StoneMor Inc. Reports Second Quarter Financial Results


BENSALEM, Pa., Aug. 11, 2022 (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 second quarter ended June 30, 2022. 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.

SECOND QUARTER FINANCIAL PERFORMANCE

  • Revenues for the second quarter were $80.0 million compared to $83.0 million in in the second quarter in the prior year. Six-month revenues were $161.0 million compared to $161.3 million in the prior year period.
    • Cemetery segment operating income for the second quarter was $5.3 million compared to $14.7 million in the second quarter in the prior year, representing a decrease of $9.3 million. Six-month cemetery segment operating income was $13.4 million compared to $26.3 million in the prior year period, representing a decrease of $13.0 million.
    • Funeral home segment operating loss for the second quarter was $0.1 million compared to operating income of $1.2 million in the second quarter in the prior year, representing a decrease of $1.4 million. Six-month funeral home segment operating income was $1.2 million compared to $2.8 million in the prior year period, representing a decrease of $1.6 million.
    • Corporate overhead expense increased to $12.8 million in the second quarter compared to $9.5 million in the second quarter in the prior year. Six-month corporate overhead expense increased to $24.6 million compared to $19.1 million in the prior year period.
  • Second quarter operating loss was $7.8 million compared to operating income of $4.1 million in the second quarter in the prior year.
  • Second quarter net loss from continuing operations was $17.3 million compared to $36.2 million in the second quarter in the prior year.
  • Second quarter adjusted EBITDA was $12.1 million compared to $32.1 million in the second quarter in the prior year.

Joe Redling, StoneMor’s President and Chief Executive Officer said, “During the second quarter of 2022, our teams continued to deliver strong sales production performance, even as we faced tough comparisons after our record performance throughout 2021. Specifically, our cemetery sales production grew 6.5% in the second quarter of 2022, compared with the same quarter of 2021, including 12% growth related to our pre-need sales production. We continue to focus on managing our costs to combat the inflationary pressures from suppliers and managing certain extraordinary costs associated with our various corporate initiatives that have had a negative impact on our performance.”

LIQUIDITY UPDATE

As of June 30, 2022, the Company had $83.3 million of cash, including $12.0 million of restricted cash, and $392.6 million of total debt.

“Through the second quarter, we remain confident that we will meet or exceed our previously announced 2022 annual guidance targets for organic growth in our trusts of $70 million and unlevered free cash flow of $40 million,” said Jeff DiGiovanni, StoneMor’s Senior Vice President and Chief Financial Officer. “For the six months ended June 30, 2022, we generated $36.6 million in organic trust growth, which excluded $10.3 million in trust funds added through our recent acquisitions, as well as $17.6 million in unlevered free cash flow.”

CONFERENCE CALL INFORMATION

StoneMor will conduct a conference call to discuss this news release today, August 11, 2022 at 4:30 p.m. Eastern Time. The conference call can be accessed by calling (800) 954-0601. No reservation number is necessary; however, 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 304 cemeteries and 72 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, statements regarding the Company’s achievement of its 2022 organic trust growth and unlevered free cash flow guidance 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 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 June 30,  Six Months Ended June 30, 
  2022  2021  2022  2021 
Net loss from continuing operations $(17,261) $(36,245) $(29,495) $(41,458)
Income tax (expense) benefit  181   (9,736)  413   (11,412)
Interest expense  9,279   9,977   18,565   20,450 
Depreciation and amortization  2,018   2,027   4,079   4,129 
Non-cash stock compensation  508   508   1,007   1,013 
Cost of lots sold  1,309   2,257   3,179   3,651 
EBITDA  (3,966)  (31,212)  (2,252)  (23,627)
Loss on debt extinguishment     40,128      40,128 
Loss on sale of businesses and other impairments  43   2,220   43   2,220 
Other (losses) gains  15   (69)  15   (69)
Change in deferred revenues  18,087   23,054   51,761   45,652 
Change in deferred selling and obtaining costs  (2,096)  (2,027)  (4,928)  (4,229)
Adjusted EBITDA $12,083  $32,094  $44,639  $60,075 


