Improvements to sales revenue impacted by
increased corporate overhead and one-time non-operating
expenses
StoneMor Partners L.P. (NYSE:STON)
(“StoneMor” or the “Partnership”) today announced
it has reported financial results for the second quarter
2017. 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.
Revenues were $86.0 million for the three months ended June 30,
2017, an increase of $7.0 million over the prior year period.
The increase was primarily due to growth in the sales of cemetery
merchandise and services and an increase in investment and other
income. Revenues were $168.9 million for the six months ended
June 30, 2017, an increase of $11.7 million over the prior year
period. The increase was also due to growth in the sales of
cemetery merchandise and services, a reduction in the number
of contract cancellations, as well as revenues from properties
acquired in August 2016.
Year-to-date net cash from operating activities was $15.5
million, an increase of $7.0 million from $8.5 million during the
prior year period. This was primarily due to a $14.3 million
increase in working capital resulting from increased focus on
delivery of pre-need merchandise, offset by a $7.3 million decrease
in net income excluding non-cash items.
Second quarter net loss was $11.6 million, compared to a net
loss of $8.1 million for the prior year restated period. Net
loss was $20.1 million for the six months ended June 30, 2017
compared to a net loss of $14.5 million for the prior year restated
period. The increased loss for the three- and six- month
periods was driven largely by increases in corporate overhead costs
resulting from the Partnership's accounting review and delayed
filing of its Annual Report on Form 10-K for 2016, as well as
certain one-time non-operating expenses such as litigation costs
offset partially by reductions in funeral home costs.
Unitholder Distributions
As of June 30, 2017, the Partnership had $6.8 million of
cash and cash equivalents and $309.9 million of total debt,
including $142.9 million outstanding under its revolving credit
facility. Given the Partnership’s current level of cash and cash
equivalents, to preserve capital resources and liquidity, the Board
of Directors of the General Partner has concluded that it is not in
the best interest of unitholders to pay a second or third quarter
2017 distribution. The decision provides additional liquidity in
future periods and the Board expects to consider appropriate levels
of distributions if and as conditions improve.
Paul Grady, StoneMor's President and Chief Executive Officer,
commented, "This difficult but prudent decision has been made in
light of our commitment to live within the four corners of our
balance sheet and ensure the Partnership has sufficient liquidity
and funds available. We look forward to sharing information
about our operational and financial performance on our investor
conference call following the announcement of our third quarter
results.”
The Partnership noted that it is continuing to work to complete
the delayed filing of its report on Form 10-Q for the Third Quarter
ended September 30, 2017. Consistent with the terms of its
recently amended credit facility, the Partnership anticipates
filing its Third Quarter 10-Q on or before January 25, 2018.
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 316 cemeteries and 94 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 Third Quarter 10-Q, providing information about
unitholder distributions, and its next investor call are
forward-looking statements. Generally, the words “believe,” “may,”
“will,” “estimate,” “continue,” “anticipate,” “intend (including,
but not limited to StoneMor’s intent to maintain or increase its
distributions),” “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 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, pay distributions, and
increase its 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, risks and uncertainties related to the following:
the consequences of the Partnership’s delinquent filing of its
Third Quarter Form 10-Q, 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 Third Quarter 10-Q
is not filed within the specified period 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 Third Quarter 10-Q within the period prescribed by
the Partnership’s amended credit facility or 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; uncertainties associated
with future revenue and revenue growth; uncertainties associated
with the integration or anticipated benefits of recent acquisitions
or any future acquisitions; StoneMor’s ability to complete and fund
additional acquisitions; 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 implement a strategic
plan relating to achieving operating improvements, including
improving sales productivity and reversing negative trends in costs
of goods sold, certain expenses, cemetery billings and investment
income from trusts, strong cash flows, further deleveraging and
liquidity enhancement; 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.
