StoneMor Partners L.P. (NYSE:STON)
(“StoneMor” or the “Partnership”) has reported
operating and financial results for the third quarter 2015.
Larry Miller, StoneMor’s President and CEO, commented, “This
quarter’s results reflect the continued strength of our core
businesses, as we generated 20% growth in both cemetery and funeral
home quarterly margin on a year over year basis. Not only are
we executing on our acquisition strategy, whereby we’ve added 3
cemeteries and 5 funeral homes year over year, but our team
continues to drive value by moderating costs and increasing revenue
efficiency, as evidenced by our record revenue per written contract
for pre-need sales. We expect to continue to enhance unitholder
value through organic enhancement of our business as well as being
acquisitive in coming periods, and believe we are well positioned
to take advantage of opportunities as they arise.”
Financial Highlights
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1) |
$ |
23,457 |
|
|
$ |
19,533 |
|
|
$ |
71,754 |
|
|
$ |
68,458 |
|
|
|
|
|
|
|
|
|
Distributable
Available Cash(1) |
$ |
32,214 |
|
|
$ |
28,474 |
|
|
$ |
64,320 |
|
|
$ |
59,974 |
|
|
|
|
|
|
|
|
|
Net
loss |
$ |
(3,402 |
) |
|
$ |
(3,268 |
) |
|
$ |
(17,133 |
) |
|
$ |
(2,977 |
) |
|
|
|
|
|
|
|
|
Cash
Distributions |
$ |
20,392 |
|
|
$ |
17,072 |
|
|
$ |
56,689 |
|
|
$ |
45,297 |
|
per unit |
$ |
0.66 |
|
|
$ |
0.62 |
|
|
$ |
1.95 |
|
|
$ |
1.83 |
|
|
|
|
|
|
|
|
|
|
At September 30, |
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
Backlog(2) |
$ |
607,272 |
|
|
$ |
529,544 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly
distribution asset coverage(3) |
6.3x |
|
|
|
|
|
|
(1) Non-GAAP financial measures used by the Partnership should
not be considered as alternatives to GAAP financial measures, and
you should not consider such non-GAAP measures in isolation or as a
substitute for the Partnership’s results as reported under
GAAP. A reconciliation of the non-GAAP financial measures of
Adjusted EBITDA, Distributable Cash Flow and Distributable
Available Cash to net loss attributable to the Partnership, the
most directly comparable GAAP financial measure, is provided in the
financial tables of this release. Please see footnote 1 to
the Financial Information table of this release.
(2) Amounts as of period end. Backlog is defined as
deferred cemetery revenues and investment income less deferred
selling and obtaining costs. It does not include deferred
unrealized gains and losses on merchandise trust assets.
(3) Ratio of selected net assets to quarterly cash distributions
paid during the most recent quarterly period as of the date
noted. Please see the Distribution Asset Coverage table of
this release.
- Adjusted EBITDA, a non-GAAP measure, was $23.5 million(1) for
the third quarter 2015 compared with $19.5 million for the prior
year 3rd quarter, an increase of over 20%. The increase from the
prior year period was primarily the result of increased sales
activity, partially offset by lower investment income from
trusts.
- Distributable Available Cash, a non-GAAP measure, was $32.2
million(1) for the third quarter 2015, compared with $28.5 million
for the prior year third quarter, a 13% increase.
- Backlog(2) increased by $77.7 million, or 15%, to $607.3
million at September 30, 2015 compared with September 30, 2014, and
by $19.8 million, or 3%, compared with June 30, 2015.
- The Partnership declared a cash distribution for the 3rd
quarter 2015 of $0.66 per common limited partner unit, a 7%
increase compared with the prior year 3rd quarter and a 2% increase
compared with the 2nd quarter 2015. The Partnership’s 3rd
quarter 2015 cash distribution will be paid on November 13, 2015 to
holders of record as of November 6, 2015. As previously
announced, it is the Partnership’s intention to continue to
increase cash distributions by $0.01 per limited partner unit per
quarter through the end of 2015.
- On a GAAP basis, net loss for the 3rd quarter 2015 was $3.4
million compared with a net loss of $3.3 million for the prior year
3rd quarter. The loss in the current period was driven
principally by the recognition of a $3.0 million legal settlement
and associated costs.
Recent Events
Acquisition activity
- During the third quarter 2015, the Partnership acquired 3
cemeteries in Illinois, 3 funeral homes in Illinois and 2 funeral
homes in Florida for an aggregate purchase price of $14.0 million.
The funeral homes have performed approximately 1,375 funeral
services in the aggregate annually, and the cemeteries have
performed approximately 503 interments in the aggregate
annually. After these acquisitions, the Partnership operates
306 cemeteries and 103 funeral homes in 28 states and Puerto
Rico.
Public offering of common units
- On July 10, 2015, the Partnership completed a follow-on public
offering of 2,415,000 common units at a public offering price of
$29.63 per unit. Net proceeds of the offering, after deducting
underwriting discounts and offering expenses, were approximately
$67.9 million. The proceeds were utilized to pay down outstanding
borrowings under the Partnership’s credit facility.
