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 second quarter ended June 30, 2021. 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.

SECOND QUARTER FINANCIAL PERFORMANCE

  • Revenues for the second quarter were $83.0 million compared to $66.6 million in the second quarter in the prior year. Six-month revenues were $161.3 million compared to $131.7 million in the prior year period. 
    • Cemetery segment operating income for the second quarter was $14.7 million compared to $7.4 million in the second quarter in the prior year, representing an increase of $7.2 million. Six-month cemetery segment operating profit was $26.3 million compared to $12.6 million in the prior year period, representing an increase of $13.7 million.
    • Funeral home segment operating income for the second quarter was $1.2 million compared to $1.0 million in the second quarter in the prior year, representing an increase of $0.2 million. Six-month funeral home segment operating profit was $2.8 million compared to $2.4 million in the prior year period, representing an increase of $0.4 million.
    • Corporate overhead expense increased to $9.5 million in the second quarter compared to $8.8 million in the second quarter in the prior year. Six-month corporate overhead expense increased to $19.1 million compared to $17.3 million in the prior year period.
  • Second quarter operating income was $4.1 million, compared to an operating loss of $0.6 million in the second quarter in the prior year.
  • Second quarter net loss from continuing operations was $36.2 million compared to $8.8 million in the second quarter in the prior year.
  • Second quarter adjusted EBITDA was $32.1 million compared to $15.1 million in the second quarter in the prior year.

Joe Redling, StoneMor’s President and Chief Executive Officer said, “The second quarter continued to build upon the momentum from the second half of 2020 and the first quarter of 2021, with top-line revenue growth of 25% and more than a $17 million increase in our adjusted EBITDA year-over-year. We continue to deliver strong cemetery sales production results, with 26% growth in pre-need cemetery sales production.”

LIQUIDITY UPDATE

As of June 30, 2021, the Company had $107.0 million of cash, including $16.6 million of restricted cash, and $391.4 million of total debt.

“We have made great progress towards our previously announced guidance targets for organic growth in our trusts and unlevered free cash flow,” said Jeff DiGiovanni, StoneMor’s Senior Vice President and Chief Financial Officer. “For the six-months ended June 30, 2021, we generated $58 million in trust growth and $26 million in unlevered free cash flow, against $50 million and $40 million annual targets, respectively. This is a testament to the success of our transformation plan and the hard-work of every member of the StoneMor team.”

Redling added, “While the successful execution of our turnaround strategy was an important step, it was only the first phase of the StoneMor transformation. We are on the right trajectory and have the tools and team in place to execute on the next phase of our transformation – which is already in full force – a continued focus on growth.”

CONFERENCE CALL INFORMATION

StoneMor will conduct a conference call to discuss this news release today, August 10, 2021 at 4:30 p.m. Eastern Time. The conference call can be accessed by calling (877) 221-6399. No reservation number is necessary; however, due to the on-going pandemic, it is advised that interested parties access the call-in number 5 to 10 minutes prior to the scheduled start time to avoid delays. 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 Bensalem, Pennsylvania, is an owner and operator of cemeteries and funeral homes in the United States, with 301 cemeteries and 70 funeral homes in 24 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 transformation, 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 ongoing coronavirus pandemic, including the effect of government regulations issued in connection therewith, its ability to identify, and negotiate acceptable agreements with, sellers 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 adjusted EBITDA and unlevered free cash flow, 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, Nominating and Governance 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 and facilitate 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 an alternative 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 (in thousands):

EBITDA AND ADJUSTED EBITDA

    Three Months Ended June 30,     Six Months Ended June 30,  
    2021     2020     2021     2020  
Net loss from continuing operations   $ (36,245 )   $ (8,798 )   $ (41,458 )   $ (23,570 )
Income tax benefit     (9,736 )     (3,492 )     (11,412 )     (2,204 )
Interest expense     9,977       11,729       20,450       23,082  
Depreciation and amortization     2,027       2,293       4,129       4,607  
EBITDA     (33,977 )     1,732       (28,291 )     1,915  
Loss on debt extinguishment     40,128             40,128        
Loss on sale of business and other impairments     2,220             2,220        
Other gains     (69 )           (69 )      
Cost of lots sold     2,257       1,547       3,651       2,843  
Non-cash stock compensation     508       352       1,013       727  
Change in deferred revenues     23,054       13,229       45,652       19,663  
Change in deferred selling and obtaining costs     (2,027 )     (1,790 )     (4,229 )     (2,968 )
Adjusted EBITDA   $ 32,094     $ 15,070     $ 60,075     $ 22,180  

