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

TREVOSE, Pa., Feb. 12, 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 six month periods ended June 30, 2018. Investors are encouraged to read the Partnership's quarterly report on Form 10-Q filed with the Securities and Exchange Commission (the “SEC”), which contains additional details, and can be found at www.stonemor.com.

Joe Redling, StoneMor’s President and Chief Executive Officer, said, “The second quarter of 2018 generated stable year over year results in many of our key performance metrics such as interments performed, net interment rights sold and cemetery contracts written. As a reminder, our financial results for the period did not yet reflect the impact of our reorganization and cost reduction efforts, which we began in the second half of 2018, and, as we previously disclosed, will take time to deliver the full results we seek. The recently reported amendment to our credit facility and financing agreement are key components of the foundation for future success, and we expect to become current in our financial filings shortly. We believe the actions we’ve taken to reorganize the business, align expenses and put the company on a better financial foundation will support improvements in 2019.”

SECOND QUARTER AND SIX MONTH FINANCIAL PERFORMANCE

  • For the three months ended June 30, 2018, revenues were $81.6 million compared to $86.0 million in the prior year period. 2018 six-month revenues were $159.5 million compared to $168.9 million in the prior year period. Two factors were largely responsible for the unfavorable comparison. In the first half of 2017, revenues benefited from a large backlog of preneed cemetery merchandise that became available to be serviced and the adoption of ASC 606 in 2018 which resulted in a reduction associated with the deferral of revenue from document fees, combined with a decrease in land sales. 
     
  • Second quarter net loss was $17.0 million compared to $11.6 million in the prior year period.  Year-to-date net loss was $34.9 million compared to $20.1 million. The increased losses were driven largely by the unfavorable comparisons previously mentioned, increased expenses related to the adoption of ASC 606, advertising and employee benefits, as well as the continued impact of higher corporate overhead related to professional fees associated with delayed financial filings and legal costs.

  • As of June 30, 2018, year-to-date cash from operations was $15.4 million, largely equal to the prior year period.

  • Merchandise trust value at June 30, 2018 was $511.9 million compared to $515.5 million at December 31, 2017.
     
  • Deferred revenue at June 30, 2018 was $933.2 million compared to $912.6 million at December 31, 2017.

  • As of June 30, 2018, the Partnership had $15.0 million of cash and cash equivalents and $322.6 million of total debt, including $156.9 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 filings 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 Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2018 (the “Delinquent Report”), 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 Delinquent Report is not filed within the period specified therein 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 Delinquent Report within the period prescribed by the Partnership’s amended credit facility 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.

CONTACT:   John McNamara
    Director - Investor Relations
    StoneMor Partners L.P.
    (215) 826-2945



STONEMOR PARTNERS L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
       
  June 30, 2018   December 31, 2017
Assets      
Current assets:      
Cash and cash equivalents $ 14,979     $ 6,821  
Accounts receivable, net of allowance 66,837     79,116  
Prepaid expenses 9,180     4,580  
Assets held for sale 1,343     1,016  
Other current assets 17,930     21,453  
Total current assets 110,269     112,986  
       
Long-term accounts receivable, net of allowance 95,421     105,935  
Cemetery property 335,037     333,404  
Property and equipment, net of accumulated depreciation 113,229     114,090  
Merchandise trusts, restricted, at fair value 511,852     515,456  
Perpetual care trusts, restricted, at fair value 340,364     339,928  
Deferred selling and obtaining costs 112,025     126,398  
Deferred tax assets 92     84  
Goodwill 24,862     24,862  
Intangible assets, net 62,342     63,244  
Other assets 25,161     19,695  
Total assets $ 1,730,654     $ 1,756,082  
       
Liabilities and Partners' Capital      
Current liabilities:      
Accounts payable and accrued liabilities $ 51,926     $ 43,023  
Accrued interest 1,912     1,781  
Current portion, long-term debt 2,139     1,002  
Total current liabilities 55,977     45,806  
       
Long-term debt, net of deferred financing costs 320,495     317,693  
Deferred revenues, net 933,159     912,626  
Deferred tax liabilities 6,623     9,638  
Perpetual care trust corpus 340,364     339,928  
Other long-term liabilities 43,464     38,695  
Total liabilities 1,700,082     1,664,386  
Commitments and contingencies      
Partners' capital (deficit):      
General partner interest (3,615 )   (2,959 )
Common limited partners' interest 34,187     94,655  
Total partners' capital 30,572     91,696  
Total liabilities and partners' capital $ 1,730,654     $ 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
June 30,
  Six Months Ended
June 30,
  2018   2017   2018   2017
Revenues:              
Cemetery:              
Interments $ 20,789     $ 19,641     $ 40,414     $ 37,620  
Merchandise 17,116     18,834     33,743     37,131  
Services 17,737     18,619     34,228     35,132  
Investment and other 12,038     13,652     21,538     26,390  
Funeral home:              
Merchandise 6,522     6,749     13,951     14,585  
Services 7,369     8,457     15,642     18,040  
Total revenues 81,571     85,952     159,516     168,898  
               
