StoneMor Partners L.P. (NYSE: STON) (“StoneMor” or
the “Partnership”), a leading owner and
operator of cemeteries and funeral homes, today reported operating
and financial results for the fourth quarter and full year 2018.
Investors are encouraged to read the Partnership's annual
report on Form 10-K filed with the Securities and Exchange
Commission (the “SEC”), which contains additional details, and can
be found at www.stonemor.com.
FOURTH QUARTER AND FULL YEAR FINANCIAL
PERFORMANCE
- Revenues for the fourth quarter were $83.4 compared to $85.3
million in the prior year period. Full year revenues were
$316.1 million compared to $338.2 million in the prior year.
Revenue declines in both periods were due to lower sales of
cemetery and funeral home merchandise and services, offset slightly
by an increase in cemetery interments. Investment and
other income for 2018 was$42.3 million, a decrease of $13.0 million
from the prior year primarily due to the impact from the adoption
of ASC 606, which reduced revenue associated with document fees by
$11.4 million.
- Fourth quarter net loss was $20.5 million compared to $45.5
million in the prior year period and a loss of $72.7 million for
the full year compared to $75.2 million in the prior year period.
Losses in quarter and year ended December 31, 2018 were
driven primarily by lower sales of cemetery and funeral home
merchandise and services, as well as the continued impact of higher
corporate and professional fees associated with delayed SEC
filings, work related to our planned conversion to a C-Corp and
legal costs. Losses in the fourth quarter of 2017 were primarily
driven by the previously disclosed impairment of goodwill related
to funeral home operations.
- Cemetery segment income for the 2018 fourth quarter was $6.6
million compared to $7.6 million for the prior year period.
The decline in segment income was primarily due to an increase in
certain costs associated with the rollout of the general manager
model across our cemetery network.
- Funeral segment income was $1.5 million for the 2018 fourth
quarter compared to $1.4 million in the prior year period.
The increase in segment income was due primarily to a reduction in
year over year costs and expenses.
- Cash from operating activities for the full year was $26.5
million compared to $15.0 million in the prior year
period.
- Merchandise trust value at December 31, 2018 was $488.2 million
compared to $515.5 million at December 31, 2017.
- Deferred revenue at December 31, 2018 was $914.3 million
compared to $912.6 million at December 31, 2017.
- As of December 31, 2018, the Partnership had $18.1 million of
cash and cash equivalents and $321.1 million of total debt,
including $155.7 million outstanding under its revolving credit
facility.
- The Partnership expects to report financial results for the
first quarter of 2019 during the week of May 13, 2019, and
anticipates it will host an investor conference call in connection
with the announcement of those results.
Joe Redling, StoneMor’s President and Chief Executive Officer,
said, “2018 was a transitional year for StoneMor on many
levels. Among the major developments, I joined the company as
its new CEO in late July and immediately began developing a
turnaround plan. Several months earlier, industry veteran Jim Ford
had been appointed the company’s new COO. We welcomed two new
independent board members and announced our intent to convert to a
C-Corporation. During the fourth quarter, we began to
implement a number of strategic, operational and organizational
initiatives that we expect will drive better efficiencies and
improve profitability. These initiatives include a major cost
reduction effort, a reorganization to decentralize operations to
drive more accountability at the local level and a thorough asset
review to prioritize resources to our top tier properties while
evaluating the strategic options of our lower performing
locations.”
“Our cost reduction effort is well underway. To date, we have
identified approximately $25 million in expense reductions that we
believe will be eliminated by the end of 2019. While many of
these cost reductions have already been put in place, certain
one-time costs specifically related to getting current in our
financial filings, finalizing the amendments to our credit facility
and the C-Corp conversion process kept overall costs higher than
would otherwise be the case. We expect, as these
non-recurring costs begin to roll off throughout 2019, that
investors will begin to see the impact of these efforts. We
also announced that we are working to refinance our existing credit
facility and that we have retained an investment banker to assist
in the process. While there is nothing to report as of yet,
the process is underway and we look forward to disclosing the
details when the refinancing is complete.”
