HOUSTON, Feb. 15, 2017 /PRNewswire/ -- Carriage
Services, Inc. (NYSE: CSV) today announced record results for the
year ending December 31, 2016, as
highlighted below:
Mel Payne, Chief Executive
Officer, stated, "Consistent with our annual Good To Great
theme of 'Carriage Services 2016: We Choose To Be Great!',
our 2016 performance was our eighth straight record annual
performance with Total Revenue growth of 2.3% to $248.2 million, Adjusted Consolidated EBITDA
growth of 3.6% to $73.7 million,
Adjusted Diluted EPS growth of 9.5% to $1.62 and Adjusted Free Cash Flow growth of 7.8%
to $47.0 million. Since we launched
the Carriage Good To Great Journey at the end of 2011, our
initial five year timeframe performance trends have been
extraordinary and have produced a Total Shareholder Return of 417%
including dividends.
|
|
Base
Year(1)
|
|
Carriage Good To
Great Journey(1)
|
|
CAGR
|
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue
|
|
$
|
182.3
|
|
|
$
|
198.2
|
|
|
$
|
213.1
|
|
|
$
|
226.1
|
|
|
$
|
242.5
|
|
|
$
|
248.2
|
|
|
6.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Consolidated
EBITDA
|
|
$
|
48.6
|
|
|
$
|
52.6
|
|
|
$
|
56.0
|
|
|
$
|
61.7
|
|
|
$
|
71.1
|
|
|
$
|
73.7
|
|
|
8.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Consolidated
EBITDA Margin
|
|
26.6
|
%
|
|
26.5
|
%
|
|
26.3
|
%
|
|
27.3
|
%
|
|
29.3
|
%
|
|
29.7
|
%
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Diluted
Earnings Per Share
|
|
$
|
0.64
|
|
|
$
|
0.80
|
|
|
$
|
0.98
|
|
|
$
|
1.24(2)
|
|
|
$
|
1.48
|
|
|
$
|
1.62
|
|
|
20.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash
Flow
|
|
$
|
29.1
|
|
|
$
|
22.9
|
|
|
$
|
36.2
|
|
|
$
|
38.6
|
|
|
$
|
43.7
|
|
|
$
|
47.0
|
|
|
10.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Price at
December 31
|
|
$
|
5.60
|
|
|
$
|
11.87
|
|
|
$
|
19.53
|
|
|
$
|
20.95
|
|
|
$
|
24.10
|
|
|
$
|
28.64
|
|
|
38.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Data shown for
the years ended December 31 in millions except per share and
percentage amounts
|
|
|
(2) Adjusted for one
time tax benefit of 10 cents per share
|
|
|
In mid-November of 2011 after a major management reorganization
on November 4, 2011, which we now
refer to as our Good To Great Transition Date, we convened a
large group of senior leaders and field operating and Houston support personnel to discuss whether
the high performance ideas and concepts related to our Standards
Operating Model had evolved over the prior eight years to a degree
that could define Carriage as a "Good Company" if led and
executed well by our operating leadership at all levels. In
preparation for this strategic meeting on Carriage's Ten Year
Vision, we all had to read the bestselling business book
Good To Great by Jim
Collins which was published in 2001.
There was a unanimous and exciting view at this meeting that we
had indeed reached an early phase of "Good
Company" and that our Managing Partners, Sales Managers
and employees across our portfolio of businesses would be inspired
to achieve higher levels of sustained operating and financial
performance by the launching of a five year Good To Great
Journey beginning in 2012 in combination with a new long term
(five year) Good To Great value creation incentive program
to complement our annual Being The Best Pinnacle Award.
Accordingly, we established and then communicated companywide
extraordinarily challenging goals over the five year timeframe
beginning in 2012 and ending with 2016 consistent with the five
year theme of taking Carriage from a Good company in 2012 to
one considered Great by 2016 based on total equity market
value growth and total shareholder returns over time.
Despite the dynamic and transformational changes in all areas of
our company over the past five years, including the turnover,
shrinkage and improved alignment of our senior leadership team and
Board of Directors, a much lower cost capital structure, and the
huge growth in our earning power and equity market value, we
nevertheless realized over the last two years that the Good To
Great Journey should not cross some artificial finish line at
the end of 2016. Instead, we concluded that such a special journey
of learning among likeminded individuals in a quest for excellence
should never end because there are still so many ways we can get
better in every operational and support function area of our
company. Our thinking now is that every time we might cross a
high performance threshold of "goodness" and be approaching
"great," we will redefine what greatness means for our industry and
company and simply continue our Good To Great Journey that
never ends.
Our year to date and fourth quarter comparative highlights are
shown below:
Year Ended December 31, 2016
compared to Year Ended December 31,
2015
- Record Total Revenue of $248.2
million, an increase of 2.3%;
- Net Income of $19.6 million, a
decrease of 6.1%;
- GAAP Diluted Earnings Per Share remained flat at $1.12;
- Record Total Field EBITDA of $104.4
million, an increase of 2.8%;
- Record Total Field EBITDA Margin up 20 basis points to
42.1%;
- Record Adjusted Consolidated EBITDA of $73.7 million, an increase of 3.6%;
- Record Adjusted Consolidated EBITDA Margin up 40 basis points
to 29.7%;
- Record Adjusted Diluted Earnings Per Share of $1.62, an increase of 9.5%; and
- Record Adjusted Free Cash Flow of $47.0
million, an increase of 7.8%.
Three Months Ended December 31,
2016 compared to Three Months Ended December 31, 2015
- Record Total Revenue of $62.9
million, an increase of 2.0%;
- Net Income of $4.1 million, a
decrease of 24.1%;
- GAAP Diluted Earnings Per Share of $0.22, a decrease of 29.0%;
- Total Field EBITDA remained flat at $27.2 million;
- Total Field EBITDA Margin down 90 basis points to 43.2%;
- Record Adjusted Consolidated EBITDA of $18.9 million, an increase of 5.9%;
- Record Adjusted Consolidated EBITDA Margin up 110 basis points
to 30.1%;
- Adjusted Diluted Earnings Per Share of $0.36, a decrease of 7.7%; and
- Record Adjusted Free Cash Flow of $12.9
million, an increase of 166.0%.
STANDARDS OPERATING MODEL/CONSOLIDATION PLATFORM CASH
EARNING POWER
During the 2008/2009 financial and market crisis, we took
control of our preneed trust fund management and initiated an
investment repositioning strategy that was enormously successful
and led to huge capital gains and much higher levels of recurring
income, resulting in substantial overfunding of our trusts compared
to regulatory and economic requirements. So in 2011 we made the
decision to report Withdrawable Trust Income in our Non-GAAP Trend
Reporting as it was not recognizable as GAAP because no death had
occurred. After seeking and receiving feedback from
institutional investors during 2015 about the complexity and
confusion related to our Non-GAAP reporting, we ended beginning in
2016 the practice of reporting Withdrawable Trust Income as well as
the adding back of other items to our Non-GAAP results so that our
GAAP and Non-GAAP performance would converge as much as
possible.
We believe the achievement of an Adjusted Consolidated EBITDA
Margin of 29.7% in 2016 is a level that has never been reached in
the history of deathcare consolidation by any mature, public
company using current accounting methodology. This company and
industry milestone confirms our conviction that Carriage has
evolved into a superior consolidation, operating and value creation
platform for the funeral and cemetery industry.
Yet it turns out that the reflection of Withdrawable Trust
Income in our Non-GAAP performance beginning in 2011 also masked
the remarkable degree of Carriage's cash earning power
transformation as shown below in our five year Good To Great
performance trends without the inclusion of Withdrawable Trust
Income.
|
|
For The Years
Ended December 31,
|
|
CAGR
|
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
%
|
|
|
(in millions
except percentage amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Consolidated
EBITDA (as reported)
|
|
$
|
48.6
|
|
|
$
|
52.6
|
|
|
$
|
56.0
|
|
|
$
|
61.7
|
|
|
$
|
71.1
|
|
|
$
|
73.7
|
|
|
8.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Withdrawable Trust
Income (pre-tax)
|
|
$
|
(4.5)
|
|
|
$
|
(1.9)
|
|
|
$
|
(1.5)
|
|
|
$
|
(1.8)
|
|
|
$
|
(0.6)
|
|
|
$
|
—
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma Adjusted
Consolidated EBITDA
|
|
$
|
44.1
|
|
|
$
|
50.7
|
|
|
$
|
54.5
|
|
|
$
|
59.9
|
|
|
$
|
70.5
|
|
|
$
|
73.7
|
|
|
10.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma Adjusted
Consolidated EBITDA Margin
|
|
24.2
|
%
|
|
25.6
|
%
|
|
25.6
|
%
|
|
26.5
|
%
|
|
29.1
|
%
|
|
29.7
|
%
|
|
4.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash
Flow (as reported)
|
|
$
|
29.1
|
|
|
$
|
22.9
|
|
|
$
|
36.2
|
|
|
$
|
38.6
|
|
|
$
|
43.7
|
|
|
$
|
47.0
|
|
|
10.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Withdrawable Trust
Income (actual cash withdrawn/after-tax)
|
|
$
|
(6.8)
|
|
|
$
|
(0.9)
|
|
|
$
|
(1.1)
|
|
|
$
|
(0.4)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma Adjusted
Free Cash Flow
|
|
$
|
22.3
|
|
|
$
|
22.0
|
|
|
$
|
35.1
|
|
|
$
|
38.2
|
|
|
$
|
43.7
|
|
|
$
|
47.0
|
|
|
16.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CSV Equity Market
Value at Dec. 31
|
|
$
|
103.2
|
|
|
$
|
215.5
|
|
|
$
|
356.6
|
|
|
$
|
387.8
|
|
|
$
|
401.2
|
|
|
$
|
476.6
|
|
|
35.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma Adjusted
Free Cash Flow Equity Yield
|
|
21.6
|
%
|
|
10.2
|
%
|
|
9.8
|
%
|
|
9.8
|
%
|
|
10.9
|
%
|
|
9.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over the first five year Good To Great timeframe we have
demonstrated the ability to convert approximately 45% of
incremental revenue into Proforma Adjusted Consolidated EBITDA
(Revenue up $65.9 million equal to
36.1%, and Proforma Adjusted Consolidated EBITDA up $29.6 million equal to 67.1%) and other value
creation metrics (Adjusted EPS and Free Cash Flow) because of a 550
basis point increase from 24.2% to 29.7% in our Proforma Adjusted
Consolidated EBITDA Margin equal to a remarkable increase of
22.7%. So what does the five year cash earning power trend
that culminated in 2016 with the milestone achievement of a
Consolidation Platform EBITDA Margin of 29.7% mean for current and
prospective long term shareholders of Carriage?
