StoneMor Inc. (NYSE: STON) (“StoneMor” or the “Company”), a leading
owner and operator of cemeteries and funeral homes, today reported
operating and financial results for the first quarter ended March
31, 2020. Investors are encouraged to read the Company's quarterly
report on Form 10-Q when it is filed with the Securities and
Exchange Commission (the “SEC”), which will contain additional
details, and will be posted at www.stonemor.com.
FIRST QUARTER FINANCIAL
PERFORMANCE
- Revenues for the first quarter were $71.2 million compared to
$71.5 million in the first quarter in the prior year.
- Cemetery segment operating income for the first quarter was
$5.2 million compared to $2.8 million in the first quarter in the
prior year, representing an increase of $2.4 million.
- Funeral home segment operating income for the first quarter was
$2.0 million compared to $1.5 million in the first quarter in the
prior year, representing an increase of $0.5 million.
- Corporate overhead expense decreased to $8.5 million in the
first quarter compared to $13.4 million in the first quarter in the
prior year.
- First quarter net income was $9.0 million compared to net loss
of $22.5 million in the first quarter in the prior year. First
quarter net income in 2020 included a gain on sale of businesses of
$24.1 million.
- Excluding the gain on sale of business of $24.1 million, the
operating loss was $1.5 million compared to a loss of $9.4 million
in the first quarter in the prior year, representing an improvement
of $7.9 million.
Joe Redling, StoneMor’s President and Chief Executive Officer
said, “With the completion of the first quarter, we are continuing
to see the impact of our company-wide cost reduction initiatives,
particularly as it relates to our corporate overhead spend. Those
efforts produced significant improvement in our operating results
this quarter. We continue to pursue and execute on our strategic
initiatives, both those previously planned and additional measures
in response to COVID-19. During April, we made the difficult
decision to reduce our corporate team by another 15%, as well as
execute upon a temporary compensation reduction for the corporate
executive team and our Board of Directors.”
“I am proud of the way our employees are responding to the
challenges associated with the COVID-19 pandemic. We have taken
appropriate steps to protect the health and safety of our employees
and the families we serve. COVID-19 continues to create personal
and economic disruption at a global level. While this has been a
challenging time, our team remains highly productive and committed
to servicing our communities at the highest level. The initial
impact – particularly in terms of pre-need and at-need sales
declines – have been countered with successful adoption of new
processes to better serve our customers in this changing
environment. Our ability to execute on these initiatives in this
challenging environment is a testament to the character and resolve
of our greatest organizational asset – our people.”
LIQUIDITY UPDATE
As of March 31, 2020, the Company had $47.5 million of
cash, including $20.4 million of restricted cash, and $343.6
million of total debt.
“The Company responded quickly to the challenges of COVID-19
and, combined with the on-going strategic initiatives, StoneMor
produced a first quarter that generated an adjusted EBITDA of $0.9
million and an adjusted operating cash flow of $1.7 million
(operating cash flow before cash interest expense),” said Jeff
DiGiovanni, StoneMor’s Senior Vice President and Chief Financial
Officer. “In addition, StoneMor reduced its debt by nearly $25
million in the first quarter thanks to the successful execution of
its divestiture strategy. We are focused on our cash flow through
effective management of our operations and related treasury
functions, our corporate cost reduction initiatives and continuing
to evaluate opportunities to further reduce debt through additional
divestitures.”
CONFERENCE CALL
INFORMATION
StoneMor will conduct a conference call to discuss this news
release today, May 14, 2020 at 4:30 p.m. Eastern Time. The
conference call can be accessed by calling (877) 256-6190. No
reservation number is necessary. StoneMor will also host a live
webcast of this conference call. Investors may access the live
webcast via the Investors page of the StoneMor website
www.stonemor.com under Events & Presentations.
About StoneMor Inc.
StoneMor Inc., headquartered in Trevose, Pennsylvania, is an
owner and operator of cemeteries and funeral homes in the United
States, with 319 cemeteries and 88 funeral homes in 27 states and
Puerto Rico.
