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| 8-K - 8-K - STONEMOR PARTNERS LP | d85778d8k.htm |
Exhibit 99.1
StoneMor Partners L.P. Announces Second Quarter 2015 Financial Results
LEVITTOWN, PA., August 10, 2015 —StoneMor Partners L.P. (NYSE: STON) (“StoneMor”) announced its results of operations for the three months ended June 30, 2015.
Larry Miller, StoneMor’s President and CEO commented, “We’re very pleased with our second quarter results which reflected record levels of quarterly GAAP revenue of $80.8 million and, for the first time, quarterly production-based revenues (non-GAAP) exceeded $100 million, reaching a record $107.0 million. In fact, we experienced strong growth in every category of revenue as we continue to see the impact of increasing sales activity from our 2014 transactions. Driving the growth in production-based revenues were increases in pre-need cemetery revenues which rose $5.6 million, or 14.6%, at-need cemetery revenues which rose $4.3 million, or 18.7%, funeral home revenues which rose $2.7 million, or 20.4% and investment income from trusts which increased $6.0 million, or 62.7%.”
Financial Highlights
| • | Revenues (GAAP) for the three months ended June 30, 2015 reached a record $80.8 million compared to $71.5 million for the three months ended June 30, 2014, a 13.0% increase. |
| • | Production-based revenues (non-GAAP) for the three months ended June 30, 2015 reached a record $107.0 million compared to $86.9 million for the three months ended June 30, 2014, a 23.0% increase. |
| • | Operating profits (GAAP) for the three months ended June 30, 2015 were $1.3 million compared to $3.3 million in the prior year period. |
| • | Adjusted operating profits (non-GAAP) for the three months ended June 30, 2015 were $20.2 million compared to $14.3 million in the same period last year, a 41.8% increase driven largely by an increase in investment income from our trusts. |
| • | Cash flows (GAAP) used in operations for the three month period ended June 30, 2015 were $1.9 million compared to $9.7 million provided by operations in the prior year period. The decline was driven primarily by the continued ramp up of pre-need sales which increased contributions into our trusts. |
| • | Distributable free cash flow (non-GAAP) for the three-month period ended June 30, 2015 increased to $19.2 million from $15.4 million in the prior year period. The increase was driven primarily by higher pre-need sales which generated increased inflows to the merchandise trust fund. |
| • | Backlog increased by $20.2 million to $587.5 million in the period ended June 30, 2015 from March 31, 2015 and by $70.8 million compared to the prior year period. Deferred cemetery revenues, the key component of backlog that will eventually flow through the income statement, reached $661.3 million as of June 30, 2015. |
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| • | Cash, accounts receivable and merchandise trusts, net of merchandise liabilities reached $500.9 million at June 30, 2015. |
| • | Net loss (GAAP) for the three months ended June 30, 2015 was $4.8 million compared to $0.1 million in the prior-year period. Since GAAP requires the deferral of revenues and certain related direct costs until the underlying merchandise and services are delivered, our GAAP performance trails our adjusted operating performance. Therefore, our increases in adjusted operating profits (non-GAAP) have not translated into increased operating profits or net income on a GAAP basis as we continue to build our pre-need sales programs. |
“The continued strength in our revenue growth and distributable free cash flow allowed us to increase our distribution for the second quarter by $0.01 per unit to $0.65 per unit as previously announced,” continued Miller. “The $20.2 million increase in our backlog provides additional visibility into the strength of pre-need sales, a key indicator for us as we look forward. Our GAAP loss was primarily the result of the deferral of revenues mentioned above, as well as a $3.5 million increase in corporate expenses arising from a combination of budgeted spending increases to enhance our back office and management information systems capabilities, increased advertising and other expenses associated with the ongoing integration of new properties and related regulatory matters. Our trust funds provided a strong source of revenue for us, with income and gains increasing by $6.0 million (non-GAAP) and $2.6 million on a GAAP basis in the quarter.
“At the same time, our liquid net assets, as measured by cash, accounts receivable and merchandise trusts net of merchandise liabilities remains high at $500.9 million, a solid foundation on which to grow. Further, we continue to monitor the market for acquisition opportunities and subsequent to the end of the second quarter, we have acquired one cemetery and four funeral homes for an aggregate purchase price of $6.6 million. All in all, this was a solid quarter for StoneMor.”
The Company reports its financial results in accordance with U.S. GAAP. However, management believes that certain non-GAAP financial measures used in managing the business may provide investors with additional information regarding underlying trends and ongoing results on a comparable basis. Specifically, management believes that production-based revenues and adjusted operating profit allow the investor to gain insight into the current operating performance of the Company. Please see the section of this press release “Non-GAAP Financial Measures” to view the reconciliation tables. Non-GAAP financial measures used by the Company should not be considered as alternatives to GAAP financial measures, and you should not consider such non-GAAP financial measures in isolation or as a substitute for an analysis of the Company’s results as reported under U.S. GAAP.
