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 fourth quarter and year ended December 31, 2021.  Investors are encouraged to read the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2021 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.

FOURTH QUARTER AND FULL YEAR 2021 FINANCIAL PERFORMANCE

  • Revenues for the fourth quarter were $79.3 million compared to $74.9 million in in the fourth quarter in the prior year.  Full year revenues were $322.8 million compared to $279.5 million in the prior year period.
  • Cemetery segment operating income for the fourth quarter was $3.4 million compared to $10.9 million in the fourth quarter in the prior year, representing a decrease of $7.5 million. Full year cemetery segment operating income was $43.8 million compared to $35.0 million in the prior year period, representing an increase of $8.8 million.
  • Funeral home segment operating loss for the fourth quarter was $0.1 million compared to operating income of $1.5 million in the fourth quarter of the prior year, representing a decrease of $1.6 million.  Full year funeral home segment operating income was $3.7 million compared to $5.0 million in the prior year period, representing a decrease of $1.4 million.
  • Corporate overhead expense increased to $10.9 million in the fourth quarter compared to $9.0 million in the fourth quarter of the prior year.  Full year corporate overhead expense increased to $39.9 million compared to $36.0 million in the prior year period.
  • Fourth quarter operating loss was $8.2 million compared to operating income of $3.4 million in the fourth quarter of the prior year.  Full year operating income was $3.8 million, compared to $3.3 million in the prior year period.
  • Fourth quarter net loss from continuing operations was $10.8 million compared to $5.7 million in the fourth quarter of the prior year.  Full year net loss from continuing operations was $57.0 million compared to $37.3 million in the prior year period.  Full year 2021 net loss from continuing operations included a loss on debt extinguishment of $40.1 million.
  • Fourth quarter adjusted EBITDA was $6.6 million compared to $28.4 million in the fourth quarter of the prior year.  Full year adjusted EBITDA was $105.2 million compared to $74.9 million in the prior year period.  Fourth quarter and Full Year 2021 adjusted EBITDA included a one-time approximately $15 million net adjustment for realized trust losses.

Joe Redling, StoneMor’s President and Chief Executive Officer said, “2021 was a remarkable year for our team, as we continued to weather the impacts of COVID-19, while executing at a high-level in the continued implementation of our strategies and initiatives.  We continued to grow our sales and revenues, with top-line revenue growth of 15.5% for the year ended December 31, 2021 compared to the year ended December 31, 2020 and we have driven a $30.3 million improvement in our adjusted EBITDA year-over-year.”

LIQUIDITY UPDATE

As of December 31, 2021, the Company had $100.3 million of cash, including $16.4 million of restricted cash, and $390.2 million of total debt.

“During 2021, we exceeded our previously announced guidance target related to organic growth in our trust assets, while achieving 98.4% of our unlevered free cash flow target,” said Jeff DiGiovanni, StoneMor’s Senior Vice President and Chief Financial Officer. “During the fourth quarter of 2021, we accelerated our strategy of reinvesting into our existing locations in an attempt to improve their quality and drive future revenue opportunities.  That acceleration included $6.3 million of capital expenditure spend in the fourth quarter alone.  We were in a position to accelerate this spend because of the prior success of our transformation plan and the hard-work of every member of the StoneMor team.”

Redling added, “We are focused on the next phase of our transformation strategy – a commitment to strategic growth.  During the first quarter of 2022, we completed three separate acquisitions, including 4 new cemeteries and 3 new funeral homes located in Virginia, Florida and West Virginia for a total purchase price of $18 million. We continue to seek out additional opportunities that can deliver high quality operations at accretive multiples.”

CONFERENCE CALL INFORMATION

StoneMor will conduct a conference call to discuss this news release today, March 30, 2022 at 4:30 p.m. Eastern Time.  The conference call can be accessed by calling (888) 383-1618.  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 304 cemeteries and 72 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 including the Company’s pursuit of additional acquisition opportunities, 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, Field 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 December 31,     Year Ended December 31,  
  2021     2020     2021     2020  
Net loss from continuing operations $ (10,753 )   $ (5,677 )   $ (56,957 )   $ (37,341 )
Income tax benefit   (6,718 )     (1,522 )     (18,370 )     (4,855 )
Interest expense   9,268       10,585       38,974       45,537  
Depreciation and amortization   1,964       2,277       8,082       9,152  
Non-cash stock compensation   511       401       2,036       1,481  
Loss on debt extinguishment               40,128        
Loss on sale of business and other impairments   17             2,307        
Other losses (gains), net   480       (129 )     1,016       (129 )
Inventory impairment   1,850             1,850        
Cost of lots sold   1,205       1,450       6,351       5,796  
EBITDA   (2,176 )     7,385       25,417       19,641  
Change in deferred revenues   10,252       22,373       87,770       61,611  
Change in deferred selling and obtaining costs   (1,519 )     (1,402 )     (8,005 )     (6,376 )
Adjusted EBITDA $ 6,557     $ 28,356     $ 105,182     $ 74,876  

