StoneMor Inc. Reports Third Quarter Financial Results
TREVOSE, Pa., Nov. 12, 2020 (GLOBE NEWSWIRE) -- StoneMor Inc. (NYSE: STON) (“StoneMor” or the “Company”), a leading owner and operator of cemeteries and funeral homes, today reported operating and financial results for the third quarter and nine-month period ended September 30, 2020. Investors are encouraged to read the Company's quarterly report on Form 10-Q when it is filed with the Securities and Exchange Commission (the “SEC”), which will contain additional details, and will be posted at www.stonemor.com.THIRD QUARTER FINANCIAL PERFORMANCE * Revenues for the third quarter were $76.9 million compared to $73.2 million in the third quarter in the prior year. Nine-month revenues were $218.8 million compared to $223.1 million in the prior year period. When adjusted to exclude revenues from properties divested since January 1, 2019, revenues for the quarter and nine months ended September 30, 2020 were $76.8 million and $217.3 million, respectively, compared to revenues of $69.2 million and $211.0 million, respectively, for the prior year periods. * Cemetery segment operating income for the third quarter was $11.7 million compared to $4.2 million in the third quarter in the prior year, representing an increase of $7.5 million. Nine-month cemetery segment operating profit was $24.3 million compared to $11.8 million in the prior year period, representing an increase of $12.6 million. * Funeral home segment operating income for the third quarter was $1.5 million compared to $1.1 million in the third quarter in the prior year, representing an increase of $0.4 million. Nine-month funeral home segment operating profit was $4.9 million compared to $4.4 million in the prior year period, representing an increase of $0.5 million. * Corporate overhead expense decreased to $9.8 million in the third quarter compared to $11.6 million in the third quarter in the prior year. * Third quarter net loss was $7.9 million compared to $42.7 million in the third quarter in the prior year. Third quarter net loss in the prior year included a loss on impairment of goodwill of $24.9 million. * Third quarter operating income was $3.2 million, compared to an operating loss of $6.6 million in the third quarter in the prior year which included other losses of $0.1 million.Joe Redling, StoneMor’s President and Chief Executive Officer said, “The third quarter continued the trend of growth established in the first half of 2020, particularly as it relates to our cemetery sales production1 and expense management initiatives. We delivered record levels of cemetery sales production during the third quarter of 2020, including a 27% year-over-year increase. The upward trajectory was largely driven by 32% growth in same-store pre-need sales production and included increases in both contract volume and average pricing. This sales production growth was generated while reducing our expenses across the board and driving increased Field EBITDA2 levels.”LIQUIDITY UPDATEAs of September 30, 2020, the Company had $64.6 million of cash, including $20.6 million of restricted cash, and $328.3 million of total debt.“StoneMor produced a third quarter that generated adjusted EBITDA of $5.5 million and operating cash flow of $2.6 million, which includes a $6.6 million cash interest payment,” said Jeff DiGiovanni, StoneMor’s Senior Vice President and Chief Financial Officer. “In addition, through the management of its Trust assets, between investment return and cash collections, net of distributions, StoneMor has increased the value of its Trust assets by $15.4 million, resulting in a further deleveraging of our balance sheet. As we look forward, we continue to focus on generating operating cash flow through effective management of our operations and related treasury functions and our corporate cost reduction initiatives.”CONFERENCE CALL INFORMATIONStoneMor will conduct a conference call to discuss this news release today, November 12, 2020 at 4:30 p.m. Eastern Time. The conference call can be accessed by calling (800) 954-0623. No reservation number is necessary; however, due to the on-going pandemic, it is advised that interested parties access the call-in number 5 to 10 minutes prior to the scheduled start time to avoid delays. StoneMor will also host a live webcast of this conference call. Investors may access the live webcast via the Investors page of the StoneMor website www.stonemor.com under Events & Presentations.About StoneMor Inc.StoneMor Inc., headquartered in Trevose, Pennsylvania, is an owner and operator of cemeteries and funeral homes in the United States, with 318 cemeteries and 86 funeral homes in 27 states and Puerto Rico. StoneMor’s cemetery