7 minute read
Letter to Shareholders
by FDLIC
THE APOSTLE PAUL (ROMANS 5:3-5)
FELLOW SHAREHOLDERS
The Apostle Paul knew exactly what to say to comfort us when things are not going smoothly. 2020 was definitely a year that did not go smoothly – far from it. Granted, most of what happened in 2020 was no fault of our own. Think about it – COVID-19, racial tensions, rioting in several large cities, political unrest, a contentious election – shall I continue??? 2020 was a year where “suffering produced perseverance; perseverance, character; and character, hope.”
When faced with extreme challenges, leaders have a choice – fight, flight, or freeze. Fight means to analyze the reality, determine alternate courses of action, and do something to move forward in faith (to persevere). Flight involves analyzing reality and choosing to retreat or give up. Freeze is all about doing nothing different to change the course. True leaders fight, and that is exactly what we did!
The decisions we made throughout the year not only salvaged 2020, but also set up our companies for an incredible future. Here are some things we did to “fight” and to prepare for the future:
We decided to have no layoffs due to the COVID-19-related economic shutdown. We announced this to our people early, giving them confidence, easing their minds, and ensuring they would be here to help us to succeed when the crisis ended.
We continued to pay all our people, including commissioned employee-salespeople (Select Producers), who received their full compensation throughout the economic shutdown.
Our companies applied for, and received, the Paycheck
Protection Program (PPP) loan, which helped considerably.
In the fourth quarter of 2020, we applied to the Small
Business Administration for forgiveness of these loans. With interest rates at all-time lows, we invested in improving our infrastructure and expanding the Home
Office in order to prepare for future growth. The rent associated with the Home Office expansion provided a higher return (5.55%) for FDLIC than we could have achieved elsewhere. We developed and deployed an online Arrangement
GuideTM for people who would like to plan some, or all, of their funeral online, with optional involvement of a salesperson.
For our funeral home clients and preneed funeral sales professionals, our software development team developed an e-signatures process for completing preneed funeral contracts electronically.
We created an online preneed funeral sales presentation for FDLIC to allow families to meet with our sales professionals online, without physical contact.
We quickly expanded our imperative to become a “thought leader” in the funeral profession by providing over 100 helpful webinars and training sessions through virtual meetings during the COVID-19 crisis period of March through December. We continued to set revenue records in Parkway, Passare, and most of our divisions of FDLIC.
Let’s look at some of our financial results from 2020: DIG’s assets increased by 5.88% to almost $170 million. Our stockholders’ equity (book value of DIG) grew 5.19% and passed $160 million. DIG paid dividends to shareholders of more than $1.75 million.
DIG repurchased $2.14 million of its own stock. DIG sold $1.73 million of its common stock that had been held as treasury stock.
With dividends included, DIG’s overall return on equity was 7.92%. Let’s face it, 2020 was a tough year, but as we often reminded ourselves, “it could’ve been worse!” The fact is, I could not be prouder of what we achieved last year. Our team pulled together and operated with true teamwork in ways I have never seen before. Lemons were continually thrown at us, and we just kept making lemonade.
So, let’s take a closer look at the success of DIG’s primary subsidiaries.
Funeral Directors Life
Even though FDLIC was adversely impacted financially in 2020, due to the COVID-19 economic shutdown, we achieved some significant wins: The COVID-19 crisis hit us hardest and unrepentantly from April through June. After being over 100% of budget through March, preneed funeral sales were 60% less than budget in April, 40% less than budget in May, and 15% less than budget in June. Yet, new monthly sales records were achieved in eight months of 2020. The average preneed funeral sale fell from an average of $5,700 to a monthly average of $4,700 in May, but it bounced back to $5,600 by year-end. Our sales management team continued signing up new funeral home clients even though their travel was restricted for most of the year. More than 170 new funeral homes joined FDLIC’s client base. We expanded FDLIC’s agency relationships by: Developing the Proxima product, which resulted in increased production from Laker Planning and Advanced Planning, Inc. Signing an agreement in late July with the largest preneed funeral agency in the United States – Precoa. Signing an agreement with one of the largest preneed funeral agencies in Utah – Family Service Agency, Inc. Advancing our agreement, signed late in 2019, with one of the largest preneed funeral agencies in Pennsylvania – Vantage Point Preneed. A.M. Best Company affirmed our rating of A- with a stable outlook.
We were recognized for the 7th time by Texas Monthly magazine and Best Companies Group as one of the Best
Companies to Work for in Texas, and we were certified once again as a Great Place To Work®, which puts us in an elite group among the best workplaces in the United States.
Parkway Advisors
2020 was an incredible year for Parkway – by far the best year in the company’s history. Our Parkway team fought through all the negatives of 2020 and achieved unimaginable positive results. The successes we achieved were significant: 2020 represented 12 consecutive years of increasing revenue and net income. During these 12 years, we added over $13 million in value to DIG! Total revenue was $4.32 million, 8.60% greater than 2019 – a new record for us! Net income was $2.3 million for the year, 22.14% higher than our previous record year! During the year, three new insurance companies signed agreements for asset management. Distributions to DIG increased by 22.22% over 2019 to $2.2 million!
Parkway did more than persevere in 2020 – the company excelled! It will be exciting to watch as Parkway builds on the momentum created last year.
Passare
Passare was another one of our companies that went beyond perseverance. 2020 was a year for the record books for the company. We set the audacious goal to be cash flow positive by December 2020, and we achieved that goal by September! We focused and aligned our Passare leadership team on how they could positively affect financial performance. We stayed diligent, watched every expense, and created new revenue opportunities, while increasing our reach in existing funeral home accounts.
In 2020, Passare achieved the following accomplishments: We reached cash flow positive! We increased revenue 49.09% over 2019. Although the 2020 income statement showed a loss, that loss was 82.29% less than 2019. We created new revenue sources – most notably: Client Services (to assist funeral home clients with establishing processes to best utilize Passare), Adoption Plans (to assist funeral home clients with the initial adoption of Passare in their business), and Premium Support (to supply ongoing help to funeral home clients who desire more proactive customer assistance). We established public and private APIs (Application
Programing Interface) to create a foundation for common platform development. We added several game-changing features – most notably e-signatures, state Electronic Death Registration System (EDRS) integrations, and The Planning Center. We increased training and accountability, decreasing the amount of time necessary to establish a new funeral home client’s “instance” (initial setup) from 15 hours to 3 hours. We formed an implementation team to make the process easier for funeral homes to switch software platforms.
As difficult as 2020 was for most businesses, Passare persevered and outperformed, beyond our wildest expectations. The company is now positioned to have a very promising 2021 and beyond. Fortunately, the losses that have occurred in Passare have led to tax savings, which have more than compensated for DIG’s investment in the company.
Conclusion
It is worth hearing the words of Paul again: “…We also glory
in our sufferings, because we know that suffering produces perseverance; perseverance, character; and character, hope.”
Through perseverance, character, and hope, we accomplished some incredible things last year – “it could’ve been worse!”
I must give honor where honor is due (Romans 13:7). Our management team has been outstanding through all the challenges of 2020! Through their dedication, their care for our people, their trust in my leadership, and frankly, their personal perseverance, our company did more than survive in 2020 – it thrived! We are blessed with strong leadership, and my heart overflows with gratitude and love for them.
We thank you, fellow shareholders, for your support. There is no greater responsibility than earning and keeping your trust and confidence. Rest assured, we will continue to work tirelessly to keep our commitments and protect and grow the value of your investment in DIG.
With sincere gratitude and blessings,
KRIS SEALE
Chairman of the Board President and Chief Executive Officer
