STONEMOR PARTNERS LP - FORM 8-K - EX-99.1

Attached files

file	filename
8-K - FORM 8-K - STONEMOR PARTNERS LP	d143536d8k.htm

Exhibit 99.1

LOGO


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

STONEMOR PARTNERS L.P. REPORTS OPERATING AND FINANCIAL RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2015

•

Adjusted EBITDA, a non-GAAP measure, was $26.5 million⁽¹⁾ for the 4^th quarter 2015, an increase of over 15% compared with the prior year 4^th quarter. Calendar year 2015 Adjusted EBITDA was $98.2 million, an increase of almost 8% compared with the prior year

•

Generated Distributable Available Cash, a non-GAAP measure, of $30.5 million⁽¹⁾ for the 4^th quarter 2015 and $83.0 million for calendar year 2015

•

Declared a quarterly cash distribution of $0.66 per limited partner unit for the 4^th quarter 2015, a 5% increase over the prior year 4^th quarter. Calendar year 2015 cash distributions were $2.61 per limited partner unit, a 6% increase compared with $2.46 for the prior year

•

Number of cemetery contracts written during the full year 2015 were 113,696 compared with 103,859 in the prior year, a 10% increase

•

Fourth quarter and full year 2015 operational and financial results will be discussed on a conference call at 11a.m ET on Monday, February 29^th

LEVITTOWN, PA – February 29, 2016 —StoneMor Partners L.P. (NYSE: STON) (“StoneMor” or the “Partnership”) has reported operating and financial results for the fourth quarter and full year 2015.

Larry Miller, StoneMor’s President and CEO, commented, “StoneMor completed another successful year in 2015. We generated record revenues, both production-based ($398.0 million) and GAAP-based ($305.6 million) while increasing adjusted EBITDA nearly 8% on a year over year basis, 15% compared to the prior year 4^th quarter and 13% from the 2015 3^rd quarter. We declared our 45^th consecutive quarterly distribution and our backlog remains a solid indication of future business. On the acquisition front, we acquired one cemetery and two funeral homes during the 4^th quarter, bringing our property count to 307 cemeteries and 105 funeral homes. The acquisition market continues to be robust, with opportunities we are currently evaluating exceeding our recent annual pace. As previously announced, Cambridge Associates was retained to provide advisory services with respect to our trust funds. We believe Cambridge, a leading advisor to pensions, foundations and endowments, private wealth, and corporate and government entities, will enhance our already strong efforts to maximize the value of our trust funds. Finally, while land sales have always represented a part of revenue generation, we are exploring the possibility of increasing our land efficiency, either through accelerated land sales or partnerships with entities that will maximize the value of our excess acreage positions. To that end we have retained Cushman & Wakefield, a leading global real estate services firm to assist us in a strategic evaluation of our real estate portfolio.”

⁽¹⁾

Non-GAAP financial measures used by the Partnership should not be considered as alternatives to GAAP financial measures, and you should not consider such non-GAAP measures in isolation or as a substitute for the Partnership’s results as reported under GAAP. A reconciliation of the non-GAAP financial measures of Adjusted EBITDA, Distributable Cash Flow and Distributable Available Cash to net loss attributable to the Partnership, the most directly comparable GAAP financial measure, is provided in the financial tables of this release. Please see footnote 1 to the Financial Information table of this release.

Financial Highlights


	Three Months Ended						Years Ended
	December 31,						December 31,
	2015			2014			2015			2014
Adjusted EBITDA⁽¹⁾	$	26,477		$	22,943		$	98,231		$	91,401
Distributable Available Cash⁽¹⁾	$	30,453		$	42,339		$	82,981		$	80,138
Net loss	$	(7,111	)	$	(7,796	)	$	(24,244	)	$	(10,773	)
Cash Distributions	$	20,823		$	17,539		$	77,512		$	62,836
per unit	$	0.66		$	0.63		$	2.61		$	2.46

	At December 31,
	2015			2014
Backlog⁽²⁾	$	609,048		$	543,329
Quarterly distribution asset coverage⁽³⁾		5.23x

•

Adjusted EBITDA, a non-GAAP measure, was $26.5 million⁽¹⁾ for the fourth quarter 2015 compared with $22.9 million for the prior year fourth quarter, an increase of over 15%. The increase from the prior year period was primarily the result of higher income from investment trusts and lower corporate overhead costs, partially offset by lower cemetery margin.