Subsequent Event
On July 10, 2015, we completed a follow-on public offering of 2,415,000 common units at a public offering price of $29.63 per unit. Net proceeds of the offering, after deducting underwriting discounts and offering expenses, were approximately $67.8 million. The proceeds were used to pay down outstanding indebtedness under our credit facility.
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Investor Conference Call and Webcast
StoneMor will conduct a conference call to discuss 2015 second quarter financial results today, Monday, August 10, 2015 at 10:00 a.m. ET. The conference call can be accessed by calling (800) 918-9578. An audio replay of the conference call will be available by calling (800) 633-8284 through 12:00 p.m. ET on August 24, 2015. The reservation number for the audio replay is 21772727. A live webcast of the conference call will also be available to investors who may access the call through the investors section of www.stonemor.com. An audio replay of the conference call will also be archived on StoneMor’s website at www.stonemor.com.
About StoneMor Partners L.P.
StoneMor Partners L.P., headquartered in Levittown, Pennsylvania, is an owner and operator of cemeteries and funeral homes in the United States, with 304 cemeteries and 102 funeral homes in 28 states and Puerto Rico. StoneMor is the only publicly traded death care company structured as a partnership. 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 Partners L.P., please visit StoneMor’s website, and the investors section, at http://www.stonemor.com.
Forward-Looking Statements
Certain statements contained in this press release, including, but not limited to, information regarding the status and progress of our operating activities, the plans and objectives of our management, assumptions regarding our future performance and plans, and any financial guidance provided or guidance related to our future distributions are forward-looking statements.
Generally, the words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend (including, but not limited to our intent to maintain or increase our distributions),” “project,” “expect,” “predict” and similar expressions identify these forward-looking statements.
These forward-looking statements are made subject to certain risks and uncertainties that could cause actual results to differ materially from those stated or implied. Our major risk is related to uncertainties associated with the cash flow from our pre-need and at-need sales, our trusts, and financings, which may impact our ability to meet our financial projections, our ability to service our debt and pay distributions, and our ability to increase our distributions.
Our additional risks and uncertainties, include, but are not limited to, the following: uncertainties associated with future revenue and revenue growth; uncertainties associated with the integration or anticipated benefits of our recent acquisitions or any future acquisitions; our ability to complete and fund additional acquisitions; the effect of economic downturns; the impact of our significant leverage on our operating plans; the decline in the fair value of certain equity and debt securities held in our trusts; our ability to attract, train and retain an adequate number of sales people; uncertainties associated with the volume and timing of pre-need sales of cemetery services and products; increased use of cremation; changes in the death rate; changes in the political or regulatory environments, including potential changes in tax accounting and trusting policies; our ability to successfully implement a strategic plan relating to achieving operating
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improvements, strong cash flows and further deleveraging; our ability to successfully compete in the cemetery and funeral home industry; litigation or legal proceedings that could expose us to significant liabilities and damage our reputation; the effects of cyber security attacks due to our significant reliance on information technology; uncertainties relating to the financial condition of third-party insurance companies that fund our pre-need funeral contracts; and various other uncertainties associated with the death care industry and our operations in particular.
When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth in our Annual Report on Form 10-K, our Current Report on Form 8-K filed with the SEC on July 6, 2015 and our other reports filed with the SEC. Except as required under applicable law, we assume no obligation to update or revise any forward-looking statements made herein or any other forward-looking statements made by us, whether as a result of new information, future events or otherwise.
Contact: John McNamara
(215) 826-2800
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Non-GAAP Financial Measures
Production Based Revenue
We present production based revenue because management believes it provides for a useful measure of both the value of contracts written and investment and other income generated during a given period and is a critical component of adjusted operating profit.
Production based revenue is a non-GAAP financial measure that may not be consistent with other similar non-GAAP financial measures presented by other publicly traded companies.
Adjusted Operating Profit
We present Adjusted Operating Profit because management believes it provides for a useful measure of economic value added by presenting an effective matching of the value of current and future revenue sources generated within a given period to the cost of producing such revenue and managing our day to day operations within that same period. It is a significant measure that we believe is an indicator of eventual profit generated within a given period of time.
Adjusted Operating Profit is a non-GAAP financial measure that may not be consistent with other similar non-GAAP financial measures presented by other publicly traded companies.
Adjusted Operating Cash Generated
We present Adjusted Operating Cash Generated because management believes it provides for a useful measure of the amount of cash generated that is available to make capital expenditures and partner distributions once all cash flow timing issues have been settled.
Adjusted operating cash generated is a non-GAAP financial measure that may not be consistent with other similar non-GAAP financial measures presented by other publicly traded companies.
