HOUSTON, April 26, 2017 /PRNewswire/ -- Carriage
Services, Inc. (NYSE: CSV) today announced record results for
the first quarter ended March 31,
2017.
Mel Payne, Chief Executive
Officer, stated, "Our first quarter performance of 2017 was also
the first quarter performance of our second five year timeframe of
Carriage's Good To Great Journey that never ends. A more
relevant first quarter (century) for long term investors was the
first 25 years of Carriage's history, which was covered in my
recent shareholder letter titled, The Evolution Of Our Learning
Journey.
Our Total Revenue in the first quarter increased 7.6% to a
record $68.1 million, and while our
Adjusted Consolidated EBITDA of $20.5
million and Adjusted Net Income of $8.1 million were also records, both of these
earnings metrics grew only nominally over last year as we brought
less of the revenue growth to the bottom line. Our diluted earnings
metrics, i.e. GAAP EPS of $0.39 and
Adjusted EPS of $0.45, were
negatively impacted by a dilution factor of 8.6% related to the
share count methodology for our convertible subordinated notes.
We view the first quarter performance as a "glass half full"
because the few concentrated operational areas of relative weakness
are opportunities to get better in the near term, as we are
continuously addressing areas of leadership weakness so that they
turn into Right Who sustained high performance
strengths in the future.
First quarter highlights are shown below:
Three Months Ended March 31, 2017
compared to Three Months Ended March 31,
2016
- Record Total Revenue of $68.1
million, an increase of 7.6%;
- Record Net Income of $7.1
million, an increase of 55.0%;
- Record GAAP Diluted Earnings Per Share of $0.39, an increase of 44.4%;
- Record Total Field EBITDA of $29.5
million, an increase of 6.6%;
- Total Field EBITDA Margin down 40 basis points to 43.3%;
- Record Adjusted Consolidated EBITDA of $20.5 million, an increase of 3.3%;
- Adjusted Consolidated EBITDA Margin down 120 basis points to
30.2%;
- Record Adjusted Net Income of $8.1
million, an increase of 1.8%; and
- Adjusted Diluted Earnings Per Share of $0.45, a decrease of 4.3%.
Our Total Overhead was about $1
million higher in the first quarter than originally
anticipated, as we reorganized our corporate functions toward the
end of last year and have since added substantial new leadership
talent to critical functional areas to position us for better
execution of our three core models over the next five years. In
particular, we made substantial leadership investments in
Operations, Strategic and Corporate Development and Information
Technology, as well as incurred one-time expenses related to a tax
strategy project and terminations.
The really good news about the first quarter of 2017 was that it
was the first time in memory that our Consolidated EBITDA and
Consolidated EBTIDA Margin of $20.5
million and 30.2%, respectively, was the same as our
Adjusted Consolidated EBITDA and Adjusted Consolidated EBITDA
Margin, meaning that we are "free at last" from confusing Non-GAAP
noise. We are intensely focused on sustaining a high performance
for the remainder of the year and thereafter consistent with our
2017 theme, "Carriage Services 2017: Owning the Future,
Accelerating the Good to Great Journey!"
Listed below are High Performance Hero Managing Partners and
Houston Support role models leading us during the first quarter on
our Good To Great Journey," concluded Mr. Payne.
