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8-K - FORM 8-K - CARRIAGE SERVICES INC | h85093e8vk.htm |
EX-99.2 - EX-99.2 - CARRIAGE SERVICES INC | h85093exv99w2.htm |
Exhibit 99.1
Press Release |
FOR IMMEDIATE RELEASE
|
Contacts: | Terry Sanford, EVP & CFO Carriage Services, Inc. | ||
713-332-8400 | ||||
Investors: | Alexandra Tramont/Matt Steinberg | |||
FTI Consulting, Inc. | ||||
(212) 850-5600 |
CARRIAGE SERVICES ANNOUNCES PARTICIPATION AT THE DAVENPORT &
CO. DEATHCARE CONFERENCE AND INTRODUCES NEW
NON-GAAP FINANCIAL MEASURES
CO. DEATHCARE CONFERENCE AND INTRODUCES NEW
NON-GAAP FINANCIAL MEASURES
Non-GAAP Measures Designed to Reflect the Underlying Value of the
Companys Trust Income
Companys Trust Income
HOUSTON October 12, 2011 Carriage Services, Inc. (NYSE: CSV) today announced that it
will participate in the Davenport & Company 2011 Deathcare 1-on-1 Conference to be held October 13,
2011 at The Roosevelt Hotel in New York City. Managements presentation will be filed as an 8-K
with the SEC this afternoon and will be posted on the Companys website.
Included within the presentation and this release, the Company has introduced new Non-GAAP
financial measures for historical periods including 2007, 2008, 2009, 2010, the six months ended
June 30, 2010 and 2011 and the rolling twelve months ended June 30, 2011, and has provided
accompanying reconciliation tables to the most comparable U.S. GAAP measure. The new Non-GAAP
performance measures are intended to make the Companys results more transparent and to educate
investors on the growing cash earnings power of Carriages trust funds. Going forward, the Company
plans to regularly report and reference these Non-GAAP performance measures. The use of these
measures does not restate or amend any previously published financial results.
Melvin C. Payne, Chairman and Chief Executive Officer, commented: We recently announced $8.5
million in cash withdrawals from certain trust funds and a new policy going forward of withdrawing
approximately $100,000 on a monthly basis as allowed from cemetery preneed trust funds under states
guidelines in advance of delivery of the merchandise and services. These withdrawals are reflective
of our rapidly increasing cash earnings power and
-1-
improving credit profile as a result of the
success of our trust fund repositioning strategy during the 2008/2009 market and financial crisis. Though we will recognize these withdrawals under
GAAP as revenue and earnings only as contracts mature in the future, it is permanent pre-tax equity
capital that can be used in the meantime to fund our very active acquisition program or for other
corporate strategic purposes. As such, we believe that it is important to demonstrate the
underlying value of these cash withdrawals to our stakeholders.
As the Company previously announced on July 20, 2011, Carriage received a total
of $8.5 million in cash withdrawals from its affiliated preneed cemetery trusts in California ($8.1
million) and Nevada ($0.4 million). It was determined that these trusts had substantial excess
realized income over the state mandated amounts and that $8.5 million was available for withdrawal
in the third quarter of 2011 by the Company. Going forward, the Company has established a policy
for the preneed cemetery trusts in these two states of withdrawing monthly the investment income
now being generated from the trust portfolios, which is estimated to be approximately $100,000,
thereby increasing Carriages Consolidated Free Cash Flow by approximately $1.2 million annually.
The Companys policy is to withdraw the income as long as the trust incomes equal or exceed the
statutory required amounts and to use the cash for higher return purposes. The trust fund
investments will also be reviewed quarterly for unrealized net gains (in excess of unrealized
losses) that can be withdrawn upon realization without putting the Company at risk of injecting
cash into these trusts to cover market losses.
Under GAAP accounting, Carriage will account for the cash withdrawals by increasing Cash and
Deferred Revenue by the withdrawn amount and thereby will also reflect this amount in Consolidated
Free Cash Flow. The Company will recognize the withdrawn cash as revenue and earnings in the
future in accordance with its current accounting policies only when the preneed contracts from
which this cash was withdrawn mature upon the death of the persons covered, and the merchandise
and services are then delivered, but there would be no additional Consolidated Free Cash Flow
attached to the future earnings of the currently withdrawn cash.
