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StoneMor Partners L.P. Reports Operating and Financial Results For 2018 Fourth Quarter and Full Year

TREVOSE, Pa., April 03, 2019 (GLOBE NEWSWIRE) -- StoneMor Partners L.P. (STON) (“StoneMor” or the “Partnership”), a leading owner and operator of cemeteries and funeral homes, today reported operating and financial results for the fourth quarter and full year 2018.  Investors are encouraged to read the Partnership's annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), which contains additional details, and can be found at www.stonemor.com.

FOURTH QUARTER AND FULL YEAR FINANCIAL PERFORMANCE

  • Revenues for the fourth quarter were $83.4 compared to $85.3 million in the prior year period.  Full year revenues were $316.1 million compared to $338.2 million in the prior year.  Revenue declines in both periods were due to lower sales of cemetery and funeral home merchandise and services, offset slightly by an increase in cemetery interments.   Investment and other income for 2018 was$42.3 million, a decrease of $13.0 million from the prior year primarily due to the impact from the adoption of ASC 606, which reduced revenue associated with document fees by $11.4 million.
  • Fourth quarter net loss was $20.5 million compared to $45.5 million in the prior year period and a loss of $72.7 million for the full year compared to $75.2 million in the prior year period.  Losses in quarter and year ended December 31, 2018 were driven primarily by lower sales of cemetery and funeral home merchandise and services, as well as the continued impact of higher corporate and professional fees associated with delayed SEC filings, work related to our planned conversion to a C-Corp and legal costs. Losses in the fourth quarter of 2017 were primarily driven by the previously disclosed impairment of goodwill related to funeral home operations.
  • Cemetery segment income for the 2018 fourth quarter was $6.6 million compared to $7.6 million for the prior year period.  The decline in segment income was primarily due to an increase in certain costs associated with the rollout of the general manager model across our cemetery network.
  • Funeral segment income was $1.5 million for the 2018 fourth quarter compared to $1.4 million in the prior year period.  The increase in segment income was due primarily to a reduction in year over year costs and expenses.
  • Cash from operating activities for the full year was $26.5 million compared to $15.0 million in the prior year period. 
  • Merchandise trust value at December 31, 2018 was $488.2 million compared to $515.5 million at December 31, 2017. 
  • Deferred revenue at December 31, 2018 was $914.3 million compared to $912.6 million at December 31, 2017. 
  • As of December 31, 2018, the Partnership had $18.1 million of cash and cash equivalents and $321.1 million of total debt, including $155.7 million outstanding under its revolving credit facility.
  • The Partnership expects to report financial results for the first quarter of 2019 during the week of May 13, 2019, and anticipates it will host an investor conference call in connection with the announcement of those results. 

Joe Redling, StoneMor’s President and Chief Executive Officer, said, “2018 was a transitional year for StoneMor on many levels.  Among the major developments, I joined the company as its new CEO in late July and immediately began developing a turnaround plan. Several months earlier, industry veteran Jim Ford had been appointed the company’s new COO.  We welcomed two new independent board members and announced our intent to convert to a C-Corporation.  During the fourth quarter, we began to implement a number of strategic, operational and organizational initiatives that we expect will drive better efficiencies and improve profitability.  These initiatives include a major cost reduction effort, a reorganization to decentralize operations to drive more accountability at the local level and a thorough asset review to prioritize resources to our top tier properties while evaluating the strategic options of our lower performing locations.” 

“Our cost reduction effort is well underway. To date, we have identified approximately $25 million in expense reductions that we believe will be eliminated by the end of 2019.  While many of these cost reductions have already been put in place, certain one-time costs specifically related to getting current in our financial filings, finalizing the amendments to our credit facility and the C-Corp conversion process kept overall costs higher than would otherwise be the case.  We expect, as these non-recurring costs begin to roll off throughout 2019, that investors will begin to see the impact of these efforts.  We also announced that we are working to refinance our existing credit facility and that we have retained an investment banker to assist in the process.  While there is nothing to report as of yet, the process is underway and we look forward to disclosing the details when the refinancing is complete.”