Distributable Free Cash Flow
We present Distributable Free Cash Flow because management believes this information is a useful adjunct to Net Cash Provided by (Used in) Operating Activities under GAAP. Distributable Free Cash Flow is a significant liquidity metric that we believe is an indicator of our ability to generate cash flow during any quarter at a level sufficient to pay the quarterly distribution to the holders of our common units and for other purposes, such as repaying debt and expanding through strategic investments.
Distributable Free Cash Flow is similar to quantitative standards of free cash flow used throughout the deathcare industry and to quantitative standards of distributable cash flow used throughout the investment community with respect to publicly traded partnerships, but is not intended to be a prediction of the future. However, our calculation of distributable free cash flow may not be consistent with calculations of free cash flow, distributable cash flow or other similarly titled measures of other companies. Distributable Free Cash Flow should not be used as a substitute for the GAAP measure of cash flows from operating, investing, or financing activities.
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Production Based Partners’ Capital
We present Production Based Partners’ Capital as a means to provide better insight into the value that our activities contribute to the enterprise. Because a portion of our revenues and direct selling expenses are captured on our balance sheet until we deliver the underlying goods or services, we believe that by including these items in our view of partners’ capital, we gain better insight into the value creation.
Backlog
We define backlog as deferred cemetery revenues and investment income less deferred selling and obtaining costs. It does not include deferred unrealized gains and losses on merchandise trust assets.
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Reconciliation of Production Based Revenue (non-GAAP) and Adjusted Operating
Profit (non-GAAP) to Revenue (GAAP) and Operating Profit (GAAP)
| Three months ended June 30, 2015 |
Three months ended June 30, 2014 |
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| (in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
| Segment Results (non-GAAP) |
GAAP Adjustments |
GAAP Results |
Segment Results (non-GAAP) |
GAAP Adjustments |
GAAP Results |
Change in GAAP results ($) |
Change in GAAP results (%) |
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| Revenues |
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| Pre-need cemetery revenues |
$ | 44,012 | $ | (16,187 | ) | $ | 27,825 | $ | 38,409 | $ | (12,659 | ) | $ | 25,750 | $ | 2,075 | 8.1 | % | ||||||||||||||
| At-need cemetery revenues |
27,435 | (1,200 | ) | 26,235 | 23,110 | 1,595 | 24,705 | 1,530 | 6.2 | % | ||||||||||||||||||||||
| Investment income from trusts |
15,641 | (6,562 | ) | 9,079 | 9,612 | (3,138 | ) | 6,474 | 2,605 | 40.2 | % | |||||||||||||||||||||
| Interest income |
2,184 | — | 2,184 | 2,034 | — | 2,034 | 150 | 7.4 | % | |||||||||||||||||||||||
| Funeral home revenues |
15,734 | (2,240 | ) | 13,494 | 13,066 | (1,588 | ) | 11,478 | 2,016 | 17.6 | % | |||||||||||||||||||||
| Other cemetery revenues |
1,983 | 25 | 2,008 | 682 | 410 | 1,092 | 916 | 83.9 | % | |||||||||||||||||||||||
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| Total revenues |
106,989 | (26,164 | ) | 80,825 | 86,913 | (15,380 | ) | 71,533 | 9,292 | 13.0 | % | |||||||||||||||||||||
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| Costs and expenses |
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| Cost of goods sold |
12,529 | (2,722 | ) | 9,807 | 10,510 | (1,860 | ) | 8,650 | 1,157 | 13.4 | % | |||||||||||||||||||||
| Cemetery expense |
19,279 | — | 19,279 | 16,141 | — | 16,141 | 3,138 | 19.4 | % | |||||||||||||||||||||||
| Selling expense |
19,738 | (3,969 | ) | 15,769 | 17,198 | (2,337 | ) | 14,861 | 908 | 6.1 | % | |||||||||||||||||||||
| General and administrative expense |
9,192 | — | 9,192 | 8,880 | — | 8,880 | 312 | 3.5 | % | |||||||||||||||||||||||
| Corporate overhead |
10,093 | — | 10,093 | 6,546 | — | 6,546 | 3,547 | 54.2 | % | |||||||||||||||||||||||
| Depreciation and amortization |