STONEMOR PARTNERS
L.P.CONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands) |
|
|
June 30, 2017 |
|
December 31, 2016 |
Assets |
(Unaudited) |
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
6,826 |
|
|
$ |
12,570 |
|
Accounts
receivable, net of allowance |
77,127 |
|
|
77,253 |
|
Prepaid
expenses |
7,708 |
|
|
5,532 |
|
Assets
held for sale |
1,169 |
|
|
— |
|
Other
current assets |
22,883 |
|
|
23,466 |
|
Total
current assets |
115,713 |
|
|
118,821 |
|
|
|
|
|
Long-term accounts
receivable, net of allowance |
100,710 |
|
|
98,886 |
|
Cemetery property |
334,456 |
|
|
337,315 |
|
Property and equipment,
net of accumulated depreciation |
113,058 |
|
|
118,281 |
|
Merchandise trusts,
restricted, at fair value |
512,423 |
|
|
507,079 |
|
Perpetual care trusts,
restricted, at fair value |
337,684 |
|
|
333,780 |
|
Deferred selling and
obtaining costs |
123,177 |
|
|
116,890 |
|
Deferred tax
assets |
67 |
|
|
64 |
|
Goodwill |
70,436 |
|
|
70,436 |
|
Intangible assets |
64,266 |
|
|
65,438 |
|
Other assets |
20,660 |
|
|
20,023 |
|
Total assets |
$ |
1,792,650 |
|
|
$ |
1,787,013 |
|
|
|
|
|
Liabilities and
Partners' Capital |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable and accrued liabilities |
$ |
39,642 |
|
|
$ |
35,547 |
|
Accrued
interest |
1,815 |
|
|
1,571 |
|
Current
portion, long-term debt |
3,251 |
|
|
1,775 |
|
Total
current liabilities |
44,708 |
|
|
38,893 |
|
|
|
|
|
Long-term debt, net of
deferred financing costs |
306,696 |
|
|
300,351 |
|
Deferred revenues |
898,256 |
|
|
866,633 |
|
Deferred tax
liabilities |
21,004 |
|
|
20,058 |
|
Perpetual care trust
corpus |
337,684 |
|
|
333,780 |
|
Other long-term
liabilities |
38,148 |
|
|
36,944 |
|
Total liabilities |
1,646,496 |
|
|
1,596,659 |
|
Commitments and
contingencies |
|
|
|
Partners' capital
(deficit): |
|
|
|
General
partner interest |
(2,387 |
) |
|
(1,914 |
) |
Common
limited partners' interest |
148,541 |
|
|
192,268 |
|
Total
partners' capital |
146,154 |
|
|
190,354 |
|
Total liabilities and
partners' capital |
$ |
1,792,650 |
|
|
$ |
1,787,013 |
|
|
|
|
|
|
|
|
|
See accompanying notes to the Unaudited Condensed Consolidated
Financial Statements in the Quarterly Report on Form 10-Q for the
quarter ended June 30, 2017 (the "Second Quarter 10-Q").
STONEMOR PARTNERS
L.P.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)(in thousands, except per
unit data) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
(As restated)* |
|
|
|
(As restated)* |
Revenues: |
|
|
|
|
|
|
|
Cemetery: |
|
|
|
|
|
|
|
Merchandise |
$ |
40,895 |
|
|
$ |
38,420 |
|
|
$ |
78,898 |
|
|
$ |
72,110 |
|
Services |
16,340 |
|
|
13,733 |
|
|
31,289 |
|
|
27,452 |
|
Investment and other |
13,511 |
|
|
12,051 |
|
|
26,086 |
|
|
26,465 |
|
Funeral
home: |
|
|
|
|
|
|
|
Merchandise |
6,749 |
|
|
6,604 |
|
|
14,585 |
|
|
14,086 |
|
Services |
8,457 |
|
|
8,170 |
|
|
18,040 |
|
|
17,037 |
|
Total
revenues |
85,952 |
|
|
78,978 |
|
|
168,898 |
|
|
157,150 |
|
|
|
|
|
|
|
|
|
Costs and
Expenses: |
|
|
|
|
|
|
|
Cost of
goods sold |
12,043 |
|
|
12,042 |
|
|
25,562 |
|
|
22,762 |
|
Cemetery
expense |
20,124 |
|
|
17,485 |
|
|
36,821 |
|
|
33,341 |
|
Selling
expense |
15,623 |
|
|
16,575 |
|
|
32,082 |
|
|
31,308 |
|
General
and administrative expense |
9,753 |
|
|
8,993 |
|
|
19,710 |
|
|
18,197 |
|
Corporate
overhead |
16,067 |
|
|
9,737 |
|
|
27,171 |
|
|
20,048 |
|
Depreciation and amortization |
3,391 |
|
|
3,155 |
|
|
6,846 |
|
|
6,220 |
|
Funeral
home expenses: |
|
|
|
|
|
|
|
Merchandise |
1,623 |
|
|
1,835 |
|
|
3,383 |
|
|
3,984 |
|
Services |
5,454 |
|
|
6,156 |
|
|
11,153 |
|
|
12,611 |
|
Other |
4,987 |
|
|
4,746 |
|
|
10,332 |
|
|
9,886 |
|
Total
costs and expenses |
89,065 |
|
|
80,724 |
|
|
173,060 |
|
|
158,357 |
|
|
|
|
|
|
|
|
|
Other gains (losses),
net |
(1,071 |
) |
|
(191 |
) |
|
(1,071 |
) |
|
(1,073 |
) |
Interest expense |
(6,741 |
) |
|
(5,707 |
) |
|
(13,447 |
) |
|
(11,497 |
) |
Loss from continuing
operations before income taxes |
(10,925 |
) |
|
(7,644 |
) |
|
(18,680 |
) |
|
(13,777 |
) |
Income tax expense |
(657 |
) |
|
(500 |
) |
|
(1,463 |
) |
|
(760 |
) |
Net loss |
$ |
(11,582 |
) |
|
$ |
(8,144 |
) |
|
$ |
(20,143 |
) |
|
$ |
(14,537 |
) |
General partner's
interest |
$ |
(121 |
) |
|
$ |
1,091 |
|
|
$ |
(210 |
) |
|
$ |
2,192 |
|
Limited partners'
interest |
$ |
(11,461 |
) |
|
$ |
(9,235 |
) |
|
$ |
(19,933 |
) |
|
$ |
(16,729 |
) |
Net loss per limited
partner unit (basic and diluted) |
$ |
(0.30 |
) |
|
$ |
(0.27 |
) |
|
$ |
(0.53 |
) |
|
$ |
(0.50 |
) |
Weighted average number
of limited partners' units outstanding (basic and diluted) |
37,957 |
|
|
34,837 |
|
|
37,938 |
|
|
33,688 |
|
|
|
|
|
|
|
|
|
|
|
|
|
*Refer to Note 1 in Part I, Item 1 of the Second Quarter
10-Q for further detail regarding the restatement.