products and services, which are sold on both a pre-need (before death) and at-need (at death) basis, include: burial lots, lawn and mausoleum crypts, burial vaults, caskets, memorials, and all services which provide for the installation of this merchandise. For additional information about StoneMor Inc. please visit StoneMor’s website, and the investors section, at http://www.stonemor.com.CONTACT Investor Relations StoneMor Inc. (215) 826-4438Cautionary Note Regarding Forward-Looking StatementsCertain statements contained in this press release, including, but not limited to, information regarding continued implementation of the Company’s performance and cost structure improvement efforts and the anticipated financial impact thereof, are forward-looking statements. Generally, the words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “project,” “expect,” “predict” and similar expressions identify these forward-looking statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.Forward-looking statements are based on management’s current expectations and estimates. These statements are neither promises nor guarantees and are made subject to certain risks and uncertainties that could cause actual results to differ materially from the results stated or implied in this press release. StoneMor’s major risks are related to uncertainties associated with current business and economic disruptions resulting from the recent coronavirus pandemic, including the effect of government regulations issued in connection therewith, its ability to identify, and negotiate acceptable agreements with, purchasers of additional properties, uncertainties associated with the cash flow from pre-need and at-need sales, trusts and financings, which may impact StoneMor’s ability to meet its financial projections and service its debt, as well as with StoneMor’s ability to maintain an effective system of internal control over financial reporting and disclosure controls and procedures.When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth in StoneMor’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and the other reports that StoneMor files with the Securities and Exchange Commission, from time to time. Except as required under applicable law, StoneMor assumes no obligation to update or revise any forward-looking statements made herein or any other forward-looking statements made by it, whether as a result of new information, future events or otherwise.Non-GAAP Financial MeasuresThis release includes certain non-GAAP financial measures, including comparable location revenues, adjusted operating income and adjusted comparable location operating income, EBITDA, adjusted EBITDA and field EBITDA, and unlevered cash provided by operating activities, which are intended as supplemental measures of the Company’s performance that are not required by or presented in accordance with GAAP. All business results presented in this release are not prepared in accordance with Article 11 of Regulation S-X.Management uses these non-GAAP measures internally to evaluate and manage the Company’s operations and to better understand its business because they facilitate a comparative assessment of the Company's operating performance relative to its performance based on results calculated under GAAP. These non-GAAP measures also isolate the effects of some items that vary from period to period without any correlation to core operating performance and eliminate certain charges that management believes do not reflect the Company's operations and underlying operational performance. The compensation committee of the Company’s board of directors also uses certain of these measures to evaluate management's performance and set its compensation. The Company believes that these non-GAAP measures also provide useful information to investors regarding certain financial and business trends relating to the Company’s financial condition and operating results facilitates an evaluation of the financial performance of the Company and its operations on a consistent basis. Providing this information therefore allows investors to make independent assessments of the Company’s financial performance, results of operation and trends while viewing the information through the eyes of management.These non-GAAP measures are subject to limitations. The non-GAAP measures presented in this release may not be comparable to similarly titled measures used by other companies because other companies may not calculate one or more in the same manner. Additionally, the non-GAAP performance measures exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements; do not reflect changes in, or cash requirements for, working capital needs; and do not