter 2011 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Marilyn Meek. Ms. Meek, the floor is yours, ma'am.

Thank you, operator. Good morning, everyone. On behalf of Stewart Enterprises, I would like to welcome everyone. By now, you should have already received a copy of the press release. If not, please visit Stewart's website at www.stei.com. Management will provide an overview of the third quarter, and then we'll open up the call to your questions.

The information contained in this call is current only at the time of this call. And the company assumes no obligation to update any statements, including forward-looking statements made during this call. Statements made by the company that are not historical facts are forward-looking statements. Examples of forward-looking statements include projections of revenue, earnings, growth rates, free cash flow, debt levels, tax benefits and other financial items; statements regarding plans and objectives of the company or its management; statements regarding the industry trends, competitive trends and their effect on future performance; and assumptions underlying the forward-looking statements regarding the company and its business.

The company's actual results could differ materially from any forward-looking statements due to several important factors, which are described in the company's Form 10-K for the year ended October 31, 2010.

The company uses adjusted earnings, adjusted EPS, EBITDA, net debt and free cash flow as financial measures. These financial measures are not in accordance with accounting principles generally accepted in the United States of America, or GAAP, and are intended to supplement, rather than replace or supersede any information presented in accordance with GAAP. Reconciliation to the most directly comparable GAAP financials measures can be found on the company's website, at www.stei.com under Investor Information, Reconciliation of Non-GAAP Financial Measures, and can also be found in the company's press release dated September 7, 2011.

With that said, I'd like to introduce the management of Stewart Enterprises. On the line, we have Tom Kitchen, President and Chief Executive Officer; and Lew Derbes, Chief Financial Officer. At this time, I'd like to turn the call over to Tom. Please go ahead.

Thomas Kitchen

Thank you, Marilyn. Good morning and thank you for joining us on the call today. I'll offer a few summary comments and then we'll turn the call over to Lew for him to cover the financial performance in more detail before opening up for some Q&A.

At the outset, I'm pleased to note that some of the more significant items reflected in the third quarter include: realizing increases in both same-store funeral calls and average revenue per call for the third consecutive quarter, producing the highest quarterly property sales in 3 years of nearly $26 million; generating significant positive operating cash flow of nearly $25 million, which is an increase of approximately 10%; and favorably settling our outstanding litigation related to Hurricane Katrina for some $12.4 million.

In the quarter, we reported net earnings of $12 million and $0.13 per share, compared to $6 million or $0.06 per share for the third quarter of last year. Excluding the impact of the litigation settlement and a tax valuation charge, we achieved a 9.5% increase in adjusted net earnings or adjusted $0.07 per share. This performance is a reflection of our underlying core operations, as shown by the more than $2 million increase in funeral revenue, which is due primarily to increases in both the average revenue per call and the overall increase in the number of funerals performed. Based upon the data we review, we believe our funeral call performance appears to be tracking slightly ahead in the markets that we serve, which is an indication of an overall increase in market share. We also saw a 3% increase in net preneed funeral sales compared to the same quarter of last year and a 7% increase compared to the second quarter of this year.

On the cemetery side, I mentioned, we've produced some $26 million in cemetery property sales, which is impressive in light of declining consumer confidence in the overall economy. We also recently announced some organizational changes, which we believe will better integrate our operations and sales activities and improve our ability to implement market-specific initiatives more effectively, particularly in the area of preneed sales. Preneed sales are important to the company's long-term potential and help maintain and build market share.

During the quarter, our board increased our annual cash dividend from $0.12 to $0.14 per share, which helped to return almost $9 million to our shareholders so far this year. It's the board's intention to periodically reevaluate the company's dividend policy for potential increases in the future.

I'm also pleased to report that during the third quarter, our board increased our share repurchase plan by an additional $25 million. So for this year, we have purchased over 3 million shares for approximately $20 million. In total, over the last 6 years, we have repurchased over 23 million shares of our common stock for $167 million, resulting in a 21% decrease in total shares outstanding. In addition, over that same timeframe, we have reduced the face value of our outstanding debt by 21% or some $87 million. We believe the board's decision to increase both the share repurchase program, as well as the cash dividend reflects our continued confidence in the company's financial condition and our ability to consistently generate strong, positive cash flow.

