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Exhibit 99.1

 

LOGO

StoneMor Partners L.P. Announces 2014 Fourth Quarter and Full Year Financial Results

LEVITTOWN, PA., March 13, 2015 —StoneMor Partners L.P. (NYSE: STON) (“StoneMor”) announced its results of operations for the three months and full year ended December 31, 2014.

Larry Miller, StoneMor’s President and CEO commented, “We are very pleased with StoneMor’s performance in 2014. Not only did we generate record revenues, both GAAP and Production-based (non-GAAP), but the year itself was transformative. Driving this transformation were the two previously announced large transactions with Service Corporation International and the Archdiocese of Philadelphia as well as the large financial commitment from a private investment fund. These three events significantly expanded our growth potential by raising our profile in the four vibrant markets of Florida, North Carolina, Pennsylvania and Virginia and by giving us the financial flexibility to consider similar transactions in the future should the opportunity arise.

“Our quarterly returns reflected solid gains in pre-need cemetery revenues which rose 29.5% (GAAP) compared to the prior year period, at-need cemetery revenues which rose 23.5% (GAAP) and funeral home revenues which rose 5.9% (GAAP), helping to drive a strong increase in operating profit. Excluding the impact of non-recurring items, the comparisons of our adjusted operating profits (non-GAAP), cash flow (GAAP) and distributable cash flow (non-GAAP) were favorable. As we look beyond the impact of one-time items such as legal settlements in 2013, higher than normal investment income in 2013, a large payment to reduce accounts payable in 2014, etc., and examine the ongoing performance of our business, we are very much where we expected to be at this point,” said Miller.

Quarterly Financial Highlights

 

    Revenues (GAAP) for the three months ended December 31, 2014 were $74.0 million compared to $63.1 million for the three months ended December 31, 2013, a 17.3% increase.

 

    Production-based revenues (non-GAAP) for the three months ended December 31, 2014 were $92.7 million compared to $86.2 million for the three months ended December 31, 2013, a 7.6% increase.

 

    Operating profits (GAAP) for the three months ended December 31, 2014 were $2.9 million compared to $1.9 million in the prior year period, a 51.1% increase.

 

   

Adjusted operating profits (non-GAAP) for the three months ended December 31, 2014 were $16.3 million compared to $20.6 million in the same period last year, a decrease of $4.3 million. During the fourth quarter of 2013, we recognized $17.6 million in investment income from our trusts, $9.0 million more than the $8.6 million we

 

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recognized in the fourth quarter of 2014. This was due to the inherent irregularity in the timing of income realized in the trusts. Had this irregular income not occurred in 2013, our operating profit would have increased by $4.6 million, or 40%.

 

    Cash flows (GAAP) used in operations for the three month period ended December 31, 2014 were $3.8 million compared to $1.8 million used in operations in the prior year period. Operating cash flows were impacted during the quarter by a $9.6 million use of cash to reduce accounts payable compared to $0.8 million used in the prior year period. The increase in the use of cash was also attributable to the ongoing impact of expenses incurred in connection with the build-out of the pre-need sales program at the Archdiocese of Philadelphia.

 

    Distributable free cash flow (non-GAAP) for the three-month period ended December 31, 2014 decreased to $11.7 million from $19.0 million for the same period last year. The decline was primarily due to the recognition of $17.6 million in investment income from our trusts in the fourth quarter of 2013 compared to the $8.6 million we recognized in the fourth quarter of 2014, a $9 million difference.

 

    Backlog increased by $13.8 million to $543.3 million in the period ended December 31, 2014 from September 30, 2014.

 

    Cash, accounts receivable and merchandise trusts, net of merchandise liabilities reached $497.1 million at December 31, 2014.

 

    Net loss (GAAP) for the three months ended December 31, 2014 was $7.8 million, as compared to a net loss of $3.5 million in the prior-year period.

“As with our quarterly comparisons, our year-over-year comparisons were impacted by a combination of one-time items as well as the ongoing expenses associated with the build-out of pre-need sales programs at the Archdiocese of Philadelphia. Nevertheless, as we look at the overall performance for the company, normalizing revenue and taking into account the various one-time items, we had a tremendous year and are very well positioned for the future.”

Full Year Financial Highlights

 

    Reaffirms intention to increase distributions by at least $.01 per unit each quarter through 2015.

 

    Revenues (GAAP) and production-based revenues (non-GAAP) reached record levels for the year ended December 31, 2014.