FIELD EBITDA

  Three Months Ended June 30,  Six Months Ended June 30, 
  2022  2021  2022  2021 
EBITDA $(3,966) $(31,212) $(2,252) $(23,627)
Corporate overhead  12,806   9,534   24,619   19,075 
Less: non-cash stock compensation  508   508   1,007   1,013 
Field EBITDA $8,332  $(22,186) $21,360  $(5,565)


UNLEVERED CASH PROVIDED BY OPERATING ACTIVITIES AND UNLEVERED FREE CASH FLOW

  Three Months Ended June 30,  Six Months Ended June 30, 
  2022  2021  2022  2021 
Net cash (used in) provided by operating activities $(2,204) $(6,198) $6,551  $(1,567)
Cash interest payments  17,095   22,502   17,206   31,141 
Unlevered cash provided by operating activities  14,891   16,304   23,757   29,574 
Less: cash paid for capital expenditures  3,542   1,587   6,144   3,361 
Unlevered free cash flow $11,349  $14,717  $17,613  $26,213 


STONEMOR INC.

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

  June 30,  December 31, 
  2022  2021 
Assets      
Current assets:      
Cash and cash equivalents, excluding restricted cash $71,238  $83,882 
Restricted cash  12,021   16,415 
Accounts receivable, net of allowance  65,106   62,220 
Prepaid expenses  8,073   6,971 
Other current assets  12,788   11,459 
Total current assets  169,226   180,947 
       
Long-term accounts receivable, net of allowance  76,769   72,309 
Cemetery property  299,549   296,758 
Property and equipment, net of accumulated depreciation  89,346   82,610 
Merchandise trusts, restricted, at fair value  604,760   567,853 
Perpetual care trusts, restricted, at fair value  349,150   339,138 
Deferred selling and obtaining costs  127,927   124,023 
Deferred tax assets  3   21 
Goodwill  6,774    
Intangible assets, net  51,902   54,023 
Other assets  22,629   23,462 
Total assets $1,798,035  $1,741,144 
       
Liabilities and Stockholders' Equity      
Current liabilities:      
Accounts payable and accrued liabilities $55,953  $44,704 
Accrued interest  4,344   4,344 
Current portion, long-term debt  2,576   762 
Total current liabilities  62,873   49,810 
       
Long-term debt, net of deferred financing costs  390,033   389,401 
Deferred revenues  1,118,208   1,056,260 
Deferred tax liabilities  11,093   10,878 
Perpetual care trust corpus  349,150   339,138 
Other long-term liabilities  41,343   41,399 
Total liabilities  1,972,700   1,886,886 
Commitments and contingencies      
       
Stockholders' equity:      
Common stock, par value $0.01 per share, 200,000,000 shares authorized, 118,723,067 and 118,290,600 shares issued and outstanding, respectively  1,187   1,182 
Paid-in capital in excess of par value  (82,719)  (83,286)
Accumulated deficit  (93,133)  (63,638)
Total stockholders' equity  (174,665)  (145,742)
Total liabilities and stockholders' equity $1,798,035  $1,741,144 


STONEMOR INC.

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

  Three Months Ended June 30,  Six Months Ended June 30, 
  2022  2021  2022  2021 
Revenues:            
Cemetery:            
Interments $22,136  $22,906  $43,291  $43,425 
Merchandise  19,744   17,787   34,600   34,069 
Services  18,370   17,698   35,228   34,979 
Investment and other  10,204   13,737   26,832   26,635 
Funeral home:            
Merchandise  5,040   5,449   11,085   11,422 
Services  4,553   5,404   9,988   10,764 
Total revenues  80,047   82,981   161,024   161,294 
Costs and Expenses:            
Cost of goods sold  12,519   12,435   24,058   23,619 
Cemetery expense  21,634   18,090   43,813   36,251 
Selling expense  17,289   14,776   32,862   28,983 
General and administrative expense  12,250   10,650   23,003   20,843 
Corporate overhead  12,806   9,534   24,619   19,075 
Depreciation and amortization  2,018   2,027   4,079   4,129 
Funeral home expenses:            
Merchandise  1,389   1,478   3,021   3,139 
Services  4,700   4,477   9,457   9,138 
Other  3,185   3,239   6,571   6,258 
Total costs and expenses  87,790   76,706   171,483   151,435 
             
