HOUSTON, May 6 /PRNewswire-FirstCall/ -- Carriage Services, Inc.
(NYSE: CSV) today announced results for the first quarter ended
March 31, 2009. Highlights from continuing operations for the first
quarter of 2009 compared to the first quarter of 2008 were as
follows: First Quarter Selected Financial Results (amounts in
millions, except per share amounts) Q1 Q1 2008 2009 Change ----
---- ------ Total Revenues $47.1 $45.8 $(1.3) Consolidated EBITDA
$12.7 $11.4 $(1.3) Net Income $3.3 $2.4 $(0.9) Diluted Earnings per
Share $0.17 $0.13 $(0.04) HIGHLIGHTS Melvin C. Payne, Chairman and
Chief Executive Officer, stated, "Considering that death rates in
the first quarter were dramatically lower this year versus last and
the economy was in deep distress, we had an excellent first
quarter. Despite the tough comparison to last year's performance,
we are particularly pleased that our first quarter 2009 revenues
declined by only 2.8% and our EPS came in at $0.13 per share. Our
Same Store Cemetery Revenue and Field EBITDA were both materially
higher this year versus last, a testament to our sales leaders and
teams executing well against a backdrop of high national
unemployment and lower consumer confidence. In fact, I do not
recall a quarter in which our people responded so well to external
factors beyond their control, and even better, gathered performance
momentum throughout the quarter. "We also made significant
sequential progress during the quarter on our three major
initiatives for 2009, i.e. to better manage our expenses, improve
cremation service execution and increase cemetery preneed property
sales, all of which bodes well for the balance of the year. Yet in
this environment we are taking nothing for granted and are
continuing to focus on operational execution." UNAUDITED INCOME
STATEMENT FROM CONTINUING OPERATIONS Period Ended March 31, 2009
($000s) Qtr 1 Qtr 4 Qtr 1 2008 2008 2009 ---- ---- ---- CONTINUING
OPERATIONS Same Store Contracts Atneed Contracts 4,640 4,144 4,166
Preneed Contracts 1,150 964 1,050 ----- --- ----- Total Same Store
Funeral Contracts 5,790 5,108 5,216 Acquisition Contracts Atneed
Contracts 800 664 714 Preneed Contracts 240 247 242 --- --- ---
Total Acquisition Funeral Contracts 1,040 911 956 ----- --- --- New
Store Openings 210 238 235 --- --- --- Total Funeral Contracts
7,040 6,257 6,407 ===== ===== ===== Same Store Revenue Funeral
Operations Revenue $31,303 $28,349 $29,455 Preneed Commission and
Other Revenue 752 617 588 --- --- --- Total Funeral Same Store
Revenue 32,055 28,966 30,043 Cemetery Operations Revenue 7,418
8,134 8,444 Cemetery Financial Revenue 1,004 695 999 ----- --- ---
Total Cemetery Same Store Revenue 8,422 8,829 9,443 ----- -----
----- Total Same Store Revenue 40,477 37,795 39,486 Acquisition
Revenue Funeral Operations Revenue 4,961 4,516 4,797 Cemetery
Operations Revenue 1,624 1,451 1,426 Cemetery Financial Revenue 81
72 94 --- --- --- Total Acquisition Revenue 6,666 6,039 6,317
------- ------- ------- Total Revenue from Continuing Operations
$47,143 $43,834 $45,803 ======= ======= ======= Field EBITDA from
Continuing Operations Same Store Funeral Field EBITDA $13,679
$11,001 $11,929 Same Store Funeral Field EBITDA Margin 42.7% 38.0%
39.7% Same Store Cemetery Field EBITDA 2,170 1,782 2,530 Same Store
Cemetery Field EBITDA Margin 25.8% 20.2% 26.8% ---- ---- ---- Total
Same Store Field EBITDA 15,849 12,783 14,459 Total Same Store Field
EBITDA Margin 39.2% 33.8% 36.6% Acquisition Funeral Field EBITDA
1,746 1,383 1,610 Acquisition Funeral Field EBITDA Margin 35.2%
30.6% 33.6% Acquisition Cemetery Field EBITDA 679 465 474
Acquisition Cemetery Field EBITDA Margin 41.9% 30.5% 33.3% ----
---- ---- Total Acquisition Field EBITDA 2,425 1,848 2,084 Total
Acquisition Field EBITDA Margin 36.4% 30.6% 33.0% ---- ---- ----
Total Field EBITDA from Continuing Operations 18,274 14,631 16,543
Total Field EBITDA Margin from Continuing Operations 38.8% 33.4%
36.1% Overhead Total Variable Overhead 1,067 1,449 1,011 Total
Regional Fixed Overhead 833 916 761 Total Corporate Fixed Overhead