“We are committed to enhancing unitholder value, demonstrating
compassion and dignity for our customers, and creating a rewarding
work environment for our employees. We look forward to
providing more details on the progress we have made when we report
our 2019 first quarter results next month, at which time we
anticipate hosting an investor conference call.”
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
filing the Annual Report on Form 10-K Report for the Year Ended
December 31, 2018 (the “2018 10-K”), announcement of first quarter
2019 results and operational improvements and expectations
regarding the next investor conference call, 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 if the Partnership is not able to
file the 2018 10-K today, 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, that the Partnership would be
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, that the Partnership would be in
default under its amended credit facility and, if the Partnership
fails to file the 2018 10-K within 120 days after notice from the
trustee under the indenture governing its senior notes, under the
indenture; the Partnership’s ability to obtain relief from its
creditors if it cannot file the 2018 10-K today 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 for the Year Ended December
31, 2017 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.
STONEMOR PARTNERS
L.P.CONSOLIDATED BALANCE SHEETS
(in thousands)
|
December 31, |
|
|
2018 |
|
|
2017 |
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
18,147 |
|
|
$ |
6,821 |
|
Accounts
receivable, net of allowance |
|
57,928 |
|
|
|
79,116 |
|
Prepaid
expenses |
|
4,475 |
|
|
|
4,580 |
|
Assets held
for sale |
|
757 |
|
|
|
1,016 |
|
Other
current assets |
|
17,009 |
|
|
|
21,453 |
|
Total
current assets |
|
98,316 |
|
|
|
112,986 |
|
|
|
|
|
|
|
|
|
Long-term accounts
receivable, net of allowance |
|
87,148 |
|
|
|
105,935 |
|
Cemetery property |
|
330,841 |
|
|
|
333,404 |
|
Property and equipment,
net of accumulated depreciation |
|
112,716 |
|
|
|
114,090 |
|
Merchandise trusts,
restricted, at fair value |
|
488,248 |
|
|
|
515,456 |
|
Perpetual care trusts,
restricted, at fair value |
|
330,562 |
|
|
|
339,928 |
|
Deferred selling and
obtaining costs |
|
112,660 |
|
|
|
126,398 |
|
Deferred tax assets |
|
86 |
|
|
|
84 |
|
Goodwill |
|
24,862 |
|
|
|
24,862 |
|
Intangible assets |
|
61,421 |
|
|
|
63,244 |
|
Other assets |
|
22,241 |
|
|
|
19,695 |
|
Total assets |
$ |
1,669,101 |
|
|
$ |
1,756,082 |
|
|
|
|
|
|
|
|
|
Liabilities and
Partners’ Capital |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities |
$ |
59,035 |
|
|
$ |
43,023 |
|
Accrued
interest |
|
1,967 |
|
|
|
1,781 |
|
Current
portion, long-term debt |
|
798 |
|
|
|
1,002 |
|
Total
current liabilities |
|
61,800 |
|
|
|
45,806 |
|
|
|
|
|
|
|
|
|
Long-term debt, net of
deferred financing costs |
|
320,248 |
|
|
|
317,693 |
|
Deferred revenues |
|
914,286 |
|
|
|
912,626 |
|
Deferred tax
liabilities |
|
6,675 |
|
|
|
9,638 |