Bob
Prindiville
|
Bright Funeral Home
& Cremation Center; Wake Forest, NC
|
James Bass
|
Emerald
Coast/McLaughlin Mortuaries; Ft. Walton Beach, FL
|
Wayne
Lovelace
|
Lotz Funeral Home;
Vinton, VA
|
Patrick
Schoen
|
Jacob Schoen &
Son Funeral Home; New Orleans, LA
|
Curtis
Ottinger
|
Heritage Funeral
Home; Chattanooga, TN
|
John
Bresnahan
|
Devanny-Condron
Funeral; Pittsfield, MA
|
Bryan
Hardwick
|
Bryan & Hardwick
Funeral Home; Zanesville, OH
|
Andy
Shemwell
|
Maddux-Fuqua-Hinton
Funeral Homes; Hopkinsville, KY
|
Ashley
Vella
|
Deegan Funeral
Chapels; Escalon, CA
|
Justin
Luyben
|
Evans Brown
Mortuaries; Sun City, CA
|
Joseph
Newkirk
|
West Contra Costa
Group; Richmond, CA
|
Cliff Pope
|
Havenbrook Funeral
Home; Norman, OK
|
Nicholas
Welzenbach
|
Los Gatos Memorial
Park; San Jose, CA
|
Winnie
Hurston
|
Houston Support -
Executive Assistant to Mel Payne
|
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)
|
|
|
|
|
|
|
|
|
3 months ended
03/31/2017
|
|
3.1%
|
2.9%
|
|
6.1%
|
2.7%
|
3.7%
|
1 year ended
12/31/2016
|
|
19.7%
|
18.3%
|
|
12.0%
|
17.6%
|
15.9%
|
2 years ended
12/31/2016
|
|
16.0%
|
15.1%
|
|
13.5%
|
12.0%
|
12.4%
|
3 years ended
12/31/2016
|
|
25.7%
|
24.2%
|
|
28.9%
|
14.8%
|
19.0%
|
4 years ended
12/31/2016
|
|
43.6%
|
41.2%
|
|
70.6%
|
23.4%
|
37.6%
|
5 years ended
12/31/2016
|
|
72.8%
|
65.4%
|
|
97.8%
|
42.6%
|
59.2%
|
|
|
|
|
|
|
|
|
(1) Investment
performance includes realized income and unrealized
appreciation.
|
(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 March 31, 2017 (in thousands)
|
|
|
|
Discretionary Trust Funds
|
|
Total Trust
Funds
|
Asset
Class
|
|
|
MV
|
|
%
|
|
MV
|
|
%
|
Cash
|
|
|
$
|
23,706
|
|
12%
|
|
$
|
38,976
|
|
17%
|
Equities
|
|
|
47,308
|
|
24%
|
|
49,895
|
|
22%
|
Fixed
Income
|
|
|
123,241
|
|
62%
|
|
134,378
|
|
59%
|
Other/Insurance
|
|
|
3,315
|
|
2%
|
|
3,507
|
|
2%
|
Total
Portfolios
|
|
|
$
|
197,570
|
|
100%
|
|
$
|
226,756
|
|
100%
|
For the three months ended March 31,
2017, Carriage's discretionary trust funds returned 3.1%
versus 3.7% for the 70/30 index benchmark.
The performance of our preneed trust fund portfolio in the first
quarter was in line with our expectations and reflected no change
in our overall portfolio strategy.
ADJUSTED FREE CASH FLOW
We produced Adjusted Free Cash Flow from operations for the
three months ended March 31, 2017 of
$6.4 million compared to Adjusted
Free Cash Flow from operations of $12.2
million for the corresponding period in 2016. The decrease
in Adjusted Free Cash Flow during the first quarter of 2017
reflected less Non-GAAP noise, along with a final payment for the
severance of a former executive and the first five-year payment for
our Good To Great incentive compensation award.
A reconciliation of Cash Flow Provided by Operations to Adjusted
Free Cash Flow for the three months ended March 31, 2017 and 2016 is as follows (in
thousands):
|
For the Three
Months
Ended March 31,
|
|
2016
|
|
2017
|
Cash Flow Provided by
Operations
|
$
|
10,233
|
|
|
$
|
8,159
|
|
Cash used for
Maintenance Capital Expenditures
|
(1,618)
|
|
|
(1,773)
|
|
Free Cash
Flow
|
$
|
8,615
|
|
|
$
|
6,386
|
|
|
|
|
|
Plus: Incremental
Special Items:
|
|
|
|
Acquisition and
Divestiture Expenses
|
516
|
|
|
—
|
|
Severance
Costs
|
2,759
|
|
|
—
|
|
Consulting
Fees
|
268
|
|
|
—
|
|
Adjusted Free Cash
Flow
|
$
|
12,158
|
|
|
$
|
6,386
|
|
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 March 31,
2018 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.
We are reaffirming our Rolling Four Quarter Outlook of Adjusted
Diluted Earnings Per Share range of $1.73 -
$1.77 for the period ending March 31,
2018.