2,970 3,413 3,373 ----- ----- ----- Total Overhead 4,870 5,778
5,145 10.3% 13.2% 11.2% ------- ------ ------- Adjusted
Consolidated EBITDA from Continuing Operations $13,404 $8,853
$11,398 ------- ------ ------- Adjusted Consolidated EBITDA Margin
from Continuing Operations 28.4% 20.2% 24.9% Special Charges
Litigation Settlement - 3,300 - Litigation Related Legal Costs 665
241 - Other Special Charges 87 - - --- --- --- Sum of Special
Charges 752 3,541 - ------- ------ ------- Consolidated EBITDA from
Continuing Operations $12,652 $5,312 $11,398 26.8% 12.1% 24.9%
Total Depreciation & Amortization 2,529 2,624 2,604 Restricted
Stock Amortization 214 246 242 Interest, Net 4,530 4,624 4,596
----- ----- ----- Pretax Income 5,379 (2,182) 3,956 Income tax
2,125 (531) 1,602 ------ ------- ------ Net income from Continuing
Operations $3,254 $(1,651) $2,354 ====== ======= ====== 6.9% (3.8)%
5.1% Diluted EPS from Continuing Operations $0.17 $(0.09) $0.13
Diluted EPS from Continuing Operations Excluding Special Charges
$0.19 $0.04 $0.13 Trend Reporting Management monitors consolidated
same store and acquisition field operating and financial results
both on a five year and most recent rolling four quarters basis
("Trend Reports") to reflect long term and short term trends and
seasonality. "Acquisition" is defined as businesses acquired since
January 2005 (date of refinancing our Senior Notes). The Trend
Reports highlight trends in volumes, revenues, Field EBITDA
(controllable profit), Field EBITDA Margin (controllable profit
margin) and the components of our overhead. Trend reporting allows
us to focus on the key operational and financial drivers relevant
to the longer term performance and valuation of our portfolio of
deathcare businesses. Please go to the Investor Relations homepage
of Carriage's web site at http://www.carriageservices.com/ for a
link to our consolidated Annual and Quarterly Trend Reports.
FUNERAL OPERATIONS First quarter Same Store Funeral Revenue
decreased $2.0 million or 6.3% as the average revenue per contract
increased 4.5% while the number of contracts declined 9.9%. Revenue
from the Acquisition portfolio decreased $0.2 million or 3.3%. The
cremation rate for the first quarter of 2009 was 41.4% compared to
40.1% for the first quarter of last year. A recent initiative
implemented in the third quarter of 2008 to increase the average
revenue per cremation contract, largely by converting direct
cremations to cremations with services, is getting traction and
helped not only our cremation average but also customer
satisfaction levels with our cremation families. As a result of
this initiative, which includes new training and presentation
options for client families, the average revenue per cremation
contract in the current quarter increased 4.6% from the first
quarter of 2008. Cremations with services have risen from 34.7% of
our total cremation contracts in the third quarter of 2008 to 40.4%
in the first quarter of 2009. Same Store Funeral Field EBITDA
declined by $1.8 million or 12.8% compared to the first quarter of
2008, while the related Field EBITDA Margin declined from 42.7% to
39.7%, both of which represent historically strong cash profit
margins. Our Acquisitions portfolio Funeral Field EBITDA declined
$136,000 to $1.6 million and the related Field EBITDA Margin
declined 160 basis points to 33.6%. CEMETERY OPERATIONS Same Store
Cemetery Operations Revenue increased $1.0 million or 13.8% to $8.4
million. Preneed sales of cemetery property accounted for $0.8
million of the increase in revenue, equal to an increase of 21%
over 2008, as the number of properties sold increased by 10.4%, the
average price increased 1.8%, and a higher proportion of the
contracts qualified for revenue recognition. Cemetery Financial
Revenue from trust funds and finance charges was flat at $1.1
million, as earnings from our cemetery trust funds increased from
the improvements to the investment allocations since last year, but
were offset by lower finance charges on the preneed receivables.