Key five year investment merit takeaways include the
following:
- Increased by almost 23% our debt leverage capacity on the same
revenue base;
- Increased by 111% our ability to self-finance from Free Cash
Flow a more rapid pace of acquisitions;
- Substantially increased returns on invested capital of both our
existing Same Store and Acquisition Funeral and Cemetery
Portfolios;
- Increasing margin trends will materially benefit long term
investment returns on future acquisitions that rank high using our
Strategic Methodology whose criteria are predictive of future
revenue growth; and
- Substantially increased our financial flexibility to pursue
additional opportunistic value creation capital allocation
decisions.
Key Adjusted Free Cash Flow Equity Yield takeaways:
- While our Equity Market Value increased 362% and Proforma
Adjusted Consolidated EBITDA Margin improved by 550 basis points,
Proforma Adjusted Free Cash Flow Equity Yield averaged 10.1% in a
relatively flat range over the past five years;
- Cash earning power Adjusted Consolidated EBITDA Margin of 29.7%
is more than 300 basis points higher than our much larger benchmark
competitor; and
- Carriage's superior and higher growth consolidation platform,
as of year-end, produces FCF Equity Yield that is over
400 basis points higher than our much larger benchmark
competitor, implying a substantial valuation discount.
Our ability to increase the cash earning power on each dollar of
revenue is directly correlated to the improved execution of our
three core models across our consolidation and operating platform
by our 4E High Performance Leaders over the last five years. The
company and industry milestone of our increasing cash earning power
margin is not due to any top-down corporate initiatives to cut
costs, under investment in earning power maintenance capital
expenditures at our local businesses, or our decision to eliminate
a broadly aggressive preneed funeral selling program when we
initiated the Standards Operating Model in 2004.
While it is generally accepted within our industry and much of
the investment community as "a matter of faith" that an aggressive
preneed funeral selling program has positive long term performance
benefits, we have seen no specific business data evidence that
aggressive preneed funeral selling programs in stand-alone funeral
homes (as apposed to funeral and cemetery combination businesses or
stand-alone cemeteries) grow funeral market share volumes, revenues
and Field EBITDA Margins over the long term. We believe that the
sustained high level of execution by our stand-alone funeral
business Managing Partners and the increasing funeral field
operational and financial performance that has been achieved over
the past five years only further validates our business
strategy.
A much more comprehensive understanding of the superior cash
earning power of Carriage's Consolidation and Operating Platform
will best be achieved by a visit to our offices in Houston and/or to some of our wonderful
operating businesses for personal engagement with our Managing
Partners and employees. But in an attempt to make a breakthrough in
investor understanding of Carriage using my 2015 shareholder letter
and 2016 quarterly earnings releases, I wrote extensively for the
first time this past year about the evolution since 2003 of our
highly innovative Standards Operating Model (Second and Third
Quarter Earnings Releases) and the conceptual research on "a
coherent yet radically decentralized model" begun in the late
1990's by Jeremy Hope, Robin Fraser and Peter
Bunce in the United Kingdom
whose work was published in the book Beyond Budgeting
co-authored by Mr. Fraser and Mr. Hope in 2003 which is continued
today by the Beyond Budgeting Round Table.
CARRIAGE GOOD TO GREAT JOURNEY BECOMES BUILT TO LAST
COMPANY
During the last quarter of 2016 we reorganized our senior
leadership team to capitalize on what we believe will be the
greatest strategic opportunity for value creation in our industry
over the next five and ten years. There has not been rapid
consolidation of our still highly fragmented industry since the
mania of the 1990's except for SCI's consolidation of primarily
other large consolidators (Alderwoods, Stewart Enterprises, etc.)
over the last ten years. Yet we sense that across the country
the industry secular revenue challenges caused by people living
longer and increasingly choosing cremations compared to traditional
burials will lead to an acceleration of consolidation over the next
ten years by owners needing a succession plan solution.
We believe that Carriage offers a unique consolidation and
operating framework as a succession plan solution - one so
different from any company during the past sixty years of
consolidation in our industry that many high quality owners and top
industry talent think its "Too Good To Be True!"
So at the end of 2016 we reorganized the Strategic and Corporate
Development function to achieve highly focused execution of our
Strategic Acquisition Model by promoting Shawn Phillips, one of our top operating leaders
who is able to credibly explain our unique Standards Operating
Model to "best in class" independent business owners across the
country using our high performance culture operating
language. Shawn joined Carriage ten years ago, has served as
Regional Partner of both our Western and Central Regions, and is
now leading and building a first class corporate development team
and a pipeline of quality acquisition candidates that fit our
higher future revenue profile strategic criteria and also align
with our Mission and Vision of Being The Best and
Five Guiding Principles. As industry consolidation
accelerates over the next ten years, we are extraordinarily well
positioned to affiliate with more than our fair share of the best
remaining independents in the best markets across the country.
As we successfully execute our three core models over the next
five to ten years, we fully expect that our share price and equity
valuation will reflect our achievements over time as a superior
value creation platform in our industry. Our Being The Best
Mission and Vision is for "Mr. Market" to
increasingly put a premium valuation on our "Compounder Company"
shares so that we get recognized publicly by investors as a
Built To Last Company.
So I am honored to announce that our next five year Good To
Great Journey timeframe theme is Carriage Services 2017 -
2021: From Good To Great to Built To Last.
Lastly and importantly for our company leadership and employees,
I am extremely proud to publicly announce our Good To Great
annual theme for this year, "Carriage Services 2017: Owning the
Future, Accelerating the Good To Great Journey!", concluded Mr.
Payne.
CARRIAGE "ROUGHLY RIGHT" SCENARIO 2017 - 2021
Shown below using 2016 full year performance as our new base
year is our updated five year financial performance scenario from
2017 through 2021. This scenario is not intended to be a formal
management estimate or forecast of future performance because of
the large number of unpredictable variables involved in the
prediction of just about anything in the future, including
uncontrollable and/or unknowable external events. Rather, the
intent and goal of this scenario is to reflect the midpoint of a
"roughly right" range of future performance as we execute our
Standards Operating, 4E Leadership and Strategic
Acquisition Models. Consistent with our performance over the
first five years of our Good To Great Journey, the 2017 -
2021 scenario clearly demonstrates the future value creation
dynamics of the Carriage Operating and Consolidation Platform, i.e,
the "trend has been our friend but the best is yet to come!"
|
|
Base Year(1)
|
|
CARRIAGE "ROUGHLY
RIGHT" SCENARIO
2017 - 2021(1)
|
|
CAGR
|
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
%
|
|
|
|
|
|
|
Total
Revenue
|
|
$
|
248.2
|
|
|
$
|
272.4
|
|
|
$
|
291.0
|
|
|
$
|
311.1
|
|
|
$
|
332.2
|
|
|
$
|
356.5
|
|
|
7.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Consolidated
EBITDA
|
|
$
|
73.7
|
|
|
$
|
83.0
|
|
|
$
|
89.7
|
|
|
$
|
97.1
|
|
|
$
|
105.2
|
|
|
$
|
113.7
|
|
|
9.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Consolidated
EBITDA Margin
|
|
29.7
|
%
|
|
30.4
|
%
|
|
30.8
|
%
|
|
31.2
|
%
|
|
31.7
|
%
|
|
31.9
|
%
|
|
1.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Data shown for
the years ended December 31 in millions except percentage
amounts
|
|
|
The Carriage "Roughly Right" Financial Performance Scenario over
the five year timeframe 2017 - 2021 shown above reflects a
continuation of the high performance trends of our Good To
Great Journey from 2012 - 2016. We believe these High
and Sustainable Quantitative Performance Trends are driven by the
Qualitative Elements of our company, i.e. the ideas and concepts of
Carriage's High Performance Culture Framework highlighted in the
next three sections of this release. The Qualitative Elements
of Carriage are the "center of the universe" reasons we have
evolved over the last thirteen years into a high performance
culture company that "just happens to be in the funeral and
cemetery business!"
CARRIAGE FRAMEWORK OF HIGH PERFORMANCE IDEAS AND
CONCEPTS
Carriage's High Performance Culture Framework is designed around
a few simple high performance concepts related to our view that
over the last fifty plus years the consolidation and operation of
family owned funeral homes and cemeteries by public companies has
been over managed for short term yet unsustainable maximum profit
and under led for long term and sustainable market share and
profitability growth. Our three core models, comprised of our
Standards Operating, 4E Leadership, and Strategic Acquisition
Models, are premised on the following passionate convictions about
our company, business and industry:
- High Performance Ideas and Concepts of Carriage are 100%
aligned with our Mission of Being The Best and
Five Guiding Principles, which are the Qualitative Elements
that drive our High and Sustainable Quantitative Performance;
- Words in the form of ideas, concepts, high performance
standards, recognition, Mission, Vision and Guiding Principles
matter greatly to people with exceptional talent, especially those
who are part of high performance teams - so over time we have
developed a unique Carriage High Performance Culture Language;
- Nature of each of our businesses is high value personal service
and sales delivered locally through highly motivated, skilled and
culturally aligned leaders and employees fully involved in their
communities;
- Nature of each market in which we operate is highly competitive
for market share with each market and Carriage business being
unique as to its competitive opportunities and challenges that are
not prone to centralized solutions or top down initiatives;
- Weak leadership locally will make a healthy and/or dominant
business weaker in competitive standing (market share) over time,
whereas strong 4E Leadership and the "Right Quality of
Staff" in a Carriage business will produce high and sustainable
performance from a good business almost overnight, consistent with
the high performance concept of First Who, Then What;
- A few simple high operating performance standards that do not
change over time weighted heavily toward long term growth in
funeral volumes and preneed cemetery property sales, which are the
primary drivers of locally produced economic value creation through
the financial dynamic of operating leverage, attracts the top
entrepreneurial and competitive talent to Carriage businesses that
do not need to be managed - just supported, recognized and rewarded
like a partner; and
- Nature of our industry is akin to "birds of a feather flock
together", as we have found that making Carriage highly selective
on acquisitions and talent is attractive to the best remaining
independent businesses and top entrepreneurial talent who want to
join an elite club of "Only The Best" Carriage businesses
and Managing Partners.