2,944 | — | 2,944 | 2,513 | — | 2,513 | 431 | 17.2 | % | |||||||||||||||||||||||
| Funeral home expense |
12,675 | (526 | ) | 12,149 | 9,635 | (199 | ) | 9,436 | 2,713 | 28.8 | % | |||||||||||||||||||||
| Acquisition related costs, net of recoveries |
336 | — | 336 | 1,240 | — | 1,240 | (904 | ) | -72.9 | % | ||||||||||||||||||||||
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| Total costs and expenses |
86,786 | (7,217 | ) | 79,569 | 72,663 | (4,396 | ) | 68,267 | 11,302 | 16.6 | % | |||||||||||||||||||||
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| Operating profit |
$ | 20,203 | $ | (18,947 | ) | $ | 1,256 | $ | 14,250 | $ | (10,984 | ) | $ | 3,266 | $ | (2,010 | ) | -61.5 | % | |||||||||||||
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| Six months ended June 30, 2015 |
Six months ended June 30, 2014 |
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| (in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
| Segment Results (non-GAAP) |
GAAP Adjustments |
GAAP Results |
Segment Results (non-GAAP) |
GAAP Adjustments |
GAAP Results |
Change in GAAP results ($) |
Change in GAAP results (%) |
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| Revenues |
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| Pre-need cemetery revenues |
$ | 79,905 | $ | (31,418 | ) | $ | 48,487 | $ | 68,385 | $ | (21,927 | ) | $ | 46,458 | $ | 2,029 | 4.4 | % | ||||||||||||||
| At-need cemetery revenues |
53,411 | (3,858 | ) | 49,553 | 42,958 | 370 | 43,328 | 6,225 | 14.4 | % | ||||||||||||||||||||||
| Investment income from trusts |
27,626 | (14,011 | ) | 13,615 | 25,240 | (12,789 | ) | 12,451 | 1,164 | 9.3 | % | |||||||||||||||||||||
| Interest income |
4,384 | — | 4,384 | 4,041 | — | 4,041 | 343 | 8.5 | % | |||||||||||||||||||||||
| Funeral home revenues |
33,149 | (4,395 | ) | 28,754 | 26,320 | (3,095 | ) | 23,225 | 5,529 | 23.8 | % | |||||||||||||||||||||
| Other cemetery revenues |
3,044 | 405 | 3,449 | 5,708 | 709 | 6,417 | (2,968 | ) | -46.3 | % | ||||||||||||||||||||||
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| Total revenues (a) |
201,519 | (53,277 | ) | 148,242 | 172,652 | (36,732 | ) | 135,920 | 12,322 | 9.1 | % | |||||||||||||||||||||
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| Costs and expenses |
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| Cost of goods sold |
22,266 | (5,376 | ) | 16,890 | 19,757 | (3,603 | ) | 16,154 | 736 | 4.6 | % | |||||||||||||||||||||
| Cemetery expense |
35,544 | — | 35,544 | 29,470 | — | 29,470 | 6,074 | 20.6 | % | |||||||||||||||||||||||
| Selling expense |
38,242 | (8,563 | ) | 29,679 | 31,027 | (4,977 | ) | 26,050 | 3,629 | 13.9 | % | |||||||||||||||||||||
| General and administrative expense |
18,521 | — | 18,521 | 16,525 | — | 16,525 | 1,996 | 12.1 | % | |||||||||||||||||||||||
| Corporate overhead |
18,827 | — | 18,827 | 14,002 | — | 14,002 | 4,825 | 34.5 | % | |||||||||||||||||||||||
| Depreciation and amortization |
5,896 | — | 5,896 | 4,881 | — | 4,881 | 1,015 | 20.8 | % | |||||||||||||||||||||||
| Funeral home expense |
25,286 | (987 | ) | 24,299 | 19,139 | (417 | ) | 18,722 | 5,577 | 29.8 | % | |||||||||||||||||||||
| Acquisition related costs, net of recoveries |
685 | — | 685 | 1,589 | — | 1,589 | (904 | ) | -56.9 | % | ||||||||||||||||||||||
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| Total costs and expenses |
165,267 | (14,926 | ) | 150,341 | 136,390 | (8,997 | ) | 127,393 | 22,948 | 18.0 | % | |||||||||||||||||||||
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| Operating profit (loss) (a) |
$ | 36,252 | $ | (38,351 | ) | $ | (2,099 | ) | $ | 36,262 | $ | (27,735 | ) | $ | 8,527 | $ | (10,626 | ) | -124.6 | % | ||||||||||||
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| (a) | The comparisons of these metrics were impacted by the one-time land sale in the first quarter of 2014. |
The tables above analyze our results of operations and the changes therein for the three months and six months ended June 30, 2015, as compared to the same periods last year. The table is structured so that our readers can determine whether changes were based upon changes in the level of merchandise and services and other revenues generated during the periods and/ or changes in the timing when merchandise and services were delivered.
