StoneMor Partners L.P. Reports Financial Results for 2018 Second Quarter
February 12 2019 - 7:00AM
StoneMor Partners L.P. (NYSE: STON) (“StoneMor” or
the “Partnership”), a leading owner and
operator of cemeteries and funeral homes, today reported financial
results for the three and six month periods ended June 30, 2018.
Investors are encouraged to read the Partnership's quarterly report
on Form 10-Q filed with the Securities and Exchange Commission (the
“SEC”), which contains additional details, and can be found
at www.stonemor.com.
Joe Redling, StoneMor’s President and Chief Executive Officer,
said, “The second quarter of 2018 generated stable year over year
results in many of our key performance metrics such as interments
performed, net interment rights sold and cemetery contracts
written. As a reminder, our financial results for the period did
not yet reflect the impact of our reorganization and cost reduction
efforts, which we began in the second half of 2018, and, as we
previously disclosed, will take time to deliver the full results we
seek. The recently reported amendment to our credit facility and
financing agreement are key components of the foundation for future
success, and we expect to become current in our financial filings
shortly. We believe the actions we’ve taken to reorganize the
business, align expenses and put the company on a better financial
foundation will support improvements in 2019.”
SECOND QUARTER AND SIX MONTH FINANCIAL
PERFORMANCE
- For the three months ended June 30, 2018, revenues were $81.6
million compared to $86.0 million in the prior year period. 2018
six-month revenues were $159.5 million compared to $168.9 million
in the prior year period. Two factors were largely responsible for
the unfavorable comparison. In the first half of 2017, revenues
benefited from a large backlog of preneed cemetery merchandise that
became available to be serviced and the adoption of ASC 606 in 2018
which resulted in a reduction associated with the deferral of
revenue from document fees, combined with a decrease in land
sales.
- Second quarter net loss was $17.0 million compared to $11.6
million in the prior year period. Year-to-date net loss was
$34.9 million compared to $20.1 million. The increased losses were
driven largely by the unfavorable comparisons previously mentioned,
increased expenses related to the adoption of ASC 606, advertising
and employee benefits, as well as the continued impact of higher
corporate overhead related to professional fees associated with
delayed financial filings and legal costs.
- As of June 30, 2018, year-to-date cash from operations was
$15.4 million, largely equal to the prior year period.
- Merchandise trust value at June 30, 2018 was $511.9 million
compared to $515.5 million at December 31, 2017.
- Deferred revenue at June 30, 2018 was $933.2 million compared
to $912.6 million at December 31, 2017.
- As of June 30, 2018, the Partnership had $15.0 million of cash
and cash equivalents and $322.6 million of total debt, including
$156.9 million outstanding under its revolving credit
facility.
About StoneMor Partners L.P.
StoneMor Partners L.P., headquartered in Trevose, Pennsylvania,
is an owner and operator of cemeteries and funeral homes in the
United States, with 322 cemeteries and 90 funeral homes in 27
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
Certain statements contained in this press release, including,
but not limited to, information regarding the expected timing of
filings and operational improvements, are forward-looking
statements. Generally, the words “believe,” “may,” “will,”
“estimate,” “continue,” “anticipate,” “intend,” “project,”
“expect,” “predict” and similar expressions identify these
forward-looking statements. These statements are made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995.
Forward-looking statements are based on management’s current
expectations and estimates. These statements are neither promises
nor guarantees and are made subject to certain risks and
uncertainties that could cause actual results to differ materially
from the results stated or implied in this press release.
StoneMor’s major risks are related to our substantial secured and
unsecured indebtedness, our ability to refinance our secured
indebtedness in the near term, uncertainties associated with the
cash flow from pre-need and at-need sales, trusts and financings,
which may impact StoneMor’s ability to meet its financial
projections, service its debt and resume paying distributions, as
well as with StoneMor’s ability to maintain an effective system of
internal control over financial reporting and disclosure controls
and procedures.
