TORONTO, Feb. 6, 2012 /CNW/ - JC Clark Ltd. ("JC Clark") is a
Toronto-based investment manager that beneficially owns 2.1 million
Class A shares of Stewart Enterprises Inc. ("Stewart"), representing
approximately 2.6% of the issued and outstanding Class A shares. JC
Clark has been a long term shareholder of Stewart, owning shares in the
Company for over 10 years. However, during this time it has become
increasingly apparent that Stewart's senior management and board of
directors have failed to create meaningful shareholder value. As a
result, JC Clark is hereby urging Stewart's board to form an
independent committee of directors to explore strategic alternatives to
enhance shareholder value.
In JC Clark's view, Stewart is a mismanaged company operating in an
attractive industry as summarized by the following facts:
Poor Revenue Growth: Stewart's revenue growth over the last 7 years has significantly
underperformed its North American, publicly-traded peers (2004 was
selected as the base year as the Company changed its accounting
treatment for pre-need obtaining costs in 2005, and subsequently
restated 2004 numbers).
Declining EBITDA: Stewart's EBITDA has declined over the last 7 years, while each of its
North American, publicly-traded peers enjoyed positive EBITDA growth
over that same time period.
High Management Turnover: Stewart has had 4 different CEOs and 1 acting CEO in the last 7 years
Unproductive Capital Investment: Stewart has spent $178 million in capital expenditures over the last 7
years, yet the Company failed to generate positive EBITDA growth over
that period. This prolonged misuse of capital has destroyed
shareholder value, and clearly demonstrates the ineffectiveness of
Stewart's current and previous management teams.
Dismal Share Price Performance: Stewart's share price has declined by 12% over the last 7 years. This
poor performance is not a recent phenomenon - Stewart's share price has
underperformed the S&P 500 in each of the last 10, 15 and 20 year
Over the last several months, JC Clark has expressed the aforementioned
concerns to Stewart's board of directors while also offering credible
suggestions for shareholder value enhancement which include:
1) A significant increase in the annual dividend
2) A large-scale share buyback (issuer tender offer)
3) Initiation of a sale process for the entire business
Unfortunately, the response received from Stewart in regards to our
concerns and recommendations was wholly inadequate, and in our view
demonstrates a continued lack of commitment with respect to shareholder
value creation on the part of both management and the board.
JC Clark has been a supportive long-term shareholder of Stewart
Enterprises; however, after nearly a decade of underperformance it is
clear to us that its board of directors must take more urgent action to
enhance shareholder value. In our view, the formation of an
independent committee of directors and the engagement of outside
financial advisors to explore strategic alternatives would be
beneficial to all Stewart shareholders.
SOURCE JC CLARK LTD.
For further information:
JC Clark Ltd.
130 Adelaide Street West
Veeral Khatri, CFA
(416) 361 - 6144