FIELD EBITDA

  Three Months Ended December 31,     Year Ended December 31,  
  2021     2020     2021     2020  
EBITDA $ (2,176 )   $ 7,385     $ 25,417     $ 19,641  
Corporate overhead   10,873       8,956       39,930       35,975  
Less: non-cash stock compensation   511       401       2,036       1,481  
Field EBITDA $ 8,186     $ 15,940     $ 63,311     $ 54,135  

UNLEVERED CASH PROVIDED BY OPERATING ACTIVITIES AND UNLEVERED FREE CASH FLOW

  Three Months Ended December 31,     Year Ended December 31,  
  2021     2020     2021     2020  
Net cash (used in) provided by operating activities $ (7,801 )   $ (2,425 )   $ 2,626     $ 1,360  
Cash interest payments   17,480       8,851       48,739       29,212  
Unlevered cash provided by operating activities   9,679       6,426       51,365       30,572  
Less: cash paid for capital expenditures   6,320       1,576       11,995       6,360  
Unlevered free cash flow $ 3,359     $ 4,850     $ 39,370     $ 24,212  

STONEMOR INC.

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

  December 31,     December 31,  
  2021     2020  
Assets          
Current assets:          
Cash and cash equivalents, excluding restricted cash $ 83,882     $ 39,244  
Restricted cash   16,415       20,846  
Accounts receivable, net of allowance   62,220       57,869  
Prepaid expenses   6,971       5,290  
Assets held for sale         28,575  
Other current assets   11,459       16,884  
Total current assets   180,947       168,708  
           
Long-term accounts receivable, net of allowance   72,309       75,301  
Cemetery property   296,758       299,526  
Property and equipment, net of accumulated depreciation   82,610       83,496  
Merchandise trusts, restricted, at fair value   567,853       501,453  
Perpetual care trusts, restricted, at fair value   339,138       312,228  
Deferred selling and obtaining costs   124,023       116,900  
Deferred tax assets   21       9  
Intangible assets, net   54,023       55,094  
Other assets   23,462       22,248  
Total assets $ 1,741,144     $ 1,634,963  
           
Liabilities and Stockholders' Equity          
Current liabilities:          
Accounts payable and accrued liabilities $ 44,704     $ 51,718  
Liabilities held for sale         23,406  
Accrued interest   4,344       95  
Current portion, long-term debt   762       317  
Total current liabilities   49,810       75,536  
           
Long-term debt, net of deferred financing costs   389,401       320,715  
Deferred revenues   1,056,260       949,164  
Deferred tax liabilities   10,878       29,652  
Perpetual care trust corpus   339,138       312,228  
Other long-term liabilities   41,399       40,081  
Total liabilities   1,886,886       1,727,376  
Commitments and contingencies          
           
Stockholders' equity:          
Common stock, par value $0.01 per share, 200,000,000 shares authorized, 118,290,600 and 117,871,141 shares issued and outstanding, respectively   1,182       1,178  
Paid-in capital in excess of par value   (83,286 )     (85,232 )
Accumulated deficit   (63,638 )     (8,359 )
Total stockholders' equity   (145,742 )     (92,413 )
Total liabilities and stockholders' equity $ 1,741,144     $ 1,634,963  

STONEMOR INC.

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

  Three Months Ended December 31,     Year Ended December 31,  
  2021     2020     2021     2020  
Revenues:                      
Cemetery:                      
Interments $ 20,355     $ 16,311     $ 85,734     $ 67,853  
Merchandise   17,091       15,682       68,095       60,600  
Services   18,095       18,045       70,314       65,701  
Investment and other   13,487       14,168       54,807       43,732  
Funeral home:                      
Merchandise   5,407       5,536       22,949       21,637  
Services   4,818       5,164       20,943       20,016  
Total revenues   79,253       74,906       322,842       279,539  
Costs and Expenses:                      
Cost of goods sold   17,104       11,812       51,746       40,119  
Cemetery expense   20,927       18,279       76,464       68,654  
Selling expense   15,528       12,292       58,962       49,668  
General and administrative expense   10,641       9,298       42,018       37,970  
Corporate overhead   10,873       8,956       39,930       35,975  
Depreciation and amortization   1,964       2,277       8,082       9,152  
Funeral home expenses:                      
Merchandise   1,478       1,602       6,285       5,872  
Services   5,271       4,398       19,283       18,078  
Other   3,173       2,735       12,974       10,839  
Total costs and expenses   86,959       71,649       315,744       276,327  
                       