Operating Highlights
Cemetery Operations
- Cemetery contracts written for the 3rd quarter were 30,722,
compared with 29,633 contracts written for the prior year 3rd
quarter, an increase of 1,089 contracts or 4%. The increase
in cemetery contracts written was principally attributable to
acquisitions and other transactions completed by the Partnership
since the second quarter of 2014, including its agreements with the
Archdiocese of Philadelphia.
- Average revenue per written contract was $2,802 for the 3rd
quarter 2015, an increase of 7% compared with the 3rd quarter
2014. In addition, pre-need contracts, which accounted for
50% of total contracts written for the 3rd quarter 2015 compared
with 48% for the 2nd quarter 2015, reached a record $3,815 revenue
per written contract for the 3rd quarter, up from $3,813 from the
2nd quarter 2015.
- Cemetery margin(3) increased to $41.8 million for the 3rd
quarter 2015, compared with $35.3 million for the prior year 3rd
quarter, an increase of $6.5 million or 19%. Cemetery margin
percentage was approximately 61% for the 3rd quarter 2015, compared
to 57% for the prior year 3rd quarter. The increase in cemetery
margin between periods was principally attributable to an increase
in contracts written as noted previously.
(1) A reconciliation of GAAP net loss to Adjusted EBITDA,
Distributable Cash Flow and Distributable Available Cash is
provided in the financial tables of this release. Please see
footnote 1 to the Financial Information table of this release.
(2) Backlog is defined as deferred cemetery revenues and
investment income less deferred selling and obtaining costs.
It does not include deferred unrealized gains and losses on
merchandise trust assets.
(3) See the Supplemental Adjusted EBITDA, Distributable Cash
Flow and Distributable Available Cash Summary in the Financial and
Operating Highlights table and related footnotes in this release
for information regarding the calculation of Cemetery margin, which
is defined as non-deferred cemetery revenues less cost of goods
sold and cemetery expenses.
Funeral Home Operations
- Funeral home calls for the 3rd quarter were 3,814, compared
with 3,595 calls for the prior year 3rd quarter, an increase of 219
calls or 6%. The increase in funeral home calls from the prior year
quarter was attributable to a combination of organic growth and
growth from acquisitions.
- Funeral Home margin(1) was $5.5 million for the 3rd quarter
2015, compared with $3.8 million for the prior year 3rd quarter, an
increase of $1.7 million or 44%. Funeral Home margin
percentage was approximately 32% for the 3rd quarter 2015, compared
with 26% for the prior year 3rd quarter. The increase in funeral
home margin and margin percentage was principally attributable to
revenues related to insurance contracts.
Trust Investment and Interest Income
- Combined Trust Investment and Interest Income(1) was $10.9
million for the 3rd quarter 2015 compared with $15.8 million
for the prior year 3rd quarter, an decrease of $4.9 million or
31%. The decrease was largely the result of the timing of
realized trust gains.
- Trust fund investment returns, including realized gains and
losses and dividends (excluding realized gains on perpetual care
trusts), net of fees, were 1.1% (4.2% annualized) for the 3rd
quarter 2015, compared with 1.6% (6.4% annualized) for the prior
year 3rd quarter and 1.9% (7.5% annualized) for the 2nd quarter
2015. The decrease in the rate of return in the current period
compared to the comparable prior year period and 2nd quarter 2015
was a result of the timing of realized merchandise trust
gains.
Corporate Expenses, Liquidity and Capital
Structure
- Combined cash selling, general and administrative, and
corporate overhead expenses for the 3rd quarter 2015 were $34.7
million, a decrease of $0.6 million or 2% from $35.3 million for
the prior year 3rd quarter, and a decrease of $4.0 million or 10%
from the 2nd quarter 2015. The decrease from the prior year
third quarter was the result of reduced professional fees. The
decrease from the 2nd quarter of 2015 resulted from decreased
commission expense, professional fees and advertising costs.
- Cash interest expense was $4.9 million for the 3rd quarter 2015
compared with $4.4 million for the prior year 3rd quarter and $5.0
million for the sequential quarter. The change from period to
period is primarily driven by changes in the amounts outstanding
under our credit facility.
- As of September 30, 2015, the Partnership had $291.0 million of
total debt, including $113.5 million outstanding under its
revolving credit facility. The Partnership had approximately
$66.5 million available on its revolving credit facility and $11.8
million of cash and cash equivalents as of September 30,
2015.
(1) See the Supplemental Adjusted EBITDA, Distributable Cash
Flow and Distributable Available Cash Summary in the Financial and
Operating Highlights table and related footnotes in this release
for information regarding the calculation of Funeral Home margin,
which is defined as non-deferred Funeral Home revenues less
associated expenses, and Trust Investment and Interest Income,
which is defined as non-deferred Investment income from trusts and
interest income.