Loss on sale of businesses and other impairments  (43)  (2,220)  (43)  (2,220)
Other (losses) gains  (15)  69   (15)  69 
Operating (loss) income  (7,801)  4,124   (10,517)  7,708 
Interest expense  (9,279)  (9,977)  (18,565)  (20,450)
Loss on debt extinguishment     (40,128)     (40,128)
Loss from continuing operations before income taxes  (17,080)  (45,981)  (29,082)  (52,870)
Income tax (expense) benefit  (181)  9,736   (413)  11,412 
Net loss from continuing operations  (17,261)  (36,245)  (29,495)  (41,458)
Discontinued operations (Note 2):            
Income from operations of discontinued businesses     860      1,449 
Income tax expense            
Net income from discontinued operations     860      1,449 
Net loss $(17,261) $(35,385) $(29,495) $(40,009)
             
Net loss from continuing operations per common share (basic) $(0.15) $(0.31) $(0.25) $(0.35)
Net income from discontinued operations per common share (basic)     0.01      0.01 
Net loss per common share (basic) $(0.15) $(0.30) $(0.25) $(0.34)
             
Net loss from continuing operations per common share (diluted) $(0.15) $(0.31) $(0.25) $(0.35)
Net income from discontinued operations per common share (diluted)     0.01      0.01 
Net loss per common share (diluted) $(0.15) $(0.30) $(0.25) $(0.34)
Weighted average number of common shares outstanding - basic  118,476   117,956   118,402   117,933 
Weighted average number of common shares outstanding - diluted  118,476   117,956   118,402   117,933 


STONEMOR INC.

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

  Six Months Ended June 30,
  2022  2021  
Cash Flows From Operating Activities:       
Net loss $(29,495) $(40,009) 
Adjustments to reconcile net loss to net cash provided by
operating activities:
       
Cost of lots sold  3,179   3,651  
Depreciation and amortization  4,079   4,169  
Provision for bad debt  2,883   3,519  
Non-cash compensation expense  1,007   1,013  
Loss on debt extinguishment     40,128  
Non-cash interest expense  1,208   3,160  
Loss on sale of businesses  43   1,353  
Other losses (gains)  15   (69) 
Changes in assets and liabilities:       
Payment of paid-in-kind interest     (18,440) 
Accounts receivable, net of allowance  (13,073)  (11,522) 
Merchandise trust fund  (22,568)  (17,378) 
Other assets  955   (2,942) 
Deferred selling and obtaining costs  (4,928)  (4,229) 
Deferred revenues  51,761   45,652  
Deferred taxes, net  233   (11,523) 
Payables and other liabilities  11,252   1,900  
Net cash provided by (used in) operating activities  6,551   (1,567) 
Cash Flows From Investing Activities:       
Cash paid for acquisitions  (18,295)    
Proceeds from divestitures  173   6,578  
Cash paid for capital expenditures  (6,144)  (3,361) 
Net cash (used in) provided by investing activities  (24,266)  3,217  
Cash Flows From Financing Activities:       
Proceeds from borrowings  6,001   404,433  
Repayments of debt  (3,897)  (329,294) 
Principal payment on finance leases  (616)  (796) 
Early redemption premium     (18,478) 
Cost of financing activities  (376)  (10,632) 
Shares repurchased related to share-based compensation  (435)    
Net cash provided by financing activities  677   45,233  
Net (decrease) increase in cash, cash equivalents and restricted cash  (17,038)  46,883  
Cash, cash equivalents and restricted cash—Beginning of period  100,297   60,090  
Cash, cash equivalents and restricted cash—End of period $83,259  $106,973  
Supplemental disclosure of cash flow information:       
Cash paid during the period for interest $17,206  $31,141  
Cash paid during the period for income taxes  2,498   1,989  
Cash paid for amounts included in the measurement of lease liabilities:       
Operating cash flows from operating leases $836  $961  
Operating cash flows from finance leases  153   166  
Financing cash flows from finance leases  616   796  
Non-cash investing and financing activities:       
Right of use assets obtained in exchange for new operating lease liabilities $47  $3,277  
Right of use assets obtained in exchange for new finance lease liabilities  197   105