Loss on sale of business and other impairments   (17 )           (2,307 )      
Other (losses) gains, net   (480 )     129       (1,016 )     129  
Operating (loss) income   (8,203 )     3,386       3,775       3,341  
Interest expense   (9,268 )     (10,585 )     (38,974 )     (45,537 )
Loss on debt extinguishment               (40,128 )      
Loss from continuing operations before income taxes   (17,471 )     (7,199 )     (75,327 )     (42,196 )
Income tax benefit   6,718       1,522       18,370       4,855  
Net loss from continuing operations   (10,753 )     (5,677 )     (56,957 )     (37,341 )
Discontinued operations:                      
Income from operations of discontinued businesses   332       86       1,678       28,982  
Income tax expense                      
Net income from discontinued operations   332       86       1,678       28,982  
Net loss $ (10,421 )   $ (5,591 )   $ (55,279 )   $ (8,359 )
                       
Net loss from continuing operations per common share (basic) $ (0.09 )   $ (0.05 )   $ (0.48 )   $ (0.35 )
Net income from discontinued operations per common share (basic)   0.00       0.00       0.01       0.27  
Net loss per common share (basic) $ (0.09 )   $ (0.05 )   $ (0.47 )   $ (0.08 )
                       
Net loss from continuing operations per common share (diluted) $ (0.09 )   $ (0.05 )   $ (0.48 )   $ (0.35 )
Net income from discontinued operations per common share (diluted)   0.00       0.00       0.01       0.27  
Net loss per common share (diluted) $ (0.09 )   $ (0.05 )   $ (0.47 )   $ (0.08 )
                       
Weighted average number of common shares outstanding - basic   118,123       117,862       117,998       106,991  
Weighted average number of common shares outstanding - diluted   118,123       117,955       117,998       106,991  

STONEMOR INC.

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

  Year Ended December 31,  
  2021     2020  
Cash Flows From Operating Activities:          
Net loss $ (55,279 )   $ (8,359 )
Adjustments to reconcile net loss to net cash provided by operating activities:          
Cost of lots sold   6,351       5,796  
Depreciation and amortization   8,122       9,395  
Provision for bad debt   6,354       6,275  
Non-cash compensation expense   2,036       1,481  
Loss on debt extinguishment   40,128        
Non-cash interest expense   4,341       17,884  
Loss (gain) on sale of businesses   1,486       (29,429 )
Other losses (gains), net   1,016       (129 )
Changes in assets and liabilities:          
Payment of paid-in-kind interest   (18,440 )      
Accounts receivable, net of allowance   (17,529 )     (20,453 )
Merchandise trust fund   (36,992 )     (25,988 )
Other assets   1,070       1,675  
Deferred selling and obtaining costs   (8,005 )     (6,376 )
Deferred revenues   87,770       61,611  
Deferred taxes, net   (18,786 )     (4,888 )
Payables and other liabilities   (1,017 )     (7,135 )
Net cash provided by operating activities   2,626       1,360  
Cash Flows From Investing Activities:          
Cash paid for capital expenditures   (11,995 )     (6,360 )
Proceeds from divestitures   6,979       57,343  
Net cash (used in) provided by investing activities   (5,016 )     50,983  
Cash Flows From Financing Activities:          
Proceeds from issuance of Series A Preferred Stock - related party         8,800  
Proceeds from issuance of Common Stock - related party         8,200  
Proceeds from borrowings   406,235       3,672  
Repayments of debt   (332,203 )     (63,915 )
Principal payment on finance leases   (1,401 )     (1,561 )
Early redemption premium   (18,478 )      
Cost of financing activities   (11,470 )     (4,170 )
Shares repurchased related to share-based compensation   (86 )     (46 )
Net cash provided by (used in) financing activities   42,597       (49,020 )
Net increase in cash, cash equivalents and restricted cash   40,207       3,323  
Cash, cash equivalents and restricted cash—Beginning of period   60,090       56,767  
Cash, cash equivalents and restricted cash—End of period $ 100,297     $ 60,090  
Supplemental disclosure of cash flow information:          
Cash paid during the period for interest $ 48,739     $ 29,212  
Cash paid during the period for income taxes   2,908       1,154  
Cash paid for amounts included in the measurement of lease liabilities:          
Operating cash flows from operating leases $ 1,917     $ 3,187  
Operating cash flows from finance leases   337       421  
Financing cash flows from finance leases   1,401       1,561  
Non-cash investing and financing activities:          
Right-of-use assets obtained in exchange for new operating lease liabilities $ 3,425     $ 467  
Right-of-use assets obtained in exchange for new finance lease liabilities   334       62  
Accrued paid-in-kind interest on 2024 Notes         10,572  
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