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StoneMor Inc. Reports Second Quarter Financial Results

·14-min read
StoneMor Partners L.P.
StoneMor Partners L.P.

BENSALEM, Pa., Aug. 11, 2022 (GLOBE NEWSWIRE) -- 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, 2022. 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 $80.0 million compared to $83.0 million in in the second quarter in the prior year. Six-month revenues were $161.0 million compared to $161.3 million in the prior year period.

    • Cemetery segment operating income for the second quarter was $5.3 million compared to $14.7 million in the second quarter in the prior year, representing a decrease of $9.3 million. Six-month cemetery segment operating income was $13.4 million compared to $26.3 million in the prior year period, representing a decrease of $13.0 million.

    • Funeral home segment operating loss for the second quarter was $0.1 million compared to operating income of $1.2 million in the second quarter in the prior year, representing a decrease of $1.4 million. Six-month funeral home segment operating income was $1.2 million compared to $2.8 million in the prior year period, representing a decrease of $1.6 million.

    • Corporate overhead expense increased to $12.8 million in the second quarter compared to $9.5 million in the second quarter in the prior year. Six-month corporate overhead expense increased to $24.6 million compared to $19.1 million in the prior year period.

  • Second quarter operating loss was $7.8 million compared to operating income of $4.1 million in the second quarter in the prior year.

  • Second quarter net loss from continuing operations was $17.3 million compared to $36.2 million in the second quarter in the prior year.

  • Second quarter adjusted EBITDA was $12.1 million compared to $32.1 million in the second quarter in the prior year.

Joe Redling, StoneMor’s President and Chief Executive Officer said, “During the second quarter of 2022, our teams continued to deliver strong sales production performance, even as we faced tough comparisons after our record performance throughout 2021. Specifically, our cemetery sales production grew 6.5% in the second quarter of 2022, compared with the same quarter of 2021, including 12% growth related to our pre-need sales production. We continue to focus on managing our costs to combat the inflationary pressures from suppliers and managing certain extraordinary costs associated with our various corporate initiatives that have had a negative impact on our performance.”

LIQUIDITY UPDATE

As of June 30, 2022, the Company had $83.3 million of cash, including $12.0 million of restricted cash, and $392.6 million of total debt.

“Through the second quarter, we remain confident that we will meet or exceed our previously announced 2022 annual guidance targets for organic growth in our trusts of $70 million and unlevered free cash flow of $40 million,” said Jeff DiGiovanni, StoneMor’s Senior Vice President and Chief Financial Officer. “For the six months ended June 30, 2022, we generated $36.6 million in organic trust growth, which excluded $10.3 million in trust funds added through our recent acquisitions, as well as $17.6 million in unlevered free cash flow.”

CONFERENCE CALL INFORMATION

StoneMor will conduct a conference call to discuss this news release today, August 11, 2022 at 4:30 p.m. Eastern Time. The conference call can be accessed by calling (800) 954-0601. No reservation number is necessary; however, 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.

CONTACT
Investor Relations
StoneMor Inc.
(215) 826-4438

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this press release, including, but not limited to, statements regarding the Company’s achievement of its 2022 organic trust growth and unlevered free cash flow guidance targets, 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 June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss from continuing operations

 

$

(17,261

)

 

$

(36,245

)

 

$

(29,495

)

 

$

(41,458

)

Income tax (expense) benefit

 

 

181

 

 

 

(9,736

)

 

 

413

 

 

 

(11,412

)

Interest expense

 

 

9,279

 

 

 

9,977

 

 

 

18,565

 

 

 

20,450

 

Depreciation and amortization

 

 

2,018

 

 

 

2,027

 

 

 

4,079

 

 

 

4,129

 

Non-cash stock compensation

 

 

508

 

 

 

508

 

 

 

1,007

 

 

 

1,013

 

Cost of lots sold

 

 

1,309

 

 

 

2,257

 

 

 

3,179

 

 

 

3,651

 

EBITDA

 

 

(3,966

)

 

 

(31,212

)

 

 

(2,252

)

 

 

(23,627

)

Loss on debt extinguishment

 

 

 

 

 

40,128

 

 

 

 

 

 

40,128

 

Loss on sale of businesses and other impairments

 

 

43

 

 

 

2,220

 

 

 

43

 