UNLEVERED CASH PROVIDED BY OPERATING ACTIVITIES AND UNLEVERED FREE CASH FLOW

    Three Months Ended June 30,     Six Months Ended June 30,  
    2021     2020     2021     2020  
Net cash (used in) provided by operating activities   $ (6,198 )   $ 6,439     $ (1,567 )   $ 1,201  
Cash interest payments     22,502       6,660       31,141       13,675  
Unlevered cash provided by operating activities     16,304       13,099       29,574       14,876  
Less: cash paid for capital expenditures     1,587       1,718       3,361       3,791  
Unlevered free cash flow   $ 14,717     $ 11,381     $ 26,213     $ 11,085  

STONEMOR INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)(in thousands, except share and per share data)

    June 30,     December 31,  
    2021     2020  
Assets                
Current assets:                
Cash and cash equivalents, excluding restricted cash   $ 90,398     $ 39,244  
Restricted cash     16,575       20,846  
Accounts receivable, net of allowance     58,661       57,869  
Prepaid expenses     6,911       5,290  
Assets held for sale           28,575  
Other current assets     15,178       16,884  
Total current assets     187,723       168,708  
                 
Long-term accounts receivable, net of allowance     76,599       75,301  
Cemetery property     296,529       299,526  
Property and equipment, net of accumulated depreciation     80,392       83,496  
Merchandise trusts, restricted, at fair value     544,268       501,453  
Perpetual care trusts, restricted, at fair value     326,958       312,228  
Deferred selling and obtaining costs     120,229       116,900  
Deferred tax assets     7       9  
Intangible assets, net     54,559       55,094  
Other assets     24,924       22,248  
Total assets   $ 1,712,188     $ 1,634,963  
                 
Liabilities and Stockholders’ Equity                
Current liabilities:                
Accounts payable and accrued liabilities   $ 45,943     $ 51,718  
Liabilities held for sale           23,406  
Accrued interest     4,722       95  
Current portion, long-term debt     1,859       317  
Total current liabilities     52,524       75,536  
                 
Long-term debt, net of deferred financing costs     389,559       320,715  
Deferred revenues     1,013,653       949,164  
Deferred tax liabilities     18,127       29,652  
Perpetual care trust corpus     326,958       312,228  
Other long-term liabilities     42,776       40,081  
Total liabilities     1,843,597       1,727,376  
Commitments and contingencies                
                 
Stockholders’ equity:                
Common stock, par value $0.01 per share, 200,000,000 shares authorized, 117,964,891                
and 117,871,141 shares issued and outstanding, respectively     1,180       1,178  
Paid-in capital in excess of par value     (84,221 )     (85,232 )
Accumulated deficit     (48,368 )     (8,359 )
Total stockholders’ equity     (131,409 )     (92,413 )
Total liabilities and stockholders’ equity   $ 1,712,188     $ 1,634,963  
                 

STONEMOR INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)(in thousands, except per share data)

    Three Months Ended June 30,     Six Months Ended June 30,  
    2021     2020     2021     2020  
Revenues:                                
Cemetery:                                
Interments   $ 22,906     $ 16,467     $ 43,425     $ 31,226  
Merchandise     17,787       14,591       34,069       28,969  
Services     17,698       16,551       34,979       31,578  
Investment and other     13,737       9,254       26,635       19,887  
Funeral home:                                
Merchandise     5,449       4,825       11,422       10,211  
Services     5,404       4,913       10,764       9,832  
Total revenues     82,981       66,601       161,294       131,703  
Costs and Expenses:                                
Cost of goods sold     12,435       9,269       23,619       18,683  
Cemetery expense     18,090       17,229       36,251       34,177  
Selling expense     14,776       12,206       28,983       24,257  
General and administrative expense     10,650       9,130       20,843       18,645  
Corporate overhead     9,534       8,756       19,075       17,257  
Depreciation and amortization     2,027       2,293       4,129       4,607  
Funeral home expenses:                                
Merchandise     1,478       1,364       3,139       2,700  
Services     4,477       4,425       9,138       8,819  
Other     3,239       2,490       6,258       5,250  
Total costs and expenses     76,706       67,162       151,435       134,395  
                                 
