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Press release content from Globe Newswire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

StoneMor Inc. Reports Third Quarter Financial Results

November 11, 2021 GMT

BENSALEM, Pa., Nov. 11, 2021 (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 third quarter ended September 30, 2021. 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.

THIRD QUARTER FINANCIAL PERFORMANCE

  • Revenues for the third quarter were $82.3 million compared to $72.7 million in in the third quarter in the prior year. Nine-month revenues were $243.6 million compared to $204.4 million in the prior year period.

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  • Cemetery segment operating income for the third quarter was $14.0 million compared to $11.5 million in the third quarter in the prior year, representing an increase of $2.6 million. Nine-month cemetery segment operating income was $40.4 million compared to $24.1 million in the prior year period, representing an increase of $16.2 million.

  • Funeral home segment operating income for the third quarter was $1.0 million compared to $1.1 million in the third quarter in the prior year, representing a decrease of $0.1 million. Nine-month funeral home segment operating income was $3.8 million compared to $3.5 million in the prior year period, representing an increase of $0.3 million.

  • Corporate overhead expense increased to $10.0 million in the third quarter compared to $9.8 million in the third quarter in the prior year. Nine-month corporate overhead expense increased to $29.1 million compared to $27.0 million in the prior year period.

  • Third quarter operating income was $4.3 million compared to $2.6 million in the third quarter in the prior year.

  • Third quarter net loss from continuing operations was $4.7 million compared to $8.1 million in the third quarter in the prior year.

  • Third quarter adjusted EBITDA was $38.5 million compared to $24.3 million in the third quarter in the prior year.

Joe Redling, StoneMor’s President and Chief Executive Officer said, “The third quarter continued to build on the positive performance trends of the past year and half, with top-line revenue growth of 13.2% and 19.2% for the three and nine months ended September 30, 2021, respectively, when compared with the same periods in 2020. Year-to-date, we have driven a $52.2 million improvement in our adjusted EBITDA year-over-year. We continue to deliver strong, sustainable cemetery sales production results, with a 9% growth in pre-need cemetery sales production for the third quarter.”

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LIQUIDITY UPDATE

As of September 30, 2021, the Company had $115.9 million of cash, including $16.4 million of restricted cash, and $391.4 million of total debt.

“We have made great progress towards our previously announced guidance targets for organic growth in our trusts and unlevered free cash flow,” said Jeff DiGiovanni, StoneMor’s Senior Vice President and Chief Financial Officer. “For the nine-months ended September 30, 2021, we generated nearly $70 million in trust growth and more than $36 million in unlevered free cash flow, against $50 million and $40 million annual targets, respectively. This is a testament to the success of our transformation plan and the hard-work of every member of the StoneMor team.”

Redling added, “We are focused on the next phase of our transformation strategy – a commitment to strategic growth. We have $100 million in cash on our balance sheet and access to additional capital, if necessary. That capital, coupled with the operational transformation completed to date, places StoneMor in the right position to execute on this strategy as we move forward.”

CONFERENCE CALL INFORMATION

StoneMor will conduct a conference call to discuss this news release today, November 11, 2021 at 4:30 p.m. Eastern Time. The conference call can be accessed by calling (877) 256-3243. No reservation number is necessary; however, due to the on-going pandemic, 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 300 cemeteries and 69 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, information regarding continued implementation of the Company’s transformation, 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 withcurrent 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 September 30,  Nine Months Ended September 30, 
  2021  2020  2021  2020 
Net loss from continuing operations $(4,747) $(8,150) $(46,205) $(31,720)
Income tax benefit  (240)  (1,129)  (11,652)  (3,333)
Interest expense  9,256   11,870   29,706   34,952 
Depreciation and amortization  1,989   2,244   6,118   6,851 
Non-cash stock compensation  512   353   1,525   1,080 
Loss on debt extinguishment        40,128    
Loss on sale of business and other impairments  70      2,290    
Other losses, net  605      536    
Cost of lots sold  1,495   1,503   5,146   4,346 
EBITDA  8,940   6,691   27,592   12,176 
Change in deferred revenues  31,866   19,575   77,518   39,238 
Change in deferred selling and obtaining costs  (2,257)  (2,006)  (6,486)  (4,974)
Adjusted EBITDA $38,549  $24,260  $98,624  $46,440 