 

 

2,220

 

Other (losses) gains

 

 

15

 

 

 

(69

)

 

 

15

 

 

 

(69

)

Change in deferred revenues

 

 

18,087

 

 

 

23,054

 

 

 

51,761

 

 

 

45,652

 

Change in deferred selling and obtaining costs

 

 

(2,096

)

 

 

(2,027

)

 

 

(4,928

)

 

 

(4,229

)

Adjusted EBITDA

 

$

12,083

 

 

$

32,094

 

 

$

44,639

 

 

$

60,075

 


FIELD EBITDA

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

EBITDA

 

$

(3,966

)

 

$

(31,212

)

 

$

(2,252

)

 

$

(23,627

)

Corporate overhead

 

 

12,806

 

 

 

9,534

 

 

 

24,619

 

 

 

19,075

 

Less: non-cash stock compensation

 

 

508

 

 

 

508

 

 

 

1,007

 

 

 

1,013

 

Field EBITDA

 

$

8,332

 

 

$

(22,186

)

 

$

21,360

 

 

$

(5,565

)


UNLEVERED CASH PROVIDED BY OPERATING ACTIVITIES AND UNLEVERED FREE CASH FLOW

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net cash (used in) provided by operating activities

 

$

(2,204

)

 

$

(6,198

)

 

$

6,551

 

 

$

(1,567

)

Cash interest payments

 

 

17,095

 

 

 

22,502

 

 

 

17,206

 

 

 

31,141

 

Unlevered cash provided by operating activities

 

 

14,891

 

 

 

16,304

 

 

 

23,757

 

 

 

29,574

 

Less: cash paid for capital expenditures

 

 

3,542

 

 

 

1,587

 

 

 

6,144

 

 

 

3,361

 

Unlevered free cash flow

 

$

11,349

 

 

$

14,717

 

 

$

17,613

 

 

$

26,213

 


STONEMOR INC.

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

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents, excluding restricted cash

 

$

71,238

 

 

$

83,882

 

Restricted cash

 

 

12,021

 

 

 

16,415

 

Accounts receivable, net of allowance

 

 

65,106

 

 

 

62,220

 

Prepaid expenses

 

 

8,073

 

 

 

6,971

 

Other current assets

 

 

12,788

 

 

 

11,459

 

Total current assets

 

 

169,226

 

 

 

180,947

 

 

 

 

 

 

 

 

Long-term accounts receivable, net of allowance

 

 

76,769

 

 

 

72,309

 

Cemetery property

 

 

299,549

 

 

 

296,758

 

Property and equipment, net of accumulated depreciation

 

 

89,346

 

 

 

82,610

 

Merchandise trusts, restricted, at fair value

 

 

604,760

 

 

 

567,853

 

Perpetual care trusts, restricted, at fair value

 

 

349,150

 

 

 

339,138

 

Deferred selling and obtaining costs

 

 

127,927

 

 

 

124,023

 

Deferred tax assets

 

 

3

 

 

 

21

 

Goodwill

 

 

6,774

 

 

 

 

Intangible assets, net

 

 

51,902

 

 

 

54,023

 

Other assets

 

 

22,629

 

 

 

23,462

 

Total assets

 

$

1,798,035

 

 

$

1,741,144

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

55,953

 

 

$

44,704

 

Accrued interest

 

 

4,344

 

 

 

4,344

 

Current portion, long-term debt

 

 

2,576

 

 

 

762

 

Total current liabilities

 

 

62,873

 

 

 

49,810

 

 

 

 

 

 

 

 

Long-term debt, net of deferred financing costs

 

 

390,033

 

 

 

389,401

 

Deferred revenues

 

 

1,118,208

 

 

 

1,056,260

 

Deferred tax liabilities

 

 

11,093

 

 

 

10,878

 

Perpetual care trust corpus

 

 

349,150

 

 

 

339,138

 

Other long-term liabilities

 

 

41,343

 

 

 

41,399

 

Total liabilities

 

 

1,972,700

 

 

 

1,886,886

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, par value $0.01 per share, 200,000,000 shares authorized, 118,723,067 and 118,290,600 shares issued and outstanding, respectively

 

 

1,187

 

 

 

1,182

 

Paid-in capital in excess of par value

 

 

(82,719

)

 

 

(83,286

)

Accumulated deficit

 

 

(93,133

)

 

 

(63,638

)

Total stockholders' equity

 

 

(174,665

)

 

 

(145,742

)

Total liabilities and stockholders' equity

 

$

1,798,035

 

 

$

1,741,144

 


STONEMOR INC.