CARRIAGE GOOD TO GREAT HIGH PERFORMANCE HEROES
At the beginning of 2012 we created a new five year incentive
award with the name Good To Great Award that was directly
linked to our annual Being The Best Pinnacle Award
which itself is linked to High Funeral Standards Achievement over a
full year, i.e. our Good To Great Awards require high
and sustained Being The Best Standards Achievement over a
full five years. We have had many wonderful performances over the
last five years by High Performance Hero Funeral and Cemetery
Managing Partners and Sales Managers and their teams of winning
employees, so I am more than honored on behalf of our Standards
Council members, senior leadership team and Board of Directors to
announce our first Good To Great Award winners for the five
year timeframe that began in 2012 and ended at year-end 2016, as
listed below:
Kristi Ah
You
|
Franklin & Downs
Funeral Home; Modesto, CA
|
James Bass
|
Twin Cities Cremation
Services and Funeral Home; Niceville, FL; and Emerald Coast Funeral Home/McLaughlin Mortuary; Fort
Walton Beach, FL
|
Kyle
Incardona
|
Hillier Funeral
Homes; Bryan, TX
|
Steve Mora
|
Conejo Mountain
Funeral Home; Camarillo, CA
|
Ken
Summers
|
P.L. Fry & Son
Funeral Home; Manteca, CA
|
Robert
Maclary
|
Kent-Forest Lawn
Funeral Home; Panama City, FL
|
Chad Woody
|
Watson-King Funeral
Homes; Rockingham, NC
|
Brad
Shemwell
|
Latham Funeral Home;
Elkton, KY
|
Michael
Page
|
Allison Funeral Home;
Liberty, TX
|
Patty
Drake
|
Drake Whaley McCarty
Funeral Home; Cynthiana, KY
|
Andy
Shemwell
|
Maddux-Fuqua-Hinton
Funeral Homes; Hopkinsville, KY
|
Tim Hauck
|
Cape Coral Group;
Cape Coral, FL
|
The above group of Good To Great Award winners along with
spouses/significant others or a guest will be hosted by our senior
leadership team and spouses on our first Good To Great
Awards trip on Wednesday, March 1,
2017 to Sunday, March 5, 2017
to the world class and unique (built into the tree tops of a
tropical rain forest next to the active Arenal Volcano)
Nayara Springs Villas in Arenal
Nayara, Costa Rica.
Congratulations to all, as you deserve to be treated as the Kings
and Queens of sustained high Being The Best Standards
Achievement that you are! You have led us as high
performance role models over the past five years and have truly set
the Performance Standard for what the Carriage Good To Great
Journey is all about.
CARRIAGE 2016 PINNACLE OF SERVICE AWARD
WINNERS
As an important part of our High Performance Culture
tradition and language, and because we have a passionate conviction
that RECOGNITION is the highest form of motivation, listed below
are 35 Carriage Being The Best Pinnacle Of Service
Award winners for 2016:
James
Terry
|
James J. Terry
Funeral Home; Downingtown, PA
|
James Bass
|
McLaughlin Twin
Cities Funeral Home; Niceville, FL; and Emerald Coast/McLaughlin Mortuary; Ft. Walton Beach,
FL
|
Bill
Martinez
|
Stanfill Funeral
Home; Miami, FL
|
Richard
Munoz
|
Connolly & Taylor
Funeral Directors; Martinez, CA
|
Benjamin
Friberg
|
Heritage Funeral Home
and Crematory; Ft. Oglethorpe, GA
|
Brad
Shemwell
|
Latham Funeral Home;
Elkton, KY
|
Joseph
Waterwash
|
Baird-Case
Jordan-Fannin Funeral Home & Cremation Service; Ft. Lauderdale,
FL
|
Jason
Higginbotham
|
Lakeland Funeral
Home; Lakeland, FL
|
Jeff Moore
|
Sterling-White
Funeral Home; Crosby, TX
|
Kristi
AhYou
|
Franklin & Downs
Funeral Homes; Modesto, CA
|
Kyle
Incardona
|
Hillier Funeral Home;
Bryan, TX
|
Jason Cox
|
Lane Funeral Home -
South Crest Chapel; Rossville, GA
|
Michael
Nicosia
|
Chapel of San Ramon
Valley, Danville, CA; and Ouimet
Brothers Concord Funeral Directors; Concord, CA
|
Robert
Maclary
|
Kent-Forest Lawn
Funeral Home; Panama City, FL
|
Tim Hauck
|
Cape Coral Group;
Cape Coral, FL
|
Andrew
Cumby
|
Cumby Family Funeral
Homes; High Point, NC
|
Chris
Duhaime
|
Funk Funeral Home;
Bristol, CT
|
Chris
Chetsas
|
Cataudella Funeral
Home; Methuen, MA
|
John
Fitzpatrick
|
Donohue Cecere
Funeral Directors; Westbury, NY
|
Chad Woody
|
Richmond County
Memorial Park; Rockingham, NC
|
Ken
Summers
|
P.L. Fry & Son
Funeral Home; Manteca, CA
|
Matthew
Simpson
|
Fry Memorial Chapel;
Tracy, CA
|
Justin
Luyben
|
Evans-Brown
Mortuaries & Crematory; Sun City, CA
|
Curtis
Ottinger
|
Heritage Funeral
Home; Chattanooga, TN
|
Verdo
Werre
|
McNary-Moore Funeral
Service; Colusa, CA
|
Andy
Shemwell
|
Maddux-Fuqua-Hinton
Funeral Home; Hopkinsville, KY
|
Steve Mora
|
Conejo Mountain
Memorial Park; Camarillo, CA; and Conejo Mountain Funeral Home; Camarillo,
CA
|
Patty
Drake
|
Drake Whaley McCarty
Funeral Home; Cynthiana, KY
|
Brian
Binion
|
Steen Funeral Homes;
Ashland, KY
|
Roger
Allen
|
LaGrone-Blackburn-Shaw Funeral Directors; Amarillo,
TX
|
Jeff
Seaman
|
Dwayne R. Spence
Funeral Home; Canal Winchester, OH
|
Ashley
Vella
|
Deegan Funeral
Chapels; Escalon, CA
|
Mike
Conner
|
Conner-Westbury
Funeral Home; Griffin, CA
|
Tim Miller
|
Fuller Funeral Home
& Cremation Service (East); Naples, FL
|
Kim
Borselli
|
Fuller Funeral Home
& Cremation Service (Pine Ridge); Naples, FL
|
The above group of Pinnacle Of Service Award winners
along with spouses/significant others or a guest will be hosted by
our senior leadership team and spouses on a trip on Thursday, May 4, 2017 to Sunday, May 7, 2017 to Playa del Carmen, Mexico. Congratulations to all, as you
deserve to be treated as the Kings and Queens of Being The Best
Standards Achievement that you are! You have led us as
high performance role models during 2016 and have truly set the
Performance Standard for what the Carriage Good To Great
Journey is all about.
TRUST FUND PERFORMANCE
Shown below are consolidated performance metrics for the
combined trust fund portfolios (preneed funeral, cemetery
merchandise and services and cemetery perpetual care) at key
dates.
Investment
Performance
|
|
|
Investment
Performance(1)
|
|
Index
Performance
|
|
|
Discretionary
|
Total
Trust
|
|
S&P 500
Stock Index
|
High Yield
Index
|
70/30
index
Benchmark(2)
|
|
|
|
|
|
|
|
|
1 year ended
12/31/16
|
|
19.7%
|
18.3%
|
|
12.0%
|
17.6%
|
15.9%
|
2 years ended
12/31/16
|
|
16.0%
|
15.7%
|
|
13.5%
|
12.0%
|
12.4%
|
3 years ended
12/31/16
|
|
25.7%
|
24.8%
|
|
28.9%
|
14.8%
|
19.0%
|
4 years ended
12/31/16
|
|
43.6%
|
42.0%
|
|
70.6%
|
23.4%
|
37.6%
|
5 years ended
12/31/16
|
|
72.8%
|
66.3%
|
|
97.8%
|
42.6%
|
59.2%
|
|
|
|
|
|
|
|
|
(1) Investment
performance includes realized income and unrealized appreciation
(depreciation).
|
(2) The 70/30
Benchmark is 70% weighted to the High Yield Index and 30% weighted
to the S&P 500 Stock Index.
|
Asset Allocation as
of December 31, 2016
(in thousands)
|
|
|
|
|
Discretionary Trust Funds
|
|
Total Trust
Funds
|
Asset
Class
|
|
|
|
MV
|
|
|
%
|
|
MV
|
|
|
%
|
Cash
|
|
|
|
$
|
28,612
|
|
14
|
%
|
|
$
|
43,924
|
|
19
|
%
|
Equities
|
|
|
|
36,546
|
|
19
|
%
|
|
38,975
|
|
17
|
%
|
Fixed
Income
|
|
|
|
127,813
|
|
65
|
%
|
|
138,952
|
|
62
|
%
|
Other/Insurance
|
|
|
|
3,317
|
|
2
|
%
|
|
3,510
|
|
2
|
%
|
Total
Portfolios
|
|
|
|
$
|
196,288
|
|
100
|
%
|
|
$
|
225,361
|
|
100
|
%
|
The performance of our preneed trust fund portfolio in 2016
marked the successful completion of our portfolio repositioning
strategy that we implemented at the beginning of the year.
Our strategy of selecting individual securities for a long-term
investment horizon was the primary driver of our performance for
the year. Our long-term holdings in regional bank and
insurance company TARP warrants and energy infrastructure companies
significantly outperformed in 2016, particularly after the
election.