Carriage Services is a leading provider of deathcare services and merchandise in the United
States. Carriage operates 155 funeral homes in 25 states and 33 cemeteries in 12 states.
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Certain statements made herein or elsewhere by, or on behalf of, the Company that are not
historical facts are intended to be forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements are based on assumptions that the Company believes are reasonable;
however, many important factors, as discussed under Forward-Looking Statements and Cautionary Statements in the
Companys Annual Report and Form 10-K for the year ended December 31, 2010, could cause the
Companys results in the future to differ materially from the forward-looking statements made
herein and in any other documents or oral presentations made by, or on behalf of, the Company.
The Company assumes no obligation to update or publicly release any revisions to forward-looking
statements made herein or any other forward-looking statements made by, or on behalf of, the
Company. A copy of the Companys Form 10-K, and other Carriage Services information and news
releases, are available at www.carriageservices.com.
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SUPPLEMENTAL NON-GAAP RECONCILIATIONS
This presentation uses Non-GAAP financial measures to present the financial earnings and
cashflow of the Company. Non-GAAP financial measures should be viewed in addition to, and not as
an alternative for, the Companys reported operating results or cash flow from operations or any
other measure of performance as determined in accordance with GAAP. Reconciliations of the
Non-GAAP financial measures to GAAP measures are provided below.
Certain state regulations allow the withdrawal of financial income from preneed cemetery
merchandise and services trust funds when realized in the trust. Under current generally accepted
accounting principles, trust income is only recognized in the Companys financial statements at a
later time when the related merchandise and services sold on the preneed contract is delivered at
the time of death. Carriage has provided financial income from the trusts on a Non-GAAP proforma
basis that are withdrawable at the time that the income is realized in the trusts instead of at the
time of delivery to reflect the current cash results.
The Non-GAAP financial measures Free Cash Flow and EBITDA are also reflected in the
presentation. Both Free Cash Flow and EBITDA are used by investors to value common stock. The
Company considers free cash flow to be an important indicator of its ability to generate cash for
acquisitions and other strategic investments. The Company has included EBITDA in this presentation
because it is widely used by investors to compare the Companys financial performance with the
performance of other death care companies. EBITDA does not give effect to the cash the Company must
use to service its debt or pay its income taxes and thus does not reflect the funds actually
available for capital expenditures. In addition, the Companys presentation of EBITDA may not be
comparable to similarly titled measures other companies report.
-4-
Reconciliation of Non-GAAP Financial Measures (unaudited):
This presentation includes the use of certain financial measures that are not GAAP measures.
The non-GAAP financial measures are presented for additional information and are reconciled to
their most comparable GAAP measures below. (amounts in 000s except per share amounts)
Reconciliation of Revenue to Non-GAAP Revenue for the years ended 2007, 2008, 2009, 2010, the six
months ended June 30, 2010 and 2011 and the rolling twelve months ended June 30, 2011:
Rolling 12 | ||||||||||||||||||||
For the years ended | mos. ended | |||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 6/30/2011 | ||||||||||||||||