Loss on sale of business and other impairments     (2,220 )           (2,220 )      
Other gains     69             69        
Operating income (loss)     4,124       (561 )     7,708       (2,692 )
Interest expense     (9,977 )     (11,729 )     (20,450 )     (23,082 )
Loss on debt extinguishment     (40,128 )           (40,128 )      
Loss from continuing operations before income taxes     (45,981 )     (12,290 )     (52,870 )     (25,774 )
Income tax benefit     9,736       3,492       11,412       2,204  
Net loss from continuing operations     (36,245 )     (8,798 )     (41,458 )     (23,570 )
Discontinued operations (Note 2):                                
Income from operations of discontinued businesses     860       4,884       1,449       28,659  
Income tax expense                        
Net income from discontinued operations     860       4,884       1,449       28,659  
Net (loss) income   $ (35,385 )   $ (3,914 )   $ (40,009 )   $ 5,089  
                                 
Net loss from continuing operations per common share (basic)   $ (0.31 )   $ (0.09 )   $ (0.35 )   $ (0.25 )
Net income from discontinued operations per common share (basic)     0.01       0.05       0.01       0.30  
Net (loss) income per common share (basic)   $ (0.30 )   $ (0.04 )   $ (0.34 )   $ 0.05  
                                 
Net loss from continuing operations per common share (diluted)   $ (0.31 )   $ (0.09 )   $ (0.35 )   $ (0.25 )
Net income from discontinued operations per common share (diluted)     0.01       0.05       0.01       0.30  
Net (loss) income per common share (diluted)   $ (0.30 )   $ (0.04 )   $ (0.34 )   $ 0.05  
Weighted average number of common shares outstanding - basic     117,956       97,572       117,933       96,022  
Weighted average number of common shares outstanding - diluted     117,956       97,572       117,933       96,022  
                                 

STONEMOR INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)

    Six Months Ended June 30,
    2021     2020  
Cash Flows From Operating Activities:                
Net (loss) income   $ (40,009 )   $ 5,089  
Adjustments to reconcile net (loss) income to net cash (used in) provided by                
operating activities:                
Cost of lots sold     3,651       2,843  
Depreciation and amortization     4,169       4,793  
Provision for bad debt     3,519       3,807  
Non-cash compensation expense     1,013       727  
Loss on debt extinguishment     40,128        
Non-cash interest expense     3,160       10,506  
Loss (gain) on sale of businesses     1,353       (28,951 )
Other gains     (69 )      
Payment-in-kind interest premium     (18,440 )      
Changes in assets and liabilities:                
Accounts receivable, net of allowance     (11,522 )     (8,234 )
Merchandise trust fund     (17,378 )     (2,242 )
Other assets     (2,942 )     4,746  
Deferred selling and obtaining costs     (4,229 )     (2,968 )
Deferred revenues     45,652       19,663  
Deferred taxes, net     (11,523 )     (2,340 )
Payables and other liabilities     1,900       (6,238 )
Net cash (used in) provided by operating activities     (1,567 )     1,201  
Cash Flows From Investing Activities:                
Cash paid for capital expenditures     (3,361 )     (3,791 )
Proceeds from divestitures     6,578       48,336  
Net cash provided by investing activities     3,217       44,545  
Cash Flows From Financing Activities:                
Proceeds from issuance of Series A Preferred Stock           8,800  
Proceeds from issuance of Common Stock           8,200  
Proceeds from borrowings     404,433       2,639  
Repayments of debt     (329,294 )     (53,572 )
Principal payment on finance leases     (796 )     (749 )
Early redemption premium     (18,478 )      
Cost of financing activities     (10,632 )     (4,236 )
Shares repurchased related to share-based compensation           (35 )
Net cash provided by (used in) financing activities     45,233       (38,953 )
Net increase in cash, cash equivalents and restricted cash     46,883       6,793  
Cash, cash equivalents and restricted cash—Beginning of period     60,090       56,767  
Cash, cash equivalents and restricted cash—End of period   $ 106,973     $ 63,560  
Supplemental disclosure of cash flow information:                
Cash paid during the period for interest   $ 31,141     $ 13,675  
Cash paid during the period for income taxes     1,989        
Cash paid for amounts included in the measurement of lease liabilities:                
Operating cash flows from operating leases   $ 961     $ 1,611  
Operating cash flows from finance leases     166       225  
Financing cash flows from finance leases     796       749  
Non-cash investing and financing activities:                
Accrued paid-in-kind interest on 2024 Notes   $     $ 7,077  

 

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