We have also invested $9 million in acquisitions during the current fiscal year. As part of our current strategy, we are identifying acquisition candidates that we believe will contribute to the future growth of our business. And finally, our financial condition remains very strong. Even after considering the repurchase of stock, payment of dividends and acquisitions, we finished the third quarter with nearly $70 million of cash on hand and no amounts borrowed on our $150 million credit facility. And with that summary, I'm going to turn the call over to Lew.

Lewis Derbes

Thanks, Tom, and good morning to all. Today, I wanted to give you some further insight on some key areas. First, I'll discuss the company's operating performance. Second, our tax planning strategies. Next, cash flow. And then finally, the performance of our trust portfolio. For the third quarter of 2011, we reported a $6 million increase in net earnings to $12 million and reported earnings per share of $0.13 per share. After adjusting net earnings for the Hurricane Katrina settlement, as well as a tax valuation charge which I will discuss later in the call, adjusted net earnings improved by 9.5%.

Turning to our operating performance, we improved funeral revenue by $2 million or 3% compared to the third quarter of 2010. This was accomplished by improving average revenue per traditional call by 1%, average revenue per cremation call by 4% and increase in same-store calls by 0.5%. At the beginning of the fiscal year, we enhanced our compensation package to provide incentives to improve our funeral operations. While this investment in our people has increased funeral expenses during the third quarter, it has been a driving factor of our positive funeral performance for the first 9 months of this year, as illustrated by this being the third consecutive quarter with increases in both calls and average revenue. We also had a combination of other factors that, although all individually immaterial, they all went against us this quarter, negatively impacting our margins. These included increased preneed expenses associated with the higher preneed funeral sales, rising energy cost, lower finance charges and some unfavorable bad debt experience. We are also pleased with the performance of our Cemetery segment, especially considering the difficult comparisons to the third quarter of 2010. Last year, you may recall, included strong cemetery property sales and merchandise deliveries, as well as a one-time $1.1 million decrease in perpetual care expenses.

In the third quarter of this year, we experienced a 1% increase in cemetery property sales to $26 million compared to the third quarter of last year. Excluding our Florida markets, which have been hit particularly hard by poor economic conditions, cemetery property sales increased more than $1 million or some 5.4% compared to the same period of the prior year. The improvement in cemetery property sales for the quarter was offset primarily by the timing of construction on various cemetery projects. Our construction backlog, however, remains strong.

In addition, as a result of the low interest rate environment, reduced interest rates on our installment sales have resulted in a $300,000 decrease in cemetery revenue during the quarter. For the quarter, we experienced a $300,000 decrease in cemetery gross profit, including the non-recurring prior year perpetual care benefit. However, if you exclude this one-time charge from the prior year, adjusted cemetery gross profit would have actually increased $800,000 this year on essentially flat revenues. It is also important to note that we have invested an additional $600,000 in the third quarter of this year in the future of our business through various growth initiatives. We believe these investments will provide benefits in the future. As Tom mentioned previously, we have successfully settled ongoing litigation related to Hurricane Katrina damages for $12.4 million or $0.08 per share.

Finally, our EBITDA remains strong at $22 million for the third quarter and $100 million for the trailing 12 months. Moving on to taxes. In the third quarter of 2011, our effective tax rate increased to 45.5%, compared to 31.8% for the same period of last year. This increase was due in part to a $1.6 million charge or $0.02 per share for evaluation allowance related to our capital loss carryforward, primarily as a result of the performance of our trust portfolio during the quarter.

For some clarification purposes, our capital loss valuation allowance may fluctuate from period to period based on the amount of realized capital losses and the available capital gains in certain of our trust funds. Additionally, a few years ago, we initiated a comprehensive examination of our tax policies and implemented several IRS-approved changes, all of which have produced significant positive results. We continue to further pursue tax planning initiatives which, if successful, will provide for additional potential cash tax savings. As a result of these efforts, we have realized federal tax refunds and reductions of federal tax payments in excess of $65 million over the last 4 years, and expect to further reduce our future tax payments by an additional $15 million, for a total cash savings in excess of $80 million.

In the third quarter of 2011, we received a $1.7 million federal tax refund and paid about $300,000 less in net state tax payments. For the first 9 months of 2011, we have paid $1.5 million more in net state tax payments, primarily due to the timing of the completion of certain state tax reviews. We have paid approximately $700,000 of federal cash tax payments in the first 9 months of the year, and we expect to pay nominal federal cash tax payments in the fourth quarter of 2011 and throughout most of next year.