Our trust fund portfolio repositioning strategy enabled us to
accomplish our goals to improve the credit quality and liquidity of
our fixed income portfolio, while increasing the amount of
recurring current income in the portfolio. Recurring annual
income increased by 15% or roughly $1.5
million in our discretionary trust fund portfolio in
2016. The majority of our repositioning strategy within our
fixed income portfolio was executed in the first half of the year
and proved to be successful with an average total return of 22% for
new fixed income purchases during 2016.
2016 also marked the eighth full year that Carriage has directly
managed our discretionary trust fund portfolio and the sixth year
we outperformed our reported benchmark. The performance of our
discretionary trust fund portfolio has exceeded our 70/30 High
Yield/S&P 500 benchmark by 33% for the eight year period. Given
our successful long term relative investment returns, we believe we
have developed an investment process that will benefit Carriage
into the future.
ADJUSTED FREE CASH FLOW
We produced Adjusted Free Cash Flow from operations for the
three months and years ended December 31,
2016 of $12.9 million and
$47.0 million, respectively, compared
to Adjusted Free Cash Flow from operations of $4.9 million and $43.7
million for the corresponding periods in 2015. A
reconciliation of Cash Flow Provided by Operations to Adjusted Free
Cash Flow for the three months and years ended December 31, 2015 and 2016 is as follows (in
thousands):
|
Three Months
Ended December
31,
|
|
Years
Ended December
31,
|
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
Cash flow provided by
operations
|
$
|
6,916
|
|
|
$
|
15,177
|
|
|
$
|
49,904
|
|
|
$
|
49,457
|
|
Cash used for
maintenance capital expenditures
|
(2,795)
|
|
|
(2,239)
|
|
|
(9,735)
|
|
|
(7,402)
|
|
Free Cash
Flow
|
$
|
4,121
|
|
|
$
|
12,938
|
|
|
$
|
40,169
|
|
|
$
|
42,055
|
|
|
|
|
|
|
|
|
|
Plus: Incremental
Special Items:
|
|
|
|
|
|
|
|
Acquisition and
divestiture expenses
|
37
|
|
|
—
|
|
|
614
|
|
|
516
|
|
Severance
costs
|
151
|
|
|
—
|
|
|
959
|
|
|
3,979
|
|
Consulting
fees
|
555
|
|
|
—
|
|
|
1,913
|
|
|
496
|
|
Adjusted Free Cash
Flow
|
$
|
4,864
|
|
|
$
|
12,938
|
|
|
$
|
43,655
|
|
|
$
|
47,046
|
|
ROLLING FOUR QUARTER OUTLOOK
The Rolling Four Quarter Outlook ("Outlook") reflects
management's opinion on the performance of the portfolio of
existing businesses, including performance of existing trusts, and
excludes size and timing of acquisitions for the Rolling Four
Quarter Outlook period ending December 31, 2017 unless we have
a signed Letter of Intent and high likelihood of a closing within
90 days. This Outlook is not intended to be management estimates or
forecasts of our future performance, as we believe precise
estimates will be precisely wrong all the time. Rather our intent
and goal is to reflect a "roughly right range" most of the time of
future Rolling Four Quarter Outlook performance as we execute our
Standards Operating, Strategic Acquisition and 4E Leadership Models
over time. Similarly, we self-publish a Company and Investment
Profile, available on our website, that includes a Five Year
"Roughly Right Scenario" of our future performance which together
with our Five Year Trend Report provides investors a ten year past
and future profile of our financial value creation dynamics and
condition, making it easier to judge whether our "trends will
continue to be the friend" of long term investors.
ROLLING FOUR QUARTER OUTLOOK – Period Ending December 31, 2017
|
|
Range
(in millions, except
per share amounts)
|
Revenues
|
|
$263 -
$267
|
Adjusted Consolidated
EBITDA
|
|
$79 - $83
|
Adjusted Net
Income
|
|
$30 - $32
|
Adjusted Basic
Earnings Per Share(1)
|
|
$1.84 -
$1.88
|
Adjusted Diluted
Earnings Per Share(1)
|
|
$1.73 -
$1.77
|
Factors affecting our analysis include, among others, funeral
contract volumes, average revenue per funeral service, cemetery
interment volumes, preneed cemetery sales, capital expenditures,
execution of our funeral and cemetery Standards Operating Model,
market volatility and changes in Federal Reserve monetary policy.
Revenues, Adjusted Consolidated EBITDA, Adjusted Net Income,
Adjusted Basic Earnings Per Share and Adjusted Diluted
Earnings Per Share for the four quarter period ending December
31, 2017 are expected to improve relative to the trailing four
quarter period ended December 31,
2016 due to increases in our existing Funeral Home and
Cemetery portfolio and modest decreases in overhead as a percentage
of revenue.
(1)
|
The Rolling Four
Quarter Outlook on Adjusted Basic Earnings Per Share and Adjusted
Diluted Earnings Per Share does not include any changes to our
fully diluted share count that could occur related to additional
share repurchases or a stock price increase and EPS dilution
calculations related to our convertible subordinated notes and
outstanding and exercisable stock options.
|
CONFERENCE CALL AND INVESTOR RELATIONS CONTACT
Carriage Services has scheduled a conference call for tomorrow,
February 16, 2017 at 9:30 a.m. central time. To participate in the
call, please dial 866-516-3867 (ID-64210285) and ask for the
Carriage Services conference call. A replay of the conference
call will be available through February 20,
2017 and may be accessed by dialing 855-859-2056
(ID-64210285). The conference call will also be available at
www.carriageservices.com. For any investor relations questions,
please contact Viki Blinderman at
713-332-8568 or Ben Brink at
713-332-8441 or email InvestorRelations@carriageservices.com.
CARRIAGE SERVICES,
INC.
|
OPERATING AND
FINANCIAL TREND REPORT
|
(IN THOUSANDS -
EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
2015
|
2016
|
%
Change
|
|
2015
|
2016
|
%
Change
|
|
|
|
|
|
|
|
|
Same Store
Contracts
|
|
|
|
|
|
|
|
Atneed
Contracts
|
5,468
|
|
5,270
|
|
(3.6%)
|
|
|
21,802
|
|
21,428
|
|
(1.7%)
|
|
Preneed
Contracts
|
1,309
|
|
1,288
|
|
(1.6%)
|
|
|
5,346
|
|
5,208
|
|
(2.6%)
|
|
Total Same Store
Funeral Contracts
|
6,777
|
|
6,558
|
|
(3.2%)
|
|
|
27,148
|
|
26,636
|
|
(1.9%)
|
|
Acquisition
Contracts
|
|
|
|
|
|
|
|
Atneed
Contracts
|
1,180
|
|
1,549
|
|
31.3%
|
|
|
4,497
|
|
5,555
|
|
23.5%
|
|
Preneed
Contracts
|
225
|
|
266
|
|
18.2%
|
|
|
982
|
|
969
|
|
(1.3%)
|
|
Total Acquisition
Funeral Contracts
|
1,405
|
|
1,815
|
|
29.2%
|
|
|
5,479
|
|
6,524
|
|
19.1%
|
|
Total Funeral
Contracts
|
8,182
|
|
8,373
|
|
2.3%
|
|
|
32,627
|
|
33,160
|
|
1.6%
|
|
|
|
|
|
|
|
|
|
Funeral Operating
Revenue
|
|
|
|
|
|
|
|
Same Store
Revenue
|
$
|
35,913
|
|
$
|
35,010
|
|
(2.5%)
|
|
|
$
|
142,690
|
|
$
|
140,459
|
|
(1.6%)
|
|
Acquisition
Revenue
|
8,758
|
|
11,282
|
|
28.8%
|
|
|
33,678
|
|
40,165
|
|
19.3%
|
|
Total Funeral
Operating Revenue
|
$
|
44,671
|
|
$
|
46,292
|
|
3.6%
|
|
|
$
|
176,368
|
|
$
|
180,624
|
|
2.4%
|
|
|
|
|
|
|
|
|
|
Cemetery Operating
Revenue
|
|
|
|
|
|
|
|
Same Store
Revenue
|
$
|
11,076
|
|
$
|
10,670
|
|
(3.7%)
|
|
|
$
|
43,336
|
|
$
|
45,441
|
|
4.9%
|
|
Acquisition
Revenue
|
795
|
|
872
|
|
9.7%
|
|
|
3,321
|
|
3,506
|
|
5.6%
|
|
Total Cemetery
Operating Revenue
|
$
|
11,871
|
|
$
|
11,542
|
|
(2.8%)
|
|
|
$
|
46,657
|
|
$
|
48,947
|
|
4.9%
|
|
|
|
|
|
|
|
|
|
Financial
Revenue
|
|
|
|
|
|
|
|
Preneed Funeral
Commission Income
|
$
|
413
|
|
$
|
291
|
|
(29.5%)
|
|
|
$
|
1,484
|
|
$
|
1,429
|
|
(3.7%)
|
|
Preneed Funeral Trust
Earnings
|
2,007
|
|
1,866
|
|
(7.0%)
|
|
|
7,966
|
|
7,348
|
|
(7.8%)
|
|
Cemetery Trust
Earnings
|
2,238
|
|
2,382
|
|
6.4%
|
|
|
8,440
|
|
8,004
|
|
(5.2%)
|
|
Preneed Cemetery
Finance Charges
|
410
|
|
491
|
|
19.8%
|
|
|
1,587
|
|
1,848
|
|