ROLLING FOUR QUARTER OUTLOOK – Period Ending March 31, 2018
|
|
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
|
|
$1.84 -
$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 March 31, 2018 are expected to improve relative
to the trailing four quarter period ended March 31, 2017 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 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,
April 27, 2017 at 9:30 a.m. central time. To participate in the
call, please dial 866-516-3867 (ID-8035998) and ask for the
Carriage Services conference call. A replay of the conference
call will be available through May 1,
2017 and may be accessed by dialing 855-859-2056
(ID-8035998). 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
March 31,
|
|
2016
|
2017
|
%
Change
|
|
|
|
|
Same Store
Contracts
|
|
|
|
Atneed
Contracts
|
6,298
|
|
6,498
|
|
3.2%
|
Preneed
Contracts
|
1,504
|
|
1,496
|
|
(0.5%)
|
Total Same Store
Funeral Contracts
|
7,802
|
|
7,994
|
|
2.5%
|
Acquisition
Contracts
|
|
|
|
Atneed
Contracts
|
720
|
|
1,189
|
|
65.1%
|
Preneed
Contracts
|
139
|
|
232
|
|
66.9%
|
Total Acquisition
Funeral Contracts
|
859
|
|
1,421
|
|
65.4%
|
Total Funeral
Contracts
|
8,661
|
|
9,415
|
|
8.7%
|
|
|
|
|
Funeral Operating
Revenue
|
|
|
|
Same Store
Revenue
|
$
|
41,352
|
|
$
|
42,717
|
|
3.3%
|
Acquisition
Revenue
|
5,562
|
|
9,245
|
|
66.2%
|
Total Funeral
Operating Revenue
|
$
|
46,914
|
|
$
|
51,962
|
|
10.8%
|
|
|
|
|
Cemetery Operating
Revenue
|
|
|
|
Same Store
Revenue
|
$
|
11,132
|
|
$
|
10,839
|
|
(2.6%)
|
Acquisition
Revenue
|
709
|
|
909
|
|
28.2%
|
Total Cemetery
Operating Revenue
|
$
|
11,841
|
|
$
|
11,748
|
|
(0.8%)
|
|
|
|
|
Financial
Revenue
|
|
|
|
Preneed Funeral
Commission Income
|
$
|
421
|
|
$
|
303
|
|
(28.0%)
|
Preneed Funeral Trust
Earnings
|
1,967
|
|
1,946
|
|
(1.1%)
|
Cemetery Trust
Earnings
|
1,766
|
|
1,716
|
|
(2.8%)
|
Preneed Cemetery
Finance Charges
|
422
|
|
482
|
|
14.2%
|
Total Financial
Revenue
|
$
|
4,576
|
|
$
|
4,447
|
|
(2.8%)
|
Total
Revenue
|
$
|
63,331
|
|
$
|
68,157
|
|
7.6%
|
|
|
|
|
Field
EBITDA
|
|
|
|
Same Store Funeral
Field EBITDA
|
$
|
16,911
|
|
$
|
17,725
|
|
4.8%
|
Same Store Funeral
Field EBITDA Margin
|
40.9%
|
|
41.5%
|
|
60 bp
|
Acquisition Funeral
Field EBITDA
|
2,413
|
|
4,014
|
|
66.3%
|
Acquisition Funeral
Field EBITDA Margin
|
43.4%
|
|
43.4%
|
|
0 bp
|
Total Funeral
Field EBITDA
|
$
|
19,324
|
|
$
|
21,739
|
|
12.5%
|
Total Funeral
Field EBITDA Margin
|
41.2%
|
|
41.8%
|
|
60
bp
|
|
|
|
|
Same Store Cemetery
Field EBITDA
|
$
|
3,843
|
|
$
|
3,295
|
|
(14.3%)
|
Same Store Cemetery
Field EBITDA Margin
|
34.5%
|
|
30.4%
|
|
(410 bp)
|
Acquisition Cemetery
Field EBITDA
|
221
|
|
353
|
|
59.7%
|
Acquisition Cemetery
Field EBITDA Margin
|
31.2%
|
|
38.8%
|
|
760 bp
|
Total Cemetery
Field EBITDA
|
$
|
4,064
|
|
$
|
3,648
|
|
(10.2%)
|
Total Cemetery
Field EBITDA Margin
|
34.3%
|
|
31.1%
|
|
(320
bp)
|
|
|
|
|
Funeral Financial
EBITDA
|
$
|
2,197
|
|
$
|
2,043
|
|
(7.0%)
|
Cemetery Financial
EBITDA
|
2,103
|
|
2,087
|
|
(0.8%)
|
Total Financial
EBITDA
|
$
|
4,300
|
|
$
|
4,130
|
|
(4.0%)
|
Total Financial
EBITDA Margin
|
94.0%
|
|
92.9%
|
|
(110
bp)
|
|
|
|
|
Total Field
EBITDA
|
$
|
27,688
|
|
$
|
29,517
|
|
6.6%
|
Total Field EBITDA
Margin
|
43.7%
|
|
43.3%
|
|
(40
bp)
|
OPERATING AND
FINANCIAL TREND REPORT