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 Inc. please visit StoneMor’s website, and the investors
section, at http://www.stonemor.com.
CONTACTInvestor RelationsStoneMor Inc.(215)
826-4438
Cautionary Note Regarding Forward-Looking
Statements
Certain statements contained in this press release, including,
but not limited to, information regarding continued implementation
of the Company’s performance and cost structure improvement efforts
and the anticipated financial impact thereof, 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 uncertainties associated with
current business and economic disruptions resulting from the recent
coronavirus pandemic, including the effect of government
regulations issued in connection therewith, its ability to
identify, and negotiate acceptable agreements with, purchasers of
additional properties, 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 and service its debt, as well as with
StoneMor’s ability to maintain an effective system of internal
control over financial reporting and disclosure controls and
procedures.
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 Quarterly
Reports on Form 10-Q 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.
Non-GAAP Financial
Measures
This release includes certain non-GAAP financial measures,
including EBITDA and adjusted EBITDA, adjusted operating cash flow
and adjusted operating income, which are intended as supplemental
measures of the Company’s performance that are not required by or
presented in accordance with GAAP. All business results presented
in this release are not prepared in accordance with Article 11 of
Regulation S-X.
Management uses these non-GAAP measures internally to evaluate
and manage the Company’s operations and to better understand its
business because they facilitate a comparative assessment of the
Company's operating performance relative to its performance based
on results calculated under GAAP. These non-GAAP measures also
isolate the effects of some items that vary from period to period
without any correlation to core operating performance and eliminate
certain charges that management believes do not reflect the
Company's operations and underlying operational performance. The
compensation committee of the Company’s board of directors also
uses certain of these measures to evaluate management's performance
and set its compensation. The Company believes that these non-GAAP
measures also provide useful information to investors regarding
certain financial and business trends relating to the Company’s
financial condition and operating results facilitates an evaluation
of the financial performance of the Company and its operations on a
consistent basis. Providing this information therefore allows
investors to make independent assessments of the Company’s
financial performance, results of operation and trends while
viewing the information through the eyes of management.
These non-GAAP measures are subject to limitations. The non-GAAP
measures presented in this release may not be comparable to
similarly titled measures used by other companies because other
companies may not calculate one or more in the same manner.
Additionally, the non-GAAP performance measures exclude significant
expenses and income that are required by GAAP to be recorded in the
Company’s financial statements; do not reflect changes in, or cash
requirements for, working capital needs; and do not reflect
interest expense, or the requirements necessary to service interest
or principal payments on debt. Further, our historical adjusted
results are not intended to project our adjusted results of
operations or financial position for any future period. To
compensate for these limitations, management presents and considers
these non-GAAP measures in conjunction with the Company’s GAAP
results; no non-GAAP measure should be considered in isolation from
or as alternatives to net income, earnings per share or any other
measure determined in accordance with GAAP. Readers should review
the reconciliations included below, and should not rely on any
single financial measure to evaluate the Company’s business.
A reconciliation of each non-GAAP measure to the most directly
comparable GAAP measure is set forth below.
