TREVOSE, Pa., Nov. 07, 2019 (GLOBE NEWSWIRE) -- StoneMor Partners L.P. (NYSE: STON) (“StoneMor” or the “Partnership”), a leading owner and operator of cemeteries and funeral homes, today reported operating and financial results for the 2019 third quarter and nine-month period ended September 30, 2019.  Investors are encouraged to read the Partnership's quarterly report on Form 10-Q when it is filed with the Securities and Exchange Commission (the “SEC”).  That report, which StoneMor expects to file on November 8, 2019, will contain additional detail, and will be able to be found at www.stonemor.com.

Quarterly Summary

  • Revenues for the three months ended September 30, 2019 were $73.2 million compared to $73.2 million in the prior year period.

  • Cemetery segment income for the three months ended September 30, 2019 was $4.2 million compared to $2.1 million in the prior year period, representing an improvement of$2.1 million.

  • Funeral home segment income for the three months ended September 30, 2019 was $1.1 million compared to $1.0 million in the prior year period, representing an improvement of $0.1 million.

  • Corporate overhead expense, excluding non-recurring expenses and non-cash stock compensation expense, declined to $9.1 million in the third quarter compared to $9.6 million in the prior year period as a result of corporate cost reduction initiatives. 

  • Significant progress made on divestiture process with targeted closings beginning in the first quarter of 2020.

  • As of September 30, 2019, the Partnership had $64.1 million of cash, including $20.6 million of restricted cash, and $362.7 million of total debt.

  • Third quarter net loss was $42.7 million compared to $17.2 million in the prior year period.  The reported net loss for the third quarter included a non-cash charge of $24.9 million for impairment of goodwill.

Joe Redling, StoneMor’s President and Chief Executive Officer said, “While our year-over-year revenue was flat in the third quarter, our results demonstrate progress on our turnaround efforts as we continue to focus on increasing profitability through both revenue enhancements and cost reduction initiatives. We experienced stabilization in our pre-need sales efforts as sales production for Q3 was flat to prior year. Throughout the quarter, we saw improvements with September sales production finishing up 8% year-over-year. Additionally, we continue to benefit from executed cost reduction initiatives as our recurring fixed expenses declined compared to the prior year period.”

“We are now executing Phase II of our cost reduction efforts. We have identified additional opportunities to further reduce costs and improve operating efficiency in the areas of procurement, field operations and corporate overhead. We expect that the execution of these initiatives over the coming months will drive improved cash flow and exceed our target of $30 million of annualized cost reductions across corporate, G&A, sales and field operations.”

Divestiture Update

After a comprehensive portfolio review, the Partnership has launched an asset sale process with Johnson Consulting Group. The Partnership expects these contemplated asset sales to close in the first quarter of 2020.

Jeffrey DiGiovanni, StoneMor’s Senior Vice President and Chief Financial Officer said, “We have made significant progress on our divestiture efforts as we have launched a sale process for select assets. Preliminary due diligence has been completed and we are encouraged with the indications of interest that we have received from potential buyers. Subject to further due diligence, prospective asset sales are expected to close in the first quarter of 2020. We expect the divestitures to have a transformational impact on our business – allowing us to reduce our debt load at multiples accretive to free cash flow while improving the liquidity profile of the business and significantly reducing our operating footprint.”

Rights Offering Update

On October 25, 2019, the Partnership’s previously announced Rights Offering to unitholders closed to subscriptions. Aggregate gross proceeds to the Partnership were $3,647,256 from the subscription of 3,039,380 common units at a purchase price of $1.20 per units in the Rights Offering. As previously reported, the net proceeds were used to redeem 3,039,380 of the Partnership’s Preferred Units.

C-Corporation Conversion Update

As previously announced, a special meeting of the Partnership unitholders will be held on December 20, 2019, at the Courtyard Philadelphia Bensalem, 3280 Tillman Road, Bensalem, PA 19020, on December 20, 2019 at 10:00 a.m. Eastern Time. All Partnership common units and Series A Convertible Preferred Units of record as of the close of business on November 4, 2019, which is the record date for the special meeting, will be entitled to vote their units.   Important information about the merger and the special meeting of the Partnership’s unitholders is included in the joint proxy statement/prospectus, which has been filed with the SEC and which will be mailed to all Partnership unitholders as of the record date.

The conversion to C-Corporation status is anticipated to be completed by the end of the fourth quarter of 2019 subject to certain closing conditions under the terms of the merger agreement, including receipt of the required approval by the Partnership's unitholders and the satisfaction of other customary closing conditions.

Unit Count Update

As of September 30, 2019, the Partnership had 39.6 million common units and 52.1 preferred units outstanding. In connection with the closing of the rights offering in October, the Partnership issued approximately 3.0 million common units and redeemed approximately 3.0 million preferred units for a total of 42.6 million common units and 49.0 preferred units outstanding.  In connection with the C-Corporation conversion, and as previously disclosed, StoneMor anticipates issuing an additional 3.0 million common units. Pro forma outstanding unit count as of September 30, 2019, after giving effect to the matters noted above and the C-Corporation conversion is expected to be approximately 94.6 million units.