Revenue |
$ | 166,856 | $ | 176,928 | $ | 177,627 | $ | 184,947 | $ | 192,348 | ||||||||||
Trust investment
net income (loss)
that is withdrawable |
1,103 | (546 | ) | 236 | 4,979 | 6,760 | ||||||||||||||
Non-GAAP Revenue |
$ | 167,959 | $ | 176,382 | $ | 177,863 | $ | 189,926 | $ | 199,108 | ||||||||||
Six months ended | ||||||||
June 30, | ||||||||
2010 | 2011 | |||||||
Revenue |
$ | 91,364 | $ | 98,765 | ||||
Trust investment net income that is
withdrawable |
1,646 | 3,427 | ||||||
Non-GAAP Revenue |
$ | 93,010 | $ | 102,192 | ||||
Reconciliation of Net Income to EBITDA and Non-GAAP EBITDA for the years ended 2007, 2008,
2009, 2010, the six months ended June 30, 2010 and 2011 and the rolling twelve months ended June
30, 2011:
Rolling 12 | ||||||||||||||||||||
For the years ended | mos. ended | |||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 6/30/2011 | ||||||||||||||||
Net income |
$ | 7,358 | $ | 1,804 | $ | 7,048 | $ | 8,079 | $ | 8,892 | ||||||||||
Provision for income taxes |
4,960 | 1,725 | 4,797 | 5,368 | 5,846 | |||||||||||||||
Pre-tax earnings |
12,318 | 3,529 | 11,845 | 13,447 | 14,738 | |||||||||||||||
Interest expense, including loan
cost
amortization |
18,344 | 18,331 | 18,498 | 18,263 | 18,201 | |||||||||||||||
Other income |
(1,151 | ) | (229 | ) | (228 | ) | (1,069 | ) | (986 | ) | ||||||||||
Noncash stock compensation |
1,168 | 1,425 | 1,455 | 1,722 | 1,903 | |||||||||||||||
Depreciation & amortization |
9,488 | 10,368 | 10,339 | 9,977 | 9,940 | |||||||||||||||
Special charges |
1,600 | 6,161 | | | 846 | |||||||||||||||
Adjusted EBITDA |
$ | 41,767 | $ | 39,585 | $ | 41,909 | $ | 42,340 | $ | 44,642 | ||||||||||
Trust investment net income (loss)
that is withdrawable |
1,103 | (546 | ) | 236 | 4,979 | 6,760 | ||||||||||||||
Non-GAAP Adjusted EBITDA |
$ | 42,870 | $ | 39,039 | $ | 42,145 | $ | 47,319 | $ | 51,402 | ||||||||||
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Reconciliation of Non-GAAP Financial Measures (unaudited), Continued:
Six months ended | ||||||||
June 30, | ||||||||
2010 | 2011 | |||||||
Net income |
$ | 5,073 | $ | 5,886 | ||||
Provision for income taxes |
3,530 | 4,008 | ||||||
Pre-tax earnings |
8,603 | 9,894 | ||||||
Interest expense, including loan cost
amortization |
9,126 | 9,064 | ||||||
Other income |
(470 | ) | (387 | ) | ||||
Noncash stock compensation |
912 | 1,093 | ||||||
Depreciation & amortization |
4,957 | 4,920 | ||||||
Special charges |
| 846 | ||||||
Adjusted EBITDA |
$ | 23,128 | $ | 25,430 | ||||
Trust investment net income that is
withdrawable |
1,646 | 3,427 | ||||||
Non-GAAP Adjusted EBITDA |
$ | 24,774 | $ | 28,857 | ||||
Adjusted EBIDA Margin |
26.6 | % | 28.2 | % |
Reconciliation of Diluted EPS to Adjusted Diluted EPS and Non-GAAP adjusted EPS for the years
ended 2007, 2008, 2009, 2010, the six months ended June 30, 2010 and 2011 and the rolling twelve
months ended June 30, 2011:
Rolling 12 | ||||||||||||||||||||
mos. | ||||||||||||||||||||
For the years ended | ended | |||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 6/30/2011 | ||||||||||||||||
Diluted EPS |
$ | 0.38 | $ | 0.09 | $ | 0.40 | $ | 0.45 | $ | 0.49 | ||||||||||
Effect of special charges |
0.05 | 0.17 | | | 0.02 | |||||||||||||||
Adjusted diluted EPS |
$ | 0.43 | $ | 0.26 | $ | 0.40 | $ | 0.45 | $ | 0.51 | ||||||||||
Trust investment net income (loss)
that is withdrawable per
diluted share |
0.03 | (0.02 | ) | 0.01 | 0.17 | 0.22 | ||||||||||||||
Non-GAAP adjusted diluted EPS |
$ | 0.46 | $ | 0.24 | $ | 0.41 | $ | 0.62 | $ | 0.73 | ||||||||||
Six months ended | ||||||||
June 30, | ||||||||
2010 | 2011 | |||||||
Diluted EPS |
$ | 0.29 | $ | 0.32 | ||||
Effect of special charges |
| 0.03 | ||||||
Adjusted diluted EPS |
$ | 0.29 | $ | 0.35 | ||||
Trust investment net
income that is withdrawable
per diluted share |
0.05 | 0.11 | ||||||