Moving on to cash flow. During the third quarter of 2011, we generated $24.8 million in operating cash flow or $2.1 million more than the same period of last year. This increase is primarily a result of the previously mentioned federal tax refund received during the third quarter. Our operating cash flow and free cash flow for the first 9 months of this year reflect a 23% and 17%, respectively, improvement over last year.

In regards to our trust portfolio, for the 12 month ended July 31, 2011, the fair market value of our portfolio increased $54 million to $818 million. This does include a decline of 2.5% during the third quarter. Even considering the downturn in the financial markets in the third quarter of 2011, total returns for the trailing 12 months were 12% for our preneed trust and 9% for our perpetual care trust, resulting in an 11% improvement in the overall portfolio.

In addition, we sold securities during the third quarter and in early August and either kept it in cash or invested in extremely short-term, high-quality securities totaling more than $120 million and representing some 15% of our total portfolio. This active management was in anticipation of the uncertainties in the domestic and world economies. We believe this defensive position in the portfolio has lessened the volatility of our returns. Subsequent to quarter end, in the month of August, we experienced an additional 3% decline in our portfolio, which decreased the fair market value by approximately $23 million. The defensive position that we have taken, as well as the steps taken to diversify our portfolio, lessened the impact of the overall decline in the S&P 500, which experienced an approximate 6% decline during the month of August. In addition, 46% of our portfolio is now invested in cash, index, or exchange-traded funds. This passive investment approach has significantly reduced our individual issuer exposure. We will continue to monitor the financial markets and adjust the portfolio as necessary to have the best possible returns. With that, I now would now like to turn the call back to Tom.

Thomas Kitchen

Thanks, Lew. In summary, after reviewing the third quarter results, we're pleased with the overall performance and remain optimistic about fiscal year 2011 and later. On a year-to-date basis, revenue improved by 3%, and we achieved a 16% increase in adjusted earnings per share. EBITDA improved by 5% and operating and free cash flow increased some 23% and 17%, respectively. We remain committed to growing our business through both internal initiatives and strategic acquisitions. While investments and certain initiatives may affect our quarter and year-to-date results, we believe they are important for long-term growth. As I mentioned in my opening comments, during the quarter, we announced changes to our organizational structure by dividing operations into 2 divisions: an Eastern and Western. This change will better integrate our operations and sales activities and further enhance customer service. It will improve our ability to better serve our families and facilitate more efficient decision-making, including strategic issues facing our business. As we approach the end of the fiscal year, we're pleased with the progress so far. Revenue, gross profit, earnings and earnings per share on both a reported, as well as on adjusted basis have all improved this year. Our balance sheet continues to be very strong, and we are well positioned for the long term. And finally, the favorable results so far this year were made possible as a result of the hard work and dedication of all the company's valued employees. Their contributions and efforts are the principal reason for our success. We're ready to take some questions.

Question-and-Answer Session

Operator

[Operator Instructions] The first question we have comes from the location of A.J. Rice of Susquehanna Financial Group.

Albert Rice - Susquehanna Financial Group, LLLP

A couple of questions, if I might. First of all, the comments on Florida, can you give us a little perspective on that? Are you saying that in the current quarter Florida deteriorated or is this part of just ongoing mix of business that Florida has been underperforming for a while and just sort of continues to underperform?

Lewis Derbes

This is Lew Derbes. Obviously, the economic conditions, particularly in Florida, have been particularly bad. We have a large cemetery presence in Florida. Certainly, we have a great sales team in that area that's working very hard through these difficult times, but it's been a challenge in that market particularly. It has been a challenge for us over the last couple of quarters. It's kind of an ongoing problem. So we wanted to give you a sense first, I think it's important to note that the total sales -- cemetery sales production that we had for this period, even including Florida being down was the highest that it's been since the third quarter of 2008. But we wanted to give some sense of the success in the other markets because that market has weighed so much on our performance.

Albert Rice - Susquehanna Financial Group, LLLP

Okay. That makes sense. Now you called out...

Thomas Kitchen

A.J., I would just add to that, I think it's been more of a year-to-date phenomenon in Florida as opposed to -- some impact from just third quarter.

Albert Rice - Susquehanna Financial Group, LLLP

Okay, that's what I was wondering. I guess you guys -- you're calling out rising energy expense and unfavorable bad debt development. Can you just give us a sense of the order of magnitude that those might have had on the quarter, and also I guess, again, whether the worst thing I would think, at least the energy side might actually turn around in the next quarter a little bit given what's been happening, but maybe just a little more flushing out what you're seeing on those 2 items?