StoneMor’s additional risks and uncertainties include, but are
not limited to: the consequences of the Partnership’s delinquent
filing of its Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2018 (the “Delinquent Report”), including that
the U.S. Securities and Exchange Commission could institute an
administrative proceeding seeking the revocation of the
registration of the Partnership’s common units under the Exchange
Act, and that the Partnership remains delinquent in its required
filings with the New York Stock Exchange (“NYSE”) and could
ultimately face the possible delisting of its common units from the
NYSE; the potential for defaults under the Partnership’s amended
credit facility if the Delinquent Report is not filed within the
period specified therein or the indenture governing its senior
notes if the Partnership fails to file it within 120 days after
notice from the trustee under the indenture; the Partnership’s
ability to obtain relief from its creditors if it cannot file the
Delinquent Report within the period prescribed by the Partnership’s
amended credit facility or within 120 days after notice from the
trustee under the indenture governing its senior notes, the terms
on which such relief might be granted and any restrictions that
might be imposed in connection with any relief that might be
obtained; uncertainty associated with the consummation of the
Partnership’s reorganization transactions; StoneMor’s ability to
successfully implement its strategic plan relating to achieving
operating improvements, including improving sales productivity and
reducing operating expenses; the effect of economic downturns; the
impact of StoneMor’s significant leverage on its operating plans;
the decline in the fair value of certain equity and debt securities
held in StoneMor’s trusts; StoneMor’s ability to attract, train and
retain an adequate number of sales people; uncertainties associated
with 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; StoneMor’s ability to successfully compete in the
cemetery and funeral home industry; litigation or legal proceedings
that could expose StoneMor to significant liabilities and damage
StoneMor’s reputation, including but not limited to litigation and
governmental investigations or proceedings arising out of or
related to accounting and financial reporting matters; the effects
of cyber security attacks due to StoneMor’s significant reliance on
information technology; uncertainties relating to the financial
condition of third-party insurance companies that fund StoneMor’s
pre-need funeral contracts; and various other uncertainties
associated with the death care industry and StoneMor’s operations
in particular.
When considering forward-looking statements, you should keep in
mind the risk factors and other cautionary statements set forth in
StoneMor’s Annual Report on Form 10-K and the other reports that
StoneMor files with the Securities and Exchange Commission, from
time to time. Except as required under applicable law, StoneMor
assumes no obligation to update or revise any forward-looking
statements made herein or any other forward-looking statements made
by it, whether as a result of new information, future events or
otherwise.
CONTACT: |
|
John McNamara |
|
|
Director - Investor Relations |
|
|
StoneMor Partners L.P. |
|
|
(215) 826-2945 |
STONEMOR PARTNERS L.P. |
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) |
(in thousands) |
|
|
|
|
|
June 30, 2018 |
|
December 31, 2017 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
14,979 |
|
|
$ |
6,821 |
|
Accounts
receivable, net of allowance |
66,837 |
|
|
79,116 |
|
Prepaid
expenses |
9,180 |
|
|
4,580 |
|
Assets
held for sale |
1,343 |
|
|
1,016 |
|
Other
current assets |
17,930 |
|
|
21,453 |
|
Total
current assets |
110,269 |
|
|
112,986 |
|
|
|
|
|
Long-term accounts
receivable, net of allowance |
95,421 |
|
|
105,935 |
|
Cemetery property |
335,037 |
|
|
333,404 |
|
Property and equipment,
net of accumulated depreciation |
113,229 |
|
|
114,090 |
|
Merchandise trusts,
restricted, at fair value |
511,852 |
|
|
515,456 |
|
Perpetual care trusts,
restricted, at fair value |
340,364 |
|
|
339,928 |
|
Deferred selling and
obtaining costs |
112,025 |
|
|
126,398 |
|
Deferred tax
assets |
92 |
|
|
84 |
|
Goodwill |
24,862 |
|
|
24,862 |
|
Intangible assets,
net |
62,342 |
|
|
63,244 |
|
Other assets |
25,161 |
|
|
19,695 |
|
Total assets |
$ |
1,730,654 |
|
|
$ |
1,756,082 |
|
|
|
|
|
Liabilities and
Partners' Capital |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable and accrued liabilities |
$ |
51,926 |
|
|
$ |
43,023 |
|
Accrued
interest |
1,912 |
|
|
1,781 |
|
Current
portion, long-term debt |
2,139 |
|
|
1,002 |
|
Total
current liabilities |
55,977 |
|
|
45,806 |
|
|
|
|
|
Long-term debt, net of
deferred financing costs |
320,495 |
|
|
317,693 |
|
Deferred revenues,
net |
933,159 |
|
|
912,626 |
|
Deferred tax
liabilities |
6,623 |
|
|
9,638 |
|
Perpetual care trust
corpus |
340,364 |
|
|
339,928 |
|
Other long-term
liabilities |
43,464 |
|
|
38,695 |
|
Total liabilities |
1,700,082 |
|
|
1,664,386 |
|
Commitments and
contingencies |
|
|
|
Partners' capital
(deficit): |
|
|
|
General
partner interest |
(3,615 |
) |
|
(2,959 |
) |
Common
limited partners' interest |
34,187 |
|
|
94,655 |
|
Total
partners' capital |
30,572 |
|
|
91,696 |
|
Total liabilities and
partners' capital |
$ |
1,730,654 |
|
|
$ |
1,756,082 |
|
|
|
|
|
|
|
|
|
See Accompanying Notes to the Unaudited Condensed
Consolidated Financial Statements.