See accompanying notes to the Unaudited Condensed Consolidated
Financial Statements in the Second Quarter Form 10-Q
STONEMOR PARTNERS
L.P.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED)(in thousands) |
|
|
Six Months Ended June 30, |
|
2017 |
|
2016 |
|
|
|
(As restated)* |
Cash Flows From
Operating Activities: |
|
|
|
Net
loss |
$ |
(20,143 |
) |
|
$ |
(14,537 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
Cost of
lots sold |
5,661 |
|
|
4,443 |
|
Depreciation and amortization |
6,846 |
|
|
6,220 |
|
Provision
for cancellations |
2,682 |
|
|
6,324 |
|
Non-cash
compensation expense |
488 |
|
|
819 |
|
Non-cash
interest expense |
2,195 |
|
|
1,534 |
|
Other
(gains) losses, net |
872 |
|
|
1,073 |
|
Changes
in assets and liabilities: |
|
|
|
Accounts
receivable, net of allowance |
(4,946 |
) |
|
(12,191 |
) |
Merchandise trust fund |
43,915 |
|
|
(10,517 |
) |
Other
assets |
(3,125 |
) |
|
(2,715 |
) |
Deferred
selling and obtaining costs |
(6,287 |
) |
|
(6,519 |
) |
Deferred
revenues |
(17,633 |
) |
|
30,579 |
|
Deferred
taxes, net |
944 |
|
|
81 |
|
Payables
and other liabilities |
4,031 |
|
|
3,865 |
|
Net cash
provided by operating activities |
15,500 |
|
|
8,459 |
|
Cash Flows From
Investing Activities: |
|
|
|
Cash paid
for capital expenditures |
(3,311 |
) |
|
(7,504 |
) |
Cash paid
for acquisitions |
— |
|
|
(1,500 |
) |
Proceeds
from divestitures |
451 |
|
|
— |
|
Proceeds
from asset sales |
401 |
|
|
1,848 |
|
Net cash
used in investing activities |
(2,459 |
) |
|
(7,156 |
) |
Cash Flows From
Financing Activities: |
|
|
|
Cash
distributions |
(24,545 |
) |
|
(44,703 |
) |
Proceeds
from borrowings |
62,792 |
|
|
38,744 |
|
Repayments of debt |
(56,256 |
) |
|
(75,247 |
) |
Proceeds
from issuance of common units, net of costs |
— |
|
|
74,537 |
|
Cost of
financing activities |
(776 |
) |
|
(351 |
) |
Net cash
used in financing activities |
(18,785 |
) |
|
(7,020 |
) |
Net decrease in
cash and cash equivalents |
(5,744 |
) |
|
(5,717 |
) |
Cash and cash
equivalents - Beginning of period |
12,570 |
|
|
15,153 |
|
Cash and cash
equivalents - End of period |
$ |
6,826 |
|
|
$ |
9,436 |
|
Supplemental
disclosure of cash flow information: |
|
|
|
Cash paid
during the period for interest |
$ |
11,118 |
|
|
$ |
9,994 |
|
Cash paid
during the period for income taxes |
$ |
2,630 |
|
|
$ |
2,325 |
|
Non-cash
investing and financing activities: |
|
|
|
Acquisition of assets by financing |
$ |
1,384 |
|
|
$ |
137 |
|
Classification of assets as held for sale |
$ |
1,169 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
*Refer to Note 1 in Part I, Item 1 of the Second
Quarter 10-Q for further detail regarding the
restatement.
See accompanying notes to the Unaudited Condensed Consolidated
Financial Statements in the Second Quarter Form 10-Q
CONTACT: |
|
John
McNamaraDirector - Investor RelationsStoneMor Partners L.P.(215)
826-2945 |
|
|
|
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