Conference Call Information

StoneMor will conduct a conference call to discuss this news release today, November 7, 2019 at 4:30 p.m. Eastern Time.   The conference call can be accessed by calling (800) 926-7385.  No reservation number is necessary.

About StoneMor Partners L.P.

StoneMor Partners L.P., headquartered in Trevose, Pennsylvania, is an owner and operator of cemeteries and funeral homes in the United States, with 321 cemeteries and 89 funeral homes in 27 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.

Important Information for Investors and Unitholders

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.

In connection with the proposed C-Corporation Conversion, StoneMor GP LLC (to be converted into a corporation named StoneMor Inc. (“GP”)) and the Partnership have filed with the SEC a registration statement on Form S-4, which includes a prospectus of GP and a proxy statement of the Partnership. GP and the Partnership also plan to file other documents with the SEC regarding the proposed transaction. A definitive joint proxy statement/prospectus will be mailed to the unitholders of the Partnership. INVESTORS AND UNITHOLDERS OF THE PARTNERSHIP ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS RELATING TO THE PROPOSED C-CORPORATION CONVERSION FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED C-CORPORATION CONVERSION. Investors and unitholders will be able to obtain free copies of the joint proxy statement/prospectus and other documents containing important information about GP and the Partnership through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by the Partnership will be available free of charge on their internet website at www.stonemor.com or by contacting their Investor Relations Department at (215) 826-4440.

Participants in the Solicitation

The Partnership, GP, and its directors and certain of its members and executive officers may be deemed to be participants in the solicitation of proxies from the unitholders of the Partnership in connection with the proposed transaction. Information about the directors and executive officers of GP is set forth in the Partnership’s Annual Report on Form 10-K which was filed with the SEC on April 3, 2019. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available. Free copies of these documents can be obtained using the contact information above.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this press release, including, but not limited to, information regarding the Partnership’s contemplated transition to a corporate structure and the timing of the contemplated asset divestitures, as well as continued performance and cost structure improvement efforts undertaken by the Partnership and the anticipated financial impact thereof, 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 the cash flow from pre-need and at-need sales, trusts and financings, which may impact StoneMor’s ability to meet its financial projections, service its debt and resume paying distributions, with the proposed merger and whether and when the transactions contemplated by the merger and reorganization agreement will be consummated, as well as with StoneMor’s ability to maintain an effective system of internal control over financial reporting and disclosure controls and procedures.

StoneMor’s additional risks and uncertainties include, but are not limited to: uncertainties associated with future revenue and revenue growth; uncertainties associated with the integration or anticipated benefits of recent acquisitions or any future acquisitions; StoneMor’s ability to successfully implement its strategic plan relating to completing asset divestitures and achieving operating improvements, including improving sales productivity and reducing operating expenses; the effect of economic downturns; the impact of StoneMor’s significant leverage on its operating plans; the decline in the fair value of certain equity and debt securities held in StoneMor’s trusts; StoneMor’s 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; StoneMor’s ability to successfully compete in the cemetery and funeral home industry; litigation or legal proceedings that could expose StoneMor to significant liabilities and damage StoneMor’s reputation, including but not limited to litigation and governmental investigations or proceedings arising out of or related to accounting and financial reporting matters; the effects of cyber security attacks due to StoneMor’s significant reliance on information technology; uncertainties relating to the financial condition of third-party insurance companies that fund StoneMor’s pre-need funeral contracts; and various other uncertainties associated with the death care industry and StoneMor’s operations in particular.

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.


STONEMOR PARTNERS L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)

 September 30,  December 31, 
 2019  2018 
Assets       
Current assets:       
Cash and cash equivalents, excluding restricted cash$43,515  $18,147 
Restricted cash 20,580    
Accounts receivable, net of allowance 61,470   57,928 
Prepaid expenses 5,630   4,475 
Other current assets 18,148   17,766 
Total current assets 149,343   98,316 
        
Long-term accounts receivable, net of allowance 78,138   87,148 
Cemetery property 328,612   330,841 
Property and equipment, net of accumulated depreciation 108,992   112,716 
Merchandise trusts, restricted, at fair value 519,529   488,248 
Perpetual care trusts, restricted, at fair value 343,028   330,562 
Deferred selling and obtaining costs 113,601   112,660 
Deferred tax assets 55   86 
Goodwill    24,862 
Intangible assets 56,562   61,421 
Other assets 32,663   22,241 
Total assets$1,730,523  $1,669,101 
        
Liabilities, Redeemable Convertible Preferred Units and Partners Deficit       
Current liabilities:       
Accounts payable and accrued liabilities$64,585  $59,035 
Accrued interest    1,967 
Current portion, long-term debt 503   798 
Total current liabilities 65,088   61,800 
        
Long-term debt, net of deferred financing costs 362,173   320,248 
Deferred revenues 943,555   914,286 
Deferred tax liabilities 11,264   6,675 
Perpetual care trust corpus 343,028   330,562 
Other long-term liabilities 51,941   42,108 
Total liabilities 1,777,049   1,675,679 
Commitments and contingencies       
        