|
(in thousands,
except per share amounts)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2016
|
2017
|
%
Change
|
|
|
|
|
Overhead
|
|
|
|
Total Variable
Overhead
|
$
|
5,400
|
|
$
|
2,166
|
|
(59.9%)
|
Total Regional Fixed
Overhead
|
875
|
|
1,067
|
|
21.9%
|
Total Corporate Fixed
Overhead
|
5,063
|
|
5,732
|
|
13.2%
|
Total
Overhead
|
$
|
11,338
|
|
$
|
8,965
|
|
(20.9%)
|
Overhead as a
Percentage of Revenue
|
17.9%
|
|
13.2%
|
|
(470
bp)
|
|
|
|
|
Consolidated
EBITDA
|
$
|
16,350
|
|
$
|
20,552
|
|
25.7%
|
Consolidated
EBITDA Margin
|
25.8%
|
|
30.2%
|
|
440
bp
|
|
|
|
|
Other Expenses and
Interest
|
|
|
|
Depreciation &
Amortization
|
$
|
3,734
|
|
$
|
3,847
|
|
3.0%
|
Non-Cash Stock
Compensation
|
958
|
|
836
|
|
(12.7%)
|
Interest
Expense
|
2,851
|
|
3,029
|
|
6.2%
|
Accretion of Discount
on Convertible Subordinated Notes
|
927
|
|
1,037
|
|
11.9%
|
Loss on Early
Extinguishment of Debt
|
567
|
|
—
|
|
|
Other, Net
|
(305)
|
|
(3)
|
|
|
Pretax
Income
|
$
|
7,618
|
|
$
|
11,806
|
|
55.0%
|
Net Tax
Provision
|
3,047
|
|
4,722
|
|
|
GAAP Net
Income
|
$
|
4,571
|
|
$
|
7,084
|
|
55.0%
|
|
|
|
|
Special Items, Net
of Tax except for **
|
|
|
|
Acquisition and
Divestiture Expenses
|
$
|
336
|
|
$
|
—
|
|
|
Severance and
Retirement Costs
|
1,794
|
|
—
|
|
|
Consulting
Fees
|
175
|
|
—
|
|
|
Accretion of Discount
on Convertible Subordinated Notes **
|
927
|
|
1,037
|
|
|
Loss on Early
Extinguishment of Debt
|
369
|
|
—
|
|
|
Gain on Sale of
Assets
|
(198)
|
|
—
|
|
|
Sum of Special
Items, Net of Tax
|
$
|
3,403
|
|
$
|
1,037
|
|
|
|
|
|
|
Adjusted Net
Income
|
$
|
7,974
|
|
$
|
8,121
|
|
1.8%
|
Adjusted Net
Profit Margin
|
12.6%
|
|
11.9%
|
|
(70
bp)
|
|
|
|
|
Adjusted Basic
Earnings Per Share
|
$
|
0.48
|
|
$
|
0.48
|
|
—%
|
Adjusted Diluted
Earnings Per Share
|
$
|
0.47
|
|
$
|
0.45
|
|
(4.3%)
|
|
|
|
|
GAAP Basic Earnings
Per Share
|
$
|
0.27
|
|
$
|
0.42
|
|
55.6%
|
GAAP Diluted Earnings
Per Share
|
$
|
0.27
|
|
$
|
0.39
|
|
44.4%
|
|
|
|
|
Weighted Average
Basic Shares Outstanding
|
16,459
|
|
16,597
|
|
|
Weighted Average
Diluted Shares Outstanding
|
16,650
|
|
18,082
|
|
|
|
|
|
|
Reconciliation to
Adjusted Consolidated EBITDA
|
|
|
|
Consolidated
EBITDA
|
$
|
16,350
|
|
$
|
20,552
|
|
25.7%
|
Acquisition and
Divestiture Expenses
|
516
|
|
—
|
|
|
Severance and
Retirement Costs
|
2,759
|
|
—
|
|
|
Consulting
Fees
|
268
|
|
—
|
|
|
Adjusted
Consolidated EBITDA
|
$
|
19,893
|
|
$
|
20,552
|
|
3.3%
|
Adjusted
Consolidated EBITDA Margin
|
31.4%
|
|
30.2%
|
|
(120
bp)
|
CARRIAGE SERVICES,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(in thousands,
except share data)
|
|
|
|
|
(unaudited)
|
|
December 31,
2016
|
|
March 31,
2017
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
3,286
|
|
|
$
|
806
|
|
Accounts receivable,
net
|
18,860
|
|
|
17,712
|
|
Inventories
|
6,147
|
|
|
6,313
|
|
Prepaid
expenses
|
2,640
|
|
|
2,426
|
|
Other current
assets
|
2,034
|
|
|
106
|
|
Total current
assets
|
32,967
|
|
|
27,363
|
|
Preneed cemetery
trust investments
|
69,696
|
|
|
69,975
|
|
Preneed funeral trust
investments
|
89,240
|
|
|
89,104
|
|
Preneed receivables,
net
|
30,383
|
|
|
30,839
|
|
Receivables from
preneed trusts
|
14,218
|
|
|
14,652
|
|
Property, plant and
equipment, net
|
235,113
|
|
|
234,416
|
|
Cemetery property,
net
|