16.4%
|
|
Total Financial
Revenue
|
$
|
5,068
|
|
$
|
5,030
|
|
(0.7%)
|
|
|
$
|
19,477
|
|
$
|
18,629
|
|
(4.4%)
|
|
Total
Revenue
|
$
|
61,610
|
|
$
|
62,864
|
|
2.0%
|
|
|
$
|
242,502
|
|
$
|
248,200
|
|
2.3%
|
|
|
|
|
|
|
|
|
|
Field
EBITDA
|
|
|
|
|
|
|
|
Same Store Funeral
Field EBITDA
|
$
|
14,497
|
|
$
|
14,296
|
|
(1.4%)
|
|
|
$
|
54,620
|
|
$
|
54,706
|
|
0.2%
|
|
Same Store Funeral
Field EBITDA Margin
|
40.4%
|
|
40.8%
|
|
40 bp
|
|
|
38.3%
|
|
38.9%
|
|
60 bp
|
|
Acquisition Funeral
Field EBITDA
|
3,743
|
|
4,534
|
|
21.1%
|
|
|
13,693
|
|
16,536
|
|
20.8%
|
|
Acquisition Funeral
Field EBITDA Margin
|
42.7%
|
|
40.2%
|
|
(250 bp)
|
|
|
40.7%
|
|
41.2%
|
|
50 bp
|
|
Total Funeral
Field EBITDA
|
$
|
18,240
|
|
$
|
18,830
|
|
3.2%
|
|
|
$
|
68,313
|
|
$
|
71,242
|
|
4.3%
|
|
Total Funeral
Field EBITDA Margin
|
40.8%
|
|
40.7%
|
|
(10
bp)
|
|
38.7%
|
|
39.4%
|
|
70
bp
|
|
|
|
|
|
|
|
|
|
Same Store Cemetery
Field EBITDA
|
$
|
3,892
|
|
$
|
3,283
|
|
(15.6%)
|
|
|
$
|
14,045
|
|
$
|
14,499
|
|
3.2%
|
|
Same Store Cemetery
Field EBITDA Margin
|
35.1%
|
|
30.8%
|
|
(430 bp)
|
|
|
32.4%
|
|
31.9%
|
|
(50 bp)
|
|
Acquisition Cemetery
Field EBITDA
|
285
|
|
310
|
|
8.8%
|
|
|
1,088
|
|
1,168
|
|
7.4%
|
|
Acquisition Cemetery
Field EBITDA Margin
|
35.8%
|
|
35.6%
|
|
(20 bp)
|
|
|
32.8%
|
|
33.3%
|
|
50 bp
|
|
Total Cemetery
Field EBITDA
|
$
|
4,177
|
|
$
|
3,593
|
|
(14.0%)
|
|
|
$
|
15,133
|
|
$
|
15,667
|
|
3.5%
|
|
Total Cemetery
Field EBITDA Margin
|
35.2%
|
|
31.1%
|
|
(410
bp)
|
|
|
32.4%
|
|
32.0%
|
|
(40
bp)
|
|
|
|
|
|
|
|
|
|
Funeral Financial
EBITDA
|
$
|
2,161
|
|
$
|
1,947
|
|
(9.9%)
|
|
|
$
|
8,339
|
|
$
|
7,941
|
|
(4.8%)
|
|
Cemetery Financial
EBITDA
|
2,585
|
|
2,799
|
|
8.3%
|
|
|
9,754
|
|
9,563
|
|
(2.0%)
|
|
Total Financial
EBITDA
|
$
|
4,746
|
|
$
|
4,746
|
|
—%
|
|
|
$
|
18,093
|
|
$
|
17,504
|
|
(3.3%)
|
|
Total Financial
EBITDA Margin
|
93.6%
|
|
94.4%
|
|
80
bp
|
|
|
92.9%
|
|
94.0%
|
|
110
bp
|
|
|
|
|
|
|
|
|
|
Total Field
EBITDA
|
$
|
27,163
|
|
$
|
27,169
|
|
—%
|
|
|
$
|
101,539
|
|
$
|
104,413
|
|
2.8%
|
|
Total Field EBITDA
Margin
|
44.1%
|
|
43.2%
|
|
(90
bp)
|
|
|
41.9%
|
|
42.1%
|
|
20
bp
|
|
|
|
|
|
|
|
|
|
OPERATING AND
FINANCIAL TREND REPORT
|
(IN THOUSANDS -
EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31
|
|
2015
|
2016
|
%
Change
|
|
2015
|
2016
|
%
Change
|
|
|
|
|
|
|
|
|
Overhead
|
|
|
|
|
|
|
|
Total Variable
Overhead
|
$
|
4,109
|
|
$
|
2,450
|
|
(40.4%)
|
|
|
$
|
10,878
|
|
$
|
13,122
|
|
20.6%
|
|
Total Regional Fixed
Overhead
|
886
|
|
1,008
|
|
13.8%
|
|
|
3,435
|
|
3,667
|
|
6.8%
|
|
Total Corporate Fixed
Overhead
|
5,081
|
|
4,991
|
|
(1.8%)
|
|
|
20,354
|
|
19,109
|
|
(6.1%)
|
|
Total
Overhead
|
$
|
10,076
|
|
$
|
8,449
|
|
(16.1%)
|
|
|
$
|
34,667
|
|
$
|
35,898
|
|
3.6%
|
|
Overhead as a
percentage of Revenue
|
16.4%
|
|
13.4%
|
|
(300
bp)
|
|
|
14.3%
|
|
14.5%
|
|
20
bp
|
|
|
|
|
|
|
|
|
|
Consolidated
EBITDA
|
$
|
17,087
|
|
$
|
18,720
|
|
9.6%
|
|
|
$
|
66,872
|
|
$
|
68,515
|
|
2.5%
|
|
Consolidated
EBITDA Margin
|
27.7%
|
|
29.8%
|
|
210
bp
|
|
|
27.6%
|
|
27.6%
|
|
0
bp
|
|
|
|
|
|
|
|
|
|
Other Expenses and
Interest
|
|
|
|
|
|
|
|
Depreciation &
Amortization
|
$
|
3,656
|
|
$
|
3,923
|
|
7.3%
|
|
|
$
|
13,780
|
|
$
|
15,421
|
|
11.9%
|
|
Non-Cash Stock
Compensation
|
996
|
|
584
|
|
(41.4%)
|
|
|
4,444
|
|
2,890
|
|
(35.0%)
|
|
Interest
Expense
|
2,888
|
|
3,016
|
|
4.4%
|
|
|
10,559
|
|
11,738
|
|
11.2%
|
|
Accretion of Discount
on Convertible Subordinated Notes
|
900
|
|
1,008
|
|
12.0%
|
|
|
3,454
|
|
3,870
|
|
12.0%
|
|
Loss on Early
Extinguishment of Debt
|
—
|
|
—
|
|
|
|
—
|
|
567
|
|
|
Other, Net
|
(9)
|
|
1,808
|
|
|
|
45
|
|
1,788
|
|
|
Pre-Tax
Income
|
$
|
8,656
|
|
$
|
8,381
|
|
(3.2%)
|
|
|
$
|
34,590
|
|
$
|
32,241
|
|
(6.8%)
|
|
Provision for Income
Taxes
|
3,222
|
|
3,137
|
|
|
|
13,737
|
|
12,682
|
|
|
Tax Adjustment
Related to Certain Discrete Items
|
—
|
|
1,117
|
|
|
|
—
|
|
(22)
|
|
|
Net Tax
Provision
|
3,222
|
|
4,254
|
|
|
|
13,737
|
|
12,660
|
|
|
GAAP Net
Income
|
$
|
5,434
|
|
$
|
4,127
|
|
(24.1%)
|
|
|
$
|
20,853
|
|
$
|
19,581
|
|
(6.1%)
|
|
|
|
|
|
|
|
|
|
Special Items, Net
of Tax except for **
|
|
|
|
|
|
|
|
Withdrawable Trust
Income
|
$
|
—
|
|
n/a
|
|
|
|
$
|
366
|
|
n/a
|
|
|
Acquisition and
Divestiture Expenses
|
24
|
|
120
|
|
|
|
405
|
|
456
|
|
|
Severance and
Retirement Costs
|
100
|
|
—
|
|
|
|
633
|
|
2,587
|
|
|
Consulting
Fees
|
367
|
|
—
|
|
|
|
1,265
|
|
323
|
|
|
Accretion of Discount
on Convertible Subordinated Notes **
|
900
|
|
1,008
|
|
|
|
3,454
|
|
3,870
|
|
|
Loss on Early
Extinguishment of Debt
|
—
|
|
—
|
|
|
|
—
|
|
369
|
|
|
Gain/Loss on Sale of
Assets
|
—
|
|
1,350
|
|
|
|
—
|
|
1,152
|
|
|
Other Special
Items
|
14
|
|
—
|
|
|
|
244
|
|
—
|
|
|
Tax Adjustment from
Prior Period **
|
—
|
|
—
|
|
|
|
141
|
|
—
|
|
|
Sum of Special
Items, Net of Tax
|
$
|
1,405
|
|
$
|
2,478
|
|
76.4%
|
|
|
$
|
6,508
|
|
$
|
8,757
|
|
34.6%
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income
|
$
|
6,839
|
|
$
|
6,605
|
|
(3.4%)
|
|
|
$
|
27,361
|
|
$
|
28,338
|
|
3.6%
|
|
Adjusted Net
Profit Margin
|
11.1%
|
|
10.5%
|
|
(60
bp)
|
|
|
11.3%
|
|
11.4%
|
|
10
bp
|
|
|
|
|
|
|
|
|
|
Adjusted Basic
Earnings Per Share
|
$
|
0.40
|
|
$
|
0.40
|
|
—%
|
|
|
$
|
1.52
|
|
$
|
1.71
|
|
12.5%
|
|
Adjusted Diluted
Earnings Per Share
|
$
|
0.39
|
|
$
|
0.36
|
|
(7.7%)
|
|
|
$
|
1.48
|
|
$
|
1.62
|
|
9.5%
|
|
|
|
|
|
|
|
|
|
GAAP Basic Earnings
Per Share
|
$
|
0.32
|
|
$
|
0.25
|
|
(21.9%)
|
|
|
$
|
1.16
|
|
$
|
1.18
|
|
1.7%
|
|
GAAP Diluted Earnings
Per Share
|
$
|
0.31
|
|
$
|
0.22
|
|
(29.0%)
|
|
|
$
|
1.12
|
|
$
|
1.12
|
|
—%
|
|
|
|
|
|
|
|
|
|
Weighted Average
Basic Shares Outstanding
|
16,828
|
|
16,554
|
|
|
|
17,791
|
|
16,515
|
|
|
Weighted Average
Diluted Shares Outstanding
|
17,499
|
|
18,370
|
|
|
|
18,313
|
|
17,460
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to
Adjusted Consolidated EBITDA
|
|
|
|
|
|
|
|
Consolidated
EBITDA
|
$
|
17,087
|
|
$
|
18,720
|
|
9.6%
|
|
|
$
|
66,872
|
|
$
|
68,515
|
|
2.5%
|
|
Withdrawable Trust
Income
|
—
|
|
n/a
|
|
|
|
555
|
|
n/a
|
|
|
Acquisition and
Divestiture Expenses
|
37
|
|
185
|
|
|
|
614
|
|
701
|
|
|
Severance and
Retirement Costs
|
151
|
|
—
|
|
|
|
959
|
|
3,979
|
|
|
Consulting
Fees
|
555
|
|
—
|
|
|
|
1,913
|
|
496
|
|
|
Other Special
Items
|
20
|
|
—
|
|
|
|
220
|
|
—
|
|
|
Adjusted
Consolidated EBITDA
|
$
|
17,850
|
|
$
|
18,905
|
|
5.9%
|
|
|
$
|
71,133
|
|
$
|
73,691
|
|
3.6%
|
|
Adjusted
Consolidated EBITDA Margin
|
29.0%
|
|
30.1%
|
|
110
bp
|
|
|
29.3%
|
|
29.7%
|
|
40
bp
|
|
|
|
|
|
CARRIAGE SERVICES,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(in thousands,
except share data)
|
|
|
|
December 31,
|
|
2015
|
|
2016
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
535
|
|
|
$
|
3,286
|
|
Accounts receivable,
net
|
18,181
|
|
|
18,860
|
|
Inventories
|
5,654
|
|
|
6,147
|
|
Prepaid
expenses
|
4,684
|
|
|
2,640
|
|
Other current
assets
|
4,707
|
|
|
2,034
|
|
Total current
assets
|
33,761
|
|
|
32,967
|
|
Preneed cemetery
trust investments
|
63,291
|
|
|
69,696
|
|
Preneed funeral trust
investments
|
85,553
|
|
|
89,240
|
|
Preneed receivables,
net
|
27,998
|
|
|
30,383
|
|
Receivables from
preneed trusts
|
13,544
|
|
|
14,218
|
|
Property, plant and
equipment, net
|
214,874
|
|
|
235,113
|
|
Cemetery property,
net
|
75,597
|
|
|
76,119
|
|
Goodwill
|
264,416
|
|
|
275,487
|
|
Intangible and other
non-current assets
|
10,978
|
|
|
14,957
|
|
Cemetery perpetual
care trust investments
|
43,127
|
|
|
46,889
|
|
Total
assets
|
$
|
833,139
|
|
|
$
|
885,069
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term debt and capital lease obligations