Investor Conference Call and Webcast
The Partnership will conduct a conference call to discuss 2015
third quarter financial results today, Monday, November 9, 2015 at
10:00 a.m. ET. The conference call can be accessed by calling
(800) 698-0460. An audio replay of the conference call will
be available by calling (800) 633-8284 through 12:00 p.m. ET on
November 23, 2015. The reservation number for the audio
replay is 21783749. A live webcast of the conference call
will also be available to investors who may access the call through
the investors section of www.stonemor.com. An audio replay of
the conference call will also be archived on the Partnership’s
website at www.stonemor.com.
About StoneMor Partners L.P.
StoneMor Partners L.P., headquartered in Levittown,
Pennsylvania, is an owner and operator of cemeteries and funeral
homes in the United States, with 306 cemeteries and 103 funeral
homes in 28 states and Puerto Rico.
StoneMor is the only publicly traded death care
company structured as a partnership. StoneMor’s cemetery
products and services, which are sold on both a pre-need
(before death) and at-need (at death) basis, include: burial
lots, lawn and mausoleum crypts, burial vaults, caskets,
memorials, and all services which provide for the installation of
this merchandise. For additional information about StoneMor
Partners L.P., please visit StoneMor’s website, and the investors
section, at http://www.stonemor.com.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains
forward-looking statements that involve a number of assumptions,
risks and uncertainties that could cause actual results to differ
materially from those contained in the forward-looking
statements. The Partnership cautions readers that any
forward-looking information is not a guarantee of future
performance. Such forward-looking statements include, but are
not limited to, statements about future financial and operating
results, the Partnership’s plans, objectives, expectations and
intentions and other statements that are not historical facts.
Risks, assumptions and uncertainties that could cause actual
results to materially differ from the forward-looking
statements include, but are not limited to, those associated with
the cash flow from our pre-need and at-need sales, our trusts, and
financings, which may impact our ability to meet our financial
projections, our ability to service our debt and pay distributions,
and our ability to increase our distributions; future revenue and
revenue growth; the integration or anticipated benefits of our
recent acquisitions or any future acquisitions; our ability to
complete and fund additional acquisitions; the effect of economic
downturns; the impact of our leverage on our operating plans; the
decline in the fair value of certain equity and debt securities
held in our trusts; our ability to attract, train and retain an
adequate number of sales people; the volume and timing of pre-need
sales of cemetery services and products; increased use of
cremation; changes in the death rate; changes in the political or
regulatory environments, including potential changes in tax
accounting and trusting policies; litigation or legal proceedings
that could expose us to significant liabilities and damage our
reputation; the effects of cyber security attacks due to our
significant reliance on information technology; the financial
condition of third-party insurance companies that fund our pre-need
funeral contracts; and other risks, assumptions and uncertainties
detailed from time to time in the Partnership’s reports filed with
the U.S. Securities and Exchange Commission, including quarterly
reports on Form 10-Q, reports on Form 8-K and annual reports on
Form 10-K. Forward-looking statements speak only as of the date
hereof, and the Partnership assumes no obligation to update such
statements, except as may be required by applicable
law.
STONEMOR PARTNERS L.P. |
CONSOLIDATED BALANCE SHEETS |
(unaudited; in thousands) |
|
|
|