Thomas Kitchen

Both of those were probably in the $200,000 to $300,000 range individually. So probably was about $0.5 million or $600,000.

Lewis Derbes

I mean in general, and I think I covered some of this in my comments, A.J., is that they were all immaterial individually. But in the aggregate, when each of these went against us, it caused some pressure on our margins. So I tried to give some examples of some that had caused that pressure, but none individually are material.

Albert Rice - Susquehanna Financial Group, LLLP

Okay. And then when I look at your CapEx for the quarter, you're roughly $6.9 million, I think the number, versus $3.1 million last year and year-to-date it stepped up. Is there some ongoing things that are driving a little higher CapEx and is that unusual this quarter or is it going to, would you say, continue to see at that level?

Lewis Derbes

It's a little bit unusual, A.J. We had some building maintenance expenses that have come up during the quarter that caused some pressure on maintenance CapEx. We did also have some -- as we evaluate decisions versus purchase and lease on our fleet of vehicles, we've had some changes in there. The portion related to the fleet could be something that you'll see continue, as we make sure -- our objective is to make sure all our customer-facing vehicles are indicative of high level of service that we provide in our operations. But the vast majority of the pressure on the CapEx for this quarter was in the building maintenance.

Thomas Kitchen

And we don't forecast that to be on a continuing basis going forward. It's just one of those phenomenons that -- in the quarter the amount was, let's say, disproportionate to the previous quarter's expense.

Albert Rice - Susquehanna Financial Group, LLLP

Right. Okay. And then my final question would be just, obviously, you had the Desert View acquisition, which looks like a nice one for you. Can you give us a little bit of background on that and flavor for that. And then also, you've commented that, I guess, you're seeing a little more on the acquisition front, maybe just comment on the pipeline generally at this point.

Thomas Kitchen

Yes. On Desert View, in particular, we like that. It was a combination operation, fairly large in market where we currently serves. So -- and it fit the profile of the businesses that we would have an interest in acquiring. So it was a logical fit for us, and we're very pleased to be successful in terms of acquiring that business. Pipeline does have quite a few opportunities there for us. We are seeing more. We also are putting more emphasis and certainly more resources to that effort. On a regular basis, we're looking at potential acquisitions and evaluating the desirability of each one. We have maintained a strict discipline with regard to where we interest in, the types of businesses. And also, we're disciplined about the pricing that we intend to submit. So at this point in time, while the pipeline is getting more opportunities in it, we believe it gives us an opportunity to be more selective.

Operator

The next question we have comes from the location of Jamie Clement of Sidoti.

James Clement - Sidoti & Company, LLC

And speaking of preneed sales, obviously, you're coming off of a great quarter here. This has been a point of emphasis for you all over the last couple of years. Tom, if you could highlight 1 or 2 things that you all have emphasized internally that is, they're yielding benefits right now. What would those be?

Thomas Kitchen

In terms of our preneed sales, it's just reemphasizing the importance there. And I think the -- there is -- we have generated the sales through the business that I would call the bread and butter of the average consumer that's coming through, as opposed to any 1 or 2 very large sales. We did experience an improvement in our large sales during the quarter, which is gratifying for us because we've got to find properties that really lend themselves to it. But for the most part, it's the bread-and-butter type of sales that we have, with the exception of Florida, it’s been a fairly broad base, and we think overall the economy has shaken off some of the fallout from the '08 and early '09 period of time. And while it's not growing significantly, I think in most places in the country, we see modest growth and that modest growth is going to translate into families that have a need to purchase a cemetery property, to come back into the market to do so. So -- and we think a combination of -- the folks that we have trained better and provide better training. As well as some of the cremation gardens that we have implemented or at least we've opened. We see some good traction there. So from that standpoint, the strategy of offering commission or options in the cemetery for memorialization, we find that that's starting to take traction as well.

James Clement - Sidoti & Company, LLC

Okay. And I think, Tom, that in your, I believe it was in your prepared remarks, I think you were -- when you were alluding to the organizational changes that you all made. I think you used the term, maybe, market-specific marketing actions for preneed that you'd be looking at going forward? Did I hear you right?

Thomas Kitchen

Yes.