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

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Cemetery:

 

 

 

 

 

 

 

 

 

 

 

 

Interments

 

$

22,136

 

 

$

22,906

 

 

$

43,291

 

 

$

43,425

 

Merchandise

 

 

19,744

 

 

 

17,787

 

 

 

34,600

 

 

 

34,069

 

Services

 

 

18,370

 

 

 

17,698

 

 

 

35,228

 

 

 

34,979

 

Investment and other

 

 

10,204

 

 

 

13,737

 

 

 

26,832

 

 

 

26,635

 

Funeral home:

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise

 

 

5,040

 

 

 

5,449

 

 

 

11,085

 

 

 

11,422

 

Services

 

 

4,553

 

 

 

5,404

 

 

 

9,988

 

 

 

10,764

 

Total revenues

 

 

80,047

 

 

 

82,981

 

 

 

161,024

 

 

 

161,294

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

12,519

 

 

 

12,435

 

 

 

24,058

 

 

 

23,619

 

Cemetery expense

 

 

21,634

 

 

 

18,090

 

 

 

43,813

 

 

 

36,251

 

Selling expense

 

 

17,289

 

 

 

14,776

 

 

 

32,862

 

 

 

28,983

 

General and administrative expense

 

 

12,250

 

 

 

10,650

 

 

 

23,003

 

 

 

20,843

 

Corporate overhead

 

 

12,806

 

 

 

9,534

 

 

 

24,619

 

 

 

19,075

 

Depreciation and amortization

 

 

2,018

 

 

 

2,027

 

 

 

4,079

 

 

 

4,129

 

Funeral home expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise

 

 

1,389

 

 

 

1,478

 

 

 

3,021

 

 

 

3,139

 

Services

 

 

4,700

 

 

 

4,477

 

 

 

9,457

 

 

 

9,138

 

Other

 

 

3,185

 

 

 

3,239

 

 

 

6,571

 

 

 

6,258

 

Total costs and expenses

 

 

87,790

 

 

 

76,706

 

 

 

171,483

 

 

 

151,435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on sale of businesses and other impairments

 

 

(43

)

 

 

(2,220

)

 

 

(43

)

 

 

(2,220

)

Other (losses) gains

 

 

(15

)

 

 

69

 

 

 

(15

)

 

 

69

 

Operating (loss) income

 

 

(7,801

)

 

 

4,124

 

 

 

(10,517

)

 

 

7,708

 

Interest expense

 

 

(9,279

)

 

 

(9,977

)

 

 

(18,565

)

 

 

(20,450

)

Loss on debt extinguishment

 

 

 

 

 

(40,128

)

 

 

 

 

 

(40,128

)

Loss from continuing operations before income taxes

 

 

(17,080

)

 

 

(45,981

)

 

 

(29,082

)

 

 

(52,870

)

Income tax (expense) benefit

 

 

(181

)

 

 

9,736

 

 

 

(413

)

 

 

11,412

 

Net loss from continuing operations

 

 

(17,261

)

 

 

(36,245

)

 

 

(29,495

)

 

 

(41,458

)

Discontinued operations (Note 2):

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations of discontinued businesses

 

 

 

 

 

860

 

 

 

 

 

 

1,449

 

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

Net income from discontinued operations

 

 

 

 

 

860

 

 

 

 

 

 

1,449

 

Net loss

 

$

(17,261

)

 

$

(35,385

)

 

$

(29,495

)

 

$

(40,009

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from continuing operations per common share (basic)

 

$

(0.15

)

 

$

(0.31

)

 

$

(0.25

)

 

$

(0.35

)

Net income from discontinued operations per common share (basic)

 

 

 

 

 

0.01

 

 

 

 

 

 

0.01

 

Net loss per common share (basic)

 

$

(0.15

)

 

$

(0.30

)

 

$

(0.25

)

 

$

(0.34

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from continuing operations per common share (diluted)

 

$

(0.15

)

 

$

(0.31

)

 

$

(0.25

)

 

$

(0.35

)

Net income from discontinued operations per common share (diluted)

 

 

 

 

 

0.01

 

 

 

 

 

 

0.01

 

Net loss per common share (diluted)

 

$

(0.15

)

 

$

(0.30

)

 

$

(0.25

)

 

$

(0.34

)

Weighted average number of common shares outstanding - basic

 

 

118,476

 

 

 

117,956

 

 

 

118,402

 

 

 

117,933

 

Weighted average number of common shares outstanding - diluted

 

 

118,476

 

 

 

117,956

 

 

 

118,402

 

 

 

117,933

 


STONEMOR INC.