 

    Revenues (GAAP) for the year ended December 31, 2014 were $288.1 million compared to $246.6 million for the year ended December 31, 2013, a 16.8% increase.

 

    Production-based revenues (non-GAAP) for the year ended December 31, 2014 were $357.0 million compared to $326.6 million in the prior year, a 9.3% increase.

 

    Operating profits (GAAP) were $13.9 million in 2014 compared to $6.4 million in the prior year period, a 117% increase.

 

   

Adjusted operating profits (non-GAAP) were $66.7 million in 2014, compared to $67.2 million in 2013. Contributing to this comparison was investment income from trusts in 2013 which was approximately $2.6 million greater than 2014. Additionally, two one-time items impacted 2014 full year results, namely a $2.8 million increase in net-costs

 

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pertaining to legal settlements and approximately $1.0 million in additional payroll processing fees. Absent these non-recurring items, adjusted operating profit for 2014 increased $5.9 million over 2013.

 

    Operating cash flows (GAAP) in 2014 were $19.4 million compared to $35.1 million in 2013. The year over year comparison was mostly due to the previously disclosed one-time impact on cash flows of $11.9 million received from a legal settlement in 2013. Excluding the settlement, the decline in operating cash flows from 2013 to 2014 were $3.8 million. This much smaller decline can largely be attributed to the ongoing impact of expenses incurred in connection with the build-out of the pre-need sales program at the Archdiocese of Philadelphia.

 

    Distributable free cash flow (non-GAAP) in 2014 was $61.3 million compared to $76.0 million in 2013. The decline was primarily due to the impact of the $11.9 million settlement which contributed to cash flows in 2013 as well as investment returns which were approximately $2.6 million greater than in 2014. Distributable free cash flow for 2014 was impacted by $2.8 million in added costs related to legal settlements as well as approximately $1.0 million in additional payroll processing fees. Absent these one-time items, the distributable free cash flow for 2014 was $65.1 million compared to $61.5 million in 2013, a $3.6 million increase.

 

    Backlog rose to $543.3 million in 2014, compared to $481.0 million in 2013, a $62.3 million increase.

 

    Net loss (GAAP) for 2014 was $10.8 million, compared to a net loss of $19.0 million in 2013.

“We continue to build up our newly created insurance division and while the results are not yet material, we have high hopes for the eventual contributions from that business,” said Miller. “Our backlog continues to grow and cash, accounts receivable and merchandise trusts minus merchandise trust liability reached $497.1 million, reflecting a company with a very strong financial foundation. We also raised our distribution three times during the year.”

The Company reports its financial results in accordance with U.S. GAAP. However, management believes that certain non-GAAP financial measures used in managing the business may provide investors with additional information regarding underlying trends and ongoing results on a comparable basis. Specifically, management believes that production-based revenues and adjusted operating profit allow the investor to gain insight into the current operating performance of the Company. Please see the section of this press release “Non-GAAP Financial Measures” to view the reconciliation tables. Non-GAAP financial measures used by the Company should not be considered as alternatives to GAAP financial measures, and you should not consider such non-GAAP financial measures in isolation or as a substitute for an analysis of the Company’s results as reported under U.S. GAAP. Certain 2013 information has been adjusted to include the effects of retrospective adjustments resulting from the Company’s 2013 first quarter acquisition.

Investor Conference Call and Webcast

StoneMor will conduct a conference call to discuss 2014 results today, Friday, March 13, 2015 at 10:00 a.m. ET. The conference call can be accessed by calling (800) 738-1032. An audio replay of the conference call will be available by calling (800) 633-8284 through 12:00 p.m. ET on March 27, 2015. The reservation number for the audio replay is 21762581. A live webcast of

 

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the conference call will also be available to investors who may access the call through the investors section of www.stonemor.com. An audio replay of the conference call will also be archived on StoneMor’s website at www.stonemor.com. Additional detailed financial, statistical and business-related information is included in a financial supplement. The earnings release and the financial supplement are available at www.stonemor.com

About StoneMor Partners L.P.

StoneMor Partners L.P., headquartered in Levittown, Pennsylvania, is an owner and operator of cemeteries and funeral homes in the United States, with 303 cemeteries and 98 funeral homes in 28 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.

Forward-Looking Statements

Certain statements contained in this press release, including, but not limited to, information regarding the status and progress of our operating activities, the plans and objectives of our management, assumptions regarding our future performance and plans, and any financial guidance or guidance related to our future distributions are forward-looking statements.

