StoneMor Inc. Reports Fourth Quarter and Full Year Financial Results

BENSALEM, Pa., March 23, 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 fourth quarter and year ended December 31, 2020. Investors are encouraged to read the Company’s annual report on Form 10-K 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 2020 FINANCIAL PERFORMANCE

  • Revenues for the fourth quarter were $74.9 million compared to $58.3 million in the fourth quarter in the prior year. Full year revenues were $279.5 million compared to $257.2 million in the prior year period. 
  • Cemetery segment operating income for the fourth quarter was $10.9 million compared to an operating loss of $0.6 million in the fourth quarter in the prior year, representing an increase of $11.5 million. Full year cemetery segment operating income was $35.0 million compared to $8.0 million in the prior year period, representing an increase of $27.0 million. 
  • Funeral home segment operating income for the fourth quarter was $1.5 million compared to $0.9 million in the fourth quarter in the prior year, representing an increase of $0.6 million. Full year funeral home segment operating income was $5.0 million compared to $4.0 million in the prior year period, representing an increase of $1.0 million.
  • Corporate overhead expense decreased to $9.0 million in the fourth quarter compared to $13.0 million in the fourth quarter in the prior year. Full year corporate overhead expense decreased to $36.0 million compared to $51.1 million in the prior year period.
  • Fourth quarter operating income was $3.4 million, compared to an operating loss of $17.4 million in the fourth quarter in the prior year. Full year operating income was $3.3 million, compared to an operating loss of $47.9 million in the prior year period.
  • Fourth quarter net loss from continuing operations was $5.7 million compared to $52.4 million in the fourth quarter in the prior year. Full year net loss from continuing operations was $37.3 million compared to $154.7 million in the prior year period. Full year net loss from continuing operations in the prior year period included a loss on impairment of goodwill of $24.9 million and a loss on debt extinguishment of $8.5 million.

Joe Redling, StoneMor’s President and Chief Executive Officer said, “The groundwork that was laid with our transformation initiatives, allowed StoneMor to produce another very strong quarter financially, while weathering the surge in the COVID-19 pandemic. We saw 29% year-over-year revenue growth, driven by a strong sales performance including a 20% increase in pre-need sales production. The revenue growth coupled with the continued focus on our operating initiatives and cost structure resulted in Adjusted EBITDA of $5.5 million in the fourth quarter, an improvement of $16.1 million versus the prior year.”

LIQUIDITY UPDATE

As of December 31, 2020, the Company had $60.1 million of cash, including $20.8 million of restricted cash, and $321.0 million of total debt.

“During the fourth quarter of 2020, StoneMor generated unlevered free cash flow of $4.9 million and increased the value of its trust assets by $45.6 million (net of income and principal distributions) resulting in a further deleveraging of our balance sheet,” said Jeff DiGiovanni, StoneMor’s Senior Vice President and Chief Financial Officer. “For 2021, we have set targets of $40 million in unlevered free cash flow and $50 million in growth in our trust assets (net of income and principal distributions). From a financial standpoint, we are focused on cash generation and trust asset growth as our key drivers of long-term stockholder value creation.”

Redling added “With the recent financial success, we are excited about our opportunity for future growth. A great deal of thanks and appreciation to the StoneMor team that has persevered through a difficult environment and delivered this high level of performance for the company and the communities and families we serve.”

CONFERENCE CALL INFORMATION

StoneMor will conduct a conference call to discuss this news release today, March 23, 2021 at 4:30 p.m. Eastern Time. The conference call can be accessed by calling (877) 308-6987. 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 313 cemeteries and 80 funeral homes in 26 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 unlevered free cash flow and trust asset growth 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 recent coronavirus pandemic, including the effect of government regulations issued in connection therewith, its ability to identify, and negotiate acceptable agreements with, purchasers 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 operating income, EBITDA, adjusted EBITDA, field EBITDA, unlevered cash provided by operating activities 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 facilitates 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 alternatives 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):


ADJUSTED OPERATING INCOME (LOSS)

  Three Months Ended December 31,  Year Ended December 31, 
  2020  2019  2020  2019 
Operating income (loss) from continuing operations $3,386  $(17,374) $3,341  $(47,928)
Less: Other gains (losses), net  129   (4,355)  129   (7,913)
Adjusted operating income (loss) $3,257  $(13,019) $3,212  $(40,015)
 