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Critical Financial Measures
| Three months ended June 30, |
Six months ended June 30, |
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| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||
| Total revenues (a) (c) |
$ | 80,825 | $ | 71,533 | $ | 148,242 | $ | 135,920 | ||||||||
| Production based revenue consisting of the total value of cemetery contracts written, funeral home revenues and investment and other income (b) (c) |
106,989 | 86,913 | 201,519 | 172,652 | ||||||||||||
| Operating profit (loss) (a) (c) |
1,256 | 3,266 | (2,099 | ) | 8,527 | |||||||||||
| Adjusted operating profit (b) (c) |
20,203 | 14,250 | 36,252 | 36,262 | ||||||||||||
| Net income (loss) (a) (c) |
(4,848 | ) | (118 | ) | (13,731 | ) | 291 | |||||||||
| Operating cash flows (a) (c) |
(1,878 | ) | 9,691 | 3,975 | 6,751 | |||||||||||
| Adjusted operating cash generated (b) (c) |
20,920 | 16,917 | 37,447 | 39,985 | ||||||||||||
| Distributable free cash flow generated (b) (c) |
$ | 19,191 | $ | 15,383 | $ | 34,753 | $ | 37,470 | ||||||||
| As of | As of | |||||||
| June 30, 2015 | December 31, 2014 | |||||||
| Distribution coverage quarters (b) |
5.51 | 8.10 | ||||||
| (a) | This is a GAAP financial measure. |
| (b) | This is a non-GAAP financial measure as defined by the Securities and Exchange Commission. Please see the reconciliation to GAAP measures or support calculation within this press release. |
| (c) | The comparison of these metrics for the six months ended period were impacted by the one-time land sale in the first quarter of 2014. |
Reconciliation of Adjusted Operating Profit (non-GAAP) to Operating Profit (GAAP)
| Three months ended June 30, |
Six months ended June 30, |
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| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||
| GAAP operating profit (loss) |
$ | 1,256 | $ | 3,266 | $ | (2,099 | ) | $ | 8,527 | |||||||
| Increase in applicable deferred revenues |
26,164 | 15,380 | 53,277 | 36,732 | ||||||||||||
| Increase in deferred cost of goods sold and selling and obtaining costs |
(7,217 | ) | (4,396 | ) | (14,926 | ) | (8,997 | ) | ||||||||
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| Adjusted operating profit |
$ | 20,203 | $ | 14,250 | $ | 36,252 | $ | 36,262 | ||||||||
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Reconciliation of Production Based Revenues (non-GAAP) to Revenues (GAAP)
| Three months ended June 30, |
Increase (Decrease) ($) |
Increase (Decrease) (%) |
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| 2015 | 2014 | |||||||||||||||
| (in thousands) | ||||||||||||||||
| Value of pre-need cemetery contracts written |
$ | 44,012 | $ | 38,409 | $ | 5,603 | 14.6 | % | ||||||||
| Value of at-need cemetery contracts written |
27,435 | 23,110 | 4,325 | 18.7 | % | |||||||||||
| Investment income from trusts |
15,641 | 9,612 | 6,029 | 62.7 | % | |||||||||||
| Interest income |
2,184 | 2,034 | 150 | 7.4 | % | |||||||||||
| Funeral home revenues |
15,734 | 13,066 | 2,668 | 20.4 | % | |||||||||||
| Other cemetery revenues |
1,983 | 682 | 1,301 | 190.8 | % | |||||||||||
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| Total production based revenues |
106,989 | 86,913 | 20,076 | 23.1 | % | |||||||||||
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| Less: |
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| Increase in deferred sales revenue and investment income |
(26,164 | ) | (15,380 | ) | (10,784 | ) | 70.1 | % | ||||||||
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| Total GAAP revenues |
$ | 80,825 | $ | 71,533 | $ | 9,292 | 13.0 | % | ||||||||
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Reconciliation of Adjusted Operating Cash Flows (non-GAAP) and Distributable
Free Cash Flow (Non-GAAP) to Operating Cash Flows (GAAP)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||
| GAAP operating cash flows |
$ | (1,878 | ) | $ | 9,691 | $ | 3,975 | $ | 6,751 | |||||||
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| Add net cash inflows into the merchandise trust |
13,247 | (128 | ) | 23,478 | 16,292 | |||||||||||
| Add net increase (decrease) in accounts receivable |
6,590 | 6,855 | 11,786 | 10,023 | ||||||||||||
| Add net decrease (increase) in merchandise liabilities |
(3,697 | ) | 923 | (3,852 | ) | 1,752 | ||||||||||
| Add net decrease (deduct net increase) in accounts payable and accrued expenses |
(2,832 | ) | (10,089 | ) | (5,356 | ) | (525 | ) | ||||||||
| Other float related changes |
9,490 | 9,665 | 7,416 | 5,692 | ||||||||||||
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| Adjusted operating cash flow generated |
20,920 | 16,917 | 37,447 | 39,985 | ||||||||||||
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| Less: maintenance capital expenditures |
(2,065 | ) | (2,774 | ) | (3,379 | ) | (4,104 | ) | ||||||||
| Plus: growth capital expenditures reclassified as operating expenses and deducted from adjusted operating cash generated (a) |
336 | 1,240 | 685 | 1,589 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Distributable free cash flow generated |
19,191 | 15,383 | 34,753 | 37,470 | ||||||||||||
| Cash on hand - beginning of the period |
6,397 | 8,240 | 10,401 | 12,175 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Distributable cash available for the period |