•

Distributable Available Cash, a non-GAAP measure, was $30.5 million⁽¹⁾ for the fourth quarter 2015 compared with $42.3 million for the prior year fourth quarter, a 28% decrease. The decrease was primarily due to different levels of cash on hand at the beginning of the reporting periods.

•

Backlog⁽²⁾ increased by $65.7 million, or 12% to $609.0 million at December 31, 2015 compared with December 31, 2014.

•

The Partnership declared a cash distribution for the 4^th quarter 2015 of $0.66 per common limited partner unit, a 5% increase compared with the prior year 4^th quarter. The Partnership’s 4^th quarter 2015 cash distribution was paid on February 12, 2016 to holders of record as of February 5, 2016.

•

On a GAAP basis, net loss for the 4^th quarter 2015 was $7.1 million compared with a net loss of $7.8 million for the prior year 4^th quarter. The GAAP losses in both periods were driven principally by the deferral of revenues, cost of goods sold and selling expenses associated with the Partnership’s pre-need sales, while other period operating costs, such as cemetery and general and administrative expenses, were expensed as incurred.

Recent Events

•

During the fourth quarter 2015, the Partnership acquired 1 cemetery and 2 funeral homes in Florida for an aggregate purchase price of $5.7 million. The funeral homes have performed approximately 594 funeral services in the aggregate annually, and the cemetery has performed approximately 164 interments in the aggregate annually. Currently, inclusive of these acquisitions, the Partnership operates 307 cemeteries and 105 funeral homes in 28 states and Puerto Rico.

•

On November 19, 2015, the Partnership entered into an at-the-market equity distribution agreement (“ATM Equity Program”) with a group of banks whereby it may sell, from time to time, common units representing limited partner interests having an aggregate offering price of up to $100,000,000. During the year ended December 31, 2015, we issued 277,667 common units under the ATM program for net proceeds of $7.5 million.

⁽¹⁾	A reconciliation of the non-GAAP financial measures of Adjusted EBITDA, Distributable Cash Flow and Distributable Available Cash is provided in the financial tables of this release. Please see footnote 1 to the Financial Information table of this release.

⁽²⁾	Amounts as of period end. Backlog is defined 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.

⁽³⁾	Ratio of selected net assets to quarterly cash distributions paid during the most recent quarterly period as of the date noted. Please see the Distribution Asset Coverage table of this release.

Operating Highlights

Cemetery Operations

•

Cemetery contracts written for the 4^th quarter 2015 of 27,180 were relatively consistent with the prior year 4^th quarter. For calendar year 2015, 113,696 cemetery contracts were written, a 10% increase from the prior year.

•

Cemetery margin⁽¹⁾ was $12.9 million for the 4^th quarter 2015, compared with $18.2 million for the prior year 4^th quarter and $15.0 million for the 3^rd quarter 2015. Cemetery margin percentage was approximately 20% for the 4^th quarter 2015, compared to 27% for the prior year 4^th quarter and 22% for the 3^rd quarter 2015. The decrease in margin and margin percentage was due principally to a decrease in pre-need sales resulting from the restructuring of its sales force. The Partnership high-graded its sales force and restructured its sales compensation program at the beginning of the 4^th quarter to maximize productivity and efficiency of its sales infrastructure in future periods. This transition process impacted pre-need sales during the early part of the 4^th quarter, but normalized by period end. For calendar year 2015, cemetery margin was $54.6 million, an increase of 5% from the prior year.

Funeral Home Operations

•

Funeral home calls for the 4^th quarter 2015 were 4,034 compared with 3,780 for the prior year 4^th quarter, an increase of 7%. Calendar year 2015 funeral home calls of 15,826 represented an increase of 12% compared with the prior year.

•

Funeral Home margin⁽¹⁾ was $4.6 million for the 4^th quarter 2015, compared with $4.1 million for the prior year 4^th quarter, an increase of 12%. Funeral Home margin percentage was approximately 27% for the 4^th quarter 2015, consistent with the prior year 4^th quarter. Calendar year 2015 funeral home margin was $17.9 million, a 19% increase from the prior year.

Trust Investment and Interest Income

•

Combined trust investment and interest income⁽¹⁾ was $16.7 million for the 4^th quarter 2015 compared with $10.5 million for the prior year 4^th quarter, an increase of $6.2 million or almost 60%. The increase was largely the result of the timing of realized trust gains. For calendar year 2015, combined trust investment and interest income was $59.6 million, an increase of 7% from the prior year.