Generally, the words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend (including, but not limited to our intent to maintain or increase our distributions),” “project,” “expect,” “predict” and similar expressions identify these forward-looking statements.

These forward-looking statements are made subject to certain risks and uncertainties that could cause actual results to differ materially from those stated or implied. Our major risk is related to uncertainties associated with the cash flow from our pre-need and at-need sales, our trusts, and financings, which may impact our ability to meet our financial projections, our ability to service our debt and pay distributions, and our ability to increase our distributions.

Our additional risks and uncertainties, include, but are not limited to, the following: uncertainties associated with future revenue and revenue growth; uncertainties associated with the integration or anticipated benefits of our recent acquisitions or any future acquisitions; our ability to complete and fund additional acquisitions; the effect of economic downturns; the impact of our significant leverage on our operating plans; the decline in the fair value of certain equity and debt securities held in our trusts; our 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; our ability to successfully implement a strategic plan relating to achieving operating improvements, strong cash flows and further deleveraging; our ability to successfully compete in the cemetery and funeral home industry; litigation or legal proceedings that could expose us to significant liabilities and damage our reputation; the effects of cyber security attacks due to our significant reliance on information technology; uncertainties relating to the financial condition of third-party insurance companies that fund our pre-need funeral contracts; and various other uncertainties associated with the death care industry and our operations in particular.

 

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When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth in our Annual Report on Form 10-K and our other reports filed with the SEC. Except as required under applicable law, we assume no obligation to update or revise any forward-looking statements made herein or any other forward-looking statements made by us, whether as a result of new information, future events or otherwise.

 

Contact:

John McNamara
(215) 826-2800

 

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Non-GAAP Financial Measures

Production Based Revenue

We present production based revenue because management believes it provides for a useful measure of both the value of contracts written and investment and other income generated during a given period and is a critical component of adjusted operating profit.

Production based revenue is a non-GAAP financial measure that may not be consistent with other similar non-GAAP financial measures presented by other publicly traded companies.

Adjusted Operating Profit

We present Adjusted Operating Profit because management believes it provides for a useful measure of economic value added by presenting an effective matching of the value of current and future revenue sources generated within a given period to the cost of producing such revenue and managing our day to day operations within that same period. It is a significant measure that we believe is an indicator of eventual profit generated within a given period of time.

Adjusted Operating Profit is a non-GAAP financial measure that may not be consistent with other similar non-GAAP financial measures presented by other publicly traded companies.

Adjusted Operating Cash Generated

We present adjusted operating cash generated revenue because management believes it provides for a useful measure of the amount of cash generated that is available to make capital expenditures and partner distributions once all cash flow timing issues have been settled.

Adjusted operating cash generated is a non-GAAP financial measure that may not be consistent with other similar non-GAAP financial measures presented by other publicly traded companies.

Distributable Free Cash Flow

We present Distributable Free Cash Flow because management believes this information is a useful adjunct to Net Cash Provided by (Used in) Operating Activities under GAAP. Distributable Free Cash Flow is a significant liquidity metric that we believe is an indicator of our ability to generate cash flow during any quarter at a level sufficient to pay the quarterly distribution to the holders of our common units and for other purposes, such as repaying debt and expanding through strategic investments.

Distributable Free Cash Flow is similar to quantitative standards of free cash flow used throughout the deathcare industry and to quantitative standards of distributable cash flow used throughout the investment community with respect to publicly traded partnerships, but is not intended to be a prediction of the future. However, our calculation of distributable free cash flow may not be consistent with calculations of free cash flow, distributable cash flow or other similarly titled measures of other companies. Distributable Free Cash Flow should not be used as a substitute for the GAAP measure of cash flows from operating, investing, or financing activities.

 

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Production Based Partners’ Capital

We present production based partners’ capital as a means to provide better insight into the value that our activities contribute to the enterprise. Because a portion of our revenues and direct selling expenses are captured on our balance sheet until we deliver the underlying goods or services, we believe that by including these items in our view of partners’ capital, we gain better insight into the value creation.

Backlog

We define backlog as deferred cemetery revenues and investment income less deferred selling and obtaining costs. It does not include deferred unrealized gains and losses on merchandise trust assets.

