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StoneMor Inc. Reports Third Quarter Financial Results

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BENSALEM, Pa., Nov. 11, 2021 (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 third quarter ended September 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.

THIRD QUARTER FINANCIAL PERFORMANCE

  • Revenues for the third quarter were $82.3 million compared to $72.7 million in in the third quarter in the prior year. Nine-month revenues were $243.6 million compared to $204.4 million in the prior year period.

  • Cemetery segment operating income for the third quarter was $14.0 million compared to $11.5 million in the third quarter in the prior year, representing an increase of $2.6 million. Nine-month cemetery segment operating income was $40.4 million compared to $24.1 million in the prior year period, representing an increase of $16.2 million.

  • Funeral home segment operating income for the third quarter was $1.0 million compared to $1.1 million in the third quarter in the prior year, representing a decrease of $0.1 million. Nine-month funeral home segment operating income was $3.8 million compared to $3.5 million in the prior year period, representing an increase of $0.3 million.

  • Corporate overhead expense increased to $10.0 million in the third quarter compared to $9.8 million in the third quarter in the prior year. Nine-month corporate overhead expense increased to $29.1 million compared to $27.0 million in the prior year period.

  • Third quarter operating income was $4.3 million compared to $2.6 million in the third quarter in the prior year.

  • Third quarter net loss from continuing operations was $4.7 million compared to $8.1 million in the third quarter in the prior year.

  • Third quarter adjusted EBITDA was $38.5 million compared to $24.3 million in the third quarter in the prior year.

Joe Redling, StoneMor’s President and Chief Executive Officer said, “The third quarter continued to build on the positive performance trends of the past year and half, with top-line revenue growth of 13.2% and 19.2% for the three and nine months ended September 30, 2021, respectively, when compared with the same periods in 2020. Year-to-date, we have driven a $52.2 million improvement in our adjusted EBITDA year-over-year. We continue to deliver strong, sustainable cemetery sales production results, with a 9% growth in pre-need cemetery sales production for the third quarter.”

LIQUIDITY UPDATE

As of September 30, 2021, the Company had $115.9 million of cash, including $16.4 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 nine-months ended September 30, 2021, we generated nearly $70 million in trust growth and more than $36 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, “We are focused on the next phase of our transformation strategy – a commitment to strategic growth. We have $100 million in cash on our balance sheet and access to additional capital, if necessary. That capital, coupled with the operational transformation completed to date, places StoneMor in the right position to execute on this strategy as we move forward.”

CONFERENCE CALL INFORMATION

StoneMor will conduct a conference call to discuss this news release today, November 11, 2021 at 4:30 p.m. Eastern Time. The conference call can be accessed by calling (877) 256-3243. 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 300 cemeteries and 69 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, 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, 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 September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Net loss from continuing operations

$

(4,747

)

$

(8,150

)

$

(46,205

)

$

(31,720

)

Income tax benefit

(240

)

(1,129

)

(11,652

)

(3,333

)

Interest expense

9,256

11,870

29,706

34,952

Depreciation and amortization

1,989

2,244

6,118

6,851

Non-cash stock compensation

512

353

1,525

1,080

Loss on debt extinguishment

40,128

Loss on sale of business and other impairments

70

2,290

Other losses, net

605

536

Cost of lots sold

1,495

1,503

5,146

4,346

EBITDA

8,940

6,691

27,592

12,176

Change in deferred revenues

31,866

19,575

77,518

39,238

Change in deferred selling and obtaining costs

(2,257

)

(2,006

)

(6,486

)

(4,974

)

Adjusted EBITDA

$

38,549

$

24,260

$

98,624

$

46,440


FIELD EBITDA

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

EBITDA

$

8,940

$

6,691

$

27,592

$

12,176

Corporate overhead

9,983

9,762

29,058

27,019

Less: non-cash stock compensation

512

353

1,525

1,080

Field EBITDA

$

18,411

$

16,100

$

55,125

$

38,115


UNLEVERED CASH PROVIDED BY OPERATING ACTIVITIES AND UNLEVERED FREE CASH FLOW

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Net cash provided by operating activities

$

11,994

$

2,584

$

10,427

$

3,785

Cash interest payments

118

6,686

31,259

20,361

Unlevered cash provided by operating activities

12,112

9,270

41,686

24,146

Less: cash paid for capital expenditures

2,314

993

5,675

4,784

Unlevered free cash flow

$

9,798

$

8,277

$

36,011

$

19,362



STONEMOR INC.

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

September 30,

December 31,

2021

2020

Assets

Current assets:

Cash and cash equivalents, excluding restricted cash

$

99,509

$

39,244

Restricted cash

16,415

20,846

Accounts receivable, net of allowance

60,066

57,869

Prepaid expenses

9,387

5,290

Assets held for sale

28,575

Other current assets

14,963

16,884

Total current assets

200,340

168,708

Long-term accounts receivable, net of allowance

76,051

75,301

Cemetery property

296,250

299,526

Property and equipment, net of accumulated depreciation

80,055

83,496

Merchandise trusts, restricted, at fair value

548,541

501,453

Perpetual care trusts, restricted, at fair value

335,076

312,228

Deferred selling and obtaining costs

122,488

116,900

Deferred tax assets

9

Intangible assets, net

54,291

55,094

Other assets

23,819

22,248

Total assets

$

1,736,911

$

1,634,963

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued liabilities

$

45,311

$

51,718

Liabilities held for sale

23,406

Accrued interest

13,222

95

Current portion, long-term debt

1,769

317

Total current liabilities

60,302

75,536

Long-term debt, net of deferred financing costs

389,672

320,715

Deferred revenues

1,027,565

949,164

Deferred tax liabilities

17,823

29,652

Perpetual care trust corpus

335,076

312,228

Other long-term liabilities

42,219

40,081

Total liabilities

1,872,657

1,727,376

Commitments and contingencies

Stockholders’ equity:

Common stock, par value $0.01 per share, 200,000,000 shares authorized, 118,011,766

and 117,871,141 shares issued and outstanding, respectively

1,180

1,178

Paid-in capital in excess of par value

(83,709

)

(85,232

)

Accumulated deficit

(53,217

)

(8,359

)

Total stockholders’ equity

(135,746

)

(92,413

)

Total liabilities and stockholders’ equity

$

1,736,911

$

1,634,963



STONEMOR INC.