76,119
|
|
|
76,543
|
|
Goodwill
|
275,487
|
|
|
275,487
|
|
Intangible and other
non-current assets
|
14,957
|
|
|
14,878
|
|
Cemetery perpetual
care trust investments
|
46,889
|
|
|
47,716
|
|
Total
assets
|
$
|
885,069
|
|
|
$
|
880,973
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term debt and capital lease obligations
|
$
|
13,267
|
|
|
$
|
14,265
|
|
Accounts
payable
|
10,198
|
|
|
7,419
|
|
Other
liabilities
|
717
|
|
|
3,285
|
|
Accrued
liabilities
|
20,091
|
|
|
11,394
|
|
Total current
liabilities
|
44,273
|
|
|
36,363
|
|
Long-term debt, net
of current portion
|
137,862
|
|
|
133,741
|
|
Revolving credit
facility
|
66,542
|
|
|
64,011
|
|
Convertible
subordinated notes due 2021
|
119,596
|
|
|
120,760
|
|
Obligations under
capital leases, net of current portion
|
2,630
|
|
|
2,580
|
|
Deferred preneed
cemetery revenue
|
54,631
|
|
|
55,156
|
|
Deferred preneed
funeral revenue
|
33,198
|
|
|
33,981
|
|
Deferred tax
liability
|
40,555
|
|
|
40,717
|
|
Other long-term
liabilities
|
2,567
|
|
|
1,798
|
|
Deferred preneed
cemetery receipts held in trust
|
69,696
|
|
|
69,975
|
|
Deferred preneed
funeral receipts held in trust
|
89,240
|
|
|
89,104
|
|
Care trusts'
corpus
|
46,290
|
|
|
47,250
|
|
Total
liabilities
|
707,080
|
|
|
695,436
|
|
Commitments and
contingencies:
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common stock, $.01
par value; 80,000,000 shares authorized; 22,490,855 and 22,552,667
shares issued at December 31, 2016 and March 31, 2017,
respectively
|
225
|
|
|
226
|
|
Additional paid-in
capital
|
215,064
|
|
|
215,527
|
|
Retained
earnings
|
22,966
|
|
|
30,050
|
|
Treasury stock, at
cost; 5,849,316 shares at December 31, 2016 and March 31,
2017
|
(60,266)
|
|
|
(60,266)
|
|
Total stockholders'
equity
|
177,989
|
|
|
185,537
|
|
Total liabilities and
stockholders' equity
|
$
|
885,069
|
|
|
$
|
880,973
|
|
CARRIAGE SERVICES,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(unaudited and in
thousands, except per share data)
|
|
|
For the Three
Months
Ended March 31,
|
|
2016
|
|
2017
|
|
|
|
|
Revenues:
|
|
|
|
Funeral
|
$
|
49,302
|
|
|
$
|
54,211
|
|
Cemetery
|
14,029
|
|
|
13,946
|
|
|
63,331
|
|
|
68,157
|
|
Field costs and
expenses:
|
|
|
|
Funeral
|
27,781
|
|
|
30,429
|
|
Cemetery
|
7,862
|
|
|
8,211
|
|
Depreciation and
amortization
|
3,336
|
|
|
3,471
|
|
Regional and
unallocated funeral and cemetery costs
|
3,049
|
|
|
2,954
|
|
|
42,028
|
|
|
45,065
|
|
Gross
profit
|
21,303
|
|
|
23,092
|
|
Corporate costs and
expenses:
|
|
|
|
General,
administrative and other
|
9,247
|
|
|
6,847
|
|
Home office
depreciation and amortization
|
398
|
|
|
376
|
|
|
9,645
|
|
|
7,223
|
|
Operating
income
|
11,658
|
|
|
15,869
|
|
Interest
expense
|
(2,851)
|
|
|
(3,029)
|
|
Accretion of discount
on convertible subordinated notes
|
(927)
|
|
|
(1,037)
|
|
Loss on early
extinguishment of debt
|
(567)
|
|
|
—
|
|
Other, net
|
305
|
|
|
3
|
|
Income before income
taxes
|
7,618
|
|
|
11,806
|
|
Provision for income
taxes
|
(3,047)
|
|
|
(4,722)
|
|
Net income
|
$
|
4,571
|
|
|
$
|
7,084
|
|
|
|
|
|
Basic earnings per
common share:
|
$
|
0.27
|
|
|
$
|
0.42
|
|
Diluted earnings per
common share:
|
$
|
0.27
|
|
|
$
|
0.39
|
|
|
|
|
|
Dividends declared
per common share:
|
$
|
0.025
|
|
|
$
|
0.050
|
|
|
|
|
|
Weighted average