|
$
|
12,236
|
|
|
$
|
13,267
|
|
Accounts
payable
|
7,917
|
|
|
10,198
|
|
Other
liabilities
|
524
|
|
|
717
|
|
Accrued
liabilities
|
16,541
|
|
|
20,091
|
|
Total current
liabilities
|
37,218
|
|
|
44,273
|
|
Long-term debt, net
of current portion
|
103,495
|
|
|
137,862
|
|
Revolving credit
facility
|
91,514
|
|
|
66,542
|
|
Convertible
subordinated notes due 2021
|
115,227
|
|
|
119,596
|
|
Obligations under
capital leases, net of current portion
|
2,875
|
|
|
2,630
|
|
Deferred preneed
cemetery revenue
|
56,721
|
|
|
54,631
|
|
Deferred preneed
funeral revenue
|
31,748
|
|
|
33,198
|
|
Deferred tax
liability
|
39,956
|
|
|
40,555
|
|
Other long-term
liabilities
|
5,531
|
|
|
2,567
|
|
Deferred preneed
cemetery receipts held in trust
|
63,291
|
|
|
69,696
|
|
Deferred preneed
funeral receipts held in trust
|
85,553
|
|
|
89,240
|
|
Care trusts'
corpus
|
42,416
|
|
|
46,290
|
|
Total
liabilities
|
675,545
|
|
|
707,080
|
|
Commitments and
contingencies:
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common stock, $.01
par value; 80,000,000 shares authorized; 22,497,873 and 22,490,855
issued as of December 31, 2015 and 2016,
respectively
|
225
|
|
|
225
|
|
Additional paid-in
capital
|
214,250
|
|
|
215,064
|
|
Retained
earnings
|
3,385
|
|
|
22,966
|
|
Treasury stock, at
cost; 5,849,316 shares at December 31, 2015 and 2016,
respectively
|
(60,266)
|
|
|
(60,266)
|
|
Total stockholders'
equity
|
157,594
|
|
|
177,989
|
|
Total liabilities and
stockholders' equity
|
$
|
833,139
|
|
|
$
|
885,069
|
|
CARRIAGE SERVICES,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Years
Ended
December
31,
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
Funeral
|
$
|
47,091
|
|
|
$
|
48,449
|
|
|
$
|
185,818
|
|
|
$
|
189,401
|
|
Cemetery
|
14,519
|
|
|
14,415
|
|
|
56,684
|
|
|
58,799
|
|
|
61,610
|
|
|
62,864
|
|
|
242,502
|
|
|
248,200
|
|
Field costs and
expenses:
|
|
|
|
|
|
|
|
Funeral
|
26,690
|
|
|
27,672
|
|
|
109,166
|
|
|
110,218
|
|
Cemetery
|
7,757
|
|
|
8,023
|
|
|
31,797
|
|
|
33,569
|
|
Depreciation and
amortization
|
3,220
|
|
|
3,560
|
|
|
12,034
|
|
|
13,919
|
|
Regional and
unallocated funeral and cemetery costs
|
4,252
|
|
|
2,297
|
|
|
11,997
|
|
|
10,844
|
|
|
41,919
|
|
|
41,552
|
|
|
164,994
|
|
|
168,550
|
|
Gross
profit
|
19,691
|
|
|
21,312
|
|
|
77,508
|
|
|
79,650
|
|
|
|
|
|
|
|
|
|
Corporate costs and
expenses:
|
|
|
|
|
|
|
|
General,
administrative and other
|
6,820
|
|
|
6,736
|
|
|
27,114
|
|
|
27,944
|
|
Home office
depreciation and amortization
|
436
|
|
|
363
|
|
|
1,746
|
|
|
1,502
|
|
|
7,256
|
|
|
7,099
|
|
|
28,860
|
|
|
29,446
|
|
Operating
income
|
12,435
|
|
|
14,213
|
|
|
48,648
|
|
|
50,204
|
|
Interest
expense
|
(2,888)
|
|
|
(3,016)
|
|
|
(10,559)
|
|
|
(11,738)
|
|
Accretion of discount
on convertible subordinated notes
|
(900)
|
|
|
(1,008)
|
|
|
(3,454)
|
|
|
(3,870)
|
|
Loss on early
extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(567)
|
|
Other, net
|
9
|
|
|
(1,808)
|
|
|
(45)
|
|
|
(1,788)
|
|
Income before income
taxes
|
8,656
|
|
|
8,381
|
|
|
34,590
|
|
|
32,241
|
|
Provision for income
taxes
|
(3,222)
|
|
|
(3,137)
|
|
|
(13,737)
|
|
|
(12,682)
|
|
Income tax
(expense) benefit related to certain discrete items
|
—
|
|
|
(1,117)
|
|
|
—
|
|
|
22
|
|
Net provision for
income taxes
|
(3,222)
|
|
|
(4,254)
|
|
|
(13,737)
|
|
|
(12,660)
|
|
Net income
|
$
|
5,434
|
|
|
$
|
4,127
|
|
|
$
|
20,853
|
|
|
$
|
19,581
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share:
|
$
|
0.32
|
|
|
$
|
0.25
|
|
|
$
|
1.16
|
|
|
$
|
1.18
|
|
Diluted earnings per
common share:
|
$
|
0.31
|
|
|
$
|
0.22
|
|
|
$
|
1.12
|
|
|
$
|
1.12
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
|
0.025
|
|
|
$
|
0.050
|
|
|
$
|
0.100
|
|
|
$
|
0.150
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
16,828
|
|
|
16,554
|
|
|
17,791
|
|
|
16,515
|
|
Diluted
|
17,499
|
|
|
18,370
|
|
|
18,313
|
|
|
17,460
|
|
CARRIAGE SERVICES,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(in
thousands)
|
|
|
|
|
|
Years Ended
December 31,
|
|
|
2015
|
|
2016
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
|
$
|
20,853
|
|
|
$
|
19,581
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
13,780
|
|
|
15,421
|
|
Provision for losses
on accounts receivable
|
|
1,679
|
|
|
2,098
|
|
Stock-based
compensation expense
|
|
4,444
|
|
|
3,229
|
|
Deferred income tax
expense
|
|
3,035
|
|
|
4,855
|
|
Amortization of
deferred financing costs
|
|
921
|
|
|
824
|
|
Accretion of discount
on convertible subordinated notes
|
|
3,454
|
|
|
3,870
|
|
Loss on early
extinguishment of debt
|
|
—
|
|
|
567
|
|
Net (gain) loss on
sale of businesses and disposal of other assets
|
|
(49)
|
|
|
2,077
|
|
Impairment of
intangible assets
|
|
—
|
|
|
145
|
|
Changes in operating
assets and liabilities that provided (required) cash:
|
|
|
|
|
Accounts and preneed
receivables
|
|
(2,310)
|
|
|
(5,162)
|
|
Inventories and other
current assets
|
|
2,582
|
|
|
1,995
|
|
Intangible and other
non-current assets
|
|
150
|
|
|
(1,155)
|
|
Preneed funeral and
cemetery trust investments
|
|
25,543
|
|
|
(14,528)
|
|
Accounts
payable
|
|
1,445
|
|
|
2,112
|
|
Accrued and other
liabilities
|
|
509
|
|
|
202
|
|
Deferred preneed
funeral and cemetery revenue
|
|
329
|
|
|
(640)
|
|
Deferred preneed
funeral and cemetery receipts held in trust
|
|
(26,461)
|
|
|
13,966
|
|
Net cash provided by
operating activities
|
|
49,904
|
|
|
49,457
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Acquisitions and land
for new construction
|
|
(9,725)
|
|
|
(26,556)
|
|
Purchase of land and
buildings previously leased
|
|
(6,080)
|
|
|
(6,258)
|
|
Net proceeds from
sale of businesses and other assets
|
|
65
|
|
|
4,385
|
|
Capital
expenditures
|
|
(29,744)
|
|
|
(16,846)
|
|
Net cash used in
investing activities
|
|
(45,484)
|
|
|
(45,275)
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Borrowings from the
revolving credit facility
|
|
103,600
|
|
|
71,200
|
|
Payments against the
revolving credit facility
|
|
(51,500)
|
|
|
(96,100)
|
|
Borrowings from the
term loan
|
|
1,562
|
|
|
39,063
|
|
Payments against the
term loan
|
|
(10,937)
|
|
|
(11,250)
|
|
Payments on long-term
debt and obligations under capital leases
|
|
(1,014)
|
|
|
(1,789)
|
|
Proceeds from the
exercise of stock options and employee stock purchase plan
contributions
|
|
758
|
|
|
870
|
|
Dividends on common
stock
|
|
(1,819)
|
|
|
(2,492)
|
|
Payment of loan
origination costs
|
|
(13)
|
|
|
(717)
|
|
Purchase of treasury
stock
|
|
(44,999)
|
|
|
—
|
|
Excess tax benefit
(deficiency) of equity compensation
|
|
64
|
|
|
(216)
|
|
Net cash used
in financing activities
|
|
(4,298)
|
|
|
(1,431)
|
|
|
|
|
|
|
Net increase in cash
and cash equivalents
|
|
122
|
|
|
2,751
|
|
Cash and cash
equivalents at beginning of year
|
|
413
|
|
|
535
|
|
Cash and cash
equivalents at end of year
|
|
$
|
535
|
|
|
$
|
3,286
|
|
NON-GAAP FINANCIAL MEASURES
This press release uses Non-GAAP financial measures to present
the financial performance of the Company. Non-GAAP financial
measures should be viewed in addition to, and not as an alternative
for, the Company's reported operating results or cash flow from
operations or any other measure of performance as determined in
accordance with GAAP. We believe the Non-GAAP results are
useful to investors because such results help investors compare our
results to previous periods and provide insights into underlying
trends in our business. The Company's GAAP financial statements
accompany this release. Reconciliations of the Non-GAAP
financial measures to GAAP measures are provided in this press
release.
