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StoneMor Partners L.P. Reports Financial Results for 2018 Third Quarter

TREVOSE, Pa., Feb. 15, 2019 (GLOBE NEWSWIRE) -- StoneMor Partners L.P. (STON) (“StoneMor” or the “Partnership”), a leading owner and operator of cemeteries and funeral homes, today reported financial results for the three and nine month periods ended September 30, 2018. Investors are encouraged to read the Partnership's quarterly report on Form 10-Q which it expects to file with the Securities and Exchange Commission (the “SEC”) later today. That report, which will contain additional details, will be able to be found at www.stonemor.com after it is filed.

Joe Redling, StoneMor’s President and Chief Executive Officer, said, “Soon after joining StoneMor in July of 2018, we began to implement changes that we believed lay the foundation for improvements in 2019 and beyond. We established a new operating structure to drive greater accountability, and we executed a comprehensive cost reduction plan, which has continued into 2019. Our third quarter financial results do not yet reflect the benefits of these efforts, which, as we have previously stated, will take time to deliver the desired financial results. With the filing of our interim financial statements we are pleased to be up to date with our financial reporting. With this behind us, we can now focus on the work of improving operational and financial performance.”

THIRD QUARTER AND NINE MONTH FINANCIAL PERFORMANCE

  • For the three months ended September 30, 2018, revenues were $73.2 million compared to $84.0 million in the prior year period. 2018 nine-month revenues were $232.7 million compared to $252.9 million in the prior year period. As previously reported, in 2017, revenues benefited from a large backlog of preneed cemetery merchandise that became available to be serviced. Third quarter and year-to-date revenues were also impacted by decreases of $4.7 million and $9.5 million, respectively, in investment and other income, primarily due to the adoption of ASC 606.

  • Third quarter net loss was $17.2 million compared to $9.6 million in the prior year period. Year-to-date net loss was $52.2 million compared to $29.7 million in the prior year period. The increased losses were driven largely by the unfavorable comparisons previously mentioned and lower overall sales resulting from the impact of cost cutting and implementation of the general manager operating model. Overall expenses increased as a result of adoption of ASC 606, as well as higher corporate overhead related to professional fees associated with delayed SEC filings, work related to our planned conversion to a C-Corp, and legal costs.

  • For the nine months ended September 30, 2018, cash from operating activities was $19.4 million, compared to $24.7 million in the prior year period.

  • Merchandise trust value at September 30, 2018 was $520.0 million compared to $515.5 million at December 31, 2017.

  • Deferred revenue at September 30, 2018 was $943.8 million compared to $912.6 million at December 31, 2017.

  • As of September 30, 2018, the Partnership had $8.0 million of cash and cash equivalents and $315.3 million of total debt, including $150.0 million outstanding under its revolving credit facility.

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 Form 10-Q Report for the Quarter Ended September 30, 2018 (the “Third Quarter 10-Q”) and operational improvements, 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 of the Partnership’s delinquent filing of its Third Quarter 10-Q, 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, and that the Partnership remains 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; the potential for defaults under the Partnership’s amended credit facility if the Third Quarter 10-Q is not filed today or the indenture governing its senior notes if the Partnership fails to file it within 120 days after notice from the trustee under the indenture; the Partnership’s ability to obtain relief from its creditors if it cannot file the Third Quarter 10-Q 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 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, 2018

December 31, 2017

Assets

Current assets:

Cash and cash equivalents

$

8,043

$

6,821

Accounts receivable, net of allowance

64,150

79,116

Prepaid expenses

9,218

4,580

Assets held for sale

1,083

1,016

Other current assets

19,145

21,453

Total current assets

101,639

112,986

Long-term accounts receivable, net of allowance

89,765

105,935

Cemetery property

333,724

333,404

Property and equipment, net of accumulated depreciation

113,674

114,090

Merchandise trusts, restricted, at fair value

520,027

515,456

Perpetual care trusts, restricted, at fair value

345,022

339,928

Deferred selling and obtaining costs

112,621

126,398

Deferred tax assets

95

84

Goodwill

24,862

24,862

Intangible assets, net

61,905

63,244

Other assets

24,549

19,695

Total assets

$

1,727,883

$

1,756,082

Liabilities and Partners' Capital

Current liabilities:

Accounts payable and accrued liabilities

$

56,472

$

43,023

Accrued interest

5,331

1,781

Current portion, long-term debt

1,184

1,002

Total current liabilities

62,987

45,806

Long-term debt, net of deferred financing costs

314,103

317,693

Deferred revenues, net

943,805

912,626

Deferred tax liabilities

6,730

9,638

Perpetual care trust corpus

345,022

339,928

Other long-term liabilities

41,776

38,695

Total liabilities

1,714,423

1,664,386

Commitments and contingencies

Partners' capital (deficit):

General partner interest

(3,794

)

(2,959

)