September 30, |
|
December 31, |
ASSETS |
|
|
2015 |
|
|
|
2014 |
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
11,792 |
|
|
$ |
10,401 |
|
Accounts receivable, net of
allowance |
|
|
66,099 |
|
|
|
62,503 |
|
Prepaid expenses |
|
|
7,064 |
|
|
|
4,708 |
|
Other current assets |
|
|
33,448 |
|
|
|
24,266 |
|
Total current assets |
|
|
118,403 |
|
|
|
101,878 |
|
|
|
|
|
|
Long-term accounts receivable, net of allowance |
|
|
93,273 |
|
|
|
89,536 |
|
Cemetery
Property |
|
|
344,662 |
|
|
|
339,848 |
|
Property
and equipment, net of accumulated depreciation |
|
|
102,671 |
|
|
|
100,391 |
|
Merchandise trusts, restricted, at fair value |
|
|
459,320 |
|
|
|
484,820 |
|
Perpetual care trusts, restricted, at fair value |
|
|
311,781 |
|
|
|
345,105 |
|
Deferred
financing costs, net of accumulated amortization |
|
|
7,907 |
|
|
|
9,089 |
|
Deferred
selling and obtaining costs |
|
|
108,754 |
|
|
|
97,795 |
|
Deferred
tax assets |
|
|
42 |
|
|
|
40 |
|
Goodwill |
|
|
64,048 |
|
|
|
58,836 |
|
Intangible assets |
|
|
67,681 |
|
|
|
68,990 |
|
Other
assets |
|
|
3,158 |
|
|
|
3,136 |
|
Total
assets |
|
$ |
1,681,700 |
|
|
$ |
1,699,464 |
|
|
|
|
|
|
LIABILITIES AND PARTNERS’ CAPITAL |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable and accrued
liabilities |
|
$ |
37,448 |
|
|
$ |
35,382 |
|
Accrued interest |
|
|
4,868 |
|
|
|
1,219 |
|
Long-term debt, current
portion |
|
|
3,294 |
|
|
|
2,251 |
|
Total current liabilities |
|
|
45,610 |
|
|
|
38,852 |
|
|
|
|
|
|
Other
long-term liabilities |
|
|
2,003 |
|
|
|
1,292 |
|
Obligation for lease and management agreements, net |
|
|
9,307 |
|
|
|
8,767 |
|
Long-term debt |
|
|
287,724 |
|
|
|
285,378 |
|
Deferred
cemetery revenues, net |
|
|
645,233 |
|
|
|
643,408 |
|
Deferred
tax liabilities |
|
|
17,815 |
|
|
|
17,708 |
|
Merchandise liability |
|
|
158,592 |
|
|
|
150,192 |
|
Perpetual care trust corpus |
|
|
311,781 |
|
|
|
345,105 |
|
Total liabilities |
|
|
1,478,065 |
|
|
|
1,490,702 |
|
|
|
|
|
|
Partners’ capital |
|
|
|
|
General partner’s interest |
|
|
(8,612 |
) |
|
|
(5,113 |
) |
Common limited partners’
interests |
|
|
212,247 |
|
|
|
213,875 |
|
Total partners’ capital |
|
|
203,635 |
|
|
|
208,762 |
|
Total liabilities and partners’
capital |
|
$ |
1,681,700 |
|
|
$ |
1,699,464 |
|
STONEMOR PARTNERS L.P. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(unaudited; in thousands, except per unit data) |
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
Revenues: |
|
|
|
|
|
|
|
Cemetery: |
|
|
|
|
|
|
|
Merchandise |
$ |
34,709 |
|
|
$ |
37,812 |
|
|
$ |
97,688 |
|
|
$ |
98,452 |
|
Services |
|
14,195 |
|
|
|
14,971 |
|
|
|
42,696 |
|
|
|
37,760 |
|
Investment and other |
|
15,054 |
|
|
|
13,152 |
|
|
|
43,062 |
|
|
|
42,418 |
|
Funeral home: |
|
|
|
|
|
|
|
Merchandise |
|
6,588 |
|
|
|
4,752 |
|
|
|
19,913 |
|
|
|
14,770 |
|
Services |
|
7,654 |
|
|
|
7,487 |
|
|
|
23,083 |
|
|
|
20,694 |
|
Total revenues |
|
78,200 |
|
|
|
78,174 |
|
|
|
226,442 |
|
|
|
214,094 |
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of goods sold: |
|
|
|
|
|
|
|
Perpetual care |
|
1,993 |
|
|
|
1,898 |
|
|
|
5,727 |
|
|
|
5,110 |
|
Merchandise |
|
6,735 |
|
|
|
7,164 |
|
|
|
19,891 |
|
|
|
20,106 |
|
Cemetery expense |
|
18,245 |
|
|
|
18,076 |
|
|
|
53,789 |
|
|
|
47,546 |
|
Selling expense |
|
14,647 |
|
|
|
16,494 |
|
|
|
44,326 |
|
|
|
42,544 |
|
General and administrative
expense |
|
8,819 |
|
|
|
9,808 |
|
|
|
27,340 |
|
|
|
26,333 |
|
Corporate overhead |
|
8,152 |
|
|
|
8,392 |
|
|
|
26,979 |
|
|
|
22,394 |
|
Depreciation and amortization |
|
3,311 |
|
|
|
3,112 |
|
|
|
9,207 |
|
|
|
7,993 |
|
Funeral home expense: |
|
|
|
|
|
|
|
Merchandise |
|
1,002 |
|
|
|
1,441 |
|
|
|
5,444 |
|
|
|
4,691 |
|
Services |
|
5,432 |
|
|
|
5,522 |
|
|
|
16,728 |
|
|
|
15,023 |
|
Other |
|
4,774 |
|
|
|
3,396 |
|
|
|
13,335 |
|
|
|
9,367 |
|
Acquisition related costs, net of
recoveries |
|
963 |
|
|
|
451 |
|
|
|
1,648 |
|
|
|
2,040 |
|
Total costs and expenses |