25,588 | 23,623 | 45,154 | 49,645 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Partner distributions made |
$ | 18,349 | $ | 14,834 | $ | 36,297 | $ | 28,225 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | We maintain a credit facility from which we borrow to make acquisitions and pay acquisition related costs. We utilize this facility for these costs. Accordingly, distributable free cash flow is not negatively impacted by amounts spent on acquisitions that are recorded as expenses. |
9
Production Based Partners’ Capital
| As of | As of | |||||||
| June 30, 2015 | December 31, 2014 | |||||||
| (in thousands) | ||||||||
| Partners’ capital |
$ | 159,281 | $ | 208,762 | ||||
| Deferred selling and obtaining costs |
(105,278 | ) | (97,795 | ) | ||||
| Deferred cemetery revenues, net |
661,282 | 643,408 | ||||||
|
|
|
|
|
|||||
| Production based partners’ capital |
$ | 715,285 | $ | 754,375 | ||||
|
|
|
|
|
|||||
Selected Net Assets
| As of | As of | |||||||
| June 30, 2015 | December 31, 2014 | |||||||
| (in thousands) | ||||||||
| Selected assets: |
||||||||
| Cash and cash equivalents |
$ | 13,403 | $ | 10,401 | ||||
| Accounts receivable, net of allowance |
67,761 | 62,503 | ||||||
| Long-term accounts receivable, net of allowance |
93,747 | 89,536 | ||||||
| Merchandise trusts, restricted, at fair value |
478,927 | 484,820 | ||||||
|
|
|
|
|
|||||
| Total selected assets |
653,838 | 647,260 | ||||||
|
|
|
|
|
|||||
| Selected liabilities: |
||||||||
| Accounts payable and accrued liabilities |
40,711 | 35,382 | ||||||
| Accrued interest |
1,356 | 1,219 | ||||||
| Current portion, long-term debt |
4,552 | 2,251 | ||||||
| Other long-term liabilities |
1,185 | 1,292 | ||||||
| Long-term debt |
326,206 | 285,378 | ||||||
| Deferred tax liabilities |
17,665 | 17,708 | ||||||
| Merchandise liability |
152,899 | 150,192 | ||||||
|
|
|
|
|
|||||
| Total selected liabilities |
544,574 | 493,422 | ||||||
|
|
|
|
|
|||||
| Total selected net assets |
$ | 109,264 | $ | 153,838 | ||||
|
|
|
|
|
|||||
| Distribution coverage quarters (a) |
5.51 | 8.10 | ||||||
| (a) | This is a measure of the ratio of selected net assets to a quarterly distribution amount. The quarterly distribution amount is calculated by taking the end of the period outstanding common units (29,312,692 at June 30, 2015 and 29,203,595 at December 31, 2014, respectively) and multiplying these units by the declared distributions during the quarters preceding the reporting dates. This total is then added to the distribution due to the General Partner based upon the same variables. |
10
StoneMor Partners L.P.
Condensed Consolidated Balance Sheet
(in thousands)
(unaudited)
| June 30, 2015 |
December 31, 2014 |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 13,403 | $ | 10,401 | ||||
| Accounts receivable, net of allowance |
67,761 | 62,503 | ||||||
| Prepaid expenses |
6,247 | 4,708 | ||||||
| Other current assets |
31,696 | 24,266 | ||||||
|
|
|
|
|
|||||
| Total current assets |
119,107 | 101,878 | ||||||
| Long-term accounts receivable, net of allowance |
93,747 | 89,536 | ||||||
| Cemetery property |
339,596 | 339,848 | ||||||
| Property and equipment, net of accumulated depreciation |
99,245 | 100,391 | ||||||
| Merchandise trusts, restricted, at fair value |
478,927 | 484,820 | ||||||
| Perpetual care trusts, restricted, at fair value |
332,110 | 345,105 | ||||||
| Deferred financing costs, net of accumulated amortization |
8,291 | 9,089 | ||||||
| Deferred selling and obtaining costs |
105,278 | 97,795 | ||||||
| Deferred tax assets |
42 | 40 | ||||||
| Goodwill |
58,836 | 58,836 | ||||||
| Intangible assets |
67,891 | 68,990 | ||||||
| Other assets |
3,300 | 3,136 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 1,706,370 | $ | 1,699,464 | ||||
|
|
|
|
|
|||||
| Liabilities and partners’ capital |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued liabilities |
$ | 40,711 | $ | 35,382 | ||||
| Accrued interest |
1,356 | 1,219 | ||||||
| Current portion, long-term debt |
4,552 | 2,251 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
46,619 | 38,852 | ||||||
| Other long-term liabilities |
1,185 | 1,292 | ||||||
| Obligation for lease and management agreements, net |
9,123 | 8,767 | ||||||
| Long-term debt |
326,206 | 285,378 | ||||||
| Deferred cemetery revenues, net |
661,282 | 643,408 | ||||||
| Deferred tax liabilities |
17,665 | 17,708 | ||||||
| Merchandise liability |
152,899 | 150,192 | ||||||
| Perpetual care trust corpus |
332,110 | 345,105 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
1,547,089 | 1,490,702 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies |
||||||||
| Partners’ capital (deficit) |
||||||||
| General partner deficit |
(7,336 | ) | (5,113 | ) | ||||
| Common partners, 29,313 and 29,204 units outstanding as of June 30, 2015 and December 31, 2014, respectively |
166,617 | 213,875 | ||||||
|
|
|
|
|
|||||
| Total partners’ capital |
159,281 | 208,762 | ||||||
|
|
|
|
|
|||||
| Total liabilities and partners’ capital |
$ | 1,706,370 | $ | 1,699,464 | ||||
|
|
|
|
|
|||||
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements in the Quarterly Report to be filed on Form 10-Q for the quarter ended June 30, 2015.