•

Trust fund investment returns, including realized gains and losses and dividends (excluding realized gains on perpetual care trusts), net of fees, were 2.1% (8.5% annualized) for the 4^th quarter 2015, compared with 1.1% (4.5% annualized) for the prior year 4^th quarter and 1.1% (4.2% annualized) for the 3^rd quarter 2015. The increase in the rate of return in the current period compared to the comparable prior year period and 3^rd quarter 2015 was a result of the timing of realized merchandise trust gains.

Corporate Expenses, Liquidity and Capital Structure

•

Corporate overhead expenses for the 4^th quarter 2015 were $7.7 million, a decrease of $2.1 million or 22% from $9.8 million for the prior year 4^th quarter, and a decrease of $0.2 million or 3% from the 3^rd quarter 2015. The decrease from the prior year 4^th quarter was due to lower legal professional fees and other miscellaneous costs.

•

Cash interest expense was $4.9 million for the 4^th quarter 2015 compared with $4.8 million for the prior year 4^th quarter and $4.9 million for the 3^rd quarter 2015.

•

As of December 31, 2015, the Partnership had $318.8 million of total debt, including $149.5 million outstanding under its revolving credit facility. The Partnership had approximately $30.5 million available on its revolving credit facility and $15.2 million of cash and cash equivalents as of December 31, 2015.

⁽¹⁾

See the Supplemental Adjusted EBITDA, Distributable Cash Flow and Distributable Available Cash Summary in the Financial and Operating Highlights table and related footnotes in this release for information regarding the calculation of Cemetery margin, which is defined as non-deferred cemetery revenues less cost of goods sold, cemetery, selling and general and administrative expenses, and Funeral Home margin, which is defined as non-deferred Funeral Home revenues less associated expenses, and Trust Investment and Interest Income, which is defined as non-deferred Investment income from trusts and interest income.

* * *

Investor Conference Call and Webcast

The Partnership will conduct a conference call to discuss 2015 fourth quarter and full year financial results today, Monday, February 29, 2016 at 11:00 a.m. ET. The conference call can be accessed by calling (800) 256-8282. An audio replay of the conference call will be available by calling (800) 633-8284 through 12:00 p.m. ET on March 14, 2016. The reservation number for the audio replay is 21804014. A live webcast of 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 the Partnership’s website 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 307 cemeteries and 105 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.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements that involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. The Partnership cautions readers that any forward-looking information is not a guarantee of future performance. Such forward-looking statements include, but are not limited to, statements about future financial and operating results, the Partnership’s plans, objectives, expectations and intentions and other statements that are not historical facts. Risks, assumptions and uncertainties that could cause actual results to materially differ from the forward-looking statements include, but are not limited to, those 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; future revenue and revenue growth; 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 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; 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; 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; the financial condition of third-party insurance companies that fund our pre-need funeral contracts; and other risks, assumptions and uncertainties detailed from time to time in the Partnership’s reports filed with the U.S. Securities and Exchange Commission, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K. Forward-looking statements speak only as of the date hereof, and the Partnership assumes no obligation to update such statements, except as may be required by applicable law.

STONEMOR PARTNERS L.P.

CONSOLIDATED BALANCE SHEETS

(unaudited; in thousands)


	December 31, 2015			December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	15,153		$	10,401
Accounts receivable, net of allowance		68,415			62,503
Prepaid expenses.		5,367			4,708
Other current assets		18,863			24,266

Total current assets		107,798			101,878
Long-term accounts receivable, net of allowance		95,167			89,536
Cemetery Property		342,639			339,848
Property and equipment, net of accumulated depreciation		104,330			100,391
Merchandise trusts, restricted, at fair value		464,676			484,820
Perpetual care trusts, restricted, at fair value		307,804			345,105
Deferred selling and obtaining costs		111,542			97,795
Deferred tax assets		40			40
Goodwill and intangible assets		137,060			127,826
Other assets		15,069			3,136

Total assets	$	1,686,125		$	1,690,375

LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable and accrued liabilities	$	31,875		$	35,382
Accrued interest		1,503			1,219
Long-term debt, current portion		2,440			2,251

Total current liabilities		35,818			38,852
Long-term debt, net of deferred financing costs		316,399			276,289
Deferred cemetery revenues, net		637,536			643,408
Deferred tax liabilities		17,833			17,708
Merchandise liability		173,097			150,192
Perpetual care trust corpus		307,804			345,105
Other long-term liabilities		13,960			10,059

Total liabilities		1,502,447			1,481,613

Partners’ capital:
General partner interest		(10,038	)		(5,113	)
Common limited partners’ interests		193,716			213,875