ADJUSTED OPERATING
INCOME(in thousands)
|
|
Three Months Ended |
|
|
|
March 31, 2020 |
|
|
December 31, 2019 |
|
|
March 31, 2019 |
|
Operating income (loss) |
|
$ |
22,575 |
|
|
$ |
(15,758 |
) |
|
$ |
(9,363 |
) |
Less: Gain on sale of businesses |
|
|
24,086 |
|
|
|
— |
|
|
|
— |
|
Less: Other (losses), net |
|
|
— |
|
|
|
(4,548 |
) |
|
|
— |
|
Adjusted operating loss |
|
$ |
(1,511 |
) |
|
$ |
(11,210 |
) |
|
$ |
(9,363 |
) |
EBITDA AND ADJUSTED
EBITDA(in thousands)
|
|
Three Months Ended |
|
|
|
March 31, 2020 |
|
|
December 31, 2019 |
|
|
March 31, 2019 |
|
Net income (loss) |
|
$ |
9,003 |
|
|
$ |
(52,358 |
) |
|
$ |
(22,534 |
) |
Income tax expense |
|
|
1,288 |
|
|
|
23,363 |
|
|
|
— |
|
Interest expense |
|
|
12,284 |
|
|
|
13,237 |
|
|
|
13,171 |
|
Depreciation and amortization |
|
|
2,459 |
|
|
|
2,662 |
|
|
|
2,757 |
|
EBITDA |
|
|
25,034 |
|
|
|
(13,096 |
) |
|
|
(6,606 |
) |
Less: Gain on sale of businesses |
|
|
24,086 |
|
|
|
— |
|
|
|
— |
|
Less: Other (losses), net |
|
|
— |
|
|
|
(4,548 |
) |
|
|
— |
|
Adjusted EBITDA |
|
$ |
948 |
|
|
$ |
(8,548 |
) |
|
$ |
(6,606 |
) |
ADJUSTED CASH FROM
OPERATIONS(in thousands)
|
|
Three Months Ended March 31, |
|
|
|
2020 |
|
|
2019 |
|
Cash used in operations |
|
$ |
(5,238 |
) |
|
$ |
(13,103 |
) |
Add: Interest expense |
|
|
12,284 |
|
|
|
13,171 |
|
Less: Non-cash interest |
|
|
(5,260 |
) |
|
|
(4,429 |
) |
Adjusted cash from
operations |
|
$ |
1,786 |
|
|
$ |
(4,361 |
) |
STONEMOR
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)(in thousands, except share and
per share data)
|
|
March 31, |
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents, excluding restricted cash |
|
$ |
27,066 |
|
|
$ |
34,867 |
|
Restricted cash |
|
|
20,400 |
|
|
|
21,900 |
|
Accounts receivable, net of allowance |
|
|
55,516 |
|
|
|
55,794 |
|
Prepaid expenses |
|
|
6,649 |
|
|
|
4,778 |
|
Assets held for sale |
|
|
77,850 |
|
|
|
23,858 |
|
Other current assets |
|
|
13,593 |
|
|
|
17,142 |
|
Total current assets |
|
|
201,074 |
|
|
|
158,339 |
|
|
|
|
|
|
|
|
|
|
Long-term accounts receivable,
net of allowance |
|
|
71,474 |
|
|
|
75,549 |
|
Cemetery property |
|
|
303,628 |
|
|
|
320,605 |
|
Property and equipment, net of
accumulated depreciation |
|
|
93,472 |
|
|
|
103,400 |
|
Merchandise trusts, restricted,
at fair value |
|
|
437,638 |
|
|
|
517,192 |
|
Perpetual care trusts,
restricted, at fair value |
|
|
284,832 |
|
|
|
343,619 |
|
Deferred selling and obtaining
costs |
|
|
113,611 |
|
|
|
114,944 |
|
Deferred tax assets |
|
|
87 |
|
|
|
81 |
|
Intangible assets |
|
|
55,942 |
|
|
|
56,246 |
|
Other assets |
|
|
26,661 |
|
|
|
29,393 |
|
Total assets |
|
$ |
1,588,419 |
|
|
$ |
1,719,368 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Owners'
Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
49,941 |
|
|
$ |
55,134 |
|
Liabilities held for sale |
|
|
52,437 |
|
|
|
20,668 |
|
Accrued interest |
|
|
117 |
|
|
|
125 |
|
Current portion, long-term debt |