|
74,073 |
|
|
|
75,754 |
|
|
|
224,414 |
|
|
|
203,147 |
|
|
|
|
|
|
|
|
|
Operating profit |
|
4,127 |
|
|
|
2,420 |
|
|
|
2,028 |
|
|
|
10,947 |
|
|
|
|
|
|
|
|
|
Gain on
acquisition/dispositions |
|
1,540 |
|
|
|
244 |
|
|
|
1,540 |
|
|
|
656 |
|
Gain
(loss) on settlement agreement, net |
|
(3,000 |
) |
|
|
- |
|
|
|
(3,000 |
) |
|
|
888 |
|
Interest
expense |
|
(5,669 |
) |
|
|
(5,268 |
) |
|
|
(16,902 |
) |
|
|
(15,990 |
) |
|
|
|
|
|
|
|
|
Net loss before income taxes |
|
(3,002 |
) |
|
|
(2,604 |
) |
|
|
(16,334 |
) |
|
|
(3,499 |
) |
|
|
|
|
|
|
|
|
Income
tax benefit (expense) |
|
(400 |
) |
|
|
(664 |
) |
|
|
(799 |
) |
|
|
522 |
|
Net
loss |
$ |
(3,402 |
) |
|
$ |
(3,268 |
) |
|
$ |
(17,133 |
) |
|
$ |
(2,977 |
) |
|
|
|
|
|
|
|
|
Allocation of net loss attributable to limited partners and
the general partner: |
|
|
|
|
General partner’s interest |
$ |
(42 |
) |
|
$ |
(44 |
) |
|
$ |
(227 |
) |
|
$ |
(49 |
) |
Limited partners’ interest |
|
(3,360 |
) |
|
|
(3,224 |
) |
|
|
(16,906 |
) |
|
|
(2,928 |
) |
Net loss |
$ |
(3,402 |
) |
|
$ |
(3,268 |
) |
|
$ |
(17,133 |
) |
|
$ |
(2,977 |
) |
|
|
|
|
|
|
|
|
Net loss attributable to common limited partners per
unit |
|
|
|
|
(basic and
diluted) |
$ |
(0.11 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.56 |
) |
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
Weighted average limited partner units
outstanding: |
|
|
|
|
Basic and diluted |
|
31,491 |
|
|
|
29,018 |
|
|
|
30,011 |
|
|
|
25,712 |
|
STONEMOR PARTNERS L.P. |
FINANCIAL AND OPERATING
HIGHLIGHTS |
(unaudited) |
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
Financial
Data: |
|
|
|
|
|
|
|
Net loss per limited partners per
unit – basic and diluted |
$ |
(0.11 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.56 |
) |
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
Adjusted EBITDA (in
thousands)(1) |
$ |
23,457 |
|
|
$ |
19,533 |
|
|
$ |
71,754 |
|
|
$ |
68,458 |
|
|
|
|
|
|
|
|
|
Distributable Available Cash (in
thousands)(1) |
$ |
32,214 |
|
|
$ |
28,474 |
|
|
$ |
64,320 |
|
|
$ |
59,974 |
|
per limited partner
unit(1) |
$ |
1.02 |
|
|
$ |
0.98 |
|
|
$ |
2.14 |
|
|
$ |
2.33 |
|
|
|
|
|
|
|
|
|
Cash distributions paid per
unit(2) |
$ |
0.66 |
|
|
$ |
0.62 |
|
|
$ |
1.95 |
|
|
$ |
1.83 |
|
|
|
|
|
|
|
|
|
Operating
Data: |
|
|
|
|
|
|
|
Interments Performed |
|
12,878 |
|
|
|
13,079 |
|
|
|
41,514 |
|
|
|
36,580 |
|
|
|
|
|
|
|
|
|
Interment rights sold
(3): |
|
|
|
|
|
|
|
Lots |
|
8,086 |
|
|
|
8,613 |
|
|
|
23,980 |
|
|
|
24,360 |
|
Mausoleum crypts (including
pre-construction) |
|
446 |
|
|
|
494 |
|
|
|
1,779 |
|
|
|
1,697 |
|
Niches |
|
441 |
|
|
|
363 |
|
|
|
1,285 |
|
|
|
1,144 |
|
Net interment rights sold(3) |
|
8,973 |
|
|
|
9,470 |
|
|
|
27,044 |
|
|
|
27,201 |
|
|
|
|
|
|
|
|
|
Number of cemetery contracts
written |
|
30,722 |
|
|
|
29,633 |
|
|
|
92,664 |
|
|
|
82,286 |
|
Aggregate contract amount (in
thousands, excluding interest) |
$ |
86,092 |
|
|
$ |
77,568 |
|
|
$ |
254,600 |
|
|
$ |
219,178 |
|
Average amount per contract
(excluding interest) |
$ |
2,802 |
|
|
$ |
2,618 |
|
|
$ |
2,748 |
|
|
$ |
2,664 |
|
|
|
|
|
|
|
|
|
Pre-need cemetery contracts
written |
|
15,257 |
|
|
|
14,215 |
|
|
|
44,687 |
|
|
|
40,474 |
|
Aggregate pre-need contract amount
(in thousands, excluding interest) |
$ |
58,211 |
|
|
$ |
50,222 |
|
|
$ |
168,216 |
|
|
$ |
144,233 |
|
Average amount per pre-need
contract (excluding interest) |
$ |
3,815 |
|
|
$ |
3,533 |
|
|
$ |
3,764 |
|
|
$ |
3,564 |
|
|
|
|
|
|
|
|
|
At-need cemetery contracts
written |
|
15,465 |
|
|
|
15,418 |
|
|
|
47,977 |
|
|
|
41,812 |
|
Aggregate at-need contract amount
(in thousands excluding interest) |
$ |
27,881 |
|
|
$ |
27,346 |
|
|
$ |
86,384 |
|
|
$ |
74,945 |
|
Average amount per at-need contract
(excluding interest) |
$ |
1,803 |
|
|
$ |
1,774 |
|
|
$ |
1,801 |
|
|
$ |
1,792 |
|
|
|
|
|
|
|
|
|
Funeral home calls |
|
3,814 |
|
|
|
3,595 |
|
|
|
11,792 |
|
|
|
10,292 |
|