EBITDA, ADJUSTED EBITDA AND FIELD EBITDA

  Three Months Ended December 31,  Year Ended December 31, 
  2020  2019  2020  2019 
Net loss from continuing operations $(5,677) $(52,373) $(37,341) $(154,718)
Income tax benefit (expense)  (1,522)  23,363   (4,855)  28,204 
Interest expense  10,585   11,636   45,537   45,246 
Depreciation and amortization  2,277   2,498   9,152   10,154 
EBITDA  5,663   (14,876)  12,493   (71,114)
Less: Other gains (losses), net  129   (4,355)  129   (7,913)
Less: Loss on debt extinguishment           (8,478)
Less: Loss on impairment of goodwill           (24,862)
Adjusted EBITDA  5,534   (10,521)  12,364   (29,861)
Less: Investment and other income  14,168   10,072   43,732   36,998 
Plus: Corporate overhead  8,956   12,962   35,975   51,107 
Field EBITDA $322  $(7,631) $4,607  $(15,752)
 

UNLEVERED CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES AND UNLEVERED FREE CASH FLOW

  Three Months Ended December 31,  Year Ended December 31, 
  2020  2019  2020  2019 
Net cash provided by (used in) operating activities $(2,425) $(11,231) $1,360  $(37,986)
Cash interest payments  8,851   7,795   29,212   32,239 
Unlevered cash provided by (used in) operating activities  6,426   (3,436)  30,572   (5,747)
Less: cash paid for capital expenditures  1,576   675   6,360   6,418 
Unlevered free cash flow $4,850  $(4,111) $24,212  $(12,165)
 

STONEMOR INC.

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

  December 31,  December 31, 
  2020  2019 
Assets        
Current assets:        
Cash and cash equivalents, excluding restricted cash $39,244  $34,867 
Restricted cash  20,846   21,900 
Accounts receivable, net of allowance  57,869   54,014 
Prepaid expenses  5,290   4,619 
Assets held for sale  28,575   136,695 
Other current assets  16,884   16,882 
Total current assets  168,708   268,977 
         
Long-term accounts receivable, net of allowance  75,301   72,808 
Cemetery property  299,526   300,486 
Property and equipment, net of accumulated depreciation  83,496   91,611 
Merchandise trusts, restricted, at fair value  501,453   477,165 
Perpetual care trusts, restricted, at fair value  312,228   314,400 
Deferred selling and obtaining costs  116,900   110,684 
Deferred tax assets  9   81 
Intangible assets, net  55,094   56,246 
Other assets  22,248   26,910 
Total assets $1,634,963  $1,719,368 
         
Liabilities and Owners' Equity        
Current liabilities:        
Accounts payable and accrued liabilities $51,718  $54,854 
Liabilities held for sale  23,406   101,704 
Accrued interest  95   125 
Current portion, long-term debt  317   374 
Total current liabilities  75,536   157,057 
         
Long-term debt, net of deferred financing costs  320,715   367,963 
Deferred revenues  949,164   899,989 
Deferred tax liabilities  29,652   34,613 
Perpetual care trust corpus  312,228   314,400 
Other long-term liabilities  40,081   47,836 
Total liabilities  1,727,376   1,821,858 
Commitments and contingencies        
         
Owners' equity:        
Common stock, par value $0.01 per share, 200,000,000 shares authorized, 117,871,141 and 94,447,356 shares issued and outstanding, respectively  1,178   944 
Paid-in capital in excess of par value  (85,232)  (103,434)
Accumulated deficit  (8,359)   
Total owners' equity  (92,413)  (102,490)
Total liabilities and owners' equity $1,634,963  $1,719,368 
 

STONEMOR INC.

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

  Three Months Ended December 31,  Year Ended December 31, 
  2020  2019  2020  2019 
Revenues:                
Cemetery:                
Interments $16,311  $12,345  $67,853  $57,010 
Merchandise  15,682   11,497   60,600   59,938 
Services  18,045   14,361   65,701   62,676 
Investment and other  14,168   10,072   43,732   36,998 
Funeral home:                
Merchandise  5,536   4,792   21,637   19,682 
Services  5,164   5,213   20,016   20,938 
     Total revenues  74,906   58,280   279,539   257,242 
Costs and Expenses:                
Cost of goods sold  11,812   8,216   40,119   37,088 
Cemetery expense  18,279   16,010   68,654   69,828 
Selling expense  12,292   13,279   49,668   53,710 
General and administrative expense  9,298   9,764   37,970   40,830 
Corporate overhead  8,956   12,962   35,975   51,107 
Depreciation and amortization  2,277   2,498   9,152   10,154 
Funeral home expenses:                
Merchandise  1,602   1,418   5,872   5,725 
Services  4,398   4,255   18,078   17,144 
Other  2,735   2,897   10,839   11,671 
     Total costs and expenses  71,649   71,299   276,327   297,257 
                 