Non-GAAP adjusted diluted EPS |
$ | 0.34 | $ | 0.46 | ||||
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Reconciliation of Non-GAAP Financial Measures (unaudited), Continued:
Reconciliation of cash provided by operating activities to free cash flow and Non-GAAP free cash
flow for the years ended 2007, 2008, 2009, 2010, the six months ended June 30, 2010 and 2011 and
the rolling twelve months ended June 30, 2011:
Rolling 12 | ||||||||||||||||||||
For the years ended | mos. ended | |||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 6/30/2011 | ||||||||||||||||
Cash provided by operating
activities |
$ | 19,277 | $ | 19,652 | $ | 16,095 | $ | 25,679 | $ | 26,923 | ||||||||||
Cash used for litigation settlement |
| | 3,300 | | | |||||||||||||||
Adjusted free cash flow |
$ | 19,277 | $ | 19,652 | $ | 19,395 | $ | 25,679 | $ | 26,923 | ||||||||||
Less maintenance capital
expenditures |
(7,833 | ) | (5,982 | ) | (5,250 | ) | (7,102 | ) | (7,027 | ) | ||||||||||
Free cash flow |
$ | 11,444 | $ | 13,670 | $ | 14,145 | $ | 18,577 | $ | 19,896 | ||||||||||
Trust investment net income (loss)
that is withdrawable |
1,103 | (546 | ) | 236 | 4,979 | 6,760 | ||||||||||||||
Non-GAAP free cash flow |
$ | 12,547 | $ | 13,124 | $ | 14,381 | $ | 23,556 | $ | 26,656 | ||||||||||
Diluted shares outstanding |
19,507 | 19,362 | 17,749 | 17,938 | 18,340 | |||||||||||||||
Non-GAAP free cash flow
per share |
$ | 0.64 | $ | 0.68 | $ | 0.81 | $ | 1.31 | $ | 1.45 |
Six months ended | ||||||||
June 30, | ||||||||
2010 | 2011 | |||||||
Cash provided by operating activities |
$ | 14,517 | $ | 15,761 | ||||
Less maintenance capital expenditures |
(3,438 | ) | (3,363 | ) | ||||
Free cash flow |
$ | 11,079 | $ | 12,398 | ||||
Trust investment net income
that is withdrawable |
1,646 | 3,427 | ||||||
Non-GAAP free cash flow |
$ | 12,725 | $ | 15,825 | ||||
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Reconciliation of Non-GAAP Financial Measures (unaudited), Continued:
Reconciliation of Financial Revenue to Non-GAAP Financial Revenue for the years ended 2007, 2008,
2009, 2010, the six months ended June 30, 2010 and 2011 and the
rolling twelve months ended June 30, 2011:
For the years ended | Rolling 12 mos. ended |
|||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 06/30/2011 | ||||||||||||||||
Financial Revenue, as reported |
$ | 9,499 | $ | 11,743 | $ | 10,214 | $ | 14,754 | $ | 15,263 | ||||||||||
Trust investment net income (loss)
that is withdrawable |
1,103 | (546 | ) | 236 | 4,979 | 6,760 | ||||||||||||||
Non-GAAP Financial Revenue |
$ | 10,602 | $ | 11,197 | $ | 10,450 | $ | 19,733 | $ | 22,023 | ||||||||||
Six months ended | ||||||||
June 30, | ||||||||
2010 | 2011 | |||||||
Financial Revenue, as reported |
$ | 7,285 | $ | 7,794 | ||||
Trust investment net income that
is withdrawable |
1,646 | 3,427 | ||||||
Non-GAAP Financial Revenue |
$ | 8,931 | $ | 11,221 | ||||
Reconciliation of Financial EBITDA to Non-GAAP Financial EBITDA for the years ended 2007, 2008,
2009, 2010, the six months ended June 30, 2010 and 2011 and the
rolling twelve months ended June 30, 2011:
For the years ended | Rolling 12 mos. ended |
|||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 06/30/2011 | ||||||||||||||||
Financial EBITDA, as reported |
$ | 7,672 | $ | 10,055 | $ | 8,477 | $ | 13,370 | $ | 13,803 | ||||||||||
Trust investment net income (loss)
that is withdrawable |
1,103 | (546 | ) | 236 | 4,979 | 6,760 | ||||||||||||||
Non-GAAP Financial EBITDA |
$ | 8,775 | $ | 9,509 | $ | 8,713 | $ | 18,349 | $ | 20,653 | ||||||||||
Six months ended | ||||||||
June 30, | ||||||||
2010 | 2011 | |||||||
Financial EBITDA, as reported |
$ | 6,627 | $ | 7,060 | ||||
Trust investment net income that
is withdrawable |
1,646 | 3,427 | ||||||
Non-GAAP Financial EBITDA |
$ | 8,273 | $ | 10,487 | ||||
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