Costs and Expenses:              
Cost of goods sold 13,086     12,043     26,521     25,562  
Cemetery expense 21,007     20,124     38,421     36,821  
Selling expense 17,166     15,623     33,422     32,082  
General and administrative expense 10,163     9,753     21,121     19,710  
Corporate overhead 15,165     16,067     26,992     27,171  
Depreciation and amortization 3,071     3,391     6,116     6,846  
Funeral home expenses:              
Merchandise 1,108     1,623     3,586     3,383  
Services 5,582     5,454     11,100     11,153  
Other 3,961     4,987     9,001     10,332  
Total costs and expenses 90,309     89,065     176,280     173,060  
               
Other losses     (1,071 )   (5,205 )   (1,071 )
Interest expense (8,107 )   (6,741 )   (15,220 )   (13,447 )
Loss before income taxes (16,845 )   (10,925 )   (37,189 )   (18,680 )
Income tax benefit (expense) (172 )   (657 )   2,249     (1,463 )
Net loss $ (17,017 )   $ (11,582 )   $ (34,940 )   $ (20,143 )
General partner's interest $ (177 )   $ (121 )   $ (364 )   $ (210 )
Limited partners' interest $ (16,840 )   $ (11,461 )   $ (34,576 )   $ (19,933 )
Net loss per limited partner unit (basic and diluted) $ (0.44 )   $ (0.30 )   $ (0.91 )   $ (0.53 )
Weighted average number of limited partners' units outstanding (basic and diluted) 37,958     37,957     37,958     37,938  

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.


STONEMOR PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
   
  Six Months Ended June 30,
  2018   2017
Cash Flows From Operating Activities:      
Net loss $ (34,940 )   $ (20,143 )
Adjustments to reconcile net loss to net cash provided by operating activities:      
Cost of lots sold 3,489     5,661  
Depreciation and amortization 6,116     6,846  
Provision for bad debt 1,644     2,682  
Non-cash compensation expense 1,913     488  
Non-cash interest expense 3,215     2,195  
Non-cash impairment charge and other losses 5,205     872  
Changes in assets and liabilities:      
Accounts receivable, net of allowance 1,195     (4,946 )
Merchandise trust fund (4,181 )   43,915  
Other assets (1,395 )   (3,125 )
Deferred selling and obtaining costs (4,184 )   (6,287 )
Deferred revenues, net 33,599     (17,633 )
Deferred taxes, net (2,649 )   944  
Payables and other liabilities 6,377     4,031  
Net cash provided by operating activities 15,404     15,500  
Cash Flows From Investing Activities:      
Cash paid for capital expenditures (7,626 )   (3,311 )
Cash paid for acquisitions (833 )    
Proceeds from divestitures       451  
Proceeds from asset sales     401  
Net cash used in investing activities (8,459 )   (2,459 )
Cash Flows From Financing Activities:      
Cash distributions     (24,545 )
Proceeds from borrowings 16,880     62,792  
Repayments of debt (12,896 )   (56,256 )
Cost of financing activities (2,771 )   (776 )
Net cash provided by (used in) financing activities 1,213     (18,785 )
Net increase (decrease) in cash and cash equivalents 8,158     (5,744 )
Cash and cash equivalents - Beginning of period 6,821     12,570  
Cash and cash equivalents - End of period $ 14,979     $ 6,826  
Supplemental disclosure of cash flow information:      
Cash paid during the period for interest $ 12,865     $ 11,118  
Cash paid during the period for income taxes $ 709     $ 2,630  
Non-cash investing and financing activities:      
Acquisition of assets by financing $ 688     $ 1,384  
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 June 30,   Six Months Ended June 30,
  2018   2017   2018   2017
Interments performed 14,102     13,627     28,674     28,057  
Interment rights sold (1)              
Lots 8,941     8,604     15,477     15,856  
Mausoleum crypts (including pre-construction) 301     553     847     1,083  
Niches 430     492     859     962  
Net interment rights sold (1) 9,672     9,649     17,183     17,901  
               
Number of pre-need cemetery contracts written 11,547     12,087     21,709     23,523  
Number of at-need cemetery contracts written 15,276     15,575     30,003     30,859  
Number of cemetery contracts written 26,823     27,662     51,712     54,382  
                       

______________________________

  1. Net of cancellations. Sales of double-depth burial lots are counted as two sales.