11
StoneMor Partners L.P.
Condensed Consolidated Statement of Operations
(in thousands, except per unit data)
(unaudited)
| Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Revenues: |
||||||||||||||||
| Cemetery |
||||||||||||||||
| Merchandise |
$ | 36,042 | $ | 34,572 | $ | 62,979 | $ | 60,640 | ||||||||
| Services |
14,591 | 12,492 | 28,501 | 22,789 | ||||||||||||
| Investment and other |
16,698 | 12,991 | 28,008 | 29,266 | ||||||||||||
| Funeral home |
||||||||||||||||
| Merchandise |
6,250 | 4,966 | 13,325 | 10,018 | ||||||||||||
| Services |
7,244 | 6,512 | 15,429 | 13,207 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
80,825 | 71,533 | 148,242 | 135,920 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Costs and expenses: |
||||||||||||||||
| Cost of goods sold (exclusive of depreciation shown separately below): |
||||||||||||||||
| Perpetual care |
2,067 | 1,821 | 3,734 | 3,212 | ||||||||||||
| Merchandise |
7,740 | 6,829 | 13,156 | 12,942 | ||||||||||||
| Cemetery expense |
19,279 | 16,141 | 35,544 | 29,470 | ||||||||||||
| Selling expense |
15,769 | 14,861 | 29,679 | 26,050 | ||||||||||||
| General and administrative expense |
9,192 | 8,880 | 18,521 | 16,525 | ||||||||||||
| Corporate overhead (including $275 and $266 in unit-based compensation for the three months ended June 30, 2015 and 2014, and $547 and $537 for the six months ended June 30, 2015 and 2014, respectively) |
10,093 | 6,546 | 18,827 | 14,002 | ||||||||||||
| Depreciation and amortization |
2,944 | 2,513 | 5,896 | 4,881 | ||||||||||||
| Funeral home expense |
||||||||||||||||
| Merchandise |
2,066 | 1,604 | 4,442 | 3,250 | ||||||||||||
| Services |
5,703 | 4,714 | 11,296 | 9,501 | ||||||||||||
| Other |
4,380 | 3,118 | 8,561 | 5,971 | ||||||||||||
| Acquisition related costs, net of recoveries |
336 | 1,240 | 685 | 1,589 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total cost and expenses |
79,569 | 68,267 | 150,341 | 127,393 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit (loss) |
1,256 | 3,266 | (2,099 | ) | 8,527 | |||||||||||
| Gain on acquisition |
— | — | — | 412 | ||||||||||||
| Gain on settlement agreement, net |
— | 888 | — | 888 | ||||||||||||
| Interest expense |
5,770 | 5,148 | 11,233 | 10,722 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) before income taxes |
(4,514 | ) | (994 | ) | (13,332 | ) | (895 | ) | ||||||||
| Income tax expense (benefit) |
334 | (876 | ) | 399 | (1,186 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
$ | (4,848 | ) | $ | (118 | ) | $ | (13,731 | ) | $ | 291 | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| General partner’s interest in net income (loss) for the period |
$ | (65 | ) | $ | (9 | ) | $ | (185 | ) | $ | (5 | ) | ||||
| Limited partners’ interest in net income (loss) for the period |
$ | (4,783 | ) | $ | (109 | ) | $ | (13,546 | ) | $ | 296 | |||||
| Net income (loss) per limited partner unit (basic and diluted) |
$ | (.16 | ) | $ | — | $ | (.46 | ) | $ | .01 | ||||||
| Weighted average number of limited partners’ units outstanding - basic |
29,286 | 25,552 | 29,258 | 24,031 | ||||||||||||
| Weighted average number of limited partners’ units outstanding - diluted |
29,286 | 25,552 | 29,258 | 24,312 | ||||||||||||
| Distributions declared per unit |
$ | .640 | $ | .600 | $ | 1.270 | $ | 1.200 | ||||||||
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements in the Quarterly Report to be filed on Form 10-Q for the quarter ended June 30, 2015.