“We are committed to enhancing unitholder value, demonstrating compassion and dignity for our customers, and creating a rewarding work environment for our employees.  We look forward to providing more details on the progress we have made when we report our 2019 first quarter results next month, at which time we anticipate hosting an investor conference call.”

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 322 cemeteries and 90 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

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this press release, including, but not limited to, information regarding the expected timing of filing the Annual Report on Form 10-K Report for the Year Ended December 31, 2018 (the “2018 10-K”), announcement of first quarter 2019 results and operational improvements and expectations regarding the next investor conference call, 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 our substantial secured and unsecured indebtedness, our ability to refinance our secured indebtedness in the near term, 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, 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: the consequences if the Partnership is not able to file the 2018 10-K today, including that the U.S. Securities and Exchange Commission could institute an administrative proceeding seeking the revocation of the registration of the Partnership’s common units under the Exchange Act, that the Partnership would be delinquent in its required filings with the New York Stock Exchange (“NYSE”) and could ultimately face the possible delisting of its common units from the NYSE, that  the Partnership would be in default under its amended credit facility and, if the Partnership fails to file the 2018 10-K within 120 days after notice from the trustee under the indenture governing its senior notes, under the indenture; the Partnership’s ability to obtain relief from its creditors if it cannot file the 2018 10-K today or within 120 days after notice from the trustee under the indenture governing its senior notes, the terms on which such relief might be granted and any restrictions that might be imposed in connection with any relief that might be obtained; uncertainty associated with the consummation of the Partnership’s reorganization transactions; StoneMor’s ability to successfully implement its strategic plan relating to 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 for the Year Ended December 31, 2017 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.
CONSOLIDATED BALANCE SHEETS
(in thousands)

  December 31,  
  2018     2017  
Assets              
Current assets:              
Cash and cash equivalents $ 18,147     $ 6,821  
Accounts receivable, net of allowance   57,928       79,116  
Prepaid expenses   4,475       4,580  
Assets held for sale   757       1,016  
Other current assets   17,009       21,453  
Total current assets   98,316       112,986  
               
Long-term accounts receivable, net of allowance   87,148       105,935  
Cemetery property   330,841       333,404  
Property and equipment, net of accumulated depreciation   112,716       114,090  
Merchandise trusts, restricted, at fair value   488,248       515,456  
Perpetual care trusts, restricted, at fair value   330,562       339,928  
Deferred selling and obtaining costs   112,660       126,398  
Deferred tax assets   86       84  
Goodwill   24,862       24,862  
Intangible assets   61,421       63,244  
Other assets   22,241       19,695  
Total assets $ 1,669,101     $ 1,756,082  
               
Liabilities and Partners Capital              
Current liabilities:              
Accounts payable and accrued liabilities $ 59,035     $ 43,023  
Accrued interest   1,967       1,781  
Current portion, long-term debt   798       1,002  
Total current liabilities   61,800       45,806  
               
Long-term debt, net of deferred financing costs   320,248       317,693  
Deferred revenues   914,286       912,626  
Deferred tax liabilities   6,675       9,638  
Perpetual care trust corpus   330,562       339,928  
Other long-term liabilities   42,108       38,695  
Total liabilities   1,675,679       1,664,386  
Commitments and contingencies              
Partners’ (deficit) capital:              
General partner interest   (4,008 )     (2,959 )
Common limited partners’ interest   (2,570 )     94,655  
Total partners’ (deficit) capital   (6,578 )     91,696  
Total liabilities and partners’ capital $ 1,669,101     $ 1,756,082  
               

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

  Years Ended December 31,  
  2018     2017  
Revenues:              
Cemetery:              
Interments $ 76,902     $ 75,077  
Merchandise   75,412       75,602  
Services   67,278       70,704  
Investment and other   42,343       55,313  
Funeral home:              
Merchandise   25,652       27,767  
Services   28,539       33,764  
Total revenues   316,126       338,227  
Costs and Expenses:              
Cost of goods sold   54,647       51,899  
Cemetery expense   78,708       76,857  
Selling expense   62,538       66,083  
General and administrative expense   43,081       39,111  
Corporate overhead   53,281       51,964  
Depreciation and amortization   11,736       13,183  
Funeral home expenses:              
Merchandise   6,579       7,131  
Services   22,159       22,929  
Other   15,787       19,743  
Total costs and expenses   348,516       348,900  
               