 

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Reconciliation of Production Based Revenue (non-GAAP) and Adjusted Operating

Profit (non-GAAP) to Revenue (GAAP) and Operating Profit (GAAP)

 

     Three months ended      Three months ended               
     December 31, 2014      December 31, 2013               
     (in thousands)      (in thousands)               
     Segment                   Segment                   Change in     Change in  
     Results      GAAP     GAAP      Results      GAAP     GAAP      GAAP results     GAAP results  
     (non-GAAP)      Adjustments     Results      (non-GAAP)      Adjustments     Results      ($)     (%)  

Revenues

                    

Pre-need cemetery revenues

   $ 41,052       $ (13,514   $ 27,538       $ 32,474       $ (11,201   $ 21,273       $ 6,265        29.5

At-need cemetery revenues

     25,020         (1,173     23,847         19,613         (309     19,304         4,543        23.5

Investment income from trusts

     8,687         (2,213     6,474         17,648         (10,266     7,382         (908     -12.3

Interest income

     1,780         —          1,780         1,717         —          1,717         63        3.7

Funeral home revenues

     14,974         (1,752     13,222         13,904         (1,416     12,488         734        5.9

Other cemetery revenues

     1,206         (76     1,130         853         51        904         226        25.0
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total revenues

  92,719      (18,728   73,991      86,209      (23,141   63,068      10,923      17.3
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Costs and expenses

Cost of goods sold

  10,535      (2,099   8,436      8,541      (1,786   6,755      1,681      24.9

Cemetery expense

  17,126      —        17,126      14,866      —        14,866      2,260      15.2

Selling expense

  15,771      (3,038   12,733      15,233      (2,535   12,698      35      0.3

General and administrative expense

  8,777      —        8,777      8,491      —        8,491      286      3.4

Corporate overhead

  10,060      —        10,060      7,218      —        7,218      2,842      39.4

Depreciation and amortization

  3,088      —        3,088      2,389      —        2,389      699      29.3

Funeral home expense

  10,883      (254   10,629      8,737      (164   8,573      2,056      24.0

Acquisition related costs, net of recoveries

  229      —        229      150      —        150      79      52.7
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total costs and expenses

  76,469      (5,391   71,078      65,625      (4,485   61,140      9,938      16.3
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Operating profit

$ 16,250    $ (13,337 $ 2,913    $ 20,584    $ (18,656 $ 1,928    $ 985      51.1
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

     Year ended      Year ended                
     December 31, 2014      December 31, 2013                
     (in thousands)      (in thousands)                
     Segment
Results
(non-GAAP)
     GAAP
Adjustments
    GAAP
Results
     Segment
Results
(non-GAAP)
     GAAP
Adjustments
    GAAP
Results
     Change in
GAAP results
($)
     Change in
GAAP results
(%)
 

Revenues

                     

Pre-need cemetery revenues

   $ 145,607       $ (40,471   $ 105,136       $ 134,857       $ (43,714   $ 91,143       $ 13,993         15.4

At-need cemetery revenues

     92,724         (559     92,165         80,000         (4,568     75,432         16,733         22.2

Investment income from trusts

     47,912         (21,742     26,170         50,564         (26,158     24,406         1,764         7.2

Interest income

     7,628         —          7,628         6,926         —          6,926         702         10.1

Funeral home revenues

     55,751         (7,065     48,686         50,808         (5,853     44,955         3,731         8.3

Other cemetery revenues

     7,369         931        8,300         3,445         334        3,779         4,521         119.6
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total revenues

  356,991      (68,906   288,085      326,600      (79,959   246,641      41,444      16.8
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Costs and expenses

Cost of goods sold

  39,842      (6,190   33,652      35,382      (7,523   27,859      5,793      20.8

Cemetery expense

  64,672      —        64,672      57,566      —        57,566      7,106      12.3

Selling expense

  64,175      (8,898   55,277      58,782      (10,950   47,832      7,445      15.6

General and administrative expense

  35,110      —        35,110      31,873      —        31,873      3,237      10.2

Corporate overhead

  32,454      —        32,454      28,875      —        28,875      3,579      12.4

Depreciation and amortization

  11,081      —        11,081      9,548      —        9,548      1,533      16.1

Funeral home expense

  40,696      (986   39,710      36,319      (665   35,654      4,056      11.4

Acquisition related costs, net of recoveries

  2,269      —        2,269      1,051      —        1,051      1,218      115.9
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total costs and expenses

  290,299      (16,074   274,225      259,396      (19,138   240,258      33,967      14.1
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Operating profit

$ 66,692    $ (52,832 $ 13,860    $ 67,204    $ (60,821 $ 6,383    $ 7,477      117.1
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

The tables above analyze our results of operations and the changes therein for the three months and twelve months ended December 31, 2014, as compared to the same periods last year. The tables are structured so that our readers can determine whether changes were based upon changes in the level of merchandise and services and other revenues generated during the periods and/ or changes in the timing when merchandise and services were delivered.