|
Perpetual care trust
corpus |
|
330,562 |
|
|
|
339,928 |
|
Other long-term
liabilities |
|
42,108 |
|
|
|
38,695 |
|
Total liabilities |
|
1,675,679 |
|
|
|
1,664,386 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Partners’ (deficit)
capital: |
|
|
|
|
|
|
|
General
partner interest |
|
(4,008 |
) |
|
|
(2,959 |
) |
Common
limited partners’ interest |
|
(2,570 |
) |
|
|
94,655 |
|
Total
partners’ (deficit) capital |
|
(6,578 |
) |
|
|
91,696 |
|
Total liabilities and
partners’ capital |
$ |
1,669,101 |
|
|
$ |
1,756,082 |
|
|
|
|
|
|
|
|
|
STONEMOR PARTNERS
L.P.CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
|
Years Ended December 31, |
|
|
2018 |
|
|
2017 |
|
Revenues: |
|
|
|
|
|
|
|
Cemetery: |
|
|
|
|
|
|
|
Interments |
$ |
76,902 |
|
|
$ |
75,077 |
|
Merchandise |
|
75,412 |
|
|
|
75,602 |
|
Services |
|
67,278 |
|
|
|
70,704 |
|
Investment
and other |
|
42,343 |
|
|
|
55,313 |
|
Funeral
home: |
|
|
|
|
|
|
|
Merchandise |
|
25,652 |
|
|
|
27,767 |
|
Services |
|
28,539 |
|
|
|
33,764 |
|
Total
revenues |
|
316,126 |
|
|
|
338,227 |
|
Costs and
Expenses: |
|
|
|
|
|
|
|
Cost of
goods sold |
|
54,647 |
|
|
|
51,899 |
|
Cemetery
expense |
|
78,708 |
|
|
|
76,857 |
|
Selling
expense |
|
62,538 |
|
|
|
66,083 |
|
General and
administrative expense |
|
43,081 |
|
|
|
39,111 |
|
Corporate
overhead |
|
53,281 |
|
|
|
51,964 |
|
Depreciation
and amortization |
|
11,736 |
|
|
|
13,183 |
|
Funeral home
expenses: |
|
|
|
|
|
|
|
Merchandise |
|
6,579 |
|
|
|
7,131 |
|
Services |
|
22,159 |
|
|
|
22,929 |
|
Other |
|
15,787 |
|
|
|
19,743 |
|
Total costs
and expenses |
|
348,516 |
|
|
|
348,900 |
|
|
|
|
|
|
|
|
|
Gain on acquisitions and
divestitures |
|
691 |
|
|
|
858 |
|
Loss on goodwill
impairment |
|
— |
|
|
|
(45,574 |
) |
Other losses, net |
|
(12,195 |
) |
|
|
(2,045 |
) |
Operating loss |
|
(43,894 |
) |
|
|
(57,434 |
) |
Interest expense |
|
(30,602 |
) |
|
|
(27,345 |
) |
Loss from operations
before income taxes |
|
(74,496 |
) |
|
|
(84,779 |
) |
Income tax benefit |
|
1,797 |
|
|
|
9,621 |
|
Net loss |
$ |
(72,699 |
) |
|
$ |
(75,158 |
) |
General partner’s
interest |
$ |
(757 |
) |
|
$ |
(782 |
) |
Limited partners’
interest |
$ |
(71,942 |
) |
|
$ |
(74,376 |
) |
Net loss per limited
partner unit (basic and diluted) |
$ |
(1.90 |
) |
|
$ |
(1.96 |
) |
Weighted average number of
limited partners’ units outstanding (basic and diluted) |
|
37,959 |
|
|
|
37,948 |
|
|
|
|
|
|
|
|
|
STONEMOR PARTNERS
L.P.CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in thousands) |
Years Ended December 31, |
|
2018 |
|
|
2017 |
|
Cash Flows From
Operating Activities: |
|
|
|
|
|
|
|
Net
loss |
$ |
(72,699 |
) |
|
$ |
(75,158 |
) |
Adjustments to reconcile net loss to net cash provided by
operating activities: |
|
|
|
|
|
|
|
Cost of
lots sold |
|
7,808 |
|
|
|
10,525 |
|
Depreciation and amortization |
|
11,736 |
|
|
|
13,183 |
|
Provision
for cancellations |
|
7,358 |
|
|
|
6,244 |
|
Non-cash
compensation expense |
|
2,523 |
|
|
|
1,045 |
|
Non-cash