Total Cemetery Same Store Revenue increased $1.0 million or 12.1%
in the first quarter of 2009 to $9.4 million compared to $8.4
million in 2008. Same Store Cemetery Field EBITDA increased by
$360,000 or 16.6% for the first quarter and resulted in a 100 basis
point increase in Field EBITDA Margin to 26.8%. In order to
increase revenues from preneed property sales, we began an
initiative in the third quarter of 2008 to increase both the
quantity and quality of the cemetery sales counselors at our major
parks and subsequently reached our minimum headcount target at the
end of January 2009. The combination of more and better preneed
sales counselors and greater inventory, largely constructed or
acquired in 2008, resulted in higher preneed cemetery sales
activity levels in this quarter compared to the first quarter of
2008. In fact, preneed property sales increased each month
sequentially starting from November 2008 and continuing through the
first quarter of 2009. Overhead Total Overhead increased $275,000
to $5.1 million in the first quarter of 2009 from $4.9 million in
the first quarter of 2008 due primarily to higher legal fees and
preneed administration costs. Total Overhead declined $633,000
sequentially from the fourth quarter of 2008 as costs in almost all
departments in the home office trended down. AdJUSTED CONSOLIDATED
EBITDA Consolidated EBITDA in the first quarter of 2009 was $11.4
million compared to Adjusted Consolidated EBITDA of $13.4 million
in the same quarter of 2008. Adjusted Consolidated EBITDA Margin
declined to 24.9% in the 2009 first quarter compared to 28.4% in
the 2008 first quarter. We adjusted the 2008 Consolidated EBITDA
for litigation costs and other charges that we believe are
non-recurring in nature and shown as special charges on the
accompanying income statement. SHARE REPURCHASE PROGRAM During
November 2008 the Board of Directors approved a new $5.0 million
share repurchase plan. During the first quarter of 2009, we
purchased 349,390 shares of common stock at an average cost per
share of $2.07. Through April 30, 2009, we had repurchased a total
of 893,929 shares of common stock at an average cost per share of
$2.05 under the new plan, and a cumulative total of 2,341,398
shares at an average cost of $3.01 per share under both repurchase
plans during the last twelve months. Cash FloW We had negative Free
Cash Flow (defined as cash flow from continuing operations less
maintenance capital expenditures) of $1.2 million during the first
quarter of 2009 compared to positive Free Cash Flow of $2.1 million
for the corresponding 2008 period. It is common for Free Cash Flow
to be low in the first quarter of a year because we pay our
semiannual cash interest payment of $5.1 million on our senior
notes in the first quarter. Additionally, cash used by operations
in the first quarter of 2009 includes the $3.3 million litigation
settlement reported in the fourth quarter of 2008. The sources and
uses of cash for the first quarter of 2009 consisted of the
following (in millions): Cash used by operations $(0.6) Cash used
for maintenance capital expenditures (0.6) ---- Free Cash Flow for
First Quarter of 2009 $(1.2) Cash and liquid investments at
beginning of year 5.0 Cash used for growth capital expenditures -
funeral homes (0.1) Cash used for growth capital expenditures -
cemeteries (1.0) Share repurchase program (0.7) Other financing
activities 0.7 --- Cash at March 31, 2009 $2.7 ==== Outlook The
Four Quarter Outlook ranges for the rolling four quarter period
ending March 31, 2010 are intended to approximate what the Company
believes will be the sustainable earning power of its portfolio of
deathcare assets over the next four quarters as our three models
are effectively executed. Performance drivers include funeral
contract volumes, cremation mix, preneed sales, preneed maturities
and deliveries, average revenue per service and sale and overhead
items. Other variables include the effective tax rate, which is
currently estimated to be in the range of 39% to 42% and the
estimated number of diluted shares outstanding which is currently
estimated to be approximately 17 million and is subject to changes
in the share price and activity in the share repurchase plan.