 

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Critical Financial Measures

 

     Three months ended      Year ended  
     December 31,      December 31,  
     2014      2013      2014      2013  
     (in thousands)      (in thousands)  

Total revenues (a)

   $ 73,991       $ 63,068       $ 288,085       $ 246,641   

Production based revenue consisting of the total value of cemetery contracts written, funeral home revenues and investment and other income (b)

     92,719         86,209         356,991         326,600   

Operating profit (a)

     2,913         1,928         13,860         6,383   

Adjusted operating profit (b)

     16,250         20,584         66,692         67,204   

Net income (loss) (a)

     (7,796      (3,539      (10,773      (19,032

Operating cash flows (a)

     (3,790      (1,819      19,448         35,077   

Adjusted operating cash generated (b)

     13,471         20,437         67,436         81,939   

Distributable free cash flow generated (b)

   $ 11,732       $ 18,967       $ 61,307       $ 76,004   

 

     As of      As of  
     December 31, 2014      December 31, 2013  

Distribution coverage quarters (b)

     8.10         7.65   

 

 

(a) This is a GAAP financial measure.
(b) This is a non-GAAP financial measure as defined by the Securities and Exchange Commission. Please see the reconciliation to GAAP measures or support calculation within this press release.

Reconciliation of Adjusted Operating Profit (non-GAAP) to Operating Profit (GAAP)

 

     Three months ended      Year ended  
     December 31,      December 31,  
     2014      2013      2014      2013  
     (in thousands)      (in thousands)  

GAAP operating profit

   $ 2,913       $ 1,928       $ 13,860       $ 6,383   

Increase in applicable deferred revenues

     18,728         23,141         68,906         79,959   

Increase in deferred cost of goods sold and selling and obtaining costs

     (5,391      (4,485      (16,074      (19,138
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted operating profit

$ 16,250    $ 20,584    $ 66,692    $ 67,204   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Reconciliation of Production Based Revenues (non-GAAP) to Revenues (GAAP)

 

     Three months ended December 31,      Increase      Increase  
     2014      2013      (Decrease) ($)      (Decrease) (%)  
     (in thousands)  

Value of pre-need cemetery contracts written

   $ 41,052       $ 32,474       $ 8,578         26.4

Value of at-need cemetery contracts written

     25,020         19,613         5,407         27.6

Investment income from trusts

     8,687         17,648         (8,961      -50.8

Interest income

     1,780         1,717         63         3.7

Funeral home revenues

     14,974         13,904         1,070         7.7

Other cemetery revenues

     1,206         853         353         41.4
  

 

 

    

 

 

    

 

 

    

 

 

 

Total production based revenues

  92,719      86,209      6,510      7.6
  

 

 

    

 

 

    

 

 

    

 

 

 

Less:

Increase in deferred sales revenue and investment income

  (18,728   (23,141   4,413      -19.1
  

 

 

    

 

 

    

 

 

    

 

 

 

Total GAAP revenues

$ 73,991    $ 63,068    $ 10,923      17.3
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Year ended December 31,      Increase      Increase  
     2014      2013      (Decrease) ($)      (Decrease) (%)  
     (in thousands)  

Value of pre-need cemetery contracts written

   $ 145,607       $ 134,857       $ 10,750         8.0

Value of at-need cemetery contracts written

     92,724         80,000         12,724         15.9

Investment income from trusts

     47,912         50,564         (2,652      -5.2

Interest income

     7,628         6,926         702         10.1

Funeral home revenues

     55,751         50,808         4,943         9.7

Other cemetery revenues

     7,369         3,445         3,924         113.9
  

 

 

    

 

 

    

 

 

    

 

 

 

Total production based revenues

  356,991      326,600      30,391      9.3
  

 

 

    

 

 

    

 

 

    

 

 

 

Less:

Increase in deferred sales revenue and investment income

  (68,906   (79,959   11,053      -13.8
  

 

 

    

 

 

    

 

 

    

 

 

 

Total GAAP revenues

$ 288,085    $ 246,641    $ 41,444      16.8
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Reconciliation of Adjusted Operating Cash Flows (non-GAAP) and Distributable Free

Cash Flow (Non-GAAP) to Operating Cash Flows (GAAP)

 