The Non-GAAP financial measures include "Special Items",
"Adjusted Net Income", "Consolidated EBITDA", "Adjusted
Consolidated EBITDA", "Adjusted Consolidated EBITDA Margin",
"Adjusted Free Cash Flow", "Funeral, Cemetery and Financial
EBITDA", "Total Field EBITDA", "Total Field EBITDA Margin",
"Adjusted Basic Earnings Per Share" and "Adjusted Diluted Earnings
Per Share" in this press release. These financial
measurements are defined as GAAP items adjusted for Special Items
and are reconciled to GAAP in this press release. In
addition, the Company's presentation of these measures may not be
comparable to similarly titled measures in other companies'
reports. The definitions used by the Company for our internal
management purposes and in this press release are as follows:
- Special Items are defined as charges or credits included in our
GAAP financial statements that can vary from period to period and
are not reflective of costs incurred in the ordinary course of our
operations. Special Items are taxed at the federal statutory rate
of 34 percent for the three months and year ended December 31, 2015 and 35 percent for the three
months and year ended December 31,
2016, except for the accretion of the discount on
Convertible Notes as this is a non-tax deductible item and the tax
adjustment from prior period.
- Adjusted Net Income is defined as net income plus adjustments
for Special Items.
- Consolidated EBITDA is defined as net income before income
taxes, interest expenses, non-cash stock compensation, depreciation
and amortization, and interest income and other, net.
- Adjusted Consolidated EBITDA is defined as Consolidated EBITDA
plus adjustments for Special Items.
- Adjusted Consolidated EBITDA Margin is defined as Adjusted
Consolidated EBITDA as a percentage of revenue.
- Adjusted Free Cash Flow is defined as net cash provided by
operations, adjusted by cash-related Special Items, less cash for
maintenance capital expenditures.
- Funeral Field EBITDA is defined as Funeral Gross Profit, which
is funeral revenue minus funeral field costs and expenses, less
depreciation and amortization, regional and unallocated funeral
overhead expenses and Funeral Financial EBITDA.
- Cemetery Field EBITDA is defined as Cemetery Gross Profit,
which is cemetery revenue minus cemetery field costs and expenses,
less depreciation and amortization, regional and unallocated
cemetery overhead expenses and Cemetery Financial EBITDA.
- Funeral Financial EBITDA is defined as Funeral Financial
Revenue less Funeral Financial Expenses.
- Cemetery Financial EBITDA is defined as Cemetery Financial
Revenue less Cemetery Financial Expenses.
- Total Field EBITDA is defined as Gross Profit less depreciation
and amortization, regional and unallocated overhead expenses.
- Total Field EBITDA Margin is defined as Total Field EBITDA as a
percentage of revenue.
- Adjusted Basic Earnings Per Share is defined as GAAP Basic
Earnings Per Share, adjusted for Special Items.
- Adjusted Diluted Earnings Per Share is defined as GAAP Diluted
Earnings Per Share, adjusted for Special Items.
Reconciliation of Non-GAAP Financial Measures:
This press release includes the use of certain financial
measures that are not GAAP measures. The Non-GAAP financial
measures are presented for additional information and are
reconciled to their most comparable GAAP measures below.
Reconciliation of Net Income to Adjusted Net Income for
the three months and years ended December 31, 2015 and 2016
(in thousands):
|
Three Months
Ended
December 31,
|
|
Years
Ended
December
31,
|
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
Net Income
|
$
|
5,434
|
|
|
$
|
4,127
|
|
|
$
|
20,853
|
|
|
$
|
19,581
|
|
Special Items, Net of
Tax, except for **
|
|
|
|
|
|
|
|
Withdrawable Trust
Income
|
—
|
|
|
n/a
|
|
|
366
|
|
|
n/a
|
|
Acquisition and
Divestiture Expenses
|
24
|
|
|
120
|
|
|
405
|
|
|
456
|
|
Severance and
Retirement Costs
|
100
|
|
|
—
|
|
|
633
|
|
|
2,587
|
|
Consulting
Fees
|
367
|
|
|
—
|
|
|
1,265
|
|
|
323
|
|
Accretion of Discount
on Convertible Subordinated Notes **
|
900
|
|
|
1,008
|
|
|
3,454
|
|
|
3,870
|
|
Loss on Early
Extinguishment of Debt
|
—
|
|
|
—
|
|
|
—
|
|
|
369
|
|
Gain/Loss on Sale of
Assets
|
—
|
|
|
1,350
|
|
|
—
|
|
|
1,152
|
|
Other Special
Items
|
14
|
|
|
—
|
|
|
244
|
|
|
—
|
|
Tax Adjustment from
Prior Period **
|
—
|
|
|
—
|
|
|
141
|
|
|
—
|
|
Total Special Items
affecting Net Income
|
$
|
1,405
|
|
|
$
|
2,478
|
|
|
$
|
6,508
|
|
|
$
|
8,757
|
|
Adjusted Net
Income
|
$
|
6,839
|
|
|
$
|
6,605
|
|
|
$
|
27,361
|
|
|
$
|
28,338
|
|
Reconciliation of Net Income to Consolidated EBITDA and
Adjusted Consolidated EBITDA for the three months and years ended
December 31, 2015 and 2016 (in thousands):
|
Three Months
Ended
December 31,
|
|
Years
Ended
December
31,
|
|
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
Net Income
|
$
|
5,434
|
|
|
$
|
4,127
|
|
|
$
|
20,853
|
|
|
$
|
19,581
|
|
Net Tax
Provision
|
3,222
|
|
|
4,254
|
|
|
13,737
|
|
|
12,660
|
|
Pre-Tax
Income
|
$
|
8,656
|
|
|
$
|
8,381
|
|
|
$
|
34,590
|
|
|
$
|
32,241
|
|
Interest
Expense
|
2,888
|
|
|
3,016
|
|
|
10,559
|
|
|
11,738
|
|
Accretion of Discount
on Convertible Subordinated Notes
|
900
|
|
|
1,008
|
|
|
3,454
|
|
|
3,870
|
|
Loss on Early
Extinguishment of Debt
|
—
|
|
|
—
|
|
|
—
|
|
|
567
|
|
Non-Cash Stock
Compensation
|
996
|
|
|
584
|
|
|
4,444
|
|
|
2,890
|
|
Depreciation &
Amortization
|
3,656
|
|
|
3,923
|
|
|
13,780
|
|
|
15,421
|
|
Other, Net
|
(9)
|
|
|
1,808
|
|
|
45
|
|
|
1,788
|
|
Consolidated
EBITDA
|
$
|
17,087
|
|
|
$
|
18,720
|
|
|
$
|
66,872
|
|
|
$
|
68,515
|
|
Adjusted
For:
|
|
|
|
|
|
|
|
Withdrawable Trust
Income
|
—
|
|
|
n/a
|
|
555
|
|
|
n/a
|
Acquisition and
Divestiture Expenses
|
37
|
|
|
185
|
|
|
614
|
|
|
701
|
|
Severance and
Retirement Costs
|
151
|
|
|
—
|
|
|
959
|
|
|
3,979
|
|
Consulting
Fees
|
555
|
|
|
—
|
|
|
1,913
|
|
|
496
|
|
Other Special
Items
|
20
|
|
|
—
|
|
|
220
|
|
|
—
|
|
Adjusted Consolidated
EBITDA
|
$
|
17,850
|
|
|
$
|
18,905
|
|
|
$
|
71,133
|
|
|
$
|
73,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
61,610
|
|
|
$
|
62,864
|
|
|
$
|
242,502
|
|
|
$
|
248,200
|
|
|
|
|
|
|
|
|
|
Adjusted Consolidated
EBITDA Margin
|
29.0%
|
|
|
30.1%
|
|
|
29.3%
|
|
|
29.7%
|
|
Reconciliation of Funeral and Cemetery Gross Profit to
Field EBITDA for the three months and years ended December
31, 2015 and 2016 (in thousands):
Funeral Field
EBITDA
|
Three Months
Ended
December 31,
|
|
Years
Ended
December
31,
|
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
Gross Profit
(GAAP)
|
$
|
14,885
|
|
|
$
|
16,478
|
|
|
$
|
59,434
|
|
|
$
|
61,620
|
|
Depreciation &
Amortization
|
2,038
|
|
|
2,437
|
|
|
7,614
|
|
|
8,891
|
|
Regional &
Unallocated Costs
|
3,478
|
|
|
1,862
|
|
|
9,604
|
|
|
8,672
|
|
Funeral Financial
EBITDA
|
(2,161)
|
|
|
(1,947)
|
|
|
(8,339)
|
|
|
(7,941)
|
|
Funeral Field
EBITDA
|
$
|
18,240
|
|
|
$
|
18,830
|
|
|
$
|
68,313
|
|
|
$
|
71,242
|
|
|
|
|
|
Cemetery Field
EBITDA
|
Three Months
Ended
December 31,
|
|
Years
Ended
December
31,
|
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
Gross Profit
(GAAP)
|
$
|
4,806
|
|
|
$
|
4,834
|
|
|
$
|
18,074
|
|
|
$
|
18,030
|
|
Depreciation &
Amortization
|
1,182
|
|
|
1,123
|
|
|
4,420
|
|
|
5,028
|
|
Regional &
Unallocated Costs
|
774
|
|
|
435
|
|
|
2,393
|
|
|
2,172
|
|
Cemetery Financial
EBITDA
|
(2,585)
|
|
|
(2,799)
|
|
|
(9,754)
|
|
|
(9,563)
|
|
Cemetery Field
EBITDA
|
$
|
4,177
|
|
|
$
|
3,593
|
|
|
$
|
15,133
|
|
|
$
|
15,667
|
|
|
|
|
|
Total Field
EBITDA
|
Three Months
Ended
December 31,
|
|
Years
Ended
December
31,
|
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
Funeral Field
EBITDA
|
$
|
18,240
|
|
|
$
|
18,830
|
|
|
$
|
68,313
|
|
|
$
|
71,242
|
|
Cemetery Field
EBITDA
|
4,177
|
|
|
3,593
|
|
|
15,133
|
|
|
15,667
|
|
Funeral Financial
EBITDA
|
2,161
|
|
|
1,947
|
|
|
8,339
|
|
|
7,941
|
|
Cemetery Financial
EBITDA
|
2,585
|
|
|
2,799