number of common and common equivalent shares
outstanding:
|
|
|
|
Basic
|
16,459
|
|
|
16,597
|
|
Diluted
|
16,650
|
|
|
18,082
|
|
CARRIAGE SERVICES,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited and in
thousands)
|
|
|
For the Three
Months
Ended March 31,
|
|
2016
|
|
2017
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
4,571
|
|
|
$
|
7,084
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
3,734
|
|
|
3,847
|
|
Provision for losses
on accounts receivable
|
523
|
|
|
389
|
|
Stock-based
compensation expense
|
1,297
|
|
|
836
|
|
Deferred income tax
expense
|
379
|
|
|
162
|
|
Amortization of
deferred financing costs
|
221
|
|
|
203
|
|
Accretion of discount
on convertible subordinated notes
|
927
|
|
|
1,037
|
|
Loss on early
extinguishment of debt
|
567
|
|
|
—
|
|
Net (gain) loss on
sale and disposal of other assets
|
(187)
|
|
|
155
|
|
|
|
|
|
Changes in operating
assets and liabilities that provided (required) cash:
|
|
|
|
Accounts and preneed
receivables
|
(479)
|
|
|
303
|
|
Inventories and other
current assets
|
(727)
|
|
|
1,976
|
|
Intangible and other
non-current assets
|
230
|
|
|
80
|
|
Preneed funeral and
cemetery trust investments
|
7,560
|
|
|
(1,404)
|
|
Accounts
payable
|
(1,755)
|
|
|
(2,778)
|
|
Accrued and other
liabilities
|
344
|
|
|
(6,142)
|
|
Deferred preneed
funeral and cemetery revenue
|
(568)
|
|
|
1,308
|
|
Deferred preneed
funeral and cemetery receipts held in trust
|
(6,404)
|
|
|
1,103
|
|
Net cash provided by
operating activities
|
10,233
|
|
|
8,159
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Acquisitions and land
for new construction
|
(2,685)
|
|
|
—
|
|
Net proceeds from the
sale of other assets
|
555
|
|
|
—
|
|
Capital
expenditures
|
(3,595)
|
|
|
(3,730)
|
|
Net cash used in
investing activities
|
(5,725)
|
|
|
(3,730)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Borrowings from the
revolving credit facility
|
11,500
|
|
|
18,800
|
|
Payments against the
revolving credit facility
|
(50,100)
|
|
|
(21,400)
|
|
Borrowings from the
term loan
|
39,063
|
|
|
—
|
|
Payments against the
term loan
|
(2,813)
|
|
|
(2,813)
|
|
Payments on other
long-term debt and obligations under capital leases
|
(321)
|
|
|
(368)
|
|
Payments on
contingent consideration recorded at acquisition date
|
—
|
|
|
(101)
|
|
Proceeds from the
exercise of stock options and employee stock purchase plan
contributions
|
228
|
|
|
315
|
|
Taxes paid on
restricted stock vestings and exercise of non-qualified
options
|
(491)
|
|
|
(509)
|
|
Dividends paid on
common stock
|
(415)
|
|
|
(833)
|
|
Payment of loan
origination costs related to the credit facility
|
(717)
|
|
|
—
|
|
Excess tax deficiency
of equity compensation
|
(106)
|
|
|
—
|
|
Net cash used in
financing activities
|
(4,172)
|
|
|
(6,909)
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
336
|
|
|
(2,480)
|
|
Cash and cash
equivalents at beginning of period
|
535
|
|
|
3,286
|
|
Cash and cash
equivalents at end of period
|
$
|
871
|
|
|
$
|
806
|
|
|
|
|
|
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 similar 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 35 percent for both the three months ended March 31, 2016 and 2017, except for the accretion
of the discount on the Convertible Notes as this is a non-tax
deductible item.