     Three months ended December 31,      Year ended December 31,  
     2014      2013      2014      2013  
     (in thousands)      (in thousands)  

GAAP operating cash flows

   $ (3,790    $ (1,819    $ 19,448       $ 35,077   
  

 

 

    

 

 

    

 

 

    

 

 

 

Add net cash inflows into the merchandise trust

  2,281      13,208      28,828      36,919   

Add net increase (decrease) in accounts receivable

  8,379      6,778      11,337      8,926   

Add net decrease (increase) in merchandise liabilities

  568      3,324      4,361      3,861   

Add net decrease (deduct net increase) in accounts payable and accrued expenses

  9,601      752      2,219      (7,588

Other float related changes

  (3,568   (1,806   1,243      4,744   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted operating cash flow generated

  13,471      20,437      67,436      81,939   
  

 

 

    

 

 

    

 

 

    

 

 

 

Less: maintenance capital expenditures

  (1,968   (1,620   (8,398   (6,986

Plus: growth capital expenditures reclassified as operating expenses and deducted from adjusted operating cash generated (a)

  229      150      2,269      1,051   
  

 

 

    

 

 

    

 

 

    

 

 

 

Distributable free cash flow generated (b)

  11,732      18,967      61,307      76,004   

Cash on hand - beginning of the period

  22,175      19,984      12,175      7,946   
  

 

 

    

 

 

    

 

 

    

 

 

 

Distributable cash available for the period

  33,907      38,951      73,482      83,950   
  

 

 

    

 

 

    

 

 

    

 

 

 

Partner distributions made

$ 17,539    $ 13,400    $ 62,836    $ 52,053   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) We maintain a credit facility from which to make acquisitions and pay acquisition related costs. We utilize this line for these costs. Accordingly, distributable free cash flow is not negatively impacted by amounts spent on acquisitions that are recorded as expenses.
(b) Results for the year ended December 31, 2013 include the impact of a legal settlement, which added $11.9 million to distributable free cash flow generated.

 

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Production Based Partners’ Capital

 

     As of      As of  
     December 31, 2014      December 31, 2013  
     (in thousands)  
Partners’ capital    $ 208,762       $ 107,520   
Deferred selling and obtaining costs      (97,795      (87,998
Deferred cemetery revenues, net      643,408         579,993   
  

 

 

    

 

 

 
Production based partners’ capital $ 754,375    $ 599,515   
  

 

 

    

 

 

 

Selected Net Assets

 

     As of      As of  
     December 31, 2014      December 31, 2013  
     (in thousands)  

Selected assets:

     

Cash and cash equivalents

   $ 10,401       $ 12,175   

Accounts receivable, net of allowance

     62,503         55,415   

Long-term accounts receivable, net of allowance

     89,536         78,367   

Merchandise trusts, restricted, at fair value

     484,820         431,556   
  

 

 

    

 

 

 

Total selected assets

  647,260      577,513   
  

 

 

    

 

 

 

Selected liabilities:

Accounts payable and accrued liabilities

  35,382      37,269   

Accrued interest

  1,219      1,512   

Current portion, long-term debt

  2,251      2,916   

Other long-term liabilities

  1,292      1,527   

Long-term debt

  285,378      289,016   

Deferred tax liabilities

  17,708      12,407   

Merchandise liability

  150,192      130,412   
  

 

 

    

 

 

 

Total selected liabilities

  493,422      475,059   
  

 

 

    

 

 

 

Total selected net assets

$ 153,838    $ 102,454   
  

 

 

    

 

 

 

Distribution coverage quarters (a)

  8.10      7.65   

 

 

(a) This is a measure of the ratio of selected net assets to a quarterly distribution amount. The quarterly distribution amount is calculated by taking the end of the period outstanding common units (29,203,595 at December 31, 2014 and 21,377,102 at December 31, 2013, respectively) and multiplying these units by the declared distributions during the quarters preceding the reporting dates. This total is then added to the distribution due to the General Partner based upon the same variables.

 

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StoneMor Partners L.P.