FIELD EBITDA

  Three Months Ended September 30, Nine Months Ended September 30, 
  2021 2020 2021 2020 
EBITDA $8,940 $6,691 $27,592 $12,176 
Corporate overhead  9,983  9,762  29,058  27,019 
Less: non-cash stock compensation  512  353  1,525  1,080 
Field EBITDA $18,411 $16,100 $55,125 $38,115 

UNLEVERED CASH PROVIDED BY OPERATING ACTIVITIES AND UNLEVERED FREE CASH FLOW

  Three Months Ended September 30,  Nine Months Ended September 30, 
  2021  2020  2021  2020 
Net cash provided by operating activities $11,994  $2,584  $10,427  $3,785 
Cash interest payments  118   6,686   31,259   20,361 
Unlevered cash provided by operating activities  12,112   9,270   41,686   24,146 
Less: cash paid for capital expenditures  2,314   993   5,675   4,784 
Unlevered free cash flow $9,798  $8,277  $36,011  $19,362 

STONEMOR INC.

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

  September 30,  December 31, 
  2021  2020 
Assets      
Current assets:      
Cash and cash equivalents, excluding restricted cash $99,509  $39,244 
Restricted cash  16,415   20,846 
Accounts receivable, net of allowance  60,066   57,869 
Prepaid expenses  9,387   5,290 
Assets held for sale     28,575 
Other current assets  14,963   16,884 
Total current assets  200,340   168,708 
       
Long-term accounts receivable, net of allowance  76,051   75,301 
Cemetery property  296,250   299,526 
Property and equipment, net of accumulated depreciation  80,055   83,496 
Merchandise trusts, restricted, at fair value  548,541   501,453 
Perpetual care trusts, restricted, at fair value  335,076   312,228 
Deferred selling and obtaining costs  122,488   116,900 
Deferred tax assets     9 
Intangible assets, net  54,291   55,094 
Other assets  23,819   22,248 
Total assets $1,736,911  $1,634,963 
       
Liabilities and Stockholders' Equity      
Current liabilities:      
Accounts payable and accrued liabilities $45,311  $51,718 
Liabilities held for sale     23,406 
Accrued interest  13,222   95 
Current portion, long-term debt  1,769   317 
Total current liabilities  60,302   75,536 
       
Long-term debt, net of deferred financing costs  389,672   320,715 
Deferred revenues  1,027,565   949,164 
Deferred tax liabilities  17,823   29,652 
Perpetual care trust corpus  335,076   312,228 
Other long-term liabilities  42,219   40,081 
Total liabilities  1,872,657   1,727,376 
Commitments and contingencies      
       
Stockholders’ equity:      
Common stock, par value $0.01 per share, 200,000,000 shares authorized, 118,011,766        
and 117,871,141 shares issued and outstanding, respectively  1,180   1,178 
Paid-in capital in excess of par value  (83,709)  (85,232)
Accumulated deficit  (53,217)  (8,359)
Total stockholders’ equity  (135,746)  (92,413)
Total liabilities and stockholders’ equity $1,736,911  $1,634,963 

STONEMOR INC.

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

  Three Months Ended September 30,  Nine Months Ended September 30, 
  2021  2020  2021  2020 
Revenues:            
Cemetery:            
Interments $21,954  $20,316  $65,379  $51,542 
Merchandise  16,935   15,949   51,004   44,918 
Services  17,240   16,078   52,219   47,656 
Investment and other  14,685   9,677   41,320   29,564 
Funeral home:            
Merchandise  6,120   5,793   17,542   16,004 
Services  5,361   4,900   16,125   14,732 
Total revenues  82,295   72,713   243,589   204,416 
Costs and Expenses:            
Cost of goods sold  11,023   9,624   34,642   28,307 
Cemetery expense  19,286   16,198   55,537   50,375 
Selling expense  14,451   13,119   43,434   37,376 
General and administrative expense  10,534   10,027   31,377   28,672 
Corporate overhead  9,983   9,762   29,058   27,019 
Depreciation and amortization  1,989   2,244   6,118   6,851 
Funeral home expenses:            
Merchandise  1,668   1,539   4,807   4,239 
Services  4,874   4,775   14,012   13,594 
Other  3,543   2,834   9,801   8,084 
Total costs and expenses  77,351   70,122   228,786   204,517 
             