- Adjusted Net Income is defined as net income plus adjustments
for Special Items and other non-recurring expenses or credits.
- 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 and non-recurring expenses or
credits.
- 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 Special Items as deemed necessary, 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 costs 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 costs 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 funeral and
cemetery costs.
- 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 ended March 31, 2016 and 2017 (in
thousands):
|
For the Three
Months
Ended March 31,
|
|
2016
|
|
2017
|
Net Income
|
$
|
4,571
|
|
|
$
|
7,084
|
|
Special Items, Net of
Tax except for **
|
|
|
|
Acquisition and
Divestiture Expenses
|
336
|
|
|
—
|
|
Severance and
Retirement Costs
|
1,794
|
|
|
—
|
|
Consulting
Fees
|
175
|
|
|
—
|
|
Accretion of Discount
on Convertible Subordinated Notes **
|
927
|
|
|
1,037
|
|
Loss on Early
Extinguishment of Debt
|
369
|
|
|
—
|
|
Gain on Sale of
Assets
|
(198)
|
|
|
—
|
|
Total Special Items
affecting Net Income
|
$
|
3,403
|
|
|
$
|
1,037
|
|
Adjusted Net
Income
|
$
|
7,974
|
|
|
$
|
8,121
|
|
Reconciliation of Net Income to Consolidated EBITDA and
Adjusted Consolidated EBITDA for the three months ended March
31, 2016 and 2017 (in thousands):
|
For the Three
Months
Ended March 31,
|
|
2016
|
|
2017
|
Net Income
|
$
|
4,571
|
|
|
$
|
7,084
|
|
Net Tax
Provision
|
3,047
|
|
|
4,722
|
|
Pretax
Income
|
$
|
7,618
|
|
|
$
|
11,806
|
|
Interest
Expense
|
2,851
|
|
|
3,029
|
|
Accretion of Discount
on Convertible Subordinated Notes
|
927
|
|
|
1,037
|
|
Loss on Early
Extinguishment of Debt
|
567
|
|
|
—
|
|
Non-Cash Stock
Compensation
|
958
|
|
|
836
|
|
Depreciation &
Amortization
|
3,734
|
|
|
3,847
|
|
Other, Net
|
(305)
|
|
|
(3)
|
|
Consolidated
EBITDA
|
$
|
16,350
|
|
|
$
|
20,552
|
|
Adjusted
For:
|
|
|
|
Acquisition and
Divestiture Expenses
|
516
|
|
|
—
|
|
Severance and
Retirement Costs
|
2,759
|
|
|
—
|
|
Consulting
Fees
|
268
|
|
|
—
|
|
Adjusted Consolidated
EBITDA
|
$
|
19,893
|
|
|
$
|
20,552
|
|
Revenue
|
$
|
63,331
|
|
|
$
|
68,157
|
|
Adjusted Consolidated
EBITDA Margin
|
31.4%
|
|
|
30.2%
|
|
Reconciliation of Funeral and Cemetery Gross Profit to
Field EBITDA for the three months ended March 31, 2016 and
2017 (in thousands):
Funeral Field
EBITDA
|
For the Three
Months
Ended March 31,
|
|
2016
|
|
2017
|
Gross Profit
(GAAP)
|
$
|
16,968
|
|
|
$
|
18,969
|
|
Depreciation &
Amortization
|
2,078
|
|
|
2,369
|
|
Regional &
Unallocated Costs
|
2,475
|
|
|
2,444
|
|
Funeral Financial
EBITDA
|
(2,197)
|
|
|
(2,043)
|
|
Funeral Field
EBITDA
|
$
|
19,324
|
|
|
$
|
21,739
|
|
|
Cemetery Field
EBITDA
|
For the Three
Months
Ended March 31,
|
|
2016
|
|
2017
|
Gross Profit
(GAAP)
|
$
|
4,335
|
|
|
$
|
4,123
|
|
Depreciation &
Amortization
|
1,258
|
|
|
1,102
|
|
Regional &
Unallocated Costs
|
574
|
|
|
510
|
|
Cemetery Financial