Common limited partners' interest

17,254

94,655

Total partners' capital

13,460

91,696

Total liabilities and partners' capital

$

1,727,883

$

1,756,082

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

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,

2018

2017

2018

2017

Revenues:

Cemetery:

Interments

$

17,716

$

17,841

$

58,130

$

55,460

Merchandise

18,023

20,051

51,766

57,182

Services

16,419

17,729

50,647

52,861

Investment and other

9,247

13,922

30,785

40,313

Funeral home:

Merchandise

5,581

6,591

19,532

21,176

Services

6,199

7,900

21,841

25,940

Total revenues

73,185

84,034

232,701

252,932

Costs and Expenses:

Cost of goods sold

12,866

11,910

39,387

37,472

Cemetery expense

19,407

19,984

57,828

56,805

Selling expense

14,251

17,082

47,673

49,164

General and administrative expense

10,916

9,752

32,037

29,462

Corporate overhead

12,876

11,887

39,868

39,058

Depreciation and amortization

2,737

3,186

8,853

10,032

Funeral home expenses:

Merchandise

1,341

1,793

4,927

5,176

Services

5,493

5,442

16,593

16,595

Other

3,314

5,346

12,315

15,678

Total costs and expenses

83,201

86,382

259,481

259,442

Other (losses) gains, net

702

338

(4,503

)

(733

)

Interest expense

(7,638

)

(6,944

)

(22,858

)

(20,391

)

Loss before income taxes

(16,952

)

(8,954

)

(54,141

)

(27,634

)

Income tax benefit (expense)

(273

)

(622

)

1,976

(2,085

)

Net loss

$

(17,225

)

$

(9,576

)

$

(52,165

)

$

(29,719

)

General partner's interest

$

(179

)

$

(99

)

$

(543

)

$

(309

)

Limited partners' interest

$

(17,046

)

$

(9,477

)

$

(51,622

)

$

(29,410

)

Net loss per limited partner unit (basic and diluted)

$

(0.45

)

$

(0.25

)

$

(1.36

)

$

(0.78

)

Weighted average number of limited partners' units outstanding (basic and diluted)

37,959

37,958

37,959

37,945

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

STONEMOR PARTNERS L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

Nine Months Ended September 30,

2018

2017

Cash Flows From Operating Activities:

Net loss

$

(52,165

)

$

(29,719

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Cost of lots sold

5,850

7,823

Depreciation and amortization

8,853

10,032

Provision for bad debt

3,776

5,123

Non-cash compensation expense

2,026

656

Non-cash interest expense

4,576

3,318

Non-cash impairment charge and other losses

4,503

517

Changes in assets and liabilities:

Accounts receivable, net of allowance

5,574

(8,576

)

Merchandise trust fund

(6,917

)

44,251

Other assets

(2,047

)

(5,053

)

Deferred selling and obtaining costs

(4,780

)

(7,246

)

Deferred revenues, net

40,361

(12,119

)

Deferred taxes, net

(2,545

)

1,425

Payables and other liabilities

12,346

14,269

Net cash provided by operating activities

19,411

24,701

Cash Flows From Investing Activities:

Cash paid for capital expenditures

(10,164

)

(7,960

)

Cash paid for acquisitions

(1,667

)

Proceeds from divestitures

701

Proceeds from asset sales

954

401

Net cash used in investing activities

(10,877

)

(6,858

)

Cash Flows From Financing Activities:

Cash distributions

(24,545

)

Proceeds from borrowings

23,880

78,792

Repayments of debt

(27,924

)

(74,627

)

Cost of financing activities

(3,268

)

(1,573

)

Net cash used in financing activities

(7,312

)

(21,953

)

Net increase (decrease) in cash and cash equivalents

1,222

(4,110

)

Cash and cash equivalents - Beginning of period

6,821

12,570

Cash and cash equivalents - End of period

$

8,043

$

8,460

Supplemental disclosure of cash flow information:

Cash paid during the period for interest

$

15,809

$

13,653

Cash paid during the period for income taxes

$

1,517

$

2,884

Non-cash investing and financing activities:

Acquisition of assets by financing

$

1,620

$

2,285

Classification of assets as held for sale

$

543

$

1,169

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

SUPPLEMENTAL OPERATING DATA

Three Months Ended
September 30,

Nine Months Ended
September 30,

2018

2017

2018

2017

Interments performed

12,876

12,859

41,550

40,916

Interment rights sold (1)

Lots

4,787

5,644

20,264

21,497

Mausoleum crypts (including pre-construction)

235

275

1,082

1,358

Niches

336

443

1,195

1,405

Net interment rights sold (1)

5,358

6,362

22,541

24,260

Number of pre-need cemetery contracts written

9,067

10,411

30,776

33,934

Number of at-need cemetery contracts written

13,892

14,211

43,895

45,070

Number of cemetery contracts written

22,959

24,622

74,671

79,004

______________________________

(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