Redeemable convertible preferred units:       
Series A 57,500    
Total redeemable convertible preferred units 57,500    
Partners’ deficit :       
General partner interest (5,024)  (4,008)
Common limited partners’ interest (99,002)  (2,570)
Total partners’ deficit (104,026)  (6,578)
Total liabilities, redeemable convertible preferred units and partners’ deficit$1,730,523  $1,669,101 
        


STONEMOR PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per unit data)

 Three Months Ended September 30,  Nine Months Ended September 30, 
 2019  2018  2019  2018 
Revenues:               
Cemetery:               
Interments$15,605  $17,716  $52,544  $58,130 
Merchandise 18,014   18,023   51,870   51,766 
Services 17,068   16,419   50,400   50,647 
Investment and other 10,063   9,247   29,474   30,785 
Funeral home:               
Merchandise 5,572   5,581   17,920   19,532 
Services 6,829   6,199   20,907   21,841 
  Total revenues 73,151   73,185   223,115   232,701 
Costs and Expenses:               
Cost of goods sold 10,677   12,866   31,263   39,387 
Cemetery expense 18,362   19,407   57,245   57,828 
Selling expense 14,609   14,251   44,839   47,673 
General and administrative expense 11,033   10,916   33,430   32,037 
Corporate overhead 11,595   12,876   38,145   39,868 
Depreciation and amortization 2,647   2,737   8,120   8,853 
Funeral home expenses:               
Merchandise 1,896   1,341   5,227   4,927 
Services 5,351   5,493   16,363   16,593 
Other 3,422   3,314   11,046   12,315 
  Total costs and expenses 79,592   83,201   245,678   259,481 
                
Other gains (losses), net (129)  702   (3,558)  (4,503)
Operating loss (6,570)  (9,314)  (26,121)  (31,283)
Interest expense (12,765)  (7,638)  (35,282)  (22,858)
Loss on debt extinguishment       (8,478)   
Loss on impairment of goodwill (24,862)     (24,862)   
Loss from operations before income taxes (44,197)  (16,952)  (94,743)  (54,141)
Income tax benefit (expense) 1,545   (273)  (4,841)  1,976 
Net loss$(42,652) $(17,225) $(99,584) $(52,165)
General partner’s interest$(425) $(179) $(1,017) $(543)
Limited partners’ interest$(42,227) $(17,046) $(98,567) $(51,622)
Net loss per limited partner unit (basic and diluted)$(1.09) $(0.45) $(2.56) $(1.36)
Weighted average number of limited partners’ units outstanding               
  (basic and diluted)38,91637,95938,43837,959



STONEMOR PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)

 Nine Months Ended September 30,
 2019  2018 
Cash Flows From Operating Activities:       
Net loss$(99,584) $(52,165)
Adjustments to reconcile net loss to net cash provided by operating       
  activities:
Cost of lots sold 5,339   5,850 
Depreciation and amortization 8,120   8,853 
Provision for bad debt 5,380   3,776 
Non-cash compensation expense 2,814   2,026 
Loss on debt extinguishment 8,478    
Loss on impairment of goodwill 24,862    
Non-cash interest expense 12,435   4,576 
Non-cash impairment charge and other losses, net 3,558   4,503 
Changes in assets and liabilities:       
  Accounts receivable, net of allowance (14,305)  5,574 
  Merchandise trust fund (11,137)  (6,917)
  Other assets (1,339)  (2,047)
  Deferred selling and obtaining costs (1,850)  (4,780)
  Deferred revenues 23,860   40,361 
  Deferred taxes, net 4,620   (2,545)
  Payables and other liabilities 1,995   12,346 
  Net cash (used in) provided by operating activities (26,754)  19,411 
Cash Flows From Investing Activities:       
Cash paid for capital expenditures (5,743)  (10,164)
Cash paid for acquisitions    (1,667)
Proceeds from divestitures 1,250    
Proceeds from asset sales    954 
  Net cash used in investing activities (4,493)  (10,877)
Cash Flows From Financing Activities:       
Proceeds from issuance of redeemable convertible preferred units, net 57,500    
Proceeds from borrowings 406,087   23,880 
Repayments of debt (366,644)  (27,924)
Principal payment on finance leases (1,098)   
Cost of financing activities (17,972)  (3,268)
Units repurchased and retired related to unit-based compensation (678)   
  Net cash provided by (used in) financing activities 77,195   (7,312)
Net increase in cash, cash equivalents and restricted cash 45,948   1,222 
Cash, cash equivalents and restricted cashBeginning of period 18,147   6,821 
Cash, cash equivalents and restricted cashEnd of period$64,095  $8,043 
Supplemental disclosure of cash flow information:       
Cash paid during the period for interest$24,444  $15,809 
Cash paid during the period for income taxes 1,470   1,517 
Cash paid for amounts included in the measurement of lease liabilities:       
Operating cash flows from operating leases$2,759  $ 
Operating cash flows from finance leases 370    
Financing cash flows from finance leases 1,098    
Non-cash investing and financing activities:       
Acquisition of assets by financing$2,234  $1,620 
Classification of assets as held for sale    543 


StoneMor Investor Relations
215-826-4440