James Clement - Sidoti & Company, LLC

And what are the kind of things that you have in mind?

Thomas Kitchen

Well, each -- our business is a very local business. And no one size fits all, and so we are very sensitive to what works maybe in one market is not going to be particularly applicable in another market. One thing that we also are cognizant of, is that we have some properties that are very large that lend themselves to a certain way of managing and doing business, and we have others that are small. And so we think that it's important for us to recognize that perhaps those 2 different types of businesses will require different strategies and different policies with regard to going forward. And that's one of the points of emphasis that we're going to make going forward. Take a look at our businesses and to really come up with a more, call it a customized approach, with regard to how we manage and how we operate in the various locations.

Operator

The next question we have comes from Bob Willoughby of Bank of America Merrill Lynch.

Robert Willoughby

Tom, you certainly emphasized the positives here. But I guess you look back at the performance during the last economic downturn and now we're soon to be on the brink of slipping into another recession, if we're not already there. When does the board or when do you guys change your view in terms of strategies to realize the value of the company? You've highlighted a number of organic initiatives which seemingly will take time to come to fruition. I mean, is there any other backup plan here you're pursuing. And maybe with that, the share repurchase amounts seem quite small relative to the cash you do have. Why are we not seeing more on that front?

Thomas Kitchen

Well, Bob. I think one -- let me -- kind of a variety of questions there. I think the board has taken actions I think to -- with regard to the increase in the dividend, with the increase in the share repurchase. So from that standpoint, I think that they have taken some specific positive steps to return money to the shareholders and to certainly provide some value for the shareholders. I think that the #1 goal for the company is to increase our business. And by doing that, it's going to provide the best overall returns for our shareholders. So I would say that the board has taken some steps to certainly enhance shareholder value, and I think they will continue to assess the options and alternatives that we have and facing us going forward. The board has been very open to this. And the board is very committed to increasing and improving shareholder value.

Robert Willoughby

Well, I agree with the efforts and the actions. I just -- the magnitude on the capital deployment front, I just thought the dividends could be higher. The share repurchases could be more. And what prevents you from moving those numbers up a bit quicker, I guess?

Thomas Kitchen

Well, in the share repurchase, we had a extended period earlier this year, when we were doing the refinancing for that period of time. We were out of the market. So that was probably -- and when we got everything teed up and ready to go, the Japanese tsunami hit and the market conditions for us issuing the debt really weren't favorable, so we extended it out approximately 4 weeks before we all came to market. So for a good period of 8 to 10 weeks, we were largely out of the market there. We've been aggressive in that market, our recent repurchase of stock, we've done more than 3 million shares this year for $20 million and a run rate of about $50 million to $60 million a year in free cash flow. That's a fair chunk on a year-to-date basis for 9 months for us to repurchase. We've also paid some $9 million worth of dividends during that period of time and as a consequence of that, that's about almost $30 million of what -- capital allocation that we believe is the right steps. We're not going to -- we have to be careful, we have to maintain a long-term view of how we think a company needs to be managed, and we want to preserve the strong financial position that we currently enjoy, and at the same time, to the extent that we can do some things that would benefit the shareholders, we're certainly open and open to any steps that we believe have some real probability of enhancing the shareholder value.

Robert Willoughby

I guess, lastly, is it a realistic assumption the fourth quarter share repurchase number should be up, hopefully, meaningfully, sequentially or...

Thomas Kitchen

Well, that's a future event. We're committed to share repurchase and what the level of share repurchase is. It's going to certainly depend in part on market conditions, and what we feel is the right capital allocation for the company during that fourth quarter. But the company has about $27 million left on the share repurchase and our intent is to be inactive in that market.

Operator

[Operator Instructions] The next question we have comes from the location of Richard Innes of JC Clark Ltd.

Dick Innes

I have one question and one comment. The question is on the funeral gross profit where it was down 2.7%, and you look at the revenue, it was up 3.1%. To get that a little higher, can you get more calls. Well, maybe not, because you're best-of-class with respect to your same home call increase. But the revenue per call at -- up 0.4%, probably doesn't cover your cost of inflation. Do you see that improving going forward? Or do we have a risk here of margin erosion going forward?