|
|
2,139 |
|
|
|
374 |
|
Total current liabilities |
|
|
104,634 |
|
|
|
76,301 |
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of deferred
financing costs |
|
|
341,443 |
|
|
|
367,963 |
|
Deferred revenues |
|
|
867,407 |
|
|
|
949,375 |
|
Deferred tax liabilities |
|
|
35,847 |
|
|
|
34,613 |
|
Perpetual care trust corpus |
|
|
284,832 |
|
|
|
343,619 |
|
Other long-term liabilities |
|
|
47,368 |
|
|
|
49,987 |
|
Total liabilities |
|
|
1,681,531 |
|
|
|
1,821,858 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners' equity: |
|
|
|
|
|
|
|
|
Common stock, par value $0.01 per share, 200,000,000 shares
authorized, 94,477,102 and 94,447,356 shares issued and
outstanding, respectively |
|
|
944 |
|
|
|
944 |
|
Paid-in capital in excess of par value |
|
|
(103,059 |
) |
|
|
(103,434 |
) |
Retained earnings |
|
|
9,003 |
|
|
|
— |
|
Total owners' equity |
|
|
(93,112 |
) |
|
|
(102,490 |
) |
Total liabilities and owners'
equity |
|
$ |
1,588,419 |
|
|
$ |
1,719,368 |
|
STONEMOR
INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED)(in thousands, except per
share and per unit data)
|
|
Three Months Ended March 31, |
|
|
|
2020 |
|
|
2019 |
|
Revenues: |
|
|
|
|
|
|
|
|
Cemetery: |
|
|
|
|
|
|
|
|
Interments |
|
$ |
15,954 |
|
|
$ |
15,944 |
|
Merchandise |
|
|
15,166 |
|
|
|
16,541 |
|
Services |
|
|
15,560 |
|
|
|
15,967 |
|
Investment and other |
|
|
11,386 |
|
|
|
9,458 |
|
Funeral home: |
|
|
|
|
|
|
|
|
Merchandise |
|
|
6,568 |
|
|
|
6,275 |
|
Services |
|
|
6,611 |
|
|
|
7,284 |
|
Total revenues |
|
|
71,245 |
|
|
|
71,469 |
|
Costs and
Expenses: |
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
9,925 |
|
|
|
9,743 |
|
Cemetery expense |
|
|
17,848 |
|
|
|
17,247 |
|
Selling expense |
|
|
13,049 |
|
|
|
14,733 |
|
General and administrative expense |
|
|
10,316 |
|
|
|
11,439 |
|
Corporate overhead |
|
|
8,501 |
|
|
|
13,413 |
|
Depreciation and amortization |
|
|
2,459 |
|
|
|
2,757 |
|
Funeral home expenses: |
|
|
|
|
|
|
|
|
Merchandise |
|
|
1,776 |
|
|
|
2,317 |
|
Services |
|
|
5,397 |
|
|
|
5,553 |
|
Other |
|
|
3,485 |
|
|
|
3,630 |
|
Total costs and expenses |
|
|
72,756 |
|
|
|
80,832 |
|
|
|
|
|
|
|
|
|
|
Gain on sale of businesses |
|
|
24,086 |
|
|
|
— |
|
Operating income (loss) |
|
|
22,575 |
|
|
|
(9,363 |
) |
Interest expense |
|
|
(12,284 |
) |
|
|
(13,171 |
) |
Income (loss) from operations
before income taxes |
|
|
10,291 |
|
|
|
(22,534 |
) |
Income tax expense |
|
|
(1,288 |
) |
|
|
— |
|
Net income (loss) |
|
$ |
9,003 |
|
|
$ |
(22,534 |
) |
Net income (loss) per common
share (basic)(1) |
|
$ |
0.10 |
|
|
$ |
(0.59 |
) |
Net income (loss) per common
share (diluted)(1) |
|
$ |
0.10 |
|
|
$ |
(0.59 |
) |
Weighted average number of common
shares outstanding - basic(2) |
|
|
94,472 |
|
|
|
38,031 |
|
Weighted average number of common
shares outstanding - diluted(2) |
|
|
94,472 |
|
|
|
38,031 |
|
STONEMOR
INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (UNAUDITED)