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

 

 

Six Months Ended June 30,

 

 

2022

 

 

2021

 

 

Cash Flows From Operating Activities:

 

 

 

 

 

 

 

Net loss

 

$

(29,495

)

 

$

(40,009

)

 

Adjustments to reconcile net loss to net cash provided by
operating activities:

 

 

 

 

 

 

 

Cost of lots sold

 

 

3,179

 

 

 

3,651

 

 

Depreciation and amortization

 

 

4,079

 

 

 

4,169

 

 

Provision for bad debt

 

 

2,883

 

 

 

3,519

 

 

Non-cash compensation expense

 

 

1,007

 

 

 

1,013

 

 

Loss on debt extinguishment

 

 

 

 

 

40,128

 

 

Non-cash interest expense

 

 

1,208

 

 

 

3,160

 

 

Loss on sale of businesses

 

 

43

 

 

 

1,353

 

 

Other losses (gains)

 

 

15

 

 

 

(69

)

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Payment of paid-in-kind interest

 

 

 

 

 

(18,440

)

 

Accounts receivable, net of allowance

 

 

(13,073

)

 

 

(11,522

)

 

Merchandise trust fund

 

 

(22,568

)

 

 

(17,378

)

 

Other assets

 

 

955

 

 

 

(2,942

)

 

Deferred selling and obtaining costs

 

 

(4,928

)

 

 

(4,229

)

 

Deferred revenues

 

 

51,761

 

 

 

45,652

 

 

Deferred taxes, net

 

 

233

 

 

 

(11,523

)

 

Payables and other liabilities

 

 

11,252

 

 

 

1,900

 

 

Net cash provided by (used in) operating activities

 

 

6,551

 

 

 

(1,567

)

 

Cash Flows From Investing Activities:

 

 

 

 

 

 

 

Cash paid for acquisitions

 

 

(18,295

)

 

 

 

 

Proceeds from divestitures

 

 

173

 

 

 

6,578

 

 

Cash paid for capital expenditures

 

 

(6,144

)

 

 

(3,361

)

 

Net cash (used in) provided by investing activities

 

 

(24,266

)

 

 

3,217

 

 

Cash Flows From Financing Activities:

 

 

 

 

 

 

 

Proceeds from borrowings

 

 

6,001

 

 

 

404,433

 

 

Repayments of debt

 

 

(3,897

)

 

 

(329,294

)

 

Principal payment on finance leases

 

 

(616

)

 

 

(796

)

 

Early redemption premium

 

 

 

 

 

(18,478

)

 

Cost of financing activities

 

 

(376

)

 

 

(10,632

)

 

Shares repurchased related to share-based compensation

 

 

(435

)

 

 

 

 

Net cash provided by financing activities

 

 

677

 

 

 

45,233

 

 

Net (decrease) increase in cash, cash equivalents and restricted cash

 

 

(17,038

)

 

 

46,883

 

 

Cash, cash equivalents and restricted cash—Beginning of period

 

 

100,297

 

 

 

60,090

 

 

Cash, cash equivalents and restricted cash—End of period

 

$

83,259

 

 

$

106,973

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

17,206

 

 

$

31,141

 

 

Cash paid during the period for income taxes

 

 

2,498

 

 

 

1,989

 

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

836

 

 

$

961

 

 

Operating cash flows from finance leases

 

 

153

 

 

 

166

 

 

Financing cash flows from finance leases

 

 

616

 

 

 

796

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

Right of use assets obtained in exchange for new operating lease liabilities

 

$

47

 

 

$

3,277

 

 

Right of use assets obtained in exchange for new finance lease liabilities

 

 

197

 

 

 

105