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

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Revenues:

Cemetery:

Interments

$

21,954

$

20,316

$

65,379

$

51,542

Merchandise

16,935

15,949

51,004

44,918

Services

17,240

16,078

52,219

47,656

Investment and other

14,685

9,677

41,320

29,564

Funeral home:

Merchandise

6,120

5,793

17,542

16,004

Services

5,361

4,900

16,125

14,732

Total revenues

82,295

72,713

243,589

204,416

Costs and Expenses:

Cost of goods sold

11,023

9,624

34,642

28,307

Cemetery expense

19,286

16,198

55,537

50,375

Selling expense

14,451

13,119

43,434

37,376

General and administrative expense

10,534

10,027

31,377

28,672

Corporate overhead

9,983

9,762

29,058

27,019

Depreciation and amortization

1,989

2,244

6,118

6,851

Funeral home expenses:

Merchandise

1,668

1,539

4,807

4,239

Services

4,874

4,775

14,012

13,594

Other

3,543

2,834

9,801

8,084

Total costs and expenses

77,351

70,122

228,786

204,517

Loss on sale of business and other impairments

(70

)

(2,290

)

Other losses, net

(605

)

(536

)

Operating income (loss)

4,269

2,591

11,977

(101

)

Interest expense

(9,256

)

(11,870

)

(29,706

)

(34,952

)

Loss on debt extinguishment

(40,128

)

Loss from continuing operations before income taxes

(4,987

)

(9,279

)

(57,857

)

(35,053

)

Income tax benefit

240

1,129

11,652

3,333

Net loss from continuing operations

(4,747

)

(8,150

)

(46,205

)

(31,720

)

Discontinued operations (Note 2):

(Loss) Income from operations of discontinued businesses

(102

)

293

1,347

28,952

Income tax expense

Net (loss) income from discontinued operations

(102

)

293

1,347

28,952

Net loss

$

(4,849

)

$

(7,857

)

$

(44,858

)

$

(2,768

)

Net loss from continuing operations per common share (basic)

$

(0.04

)

$

(0.07

)

$

(0.39

)

$

(0.31

)

Net (loss) income from discontinued operations per common share (basic)

(0.00

)

0.00

0.01

0.28

Net loss per common share (basic)

$

(0.04

)

$

(0.07

)

$

(0.38

)

$

(0.03

)

Net loss from continuing operations per common share (diluted)

$

(0.04

)

$

(0.07

)

$

(0.39

)

$

(0.31

)

Net (loss) income from discontinued operations per common share (diluted)

(0.00

)

0.00

0.01

0.28

Net loss per common share (diluted)

$

(0.04

)

$

(0.07

)

$

(0.38

)

$

(0.03

)

Weighted average number of common shares outstanding - basic

118,003

117,819

117,956

103,341

Weighted average number of common shares outstanding - diluted

118,003

117,819

117,956

103,341



STONEMOR INC.

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

Nine Months Ended September 30,

2021

2020

Cash Flows From Operating Activities:

Net loss

$

(44,858

)

$

(2,768

)

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

Cost of lots sold

5,146

4,346

Depreciation and amortization

6,158

7,078

Provision for bad debt

5,074

4,529

Non-cash compensation expense

1,525

1,080

Loss on debt extinguishment

40,128

Non-cash interest expense

3,740

16,159

Loss (gain) on sale of businesses

1,525

(31,120

)

Other losses, net

536

2,169

Changes in assets and liabilities:

Payment of paid-in-kind interest

(18,440

)

Accounts receivable, net of allowance

(16,205

)

(16,180

)

Merchandise trust fund

(37,542

)

(12,284

)

Other assets

(4,846

)

3,799

Deferred selling and obtaining costs

(6,486

)

(4,974

)

Deferred revenues

77,518

39,238

Deferred taxes, net

(11,821

)

(3,490

)

Payables and other liabilities

9,275

(3,797

)

Net cash provided by operating activities

10,427

3,785

Cash Flows From Investing Activities:

Cash paid for capital expenditures

(5,675

)

(4,784

)

Proceeds from divestitures

6,462

48,336

Net cash provided by investing activities

787

43,552

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

406,235

3,672

Repayments of debt

(331,197

)

(54,782

)

Principal payment on finance leases

(1,097

)

(1,061

)

Early redemption premium

(18,478

)

Cost of financing activities

(10,843

)

(4,294

)

Shares repurchased related to share-based compensation

(35

)

Net cash provided by (used in) financing activities

44,620

(39,500

)

Net increase in cash, cash equivalents and restricted cash

55,834

7,837

Cash, cash equivalents and restricted cash—Beginning of period

60,090

56,767

Cash, cash equivalents and restricted cash—End of period

$

115,924

$

64,604

Supplemental disclosure of cash flow information:

Cash paid during the period for interest

$

31,259

$

20,361

Cash paid during the period for income taxes

2,727

1,077

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

Operating cash flows from operating leases

$

1,446

$

2,372

Operating cash flows from finance leases

253

328

Financing cash flows from finance leases

1,097

1,061

Non-cash investing and financing activities:

Accrued paid-in-kind interest on 2024 Notes

$

$

10,572


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