(in
thousands)
|
|
Three Months Ended March 31, |
|
|
2020 |
|
|
2019 |
|
|
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
9,003 |
|
|
$ |
(22,534 |
) |
|
Adjustments to reconcile net income (loss) to net cash used in
operating activities: |
|
|
|
|
|
|
|
|
|
Cost of lots sold |
|
|
1,296 |
|
|
|
1,522 |
|
|
Depreciation and amortization |
|
|
2,459 |
|
|
|
2,757 |
|
|
Provision for bad debt |
|
|
1,144 |
|
|
|
2,042 |
|
|
Non-cash compensation expense |
|
|
375 |
|
|
|
277 |
|
|
Non-cash interest expense |
|
|
5,260 |
|
|
|
4,429 |
|
|
Gain on sale of businesses |
|
|
(24,086 |
) |
|
|
— |
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable, net of allowance |
|
|
(1,595 |
) |
|
|
(1,965 |
) |
|
Merchandise trust fund |
|
|
(1,829 |
) |
|
|
(5,990 |
) |
|
Other assets |
|
|
2,338 |
|
|
|
(4,382 |
) |
|
Deferred selling and obtaining costs |
|
|
(1,178 |
) |
|
|
17 |
|
|
Deferred revenues |
|
|
6,434 |
|
|
|
8,584 |
|
|
Deferred taxes, net |
|
|
1,228 |
|
|
|
— |
|
|
Payables and other liabilities |
|
|
(6,087 |
) |
|
|
2,140 |
|
|
Net cash used in operating activities |
|
|
(5,238 |
) |
|
|
(13,103 |
) |
|
Cash Flows From
Investing Activities: |
|
|
|
|
|
|
|
|
|
Cash paid for capital expenditures |
|
|
(2,073 |
) |
|
|
(1,903 |
) |
|
Proceeds from divestitures |
|
|
28,190 |
|
|
|
— |
|
|
Net cash provided by (used in) investing activities |
|
|
26,117 |
|
|
|
(1,903 |
) |
|
Cash Flows From
Financing Activities: |
|
|
|
|
|
|
|
|
|
Proceeds from borrowings |
|
|
2,639 |
|
|
|
24,562 |
|
|
Repayments of debt |
|
|
(32,181 |
) |
|
|
(253 |
) |
|
Principal payment on finance leases |
|
|
(425 |
) |
|
|
(366 |
) |
|
Cost of financing activities |
|
|
(213 |
) |
|
|
(2,636 |
) |
|
Net cash (used in) provided by financing activities |
|
|
(30,180 |
) |
|
|
21,307 |
|
|
Net (decrease)
increase in cash, cash equivalents and restricted
cash |
|
|
(9,301 |
) |
|
|
6,301 |
|
|
Cash, cash equivalents
and restricted cash—Beginning of period |
|
|
56,767 |
|
|
|
18,147 |
|
|
Cash, cash equivalents
and restricted cash—End of period |
|
$ |
47,466 |
|
|
$ |
24,448 |
|
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
Cash paid during the period for interest |
|
$ |
7,015 |
|
|
$ |
2,842 |
|
|
Cash paid during the period for income taxes |
|
|
— |
|
|
|
41 |
|
|
Cash paid for amounts
included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
|
Operating cash flows from operating leases |
|
$ |
848 |
|
|
$ |
932 |
|
|
Operating cash flows from finance leases |
|
|
116 |
|
|
|
116 |
|
|
Financing cash flows from finance leases |
|
|
425 |
|
|
|
366 |
|
|
Non-cash investing and
financing activities: |
|
|
|
|
|
|
|
|
|
Acquisition of assets by financing |
|
$ |
— |
|
|
$ |
1,314 |
|
|
Net transfers within assets held for sale |
|
|
80,822 |
|
|
|
— |
|
|
Accrued paid-in-kind interest on Senior Secured Notes |
|
|
3,615 |
|
|
|
— |
|
|
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