_______________________________________________________
|
|
(1 |
) |
A
reconciliation of GAAP net loss to Adjusted EBITDA, Distributable
Cash Flow and Distributable Available Cash is provided in the
financial tables of this release. Please see footnote 1 to
the Financial Information table of this release. |
|
|
(2 |
) |
Represents the
cash distributions declared for the respective period and paid by
the Partnership within 45 days after the end of each quarter,
utilizing the distributable cash flow generated during the
respective period. |
|
|
(3 |
) |
Net of
cancellations. Sales of double-depth burial lots are counted
as two sales. |
|
|
STONEMOR PARTNERS L.P. |
FINANCIAL AND OPERATING
HIGHLIGHTS |
(unaudited; in thousands, except per unit
amounts) |
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
Reconciliation
of net loss to non-GAAP measures(1): |
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
Net loss |
$ |
(3,402 |
) |
|
$ |
(3,268 |
) |
|
$ |
(17,133 |
) |
|
$ |
(2,977 |
) |
Acquisition and related costs |
|
963 |
|
|
|
451 |
|
|
|
1,648 |
|
|
|
2,040 |
|
Depreciation and amortization |
|
3,311 |
|
|
|
3,112 |
|
|
|
9,207 |
|
|
|
7,993 |
|
Cost of cemetery lots sold |
|
2,589 |
|
|
|
1,525 |
|
|
|
7,506 |
|
|
|
7,181 |
|
Non-cash interest expense |
|
740 |
|
|
|
830 |
|
|
|
2,207 |
|
|
|
2,127 |
|
Non-cash stock compensation
expense |
|
277 |
|
|
|
265 |
|
|
|
824 |
|
|
|
802 |
|
Maintenance capital
expenditures(2) |
|
(1,632 |
) |
|
|
(2,326 |
) |
|
|
(5,011 |
) |
|
|
(6,430 |
) |
Non-cash income tax expense |
|
550 |
|
|
|
1,082 |
|
|
|
905 |
|
|
|
(1,776 |
) |
Gain on
acquisition/dispositions |
|
(1,540 |
) |
|
|
(244 |
) |
|
|
(1,540 |
) |
|
|
(656 |
) |
Net operating profit deferral from
non-delivered merchandise and services(3) |
|
12,190 |
|
|
|
11,760 |
|
|
|
50,541 |
|
|
|
39,495 |
|
Distributable Cash Flow (1) |
$ |
14,046 |
|
|
$ |
13,187 |
|
|
$ |
49,154 |
|
|
$ |
47,799 |
|
Supplemental Adjusted EBITDA, Distributable Cash Flow and
Distributable Available Cash Summary(3): |
Revenues |
|
|
|
|
|
|
|
Pre-need cemetery revenues |
$ |
42,492 |
|
|
$ |
36,170 |
|
|
$ |
122,397 |
|
|
$ |
104,555 |
|
At-need cemetery revenues |
|
25,151 |
|
|
|
24,746 |
|
|
|
78,562 |
|
|
|
67,704 |
|
Investment income from trusts |
|
8,691 |
|
|
|
13,985 |
|
|
|
36,317 |
|
|
|
39,225 |
|
Interest income |
|
2,233 |
|
|
|
1,807 |
|
|
|
6,617 |
|
|
|
5,848 |
|
Funeral home revenues |
|
17,077 |
|
|
|
14,457 |
|
|
|
50,226 |
|
|
|
40,777 |
|
Other cemetery revenues |
|
1,154 |
|
|
|
455 |
|
|
|
4,198 |
|
|
|
6,163 |
|
Total revenues |
|
96,798 |
|
|
|
91,620 |
|
|
|
298,317 |
|
|
|
264,272 |
|
Costs and
expenses |
|
|
|
|
|
|
|
Cost of goods sold(4) |
|
8,743 |
|
|
|
8,025 |
|
|
|
26,092 |
|
|
|
22,126 |
|
Cemetery expense |
|
18,245 |
|
|
|
18,076 |
|
|
|
53,789 |
|
|
|
47,546 |
|
Selling expense |
|
18,034 |
|
|
|
17,377 |
|
|
|
56,276 |
|
|
|
48,404 |
|
General and administrative
expense |
|
8,819 |
|
|
|
9,808 |
|
|
|
27,340 |
|
|
|
26,333 |
|
Cash corporate overhead(5) |
|
7,875 |
|
|
|
8,127 |
|
|
|
26,155 |
|
|
|
21,592 |
|
Funeral home expense |
|
11,625 |
|
|
|
10,674 |
|
|
|
36,911 |
|
|
|
29,813 |
|
Total costs and expenses |
|
73,341 |
|
|
|
72,087 |
|
|
|
226,563 |
|
|
|
195,814 |
|
Adjusted
EBITDA(1) |
|
23,457 |
|
|
|
19,533 |
|
|
|
71,754 |
|
|
|
68,458 |
|
Cash interest expense(6) |
|
(4,929 |
) |
|
|
(4,438 |
) |
|
|
(14,695 |
) |
|
|
(13,863 |
) |
Cash income taxes |
|
150 |
|
|
|
418 |
|
|
|
106 |
|
|
|
(1,254 |
) |
Cash gain (loss) on settlement and
acquisition/disposition(7) |
|
(3,000 |
) |
|
|
- |
|
|
|
(3,000 |
) |
|
|
888 |
|
Maintenance capital
expenditures(2) |
|
(1,632 |
) |
|
|
(2,326 |
) |
|
|
(5,011 |
) |
|
|
(6,430 |
) |
Distributable Cash
Flow(1) |
|
14,046 |
|
|
|
13,187 |
|
|
|
49,154 |
|
|
|
47,799 |
|
|
|
|
|
|
|
|
|
Discretionary adjustments considered by the Board of
Directors of the General Partner |
in the
determination of quarterly cash distributions: |
Non-recurring legal
settlement(7) |
|