12
StoneMor Partners L.P.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Operating activities: |
||||||||||||||||
| Net income (loss) |
$ | (4,848 | ) | $ | (118 | ) | $ | (13,731 | ) | $ | 291 | |||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
||||||||||||||||
| Cost of lots sold |
2,869 | 2,599 | 4,917 | 5,656 | ||||||||||||
| Depreciation and amortization |
2,944 | 2,513 | 5,896 | 4,881 | ||||||||||||
| Unit-based compensation |
275 | 266 | 547 | 537 | ||||||||||||
| Accretion of debt discounts |
733 | 673 | 1,467 | 1,297 | ||||||||||||
| Gain on acquisition |
— | — | — | (412 | ) | |||||||||||
| Changes in assets and liabilities that provided (used) cash: |
||||||||||||||||
| Accounts receivable |
(6,590 | ) | (6,855 | ) | (11,786 | ) | (10,023 | ) | ||||||||
| Allowance for doubtful accounts |
1,598 | 2,186 | 2,317 | 2,891 | ||||||||||||
| Merchandise trust fund |
(13,247 | ) | 128 | (23,478 | ) | (16,292 | ) | |||||||||
| Prepaid expenses |
(3,140 | ) | (3,718 | ) | (1,539 | ) | (2,576 | ) | ||||||||
| Other current assets |
(7,082 | ) | (5,695 | ) | (7,430 | ) | (2,301 | ) | ||||||||
| Other assets |
(101 | ) | (1,085 | ) | (193 | ) | (1,129 | ) | ||||||||
| Accounts payable and accrued and other liabilities |
2,832 | 10,089 | 5,356 | 525 | ||||||||||||
| Deferred selling and obtaining costs |
(2,374 | ) | (2,571 | ) | (7,483 | ) | (5,374 | ) | ||||||||
| Deferred cemetery revenue |
20,465 | 13,323 | 45,307 | 32,204 | ||||||||||||
| Deferred taxes (net) |
91 | (1,121 | ) | (44 | ) | (1,672 | ) | |||||||||
| Merchandise liability |
3,697 | (923 | ) | 3,852 | (1,752 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash provided by (used in) operating activities |
(1,878 | ) | 9,691 | 3,975 | 6,751 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Investing activities: |
||||||||||||||||
| Cash paid for cemetery property |
(2,370 | ) | (2,166 | ) | (3,871 | ) | (2,914 | ) | ||||||||
| Purchase of subsidiaries |
— | (53,800 | ) | — | (54,000 | ) | ||||||||||
| Consideration for lease and management agreements |
— | (53,000 | ) | — | (53,000 | ) | ||||||||||
| Cash paid for property and equipment |
(2,065 | ) | (2,774 | ) | (3,379 | ) | (4,104 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash used in investing activities |
(4,435 | ) | (111,740 | ) | (7,250 | ) | (114,018 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Financing activities: |
||||||||||||||||
| Cash distributions |
(18,349 | ) | (14,834 | ) | (36,297 | ) | (28,225 | ) | ||||||||
| Additional borrowings on long-term debt |
36,488 | 22,872 | 56,823 | 39,872 | ||||||||||||
| Repayments of long-term debt |
(4,820 | ) | (19,645 | ) | (14,215 | ) | (75,149 | ) | ||||||||
| Proceeds from public offering |
— | 67,273 | — | 120,451 | ||||||||||||
| Proceeds from issuance of common units |
— | 53,430 | — | 53,430 | ||||||||||||
| Cost of financing activities |
— | — | (34 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash provided by financing activities |
13,319 | 109,096 | 6,277 | 110,379 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in cash and cash equivalents |
7,006 | 7,047 | 3,002 | 3,112 | ||||||||||||
| Cash and cash equivalents - Beginning of period |
6,397 | 8,240 | 10,401 | 12,175 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Cash and cash equivalents - End of period |
$ | 13,403 | $ | 15,287 | $ | 13,403 | $ | 15,287 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Supplemental disclosure of cash flow information: |
||||||||||||||||
| Cash paid during the period for interest |
$ | 8,375 | $ | 7,972 | $ | 9,551 | $ | 9,395 | ||||||||
| Cash paid during the period for income taxes |
$ | 3,450 | $ | 3,152 | $ | 3,516 | $ | 3,152 | ||||||||
| Non-cash investing and financing activities: |
||||||||||||||||
| Acquisition of assets by financing |
$ | 105 | $ | 20 | $ | 242 | $ | 50 | ||||||||
| Acquisition of assets by assumption of directly related liability |
$ | — | $ | 8,368 | $ | — | $ | 8,368 | ||||||||
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements in the Quarterly Report to be filed on Form 10-Q for the quarter ended June 30, 2015.
13