reflect interest expense, or the requirements necessary to service interest or principal payments on debt. Further, our historical adjusted results are not intended to project our adjusted results of operations or financial position for any future period. To compensate for these limitations, management presents and considers these non-GAAP measures in conjunction with the Company’s GAAP results; no non-GAAP measure should be considered in isolation from or as alternatives to net income, earnings per share or any other measure determined in accordance with GAAP. Readers should review the reconciliations included below, and should not rely on any single financial measure to evaluate the Company’s business.A reconciliation of each non-GAAP measure to the most directly comparable GAAP measure is set forth below (in thousands):COMPARABLE LOCATION REVENUES Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Total revenues $76,856 $73,151 $218,808 $223,115 Less: Revenue associated with divested properties 77 3,922 1,538 12,116 Comparable location revenues $76,779 $69,229 $217,270 $210,999 ADJUSTED OPERATING INCOME (LOSS) AND ADJUSTED COMPARABLE LOCATION OPERATING INCOME (LOSS) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Operating income (loss) $3,211 $(6,570) $30,475 $(26,121) Less: Gain on sale of businesses — — 31,120 — Less: Other losses, net — (129) (2,169) (3,558) Adjusted operating income (loss) 3,211 (6,441) 1,524 (22,563) Less: Operating income (loss) associated with divested properties 60 1,331 (255) 3,418 Adjusted comparable location operating income (loss) $3,151 $(7,772) $1,779 $(25,981) EBITDA, ADJUSTED EBITDA AND FIELD EBITDA Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net loss $(7,857) $(42,652) $(2,768) $(99,584) Income tax benefit (expense) (1,129) (1,545) (3,333) 4,841 Interest expense 12,197 12,765 36,576 35,282 Depreciation and amortization 2,285 2,647 7,078 8,120 EBITDA 5,496 (28,785) 37,553 (51,341) Less: Gain on sale of businesses — — 31,120 — Less: Other losses, net — (129) (2,169) (3,558) Less: Loss on debt extinguishment — — — (8,478) Less: Loss on impairment of goodwill — (24,862) — (24,862) Adjusted EBITDA 5,496 (3,794) 8,602 (14,443) Less: Investment and other income 9,905 10,063 30,830 29,474 Plus: Corporate overhead 9,762 11,595 27,019 38,145 Field EBITDA $5,353 $(2,262) $4,791 $(5,772) UNLEVERED CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net cash provided by (used in) operating activities $2,584 $4,817 $3,785 $(26,755) Cash interest payments 6,686 7,463 20,361 24,444 Unlevered cash provided by (used in) operating activities $9,270 $12,280 $24,146 $(2,311) STONEMOR INC.CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and per share data) September 30, December 31, 2020 2019 Assets Current assets: Cash and cash equivalents, excluding restricted cash $44,003 $34,867 Restricted cash 20,601 21,900 Accounts receivable, net of allowance 57,995 55,794 Prepaid expenses 4,808 4,778 Assets held for sale 32,109 23,858 Other current assets 14,756 17,142 Total current assets 174,272 158,339 Long-term accounts receivable, net of allowance 75,104 75,549 Cemetery property 302,918 320,605 Property and equipment, net of accumulated depreciation 90,234 103,400 Merchandise trusts, restricted, at fair value 484,520 517,192 Perpetual care trusts, restricted, at fair value 300,738 343,619 Deferred selling and obtaining costs 117,367 114,944 Deferred tax assets 20 81 Intangible assets 55,377 56,246 Other assets 25,862 29,393 Total assets $1,626,412 $1,719,368 Liabilities and Owners' Equity Current liabilities: Accounts payable and accrued liabilities $52,524 $55,134 Liabilities held for sale 24,815 20,668 Accrued interest 113 125 Current portion, long-term debt 1,143 374 Total current liabilities 78,595 76,301 Long-term debt, net of deferred financing costs 327,173 367,963 Deferred revenues 929,120 949,375 Deferred tax liabilities 31,062 34,613 Perpetual care trust corpus 300,738 343,619 Other long-term liabilities 46,938 49,987 Total liabilities 1,713,626 1,821,858 Commitments and contingencies Owners' equity: Common stock, par value $0.01 per share, 200,000,000 shares authorized, 117,824,266 and 94,447,356 shares issued and outstanding, respectively 1,178 944 Paid-in capital in excess of par value (85,624) (103,434) Retained deficit (2,768) — Total owners' equity (87,214) (102,490) Total liabilities and owners' equity $1,626,412 $1,719,368 STONEMOR INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share and per unit data) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Revenues: Cemetery: Interments $21,409 $15,605 $54,755 $52,544 Merchandise 16,328 18,014 46,567 51,870 Services 16,435 17,068 48,923 50,400 Investment