interest expense |
|
5,985 |
|
|
|
4,479 |
|
Gain on
acquisitions and divestitures |
|
(691 |
) |
|
|
(858 |
) |
Loss on
goodwill impairment |
|
— |
|
|
|
45,574 |
|
Other
losses, net |
|
12,195 |
|
|
|
1,843 |
|
Changes
in assets and liabilities: |
|
|
|
|
|
|
|
Accounts
receivable, net of allowance |
|
4,498 |
|
|
|
(17,074 |
) |
Merchandise trust fund |
|
4,295 |
|
|
|
46,695 |
|
Other
assets |
|
2,618 |
|
|
|
1,410 |
|
Deferred
selling and obtaining costs |
|
(4,819 |
) |
|
|
(9,508 |
) |
Deferred
revenues |
|
37,405 |
|
|
|
(9,049 |
) |
Deferred
taxes, net |
|
(2,591 |
) |
|
|
(10,439 |
) |
Payables
and other liabilities |
|
10,836 |
|
|
|
6,064 |
|
Net cash
provided by operating activities |
|
26,457 |
|
|
|
14,976 |
|
Cash Flows From
Investing Activities: |
|
|
|
|
|
|
|
Cash paid
for capital expenditures |
|
(12,172 |
) |
|
|
(10,789 |
) |
Cash paid
for acquisitions |
|
(1,667 |
) |
|
|
— |
|
Proceeds
from divestitures |
|
— |
|
|
|
1,241 |
|
Proceeds
from asset sales |
|
1,276 |
|
|
|
627 |
|
Net cash
used in investing activities |
|
(12,563 |
) |
|
|
(8,921 |
) |
Cash Flows From
Financing Activities: |
|
|
|
|
|
|
|
Cash
distributions |
|
— |
|
|
|
(24,545 |
) |
Proceeds
from borrowings |
|
29,880 |
|
|
|
103,292 |
|
Repayments of debt |
|
(28,493 |
) |
|
|
(88,951 |
) |
Cost of
financing activities |
|
(3,955 |
) |
|
|
(1,600 |
) |
Net cash
used in financing activities |
|
(2,568 |
) |
|
|
(11,804 |
) |
Net increase
(decrease) in cash and cash equivalents |
|
11,326 |
|
|
|
(5,749 |
) |
Cash and cash
equivalents—Beginning of
period |
|
6,821 |
|
|
|
12,570 |
|
Cash and cash
equivalents—End of
period |
$ |
18,147 |
|
|
$ |
6,821 |
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
|
|
|
Cash paid
during the period for interest |
$ |
25,606 |
|
|
$ |
22,901 |
|
Cash paid
during the period for income taxes |
$ |
1,725 |
|
|
$ |
2,756 |
|
Non-cash
investing and financing activities: |
|
|
|
|
|
|
|
Acquisition of assets by financing |
$ |
2,673 |
|
|
$ |
2,705 |
|
Classification of assets as held for sale |
$ |
543 |
|
|
$ |
1,016 |
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL OPERATING DATA
|
Years Ended December 31, |
|
SUPPLEMENTAL
DATA: |
2018 |
|
|
2017 |
|
Interments
performed |
|
54,773 |
|
|
|
54,109 |
|
Net interment rights
sold (1) |
|
|
|
|
|
|
|
Lots |
|
27,044 |
|
|
|
28,235 |
|
Mausoleum
crypts (including pre-construction) |
|
1,334 |
|
|
|
1,926 |
|
Niches |
|
1,685 |
|
|
|
1,857 |
|
Total net
interment rights sold (1) |
|
30,063 |
|
|
|
32,018 |
|
Number of pre-need
cemetery contracts written |
|
39,989 |
|
|
|
44,894 |
|
Number of at-need
cemetery contracts written |
|
57,664 |
|
|
|
59,387 |
|
Number of
cemetery contracts written |
|
97,653 |
|
|
|
104,281 |
|
|
|
|
|
|
|
|
|
______________________________
- Net of cancellations. Sales of double-depth burial lots are
counted as two sales
CONTACT: |
|
John
McNamaraDirector - Investor RelationsStoneMor Partners L.P.(215)
826-2945 |
|
|
|
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