Consolidated Balance Sheet

(in thousands)

 

     December 31,     December 31,  
     2014     2013  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 10,401      $ 12,175   

Accounts receivable, net of allowance

     62,503        55,415   

Prepaid expenses

     4,708        3,622   

Other current assets

     24,266        22,667   
  

 

 

   

 

 

 

Total current assets

  101,878      93,879   

Long-term accounts receivable, net of allowance

  89,536      78,367   

Cemetery property

  339,848      316,469   

Property and equipment, net of accumulated depreciation

  100,391      85,007   

Merchandise trusts, restricted, at fair value

  484,820      431,556   

Perpetual care trusts, restricted, at fair value

  345,105      311,771   

Deferred financing costs, net of accumulated amortization

  9,089      8,308   

Deferred selling and obtaining costs

  97,795      87,998   

Deferred tax assets

  40      42   

Goodwill

  58,836      48,737   

Intangible assets

  68,990      9,655   

Other assets

  3,136      2,554   
  

 

 

   

 

 

 

Total assets

$ 1,699,464    $ 1,474,343   
  

 

 

   

 

 

 

Liabilities and partners’ capital

Current liabilities:

Accounts payable and accrued liabilities

$ 35,382    $ 37,269   

Accrued interest

  1,219      1,512   

Current portion, long-term debt

  2,251      2,916   
  

 

 

   

 

 

 

Total current liabilities

  38,852      41,697   

Other long-term liabilities

  1,292      1,527   

Obligation for lease and management agreements, net

  8,767      —     

Long-term debt

  285,378      289,016   

Deferred cemetery revenues, net

  643,408      579,993   

Deferred tax liabilities

  17,708      12,407   

Merchandise liability

  150,192      130,412   

Perpetual care trust corpus

  345,105      311,771   
  

 

 

   

 

 

 

Total liabilities

  1,490,702      1,366,823   
  

 

 

   

 

 

 

Commitments and contingencies

Partners’ capital (deficit)

General partner deficit

  (5,113   (2,137

Common partners, 29,204 and 21,377 units outstanding as of December 31, 2014 and December 31, 2013, respectively

  213,875      109,657   
  

 

 

   

 

 

 

Total partners’ capital

  208,762      107,520   
  

 

 

   

 

 

 

Total liabilities and partners’ capital

$ 1,699,464    $ 1,474,343   
  

 

 

   

 

 

 

See accompanying notes to the Consolidated Financial Statements in the Annual Report to be filed on Form 10-K for the year ended December 31, 2014.

 

13


StoneMor Partners L.P.

Consolidated Statement of Operations

(in thousands, except per unit data)

 

     Three months ended     Year ended  
     December 31,     December 31,  
     2014     2013     2014     2013  

Revenues:

        

Cemetery

        

Merchandise

   $ 33,903      $ 27,087      $ 132,355      $ 110,673   

Services

     14,067        10,632        51,827        44,054   

Investment and other

     12,799        12,861        55,217        46,959   

Funeral home

        

Merchandise

     6,290        5,186        21,060        18,922   

Services

     6,932        7,302        27,626        26,033   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

  73,991      63,068      288,085      246,641   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

Cost of goods sold (exclusive of depreciation shown separately below):

Perpetual care

  1,757      1,457      6,867      5,656   

Merchandise

  6,679      5,298      26,785      22,203   

Cemetery expense

  17,126      14,866      64,672      57,566   

Selling expense

  12,733      12,698      55,277      47,832   

General and administrative expense

  8,777      8,491      35,110      31,873   

Corporate overhead (including $266 and $332 in unit-based compensation for the three months ended December 31, 2014 and 2013, and $1,068 and $1,370 for the year ended December 31, 2014 and 2013, respectively)

  10,060      7,218      32,454      28,875   

Depreciation and amortization

  3,088      2,389      11,081      9,548   

Funeral home expense

Merchandise

  1,968      771      6,659      5,569   

Services

  5,447      4,951      20,470      19,190   

Other

  3,214      2,851      12,581      10,895   

Acquisition related costs, net of recoveries

  229      150      2,269      1,051   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost and expenses

  71,078      61,140      274,225      240,258   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

  2,913      1,928      13,860      6,383   

Gain on acquisitions

  —        —        412      2,530   

Gain on settlement agreement, net

  —        —        888      12,261   

Gain on sale of other assets

  —        —        —        155   

Gain on sale of funeral home

  —        —        244      —     

Loss on early extinguishment of debt

  214      —        214      21,595   

Loss on impairment of long-lived assets

  440      —        440      —     

Interest expense

  5,620      5,282      21,610      21,070   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss before income taxes

  (3,361   (3,354   (6,860   (21,336

Income tax expense (benefit)

  4,435      185      3,913      (2,304
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

$ (7,796 $ (3,539 $ (10,773 $ (19,032
  

 

 

   

 

 

   

 

 

   

 

 

 

General partner’s interest in net loss for the period

$ (106 $ (66 $ (155 $ (350

Limited partners’ interest in net loss for the period

$ (7,690 $ (3,473 $ (10,618 $ (18,682

Net loss per limited partner unit (basic and diluted)

$ (0.26 $ (0.16 $ (0.40 $ (0.89

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

  29,165      21,368      26,582      20,954   

Distributions declared per unit

$ .620    $ .600    $ 2.430    $ 2.385   

See accompanying notes to the Consolidated Financial Statements in the Annual Report to be filed on Form 10-K for the year ended December 31, 2014.