Gain on acquisitions and divestitures   691       858  
Loss on goodwill impairment         (45,574 )
Other losses, net   (12,195 )     (2,045 )
Operating loss   (43,894 )     (57,434 )
Interest expense   (30,602 )     (27,345 )
Loss from operations before income taxes   (74,496 )     (84,779 )
Income tax benefit   1,797       9,621  
Net loss $ (72,699 )   $ (75,158 )
General partner’s interest $ (757 )   $ (782 )
Limited partners’ interest $ (71,942 )   $ (74,376 )
Net loss per limited partner unit (basic and diluted) $ (1.90 )   $ (1.96 )
Weighted average number of limited partners’ units outstanding (basic and diluted)   37,959       37,948  
               

STONEMOR PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) Years Ended December 31,
  2018     2017  
Cash Flows From Operating Activities:              
Net loss $ (72,699 )   $ (75,158 )
Adjustments to reconcile net loss to net cash provided by operating activities:              
Cost of lots sold   7,808       10,525  
Depreciation and amortization   11,736       13,183  
Provision for cancellations   7,358       6,244  
Non-cash compensation expense   2,523       1,045  
Non-cash interest expense   5,985       4,479  
Gain on acquisitions and divestitures   (691 )     (858 )
Loss on goodwill impairment         45,574  
Other losses, net   12,195       1,843  
Changes in assets and liabilities:              
Accounts receivable, net of allowance   4,498       (17,074 )
Merchandise trust fund   4,295       46,695  
Other assets   2,618       1,410  
Deferred selling and obtaining costs   (4,819 )     (9,508 )
Deferred revenues   37,405       (9,049 )
Deferred taxes, net   (2,591 )     (10,439 )
Payables and other liabilities   10,836       6,064  
Net cash provided by operating activities   26,457       14,976  
Cash Flows From Investing Activities:              
Cash paid for capital expenditures   (12,172 )     (10,789 )
Cash paid for acquisitions   (1,667 )      
Proceeds from divestitures         1,241  
Proceeds from asset sales   1,276       627  
Net cash used in investing activities   (12,563 )     (8,921 )
Cash Flows From Financing Activities:              
Cash distributions         (24,545 )
Proceeds from borrowings   29,880       103,292  
Repayments of debt   (28,493 )     (88,951 )
Cost of financing activities   (3,955 )     (1,600 )
Net cash used in financing activities   (2,568 )     (11,804 )
Net increase (decrease) in cash and cash equivalents   11,326       (5,749 )
Cash and cash equivalentsBeginning of period   6,821       12,570  
Cash and cash equivalentsEnd of period $ 18,147     $ 6,821  
Supplemental disclosure of cash flow information:              
Cash paid during the period for interest $ 25,606     $ 22,901  
Cash paid during the period for income taxes $ 1,725     $ 2,756  
Non-cash investing and financing activities:              
Acquisition of assets by financing $ 2,673     $ 2,705  
Classification of assets as held for sale $ 543     $ 1,016  
               

SUPPLEMENTAL OPERATING DATA

  Years Ended December 31,  
SUPPLEMENTAL DATA: 2018     2017  
Interments performed   54,773       54,109  
Net interment rights sold (1)              
Lots   27,044       28,235  
Mausoleum crypts (including pre-construction)   1,334       1,926  
Niches   1,685       1,857  
Total net interment rights sold (1)   30,063       32,018  
Number of pre-need cemetery contracts written   39,989       44,894  
Number of at-need cemetery contracts written   57,664       59,387  
Number of cemetery contracts written   97,653       104,281  
               

______________________________

  1. Net of cancellations. Sales of double-depth burial lots are counted as two sales
CONTACT:     John McNamara
Director - Investor Relations
StoneMor Partners L.P.
(215) 826-2945