STONEMOR PARTNERS L.P. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) |
(in thousands, except per unit
data) |
|
|
|
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues: |
|
|
|
|
|
|
|
Cemetery: |
|
|
|
|
|
|
|
Interments |
$ |
20,789 |
|
|
$ |
19,641 |
|
|
$ |
40,414 |
|
|
$ |
37,620 |
|
Merchandise |
17,116 |
|
|
18,834 |
|
|
33,743 |
|
|
37,131 |
|
Services |
17,737 |
|
|
18,619 |
|
|
34,228 |
|
|
35,132 |
|
Investment and other |
12,038 |
|
|
13,652 |
|
|
21,538 |
|
|
26,390 |
|
Funeral
home: |
|
|
|
|
|
|
|
Merchandise |
6,522 |
|
|
6,749 |
|
|
13,951 |
|
|
14,585 |
|
Services |
7,369 |
|
|
8,457 |
|
|
15,642 |
|
|
18,040 |
|
Total
revenues |
81,571 |
|
|
85,952 |
|
|
159,516 |
|
|
168,898 |
|
|
|
|
|
|
|
|
|
Costs and
Expenses: |
|
|
|
|
|
|
|
Cost of
goods sold |
13,086 |
|
|
12,043 |
|
|
26,521 |
|
|
25,562 |
|
Cemetery
expense |
21,007 |
|
|
20,124 |
|
|
38,421 |
|
|
36,821 |
|
Selling
expense |
17,166 |
|
|
15,623 |
|
|
33,422 |
|
|
32,082 |
|
General
and administrative expense |
10,163 |
|
|
9,753 |
|
|
21,121 |
|
|
19,710 |
|
Corporate
overhead |
15,165 |
|
|
16,067 |
|
|
26,992 |
|
|
27,171 |
|
Depreciation and amortization |
3,071 |
|
|
3,391 |
|
|
6,116 |
|
|
6,846 |
|
Funeral
home expenses: |
|
|
|
|
|
|
|
Merchandise |
1,108 |
|
|
1,623 |
|
|
3,586 |
|
|
3,383 |
|
Services |
5,582 |
|
|
5,454 |
|
|
11,100 |
|
|
11,153 |
|
Other |
3,961 |
|
|
4,987 |
|
|
9,001 |
|
|
10,332 |
|
Total
costs and expenses |
90,309 |
|
|
89,065 |
|
|
176,280 |
|
|
173,060 |
|
|
|
|
|
|
|
|
|
Other losses |
— |
|
|
(1,071 |
) |
|
(5,205 |
) |
|
(1,071 |
) |
Interest expense |
(8,107 |
) |
|
(6,741 |
) |
|
(15,220 |
) |
|
(13,447 |
) |
Loss before income
taxes |
(16,845 |
) |
|
(10,925 |
) |
|
(37,189 |
) |
|
(18,680 |
) |
Income tax benefit
(expense) |
(172 |
) |
|
(657 |
) |
|
2,249 |
|
|
(1,463 |
) |
Net loss |
$ |
(17,017 |
) |
|
$ |
(11,582 |
) |
|
$ |
(34,940 |
) |
|
$ |
(20,143 |
) |
General partner's
interest |
$ |
(177 |
) |
|
$ |
(121 |
) |
|
$ |
(364 |
) |
|
$ |
(210 |
) |
Limited partners'
interest |
$ |
(16,840 |
) |
|
$ |
(11,461 |
) |
|
$ |
(34,576 |
) |
|
$ |
(19,933 |
) |
Net loss per limited
partner unit (basic and diluted) |
$ |
(0.44 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.91 |
) |
|
$ |
(0.53 |
) |
Weighted average number
of limited partners' units outstanding (basic and diluted) |
37,958 |
|
|
37,957 |
|
|
37,958 |
|
|
37,938 |
|
See Accompanying Notes to the Unaudited Condensed
Consolidated Financial Statements.