 

14


StoneMor Partners L.P.

Consolidated Statement of Cash Flows

(in thousands)

 

     Three months ended December 31,     Year ended December 31,  
     2014     2013     2014     2013  

Operating activities:

        

Net loss

   $ (7,796   $ (3,539   $ (10,773   $ (19,032

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

        

Cost of lots sold

     3,110        1,972        10,291        8,019   

Depreciation and amortization

     3,088        2,389        11,081        9,548   

Unit-based compensation

     266        332        1,068        1,370   

Accretion of debt discounts

     812        627        2,939        2,303   

Gain on acquisitions

     —          —          (412     (2,530

Gain on sale of other assets

     —          —          —          (155

Gain on sale of funeral home

     —          —          (244     —     

Loss on early extinguishment of debt

     214        —          214        21,595   

Loss on impairment of long-lived assets

     440        —          440        —     

Changes in assets and liabilities that provided (used) cash:

        

Accounts receivable

     (8,379     (6,778     (11,337     (8,926

Allowance for doubtful accounts

     (1,666     1,255        981        92   

Merchandise trust fund

     (2,281     (13,208     (28,828     (36,919

Prepaid expenses

     1,849        2,136        (1,064     210   

Other current assets

     (481     (1,342     (1,500     (5,248

Other assets

     782        (712     (615     2,861   

Accounts payable and accrued and other liabilities

     (9,601     (752     (2,219     7,588   

Deferred selling and obtaining costs

     (2,942     (2,797     (9,797     (11,681

Deferred cemetery revenue

     15,366        21,527        60,841        72,708   

Deferred taxes (net)

     3,997        395        2,743        (2,865

Merchandise liability

     (568     (3,324     (4,361     (3,861
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

  (3,790   (1,819   19,448      35,077   
  

 

 

   

 

 

   

 

 

   

 

 

 

Investing activities:

Cash paid for cemetery property

  (1,484   (1,556   (6,176   (5,766

Purchase of subsidiaries

  (2,381   —        (56,381   (14,100

Consideration for lease and management agreements

  —        —        (53,000   —     

Proceeds from divestiture of funeral home

  —        —        297      —     

Cash paid for property and equipment

  (1,968   (1,620   (8,398   (6,986

Proceeds from sales of other assets

  —        —        —        155   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

  (5,833   (3,176   (123,658   (26,697
  

 

 

   

 

 

   

 

 

   

 

 

 

Financing activities:

Cash distributions

  (17,539   (13,400   (62,836   (52,053

Additional borrowings on long-term debt

  29,500      32,500      92,865      269,502   

Repayments of long-term debt

  (11,352   (21,896   (98,140   (239,932

Proceeds from public offering

  —        —        120,345      38,377   

Proceeds from issuance of common units

  (85   —        53,152      —     

Fees paid related to early extinguishment of debt

  —        —        —        (14,920

Cost of financing activities

  (2,675   (18   (2,950   (5,125
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

  (2,151   (2,814   102,436      (4,151
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

  (11,774   (7,809   (1,774   4,229   

Cash and cash equivalents - Beginning of period

  22,175      19,984      12,175      7,946   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents - End of period

$ 10,401    $ 12,175    $ 10,401    $ 12,175   
  

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental disclosure of cash flow information:

Cash paid during the period for interest

$ 8,493    $ 8,151    $ 18,796    $ 18,907   

Cash paid during the period for income taxes

$ 779    $ 576    $ 4,315    $ 3,891   

Non-cash investing and financing activities:

Acquisition of assets by financing

$ 136    $ 83    $ 387    $ 190   

Issuance of limited partner units for cemetery acquisition

$ —      $ —      $ —      $ 3,718   

Acquisition of assets by assumption of directly related liability

$ —      $ —      $ 8,368    $ 3,924   

See accompanying notes to the Consolidated Financial Statements in the Annual Report to be filed on Form 10-K for the year ended December 31, 2014.

 

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