and other 9,905 10,063 30,830 29,474 Funeral home: Merchandise 6,590 5,572 18,767 17,920 Services 6,189 6,829 18,966 20,907 Total revenues 76,856 73,151 218,808 223,115 Costs and Expenses: Cost of goods sold 9,977 10,677 29,464 31,263 Cemetery expense 16,703 18,362 52,458 57,245 Selling expense 13,658 14,609 39,316 44,839 General and administrative expense 10,491 11,033 30,602 33,430 Corporate overhead 9,762 11,595 27,019 38,145 Depreciation and amortization 2,285 2,647 7,078 8,120 Funeral home expenses: Merchandise 1,755 1,896 5,069 5,227 Services 5,653 5,351 16,347 16,363 Other 3,361 3,422 9,931 11,046 Total costs and expenses 73,645 79,592 217,284 245,678 Gain on sale of businesses — — 31,120 — Other losses — (129) (2,169) (3,558) Operating income (loss) 3,211 (6,570) 30,475 (26,121) Interest expense (12,197) (12,765) (36,576) (35,282) Loss on debt extinguishment — — — (8,478) Loss on impairment of goodwill — (24,862) — (24,862) Loss from operations before income taxes (8,986) (44,197) (6,101) (94,743) Income tax benefit (expense) 1,129 1,545 3,333 (4,841) Net loss $(7,857) $(42,652) $(2,768) $(99,584) Net loss per common share (basic)(1) $(0.07) $(1.10) $(0.03) $(2.59) Net loss per common share (diluted)(1) $(0.07) $(1.10) $(0.03) $(2.59) Weighted average number of common shares outstanding - basic(2) 117,819 38,916 103,341 38,438 Weighted average number of common shares outstanding - diluted(2) 117,819 38,916 103,341 38,438 (1) For the three and nine months ended September 30, 2020, represents net loss divided by weighted average number of common shares outstanding and for the three and nine months ended September 30, 2019, represents net loss divided by weighted average number of common limited partner units outstanding. (2) For the three and nine months ended September 30, 2020, represents weighted average number of common shares outstanding and for the three and nine months ended September 30, 2019, represents weighted average number of common limited partner units outstanding.STONEMOR INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) Nine Months Ended September 30, 2020 2019 Cash Flows From Operating Activities: Net loss $(2,768) $(99,584) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Cost of lots sold 4,346 5,339 Depreciation and amortization 7,078 8,120 Provision for bad debt 4,529 5,380 Non-cash compensation expense 1,080 2,814 Loss on debt extinguishment — 8,478 Loss on impairment of goodwill — 24,862 Non-cash interest expense 16,159 12,435 Gain on sale of businesses (31,120) — Other losses, net 2,169 3,558 Changes in assets and liabilities: Accounts receivable, net of allowance (16,180) (14,305) Merchandise trust fund (12,284) (11,137) Other assets 3,799 (1,339) Deferred selling and obtaining costs (4,974) (1,850) Deferred revenues 39,238 23,860 Deferred taxes, net (3,490) 4,620 Payables and other liabilities (3,797) 1,994 Net cash provided by (used in) operating activities 3,785 (26,755) Cash Flows From Investing Activities: Cash paid for capital expenditures (4,784) (5,743) Proceeds from divestitures 48,336 1,250 Net cash provided by (used in) investing activities 43,552 (4,493) Cash Flows From Financing Activities: Proceeds from issuance of Series A Preferred Stock 8,800 — Proceeds from issuance of Common Stock 8,200 — Proceeds from issuance of redeemable convertible preferred units, net — 57,500 Proceeds from borrowings 3,672 406,087 Repayments of debt (54,782) (366,644) Principal payment on finance leases (1,061) (1,098) Cost of financing activities (4,294) (17,972) Shares repurchased related to share-based compensation (35) (677) Net cash (used in) provided by financing activities (39,500) 77,196 Net increase in cash, cash equivalents and restricted cash 7,837 45,948 Cash, cash equivalents and restricted cash—Beginning of period 56,767 18,147 Cash, cash equivalents and restricted cash—End of period $64,604 $64,095 Supplemental disclosure of cash flow information: Cash paid during the period for interest $20,361 $24,444 Cash paid during the period for income taxes 1,077 1,470 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $2,372 $2,759 Operating cash flows from finance leases 328 370 Financing cash flows from finance leases 1,061 1,098 Non-cash investing and financing activities: Acquisition of assets by financing $— $2,234 Net transfers within assets held for sale 81,108 — Accrued paid-in-kind interest on Senior Secured Notes 10,572 — * * *1 Cemetery sales production represents dollar volume associated with new contracts executed during the period. 2 Field EBITDA represents Adjusted Operating Income less Investment and Other Income plus Corporate Overhead and Depreciation and Amortization.
GlobeNewswire · 11/12 21:03