|
|
|
9,754
|
|
|
9,563
|
|
Total Field
EBITDA
|
$
|
27,163
|
|
|
$
|
27,169
|
|
|
$
|
101,539
|
|
|
$
|
104,413
|
|
Reconciliation of GAAP Basic Earnings Per Share to
Adjusted Basic Earnings Per Share for the three months and years
ended December 31, 2015 and 2016:
|
Three Months
Ended
December 31,
|
|
Years
Ended
December
31,
|
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
GAAP Basic Earnings
Per Share
|
$
|
0.32
|
|
|
$
|
0.25
|
|
|
$
|
1.16
|
|
|
$
|
1.18
|
|
Special Items
Affecting Net Income
|
0.08
|
|
|
0.15
|
|
|
0.36
|
|
|
0.53
|
|
Adjusted Basic
Earnings Per Share
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
$
|
1.52
|
|
|
$
|
1.71
|
|
Reconciliation of GAAP Diluted Earnings Per Share to
Adjusted Diluted Earnings Per Share for the three months and years
ended December 31, 2015 and 2016:
|
Three Months
Ended
December 31,
|
|
Years
Ended
December
31,
|
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
GAAP Diluted Earnings
Per Share
|
$
|
0.31
|
|
|
$
|
0.22
|
|
|
$
|
1.12
|
|
|
$
|
1.12
|
|
Special Items
Affecting Net Income
|
0.08
|
|
|
0.14
|
|
|
0.36
|
|
|
0.50
|
|
Adjusted Diluted
Earnings Per Share
|
$
|
0.39
|
|
|
$
|
0.36
|
|
|
$
|
1.48
|
|
|
$
|
1.62
|
|
On page nine of this press release, we present the Rolling Four
Quarter Outlook ("Outlook") which reflects management's opinion on
the performance of the portfolio of existing businesses, including
performance of existing trusts, and excludes size and timing of
acquisitions for the Rolling Four Quarter Outlook period ending
December 31, 2017 unless we have a
signed Letter of Intent and high likelihood of a closing within 90
days. This Outlook is not intended to be management estimates or
forecasts of our future performance, as we believe precise
estimates will be precisely wrong all the time. The
following four reconciliations are presented at the midpoint
of the range in this Outlook.
Reconciliation of Net Income to Consolidated EBITDA and
Adjusted Consolidated EBITDA for the estimated Rolling Four
Quarters ending December 31, 2017 (in
thousands):
|
Rolling Four
Quarter Outlook
|
|
|
December 31,
2017E
|
|
Net Income
|
|
|
$
|
26,800
|
|
|
|
Net Tax
Provision
|
|
|
17,800
|
|
|
|
Pre-Tax
Income
|
|
|
$
|
44,600
|
|
|
|
Net Interest Expense,
including Accretion of Discount on Convertible Subordinated
Notes
|
|
|
16,500
|
|
|
|
Depreciation &
Amortization, including Non-cash Stock Compensation
|
|
|
19,600
|
|
|
|
Consolidated
EBITDA
|
|
|
$
|
80,700
|
|
|
|
Adjusted for Special
Items
|
|
|
—
|
|
|
|
Adjusted Consolidated
EBITDA
|
|
|
$
|
80,700
|
|
|
|
Reconciliation of Net Income to Adjusted Net Income for
the estimated Rolling Four Quarters ending December 31, 2017 (in thousands):
|
Rolling Four
Quarter Outlook
|
|
|
December 31,
2017E
|
|
Net Income
|
|
|
$
|
26,800
|
|
|
|
Special
Items
|
|
|
4,300
|
|
|
|
Adjusted Net
Income
|
|
|
$
|
31,100
|
|
|
|
Reconciliation of GAAP Basic Earnings Per Share to
Adjusted Basic Earnings Per Share for the estimated Rolling Four
Quarters ending December 31,
2017:
|
Rolling Four
Quarter Outlook
|
|
|
December 31,
2017E
|
|
GAAP Basic
Earnings Per Share
|
|
|
$
|
1.60
|
|
|
|
Special Items
Affecting Net Income
|
|
|
0.26
|
|
|
|
Adjusted
Basic Earnings Per Share
|
|
|
$
|
1.86
|
|
|
|
Reconciliation of GAAP Diluted Earnings Per Share to
Adjusted Diluted Earnings Per Share for the estimated Rolling Four
Quarters ending December 31,
2017:
|
Rolling Four
Quarter Outlook
|
|
|
December 31,
2017E
|
|
GAAP Diluted Earnings
Per Share
|
|
|
$
|
1.50
|
|
|
|
Special Items
Affecting Net Income
|
|
|
0.25
|
|
|
|
Adjusted Diluted
Earnings Per Share
|
|
|
$
|
1.75
|
|
|
|
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Certain statements made herein or elsewhere by, or on behalf of,
the Company that are not historical facts are intended to be
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In addition to
historical information, this Press Release contains certain
statements and information that may constitute forward-looking
statements within the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements include,
but are not limited to, statements regarding any projections of
earnings, revenues, asset sales, cash flow, debt levels or other
financial items; any statements of the plans, strategies and
objectives of management for future operations; any statements
regarding future economic conditions or performance; any statements
of belief; and any statements of assumptions underlying any of the
foregoing and are based on our current expectations and beliefs
concerning future developments and their potential effect on us.
The words "may", "will", "estimate", "intend", "believe", "expect",
"seek", "project", "forecast", "foresee", "should", "would",
"could", "plan", "anticipate" and other similar words or
expressions are intended to identify forward-looking statements,
which are generally not historical in nature. While management
believes that these forward-looking statements are reasonable as
and when made, there can be no assurance that future developments
affecting us will be those that we anticipate. All comments
concerning our expectations for future revenues and operating
results are based on our forecasts for our existing operations and
do not include the potential impact of any future acquisitions. Our
forward-looking statements involve significant risks and
uncertainties (some of which are beyond our control) and
assumptions that could cause actual results to differ materially
from our historical experience and our present expectations or
projections. Important factors that could cause actual results to
differ materially from those in the forward-looking statements
include, but are not limited to, those summarized below:
- the ability to find and retain skilled personnel;
- our ability to execute our growth strategy;
- the effects of competition;
- the execution of our Standards Operating, 4E Leadership and
Strategic Acquisition Models;
- changes in the number of deaths in our markets;
- changes in consumer preferences;
- our ability to generate preneed sales;
- the investment performance of our funeral and cemetery trust
funds;
- fluctuations in interest rates;
- our ability to obtain debt or equity financing on satisfactory
terms to fund additional acquisitions, expansion projects, working
capital requirements and the repayment or refinancing of
indebtedness;
- death benefits related to preneed funeral contracts funded
through life insurance contracts;
- the financial condition of third-party insurance companies that
fund our preneed funeral contracts;
- increased or unanticipated costs, such as insurance or
taxes;
- effects of the application of applicable laws and regulations,
including changes in such regulations or the interpretation
thereof;
- consolidation of the deathcare industry; and
- other factors and uncertainties inherent in the deathcare
industry.
For additional information regarding known material factors that
could cause our actual results to differ from our projected
results, please see "Risk Factors" in our most recent Annual Report
on Form 10-K. Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date hereof.
We undertake no obligation to publicly update or revise any
forward-looking statements after the date they are made, whether as
a result of new information, future events or otherwise. A copy of
the Company's Form 10-K, other Carriage Services information and
news releases are available at www.carriageservices.com.
This press release includes the use of certain financial
measures that are not GAAP measures. The Non-GAAP financial
measures are presented for additional information and are
reconciled to their most comparable GAAP measures in the tables
presented above.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/carriage-services-announces-record-2016-annual-results-increases-rolling-four-quarter-outlook-300408250.html
SOURCE Carriage Services, Inc.