Though we expect to acquire businesses in the future, we have not
forecast any acquisitions in the Four Quarter Outlook ending March
31, 2010, because of the uncertainty as to the timing and size of
acquisitions. ROLLING FOUR QUARTER OUTLOOK - Period Ending March
31, 2010 (amounts in millions, except per share amounts) Range
----- Revenues $175.0 - $180.0 Field EBITDA $59.5 - $63.0 Field
EBITDA Margin 34.0% - 35.0% Total Overhead $22.0 - $23.0
Consolidated EBITDA $37.0 - $41.0 Consolidated EBITDA Margin 21.1%
- 22.8% Interest $18.1 Depreciation & Amortization $11.0 Cash
Taxes $1.0 Net Income $6.4 - $7.1 Diluted Earnings Per Share $0.36
- $0.40 Free Cash Flow $13.0 - $15.0 Consolidated EBITDA for this
period is expected to increase relative to the full year of 2008
for the following reasons: -- Increase in Funeral Field EBITDA with
better execution of the Standards Operating Model. -- Increase in
Same Store Cemetery EBITDA with higher preneed sales and lower bad
debt expense. -- Higher cemetery financial revenue. -- Tighter
management of overhead expenses. -- Lower special charges due
primarily to elimination of most litigation. Long Term Outlook -
Through 2013 (Base Year 2008) Revenue growth of 6-7% annually,
including acquisitions Consolidated EBITDA growth of 9-11%
annually, including acquisitions Consolidated EBITDA Margin range
of 22-26% Delever the Company through increasing cash flow and
earnings CONFERENCE CALL Carriage Services has scheduled a
conference call for tomorrow, Thursday, May 7, 2009 at 10:30 a.m.
eastern time. To participate in the call, please dial 303-262-2130
at least ten minutes before the conference call begins and ask for
the Carriage Services conference call. A telephonic replay of the
conference call will be available through May 14, 2009 and may be
accessed by dialing 303-590-3000 and using pass code 11129295#. An
audio archive will also be available on the company's website at
http://www.carriageservices.com/ shortly after the call and will be
accessible for approximately 90 days. For more information, please
contact Karen Roan at DRG&E at 713-529-6600 or email . Carriage
Services is a leading provider of death care services and products.
Carriage operates 134 funeral homes in 25 states and 32 cemeteries
in 11 states. Use of Non-GAAP Financial Measures This press release
uses the following Non-GAAP financial measures "free cash flow" and
"EBITDA". Both free cash flow and EBITDA are used by investors to
value common stock. The Company considers free cash flow to be an
important indicator of its ability to generate cash for
acquisitions and other strategic investments. The Company has
included EBITDA in this press release because it is widely used by
investors to compare the Company's financial performance with the
performance of other deathcare companies. The Company also uses
Field EBITDA and Field EBITDA Margin to monitor and compare the
financial performance of the individual funeral and cemetery field
businesses. EBITDA does not give effect to the cash the Company
must use to service its debt or pay its income taxes and thus does
not reflect the funds actually available for capital expenditures.
In addition, the Company's presentation of EBITDA may not be
comparable to similarly titled measures other companies report.
Non-GAAP financial measures should be viewed in addition to, and
not as an alternative for, the Company's reported operating results
or cash flow from operations or any other measure of performance as
determined in accordance with GAAP. The Company categorizes its
general and administrative expenses into three categories of
overhead: (1) variable overhead, (2) regional fixed overhead and
(3) corporate fixed overhead. Variable overhead consists of cost
and expense such as incentive compensation which will vary with
profitability or legal expense unrelated to our day to day
operations. Regional fixed overhead and corporate fixed overhead
represent the cost and expenses of our regional operations leaders
and the home office and will not vary as a result of profitability.