3,000 |
|
|
|
- |
|
|
|
3,000 |
|
|
|
- |
|
Non-recurring impact from early
repayment marketing program(8) |
|
1,765 |
|
|
|
- |
|
|
|
1,765 |
|
|
|
- |
|
Distributable Cash Flow
with discretionary adjustments by the Board of Directors of the
General Partner |
|
18,811 |
|
|
|
13,187 |
|
|
|
53,919 |
|
|
|
47,799 |
|
Cash on hand – beginning
of period |
|
13,403 |
|
|
|
15,287 |
|
|
|
10,401 |
|
|
|
12,175 |
|
Distributable
Available Cash(1)(9) |
$ |
32,214 |
|
|
$ |
28,474 |
|
|
$ |
64,320 |
|
|
$ |
59,974 |
|
|
|
|
|
|
|
|
|
Cash
distributions paid(10) |
$ |
20,392 |
|
|
$ |
17,072 |
|
|
$ |
56,689 |
|
|
$ |
45,297 |
|
per limited partner unit |
$ |
0.66 |
|
|
$ |
0.62 |
|
|
$ |
1.95 |
|
|
$ |
1.83 |
|
|
|
|
|
|
|
|
|
Excess of
Distributable Available Cash after cash distributions
paid(11) |
$ |
11,822 |
|
|
$ |
11,402 |
|
|
$ |
7,631 |
|
|
$ |
14,677 |
|
|
|
|
|
|
|
|
|
(1) Although not prescribed under generally
accepted accounting principles (“GAAP”), the Partnership’s
management believes the presentation of Adjusted EBITDA,
Distributable Cash Flow (“DCF”) and Distributable Available Cash is
relevant and useful because it helps the Partnership’s investors
understand its operating performance, allows for easier comparison
of its results with other master limited partnerships (“MLP”), and
is a critical component in the determination of quarterly cash
distributions. As a MLP, the Partnership is required to distribute
100% of available cash, subject to cash reserves established by its
general partner and as defined in its limited partnership agreement
(“Available Cash”), to investors on a quarterly basis, in
compliance with applicable Delaware law. The Partnership refers to
Available Cash prior to the establishment of cash reserves as
Distributable Available Cash. Adjusted EBITDA, DCF and
Distributable Available Cash should not be considered in isolation
of, or as a substitute for, net income as an indicator of operating
performance or cash flows from operating activities as a measure of
liquidity. While the Partnership’s management believes that its
methodology of calculating Adjusted EBITDA, DCF and Distributable
Available Cash is generally consistent with the common practice of
other MLPs, such metrics may not be consistent and, as such, may
not be comparable to measures reported by other MLPs, who may use
other adjustments related to their specific businesses. Adjusted
EBITDA, DCF and Distributable Available Cash are supplemental
financial measures used by the Partnership’s management and by
external users of the Partnership’s financial statements such as
investors, lenders under the Partnership’s credit facility,
research analysts, rating agencies and others to assess its:
- Operating performance as compared to other publicly traded
partnerships, without regard to financing methods, historical cost
basis or capital structure;
- Ability to generate sufficient cash flows to support its
distributions to unitholders;
- Ability to incur and service debt and fund acquisitions and
growth opportunities; and
- Ability to comply with financial covenants in its Credit
Facility, which is calculated based upon Adjusted EBITDA with
certain adjustments.
DCF is determined by calculating EBITDA, which
is defined as net income (loss) plus interest expense, income tax,
and depreciation and amortization, then adjusting it for non-cash,
non-recurring and other items to achieve Adjusted EBITDA, and then
deducting cash interest expense, net cash income tax, maintenance
capital expenditures and other items. Distributable Available Cash
is then determined by adjusting DCF for discretionary adjustments
considered by the Board of Directors of the General Partner in
determination of the quarterly cash distribution, and then adding
cash on hand at the beginning of the period. The Partnership
defines Adjusted EBITDA as net income (loss) plus the following
adjustments:
- Interest expense;
- Income tax expense;
- Depreciation and amortization.
