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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