STONEMOR PARTNERS L.P. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) |
(in thousands) |
|
|
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
Cash Flows From
Operating Activities: |
|
|
|
Net loss |
$ |
(34,940 |
) |
|
$ |
(20,143 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
Cost of
lots sold |
3,489 |
|
|
5,661 |
|
Depreciation and amortization |
6,116 |
|
|
6,846 |
|
Provision
for bad debt |
1,644 |
|
|
2,682 |
|
Non-cash
compensation expense |
1,913 |
|
|
488 |
|
Non-cash
interest expense |
3,215 |
|
|
2,195 |
|
Non-cash
impairment charge and other losses |
5,205 |
|
|
872 |
|
Changes
in assets and liabilities: |
|
|
|
Accounts
receivable, net of allowance |
1,195 |
|
|
(4,946 |
) |
Merchandise trust fund |
(4,181 |
) |
|
43,915 |
|
Other
assets |
(1,395 |
) |
|
(3,125 |
) |
Deferred
selling and obtaining costs |
(4,184 |
) |
|
(6,287 |
) |
Deferred
revenues, net |
33,599 |
|
|
(17,633 |
) |
Deferred
taxes, net |
(2,649 |
) |
|
944 |
|
Payables
and other liabilities |
6,377 |
|
|
4,031 |
|
Net cash
provided by operating activities |
15,404 |
|
|
15,500 |
|
Cash Flows From
Investing Activities: |
|
|
|
Cash paid
for capital expenditures |
(7,626 |
) |
|
(3,311 |
) |
Cash paid
for acquisitions |
(833 |
) |
|
— |
|
Proceeds
from divestitures |
|
— |
|
|
451 |
|
Proceeds
from asset sales |
|
|
401 |
|
Net cash
used in investing activities |
(8,459 |
) |
|
(2,459 |
) |
Cash Flows From
Financing Activities: |
|
|
|
Cash
distributions |
— |
|
|
(24,545 |
) |
Proceeds
from borrowings |
16,880 |
|
|
62,792 |
|
Repayments of debt |
(12,896 |
) |
|
(56,256 |
) |
Cost of
financing activities |
(2,771 |
) |
|
(776 |
) |
Net cash
provided by (used in) financing activities |
1,213 |
|
|
(18,785 |
) |
Net increase
(decrease) in cash and cash equivalents |
8,158 |
|
|
(5,744 |
) |
Cash and cash
equivalents - Beginning of period |
6,821 |
|
|
12,570 |
|
Cash and cash
equivalents - End of period |
$ |
14,979 |
|
|
$ |
6,826 |
|
Supplemental
disclosure of cash flow information: |
|
|
|
Cash paid
during the period for interest |
$ |
12,865 |
|
|
$ |
11,118 |
|
Cash paid
during the period for income taxes |
$ |
709 |
|
|
$ |
2,630 |
|
Non-cash
investing and financing activities: |
|
|
|
Acquisition of assets by financing |
$ |
688 |
|
|
$ |
1,384 |
|
Classification of assets as held for sale |
$ |
543 |
|
|
$ |
1,169 |
|
See Accompanying Notes to the Unaudited Condensed
Consolidated Financial Statements.
SUPPLEMENTAL OPERATING DATA |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Interments
performed |
14,102 |
|
|
13,627 |
|
|
28,674 |
|
|
28,057 |
|
Interment rights sold
(1) |
|
|
|
|
|
|
|
Lots |
8,941 |
|
|
8,604 |
|
|
15,477 |
|
|
15,856 |
|
Mausoleum
crypts (including pre-construction) |
301 |
|
|
553 |
|
|
847 |
|
|
1,083 |
|
Niches |
430 |
|
|
492 |
|
|
859 |
|
|
962 |
|
Net
interment rights sold (1) |
9,672 |
|
|
9,649 |
|
|
17,183 |
|
|
17,901 |
|
|
|
|
|
|
|
|
|
Number of pre-need
cemetery contracts written |
11,547 |
|
|
12,087 |
|
|
21,709 |
|
|
23,523 |
|
Number of at-need
cemetery contracts written |
15,276 |
|
|
15,575 |
|
|
30,003 |
|
|
30,859 |
|
Number of cemetery
contracts written |
26,823 |
|
|
27,662 |
|
|
51,712 |
|
|
54,382 |
|
|
|
|
|
|
|
|
|
|
|
|
|
______________________________
- Net of cancellations. Sales of double-depth burial lots are
counted as two sales.
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