- Asset impairments;
- Acquisition and related costs;
- Non-cash stock compensation;
- (Gains) losses on asset disposal; and
- Other items.
(2) Maintenance capital expenditures
include those capitalized costs which the Partnership incurs to
maintain its properties and equipment as well as corporate
expenditures.
(3) Includes adjustments to add back
certain revenues and related expenses deferred in accordance with
GAAP. The Partnership’s management has provided this data so as to
present its results in a manner consistent with its internal
managerial accounting practices, which recognizes certain revenue
and related expenses when contracts are signed by the customer and
accepted by the Partnership. Under GAAP, the Partnership
recognizes pre-need cemetery sales for sales of burial lots and
mausoleum crypts when the product is constructed and at least 10%
of the sales price is collected, while other products are
recognized when the criteria for delivery under GAAP are met, which
include purchase of the product, delivery and installation, and
transfer of title, among other items. The Partnership’s
management believes that this data is relevant and useful to its
investors so as to better understand its operating performance and
allow for easier comparison to other MLPs.
(4) Excludes non-cash amortization of cemetery
property.
(5) Excludes non-cash stock compensation
expense.
(6) Excludes non-cash amortization of
deferred finance costs and other non-cash items.
(7) Consists of the estimated non-recurring
settlement cost and associated legal fees of a litigation
matter. The Board of Directors and management of the General
Partner deemed this item as non-recurring and excluded the impact
in its determination of DCF and Distributable Available Cash for
the period after consideration of the item’s characteristics,
including, but not limited to, the type of litigation and the
amount of the settlement.
(8) Consists of the non-recurring reduction
of pre-need cemetery revenues resulting from the Partnership’s
early payment marketing program, which offers certain discounts for
installment pre-need sales if paid in full within specific
dates. The Board of Directors and management of the
General Partner considered this item as non-recurring and excluded
the impact in its determination of DCF and Distributable Available
Cash for the period as they do not expect to offer such programs in
future periods.
(9) Including the discretionary adjustments
by the Board of Directors of the General Partner in the
determination of quarterly cash distributions, Adjusted EBITDA
would have been $25.2 million and $73.5 million for the three and
nine months ended September 30, 2015.
(10) Represents cash distributions declared
for the respective period and paid by the Partnership within 45
days after the end of each quarter, utilizing the DCF and
Distributable Available Cash generated during the respective
period.
(11) The Partnership seeks to at least
maintain its current cash distribution in future quarterly periods,
and expects to only increase such cash distributions when future
DCF and Distributable Available Cash amounts allow for it and are
expected to be sustained. The Partnership’s determination of
quarterly cash distributions and its resulting determination of the
amount of excess (shortfall) those cash distributions generate in
comparison to DCF and Distributable Available Cash are based upon
its assessment of numerous factors, including but not limited to
the variability of cash flow from the Partnership’s pre-need and
at-need sales and its trust investments performance, interest rate
movements, and financial leverage. The Partnership also
considers its historical trailing four quarters of excess or
shortfalls and future forecasted excess or shortfalls that its cash
distributions generate in comparison to DCF and Distributable
Available Cash due to the variability of its DCF and Distributable
Available Cash generated each quarter, which could have more or
less excess (shortfalls) generated quarter to quarter.
STONEMOR PARTNERS L.P. |
DISTRIBUTION ASSET COVERAGE |
(unaudited; in thousands, except ratios) |
|
|
|
September 30, |
|
December 31, |
|
|
|
2015 |
|
|
|
2014 |
|
Selected assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
11,792 |
|
|
$ |
10,401 |
|
Accounts receivable, net of
allowance |
|
|
66,099 |
|
|
|
62,503 |
|
Long-term accounts receivable, net
of allowance |
|
|
93,273 |
|
|
|
89,536 |
|
Merchandise trusts, restricted, at
fair value |
|
|
459,320 |
|
|
|
484,820 |
|
Total selected assets |
|
|
630,484 |
|
|
|
647,260 |
|
|
|
|
|
|
|
|
|
|
|
Selected liabilities: |
|
|
|
|
Accounts payable and accrued
liabilities |
|
|
37,448 |
|
|
|
35,382 |
|
Accrued interest |
|
|
4,868 |
|
|
|
1,219 |
|
Long-term debt, current
portion |
|
|
3,294 |
|
|
|
2,251 |
|
Long-term debt |
|
|
287,724 |
|
|
|
285,378 |
|
Merchandise liability |
|
|
158,592 |
|
|
|
150,192 |
|
Total selected liabilities |
|
|
491,926 |
|
|
|
474,422 |
|
Total selected net assets |
|
$ |
138,558 |
|
|
$ |
172,838 |
|
Distribution asset coverage(1) |
|
6.3x |
|
9.1x |
|
|
|
|
|
__________________________________________________________________________________________________________________(1) Ratio
of selected net assets to quarterly cash distributions paid during
the most recent quarterly period as of the date noted.
CONTACT: John McNamara
Director - Investor Relations
StoneMor Partners L.P.
(215) 826-2945
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