Thomas Kitchen

Well, and Dick, I would not put too much emphasis on that one quarter. They were, as Lew mentioned in his comments, a number of factors that combined to work against us against in that quarter. And so over the longer term, we have expanded out the margin with regard to the funerals with regard to the first 9 months experience. And my anticipation is that the fourth quarter will certainly be more consistent with the first 3 quarters experienced as opposed to the third quarter standing on its own. With regard to the top line for funeral, we believe it's important to strike a balance between the increases in calls and the increase in average revenue. We don't want to focus on too much on average revenue increases and perhaps be losing some of the calls. Which I think a strategy for us that we'd like to pursue would be to continue the steps that we need to take in order to maintain and expand on our market share with regard to the number of calls, and then at the same time, realize the benefit of some average revenue increases. So I would say that, at this point in time, while the increase of $2 million in the funeral is good and the increased costs really exceeded that, that's not good, I don't expect that to be a long-term condition for the company.

Dick Innes

And the comment is that with the $27 million on the share buyback, sitting on cash of almost $70 million, you've got the litigation receivable of $11 million, what I consider to be a depressed stock price of under $6, it seems to me that it'd be great opportunity to buy back, well, up to almost 5% of the shares outstanding.

Thomas Kitchen

Well, Dick, I can't really comment in terms of what...

Dick Innes

No, I understand that. I'm just...

Thomas Kitchen

Let me just say, at the current pricing levels, I would agree with you, that I believe our stock is undervalued. And I would -- even if it were $2 or $3 higher, I would say it's undervalued. And we always want to be better, and I think that there are opportunities for us to improve the shareholder value going forward. And that's what the goal of this management team is going to achieve.

Operator

The next question we have comes from John Ransom of Raymond James.

John Ransom - Raymond James & Associates, Inc.

We've seen a couple of deals that have been bid pretty aggressively by private equity. Do you see any changes around prices or bidding as you go out and look for acquisitions? Are you still able to buy at you historical multiples?

Thomas Kitchen

Well, we were able to buy with the historical multiples for the Desert View that we did, and we're pleased with that. I mentioned earlier in the Q&A that we've been disciplined about our pricing, so we're not going to get into a bidding contest just for the sake of buying a property. We do believe that it's appropriate for us to look at the businesses and to evaluate them as maybe an A, B or C type of business. And so if the business has got the right critical mass, fits the profile that we wanted to see, it's in the right geographic area, it's got the right demographics surrounding it, we believe it's got a real future and, let's say, it integrates well with our existing operations, we would be at the high end of the multiples that we would be willing to pay. And so if a business has some interest, but doesn't quite meet all of those characteristics that I just mentioned, we would maybe perhaps be in the middle or somewhat down in terms of the range of multiples that we would be willing to pay. So at this point, while we know that just about every business we submit a price on is going to have more than one bidder, we are going to really focus on paying what we consider to be a fair value for the business. And then another important question for us to answer is, what are we going to do with the business once we acquire it? In terms of, is it going to fit well and produce the types of returns that we're looking for? So at this point in time, while the competition out there is important for us to consider, it still is not going to overly out sway us from the approach and the strategy that we're following with regard to acquiring businesses.

John Ransom - Raymond James & Associates, Inc.

Well, have you seen, for particularly larger deals or for higher-quality deals, have you seen prices move up because of this private equity factor? Are we ever setting [ph] that?

Thomas Kitchen

In one or two, we have. And so it's kind of -- from our standpoint, I'm a little reluctant to say based on the observations that we've had, I'm a little reluctant to throw any firm conclusion. Give me a few more quarters of experience, where I'd see what's happening, I may be able to develop a better opinion of that. At this point in time, in several businesses we've taken an interest in, we find that there is some other potential purchaser that's willing to pay more than what we're willing to pay. And quite frankly, on a couple of those businesses we were at the high-end of our range, that we consider to be reasonable. So -- but I would not -- I'd be a little hesitant at this point in time to draw a firm conclusion about -- give it a couple more quarters, and I'd see a couple more examples of that, I might be able to do that.

Operator

Well, it appears that we have no further questions at this time. We will go ahead and conclude our question-and-answer session. I would now like to turn the conference back over to management for any closing remarks. Gentlemen?

Thomas Kitchen

Well, thank you very much. And I'd just like to conclude by thanking everybody for joining us today. We appreciate your interest and continued support in Stewart Enterprises, and we'll talk again next quarter. Thank you.

Operator

And we thank you, gentlemen, for your time. This does conclude today's teleconference. At this time, you may disconnect your lines. Thank you.

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