Loss on sale of business and other impairments  (70)     (2,290)   
Other losses, net  (605)     (536)   
Operating income (loss)  4,269   2,591   11,977   (101)
Interest expense  (9,256)  (11,870)  (29,706)  (34,952)
Loss on debt extinguishment        (40,128)   
Loss from continuing operations before income taxes  (4,987)  (9,279)  (57,857)  (35,053)
Income tax benefit  240   1,129   11,652   3,333 
Net loss from continuing operations  (4,747)  (8,150)  (46,205)  (31,720)
Discontinued operations (Note 2):            
(Loss) Income from operations of discontinued businesses  (102)  293   1,347   28,952 
Income tax expense            
Net (loss) income from discontinued operations  (102)  293   1,347   28,952 
Net loss $(4,849) $(7,857) $(44,858) $(2,768)
             
Net loss from continuing operations per common share (basic) $(0.04) $(0.07) $(0.39) $(0.31)
Net (loss) income from discontinued operations per common share (basic)  (0.00)  0.00   0.01   0.28 
Net loss per common share (basic) $(0.04) $(0.07) $(0.38) $(0.03)
             
Net loss from continuing operations per common share (diluted) $(0.04) $(0.07) $(0.39) $(0.31)
Net (loss) income from discontinued operations per common share (diluted)  (0.00)  0.00   0.01   0.28 
Net loss per common share (diluted) $(0.04) $(0.07) $(0.38) $(0.03)
Weighted average number of common shares outstanding - basic  118,003   117,819   117,956   103,341 
Weighted average number of common shares outstanding - diluted  118,003   117,819   117,956   103,341 

STONEMOR INC.

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

  Nine Months Ended September 30,
  2021  2020 
Cash Flows From Operating Activities:      
Net loss $(44,858) $(2,768)
Adjustments to reconcile net loss to net cash provided by
operating activities:
      
Cost of lots sold  5,146   4,346 
Depreciation and amortization  6,158   7,078 
Provision for bad debt  5,074   4,529 
Non-cash compensation expense  1,525   1,080 
Loss on debt extinguishment  40,128    
Non-cash interest expense  3,740   16,159 
Loss (gain) on sale of businesses  1,525   (31,120)
Other losses, net  536   2,169 
Changes in assets and liabilities:      
Payment of paid-in-kind interest  (18,440)   
Accounts receivable, net of allowance  (16,205)  (16,180)
Merchandise trust fund  (37,542)  (12,284)
Other assets  (4,846)  3,799 
Deferred selling and obtaining costs  (6,486)  (4,974)
Deferred revenues  77,518   39,238 
Deferred taxes, net  (11,821)  (3,490)
Payables and other liabilities  9,275   (3,797)
Net cash provided by operating activities  10,427   3,785 
Cash Flows From Investing Activities:      
Cash paid for capital expenditures  (5,675)  (4,784)
Proceeds from divestitures  6,462   48,336 
Net cash provided by investing activities  787   43,552 
Cash Flows From Financing Activities:      
Proceeds from issuance of Series A Preferred Stock     8,800 
Proceeds from issuance of Common Stock     8,200 
Proceeds from borrowings  406,235   3,672 
Repayments of debt  (331,197)  (54,782)
Principal payment on finance leases  (1,097)  (1,061)
Early redemption premium  (18,478)   
Cost of financing activities  (10,843)  (4,294)
Shares repurchased related to share-based compensation     (35)
Net cash provided by (used in) financing activities  44,620   (39,500)
Net increase in cash, cash equivalents and restricted cash  55,834   7,837 
Cash, cash equivalents and restricted cash—Beginning of period  60,090   56,767 
Cash, cash equivalents and restricted cash—End of period $115,924  $64,604 
Supplemental disclosure of cash flow information:      
Cash paid during the period for interest $31,259  $20,361 
Cash paid during the period for income taxes  2,727   1,077 
Cash paid for amounts included in the measurement of lease liabilities:      
Operating cash flows from operating leases $1,446  $2,372 
Operating cash flows from finance leases  253   328 
Financing cash flows from finance leases  1,097   1,061 
Non-cash investing and financing activities:      
Accrued paid-in-kind interest on 2024 Notes $  $10,572