Other gains (losses), net  129   (4,355)  129   (7,913)
Operating income (loss)  3,386   (17,374)  3,341   (47,928)
Interest expense  (10,585)  (11,636)  (45,537)  (45,246)
Loss on debt extinguishment           (8,478)
Loss on goodwill impairment           (24,862)
Loss from continuing operations before income taxes  (7,199)  (29,010)  (42,196)  (126,514)
Income tax benefit (expense)  1,522   (23,363)  4,855   (28,204)
Net loss from continuing operations  (5,677)  (52,373)  (37,341)  (154,718)
Discontinued operations:                
Income from operations of discontinued businesses  86   15   28,982   2,776 
Income tax expense            
Net income from discontinued operations  86   15   28,982   2,776 
Net loss $(5,591) $(52,358) $(8,359) $(151,942)
                 
Net loss from continuing operations per common share (basic) $(0.05) $(1.24) $(0.35) $(3.91)
Net income from discontinued operations per common share (basic)  0.00   0.00   0.27   0.07 
Net loss per common share (basic) $(0.05) $(1.23) $(0.08) $(3.84)
                 
Net loss from continuing operations per common share (diluted) $(0.05) $(1.24) $(0.35) $(3.90)
Net income from discontinued operations per common share (diluted)  0.00   0.00   0.27   0.07 
Net loss per common share (diluted) $(0.05) $(1.23) $(0.08) $(3.83)
                 
Weighted average number of common shares outstanding - basic  117,862   42,401   106,991   39,614 
Weighted average number of common shares outstanding - diluted  117,955   42,401   107,001   39,677 
                 

STONEMOR INC.

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

  Year Ended December 31, 
  2020  2019 
Cash Flows From Operating Activities:        
Net loss $(8,359) $(151,942)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:        
Cost of lots sold  5,796   7,027 
Depreciation and amortization  9,395   10,782 
Provision for bad debt  6,275   7,559 
Non-cash compensation expense  1,481   3,623 
Loss on debt extinguishment     8,478 
Loss on goodwill impairment     24,862 
Non-cash interest expense  17,884   18,095 
Gain on sale of businesses  (29,429)   
Other (gains) losses, net  (129)  8,106 
Changes in assets and liabilities:        
     Accounts receivable, net of allowance  (20,453)  (8,633)
     Merchandise trust fund  (25,988)  (17,916)
     Other assets  1,675   (56)
     Deferred selling and obtaining costs  (6,376)  (3,598)
     Deferred revenues  61,611   36,656 
     Deferred taxes, net  (4,888)  27,943 
     Payables and other liabilities  (7,135)  (8,972)
          Net cash provided by (used in) operating activities  1,360   (37,986)
Cash Flows From Investing Activities:        
Cash paid for capital expenditures  (6,360)  (6,418)
Proceeds from divestitures  57,343   6,255 
          Net cash provided by (used in) investing activities  50,983   (163)
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 issuance of redeemable convertible preferred units     12,500 
Proceeds from issuance of redeemable convertible preferred units - related party     45,000 
Proceeds from borrowings  3,672   406,087 
Repayments of debt  (63,915)  (366,905)
Principal payment on finance leases  (1,561)  (1,464)
Cost of financing activities  (4,170)  (17,396)
Reduction to GP Holdings' Merger consideration due to SEC settlement - related party     (250)
Units repurchased related to unit-based compensation  (46)  (803)
          Net cash (used in) provided by financing activities  (49,020)  76,769 
Net increase in cash, cash equivalents and restricted cash  3,323   38,620 
Cash, cash equivalents and restricted cash—Beginning of period  56,767   18,147 
Cash, cash equivalents and restricted cash—End of period $60,090  $56,767 
Supplemental disclosure of cash flow information:        
Cash paid during the period for interest $29,212  $32,239 
Cash paid during the period for income taxes  1,154   1,419 
Cash paid for amounts included in the measurement of lease liabilities:        
Operating cash flows from operating leases $3,187  $3,638 
Operating cash flows from finance leases  421   495 
Financing cash flows from finance leases  1,561   1,464 
Non-cash investing and financing activities:        
Acquisition of assets by financing $62  $2,277 
Accrued paid-in-kind interest on Senior Secured Notes (defined within)  10,572   7,867 


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