EBITDA
|
(2,103)
|
|
|
(2,087)
|
|
Cemetery Field
EBITDA
|
$
|
4,064
|
|
|
$
|
3,648
|
|
|
Total Field
EBITDA
|
For the Three
Months
Ended March 31,
|
|
2016
|
|
2017
|
Funeral Field
EBITDA
|
$
|
19,324
|
|
|
$
|
21,739
|
|
Cemetery Field
EBITDA
|
4,064
|
|
|
3,648
|
|
Funeral Financial
EBITDA
|
2,197
|
|
|
2,043
|
|
Cemetery Financial
EBITDA
|
2,103
|
|
|
2,087
|
|
Total Field
EBITDA
|
$
|
27,688
|
|
|
$
|
29,517
|
|
Reconciliation of GAAP Basic Earnings Per Share to
Adjusted Basic Earnings Per Share for the three months ended March
31, 2016 and 2017:
|
For the Three
Months
Ended March 31,
|
|
2016
|
|
2017
|
GAAP Basic Earnings
Per Share
|
$
|
0.27
|
|
|
$
|
0.42
|
|
Special Items
Affecting Net Income
|
0.21
|
|
|
0.06
|
|
Adjusted Basic
Earnings Per Share
|
$
|
0.48
|
|
|
$
|
0.48
|
|
Reconciliation of GAAP Diluted Earnings Per Share to
Adjusted Diluted Earnings Per Share for the three months ended
March 31, 2016 and 2017:
|
For the Three
Months
Ended March 31,
|
|
2016
|
|
2017
|
GAAP Diluted Earnings
Per Share
|
$
|
0.27
|
|
|
$
|
0.39
|
|
Special Items
Affecting Net Income
|
0.20
|
|
|
0.06
|
|
Adjusted Diluted
Earnings Per Share
|
$
|
0.47
|
|
|
$
|
0.45
|
|
Earlier in 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
March 31, 2018 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 March 31, 2018 (in
thousands):
|
Rolling Four
Quarter Outlook
|
|
|
March 31,
2018E
|
|
Net Income
|
|
|
$
|
26,800
|
|
|
|
Net Tax
Provision
|
|
|
17,800
|
|
|
|
Pretax
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 March 31, 2018 (in thousands):
|
Rolling Four
Quarter Outlook
|
|
|
March 31,
2018E
|
|
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 March 31,
2018:
|
Rolling Four
Quarter Outlook
|
|
|
March 31,
2018E
|
|
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 March 31,
2018:
|
Rolling Four
Quarter Outlook
|
|
|
March 31,
2018E
|
|
GAAP Diluted Earnings
Per Share
|
|
|
$
|
1.50
|
|
|
|
Special Items
Affecting Net Income
|
|
|
0.25
|
|
|
|
Adjusted Diluted
Earnings Per Share
|
|
|
$
|
1.75
|
|
|
|
Supplemental Information:
Funeral homes and cemeteries purchased after
December 31, 2012 are referred to as
"Acquired" in our Trend Report. This classification of acquisitions
has been important to management and investors in monitoring the
results of these businesses and to gauge the leveraging performance
contribution that a selective acquisition program can have on total
company performance.
The presentation below highlights the impact of our 2012 Acquired
Portfolio that moved from Acquired to Same Store beginning
January 1, 2017 (in thousands):
|
For the Three
Months Ended March 31, 2016
|
|
|
|
|
|
Revenue
|
|
EBITDA
|
2012 Acquired
Portfolio
|
$
|
4,115
|
|
|
$
|
1,759
|
|
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:
- our 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-first-quarter-2017-results-and-reaffirms-rolling-four-quarter-outlook-300446531.html
SOURCE Carriage Services, Inc.