Total partners’ capital		183,678			208,762

Total liabilities and partners’ capital	$	1,686,125		$	1,690,375

STONEMOR PARTNERS L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except per unit data)


	Three Months Ended						Years Ended
	December 31,						December 31,
	2015			2014			2015			2014
Revenues:
Cemetery:
Merchandise	$	34,174		$	33,903		$	131,862		$	132,355
Services		13,547			14,067			56,243			51,827
Investment and other		16,703			12,799			59,765			55,217
Funeral home:
Merchandise		6,809			6,290			26,722			21,060
Services		7,965			6,932			31,048			27,626

Total revenues		79,198			73,991			305,640			288,085

Costs and expenses:
Cost of goods sold		13,306			8,436			38,924			33,652
Cemetery expense		17,507			17,126			71,296			64,672
Selling expense		14,558			12,733			58,884			55,277
General and administrative expense		9,031			8,777			36,371			35,110
Corporate overhead		9,982			10,289			38,609			34,723
Depreciation and amortization		3,596			3,088			12,803			11,081
Funeral home expense:
Merchandise		1,484			1,968			6,928			6,659
Services		6,231			5,447			22,959			20,470
Other		4,191			3,214			17,526			12,581

Total costs and expenses		79,886			71,078			304,300			274,225

Operating income (loss)		(688	)		2,913			1,340			13,860
Gain on acquisitions and divestitures		—			—			1,540			656
Gain on settlement agreement, net		—			—			—			888
Legal settlement		(135	)		—			(3,135	)		—
Loss on early extinguishment of debt		—			(214	)		—			(214	)
Loss on impairment of long-lived assets		(296	)		(440	)		(296	)		(440	)
Interest expense		(5,683	)		(5,620	)		(22,585	)		(21,610	)

Net loss before income taxes		(6,802	)		(3,361	)		(23,136	)		(6,860	)
Income tax benefit (expense)		(309	)		(4,435	)		(1,108	)		(3,913	)

Net loss	$	(7,111	)	$	(7,796	)	$	(24,244	)	$	(10,773	)

Allocation of net loss attributable to limited partners and the general partner:
General partner’s interest	$	(88	)	$	(106	)	$	(315	)	$	(155	)
Limited partners’ interest		(7,023	)		(7,690	)		(23,929	)		(10,618	)

Net loss	$	(7,111	)	$	(7,796	)	$	(24,244	)	$	(10,773	)

Net loss attributable to common limited partners per unit (basic and diluted)	$	(0.22	)	$	(0.26	)	$	(0.79	)	$	(0.40	)

Weighted average limited partner units outstanding:
Basic and diluted		31,840			29,165			30,472			26,582

STONEMOR PARTNERS L.P.

FINANCIAL AND OPERATING HIGHLIGHTS

(unaudited)


	Three Months Ended						Years Ended
	December 31,						December 31
	2015			2014			2015			2014
Financial Data:
Net loss per limited partners per unit – basic and diluted	$	(0.22	)	$	(0.26	)	$	(0.79	)	$	(0.40	)
Adjusted EBITDA (in thousands)⁽¹⁾	$	26,477		$	22,943		$	98,231		$	91,401
Distributable Available Cash (in thousands)⁽¹⁾	$	30,453		$	42,339		$	82,981		$	80,138
per limited partner unit⁽¹⁾	$	0.96		$	1.45		$	2.72		$	3.01
Cash distributions paid per unit⁽²⁾	$	0.66		$	0.63		$	2.61		$	2.46
Operating Data:
Interments Performed		13,323			13,986			54,837			50,566
Interment rights sold ⁽³⁾:
Lots		9,282			7,414			33,262			31,774
Mausoleum crypts (including pre-construction)		426			489			2,205			2,186
Niches		334			322			1,619			1,466

Net interment rights sold⁽³⁾		10,042			8,225			37,086			35,426

Number of cemetery contracts written		27,180			27,504			113,696			103,859
Aggregate contract amount (in thousands, excluding interest)	$	61,424		$	66,072		$	262,383		$	238,331
Average amount per contract (excluding interest)	$	2,260		$	2,402		$	2,308		$	2,295
Pre-need cemetery contracts written		12,381			12,374			52,228			48,585
Aggregate pre-need contract amount (in thousands, excluding interest)	$	36,409		$	41,052		$	158,806		$	145,607
Average amount per pre-need contract (excluding interest)	$	2,941		$	3,318		$	3,041		$	2,997
At-need cemetery contracts written		14,799			15,130			61,468			55,274
Aggregate at-need contract amount (in thousands excluding interest)	$	25,015		$	25,020		$	103,577		$	92,724
Average amount per at-need contract (excluding interest)	$	1,690		$	1,654		$	1,685		$	1,678
Funeral home calls		4,034			3,780			15,826			14,072

⁽¹⁾	A reconciliation of GAAP net loss to Adjusted EBITDA, Distributable Cash Flow and Distributable Available Cash is provided in the financial tables of this release. Please see footnote 1 to the Financial Information table of this release.