Special charges are considered by management to be unusual in
nature, unique and not expected to occur in the normal course of
business. Forward-Looking Statements Certain statements made herein
or elsewhere by, or on behalf of, the Company that are not
historical facts are intended to be forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements are based on assumptions that the Company
believes are reasonable; however, many important factors, as
discussed under "Forward-Looking Statements and Cautionary
Statements" in the Company's Annual Report and Form 10-K for the
year ended December 31, 2008, could cause the Company's results in
the future to differ materially from the forward-looking statements
made herein and in any other documents or oral presentations made
by, or on behalf of, the Company. The Company assumes no obligation
to update or publicly release any revisions to forward-looking
statements made herein or any other forward-looking statements made
by, or on behalf of, the Company. A copy of the Company's Form
10-K, and other Carriage Services information and news releases,
are available at http://www.carriageservices.com/. Contacts: Terry
Sanford, SVP & CFO Carriage Services, Inc. 713-332-8400 Ken
Dennard / Kip Rupp / DRG&E / 713-529-6600 - Tables to Follow -
CARRIAGE SERVICES, INC. Selected Financial Data March 31, 2009
(unaudited) Selected Balance Sheet Data (in 000s): 12/31/2008
3/31/2009 ---------- --------- Cash and short-term investments
$5,007 $2,654 Total Senior Debt (a) $137,732 $138,369 Common shares
outstanding 17,835 17,946 Ratios and other data Days sales in
funeral accounts receivable 21.3 20.8 Senior Debt to total
capitalization 41.1 41.0 Senior Debt to adjusted EBITDA from
continuing operations (rolling twelve months) 3.6 3.8 (a) - Senior
debt does not include the convertible junior subordinated
debentures. Reconciliation of Non-GAAP Financial Measures: This
press release includes the use of certain financial measures that
are not GAAP measures. The non-GAAP financial measures are
presented for additional information and are reconciled to their
most comparable GAAP measures below. Reconciliation of Net Income
from continuing operations to adjusted EBITDA from continuing
operations for the three months ended March 31, 2008 and 2009,
three months ended December 31, 2008 and the estimated rolling four
quarters ended March 31, 2010 (presented at the midpoint of the
range identified in the release)(in 000s): Rolling Three Three
Three Four months months months Quarter ended ended ended Outlook
3/31/2008 12/31/2008 3/31/2009 3/31/2010 E --------- ----------
--------- ----------- Net income from continuing operations $3,254
$(1,651) $2,354 $6,800 Provision for income taxes 2,125 (531) 1,602
3,100 ----- ---- ----- ----- Pre-tax earnings from continuing
operations 5,379 (2,182) 3,956 9,900 Net interest expense,
including loan cost amortization 4,530 4,624 4,596 18,100 Special
charges 752 3,541 - - Restricted stock amortization 214 246 242
1,000 Depreciation 2,529 2,624 2,604 10,000 ----- ----- -----
------ Adjusted EBITDA from continuing operations $13,404 $8,853
$11,398 $39,000 ======= ====== ======= ======= Revenue from
continuing operations $47,143 $43,834 $45,803 $177,500 Adjusted
EBITDA margin from continuing operations 28.4% 20.2% 24.9% 22.0%
Reconciliation of Non-GAAP Financial Measures, Continued:
Reconciliation of cash provided by operating activities from
continuing operations to free cash flow (in 000s): Rolling Four
Three months Three months Quarter ended ended Outlook 3/31/2008
3/31/2009(1) 3/31/2010 E --------- ----------- ----------- Cash
provided by (used in) operating activities from continuing
operations $3,409 $(555) $21,000 Less maintenance capital
expenditures from continuing operations (1,314) (622) (7,000)
------ ---- ------ Free cash flow from continuing operations $2,095
$(1,177) $14,000 ====== ======= ======= (1) Included in cash flow
for the three months ended 3/31/09 is the $3.3 million litigation
settlement payment. DATASOURCE: Carriage Services, Inc. CONTACT:
Terry Sanford, SVP & CFO of Carriage Services, Inc.,
+1-713-332-8400; or Ken Dennard, , or Kip Rupp, , both of
DRG&E, +1-713-529-6600, for Carriage Services, Inc. Web Site:
http://www.carriageservices.com/
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