⁽²⁾	Represents the cash distributions declared for the respective period and paid by the Partnership within 45 days after the end of each quarter, utilizing the distributable cash flow generated during the respective period.

⁽³⁾	Net of cancellations. Sales of double-depth burial lots are counted as two sales.

STONEMOR PARTNERS L.P.

FINANCIAL AND OPERATING HIGHLIGHTS

(unaudited; in thousands, except per unit amounts)


	Three Months Ended						Years Ended
	December 31,						December 31,
	2015			2014			2015			2014
Reconciliation of net loss to non-GAAP measures⁽¹⁾:
Net loss	$	(7,111	)	$	(7,796	)	$	(24,244	)	$	(10,773	)
Acquisition and related costs		1,575			229			3,223			2,269
Depreciation and amortization		3,596			3,088			12,803			11,081
Cost of cemetery lots sold		5,597			3,110			13,103			10,291
Non-cash interest expense		742			812			2,949			2,939
Non-cash stock compensation expense		692			266			1,516			1,068
Maintenance capital expenditures⁽²⁾		(2,926	)		(1,968	)		(7,937	)		(8,398	)
Non-cash income tax expense		360			8,432			1,265			6,656
Gain on acquisition/dispositions		—			—			(1,540	)		(656	)
Loss on early extinguishment of debt		—			214			—			214
Net operating profit deferral from non-delivered merchandise and services⁽³⁾		16,001			13,337			66,542			52,832

Distributable Cash Flow ⁽¹⁾	$	18,526		$	20,164		$	67,680		$	67,963

Supplemental Adjusted EBITDA, Distributable Cash Flow and Distributable Available Cash Summary⁽³⁾:
Revenues
Pre-need cemetery revenues	$	36,409		$	41,052		$	158,806		$	145,607
At-need cemetery revenues		25,015			25,020			103,577			92,724
Investment income from trusts		14,620			8,687			50,937			47,912
Interest income		2,055			1,780			8,672			7,628
Funeral home revenues		17,148			14,974			67,374			55,751
Other cemetery revenues		4,426			1,206			8,624			7,369

Total revenues		99,673			92,719			397,990			356,991

Costs and expenses
Cost of goods sold⁽⁴⁾		9,353			7,425			35,445			29,551
Cemetery expense		17,506			17,126			71,295			64,672
Selling expense		17,056			15,771			73,332			64,175
General and administrative expense		9,031			8,777			36,371			35,110
Cash corporate overhead⁽⁵⁾		7,679			9,794			33,834			31,386
Funeral home expense		12,571			10,883			49,482			40,696

Total costs and expenses		73,196			69,776			299,759			265,590

Adjusted EBITDA⁽¹⁾		26,477			22,943			98,231			91,401
Cash interest expense⁽⁶⁾		(4,941	)		(4,808	)		(19,636	)		(18,671	)
Cash income taxes		51			3,997			157			2,743
Cash gain (loss) on settlement and acquisition/disposition⁽⁷⁾		(135	)		—			(3,135	)		888
Maintenance capital expenditures⁽²⁾		(2,926	)		(1,968	)		(7,937	)		(8,398	)

Distributable Cash Flow⁽¹⁾		18,526			20,164			67,680			67,963
Discretionary adjustments considered by the Board of Directors of the General Partner in the determination of quarterly cash distributions:
Non-recurring legal settlement⁽⁷⁾		135			—			3,135			—
Non-recurring impact from early repayment marketing program⁽⁸⁾		—			—			1,765			—

Distributable Cash Flow with discretionary adjustments by the Board of Directors of the General Partner		18,661			20,164			72,580			67,963
Cash on hand – beginning of period		11,792			22,175			10,401			12,175

Distributable Available Cash⁽¹⁾⁽⁹⁾	$	30,453		$	42,339		$	82,981		$	80,138

Cash distributions paid⁽¹⁰⁾	$	20,823		$	17,539		$	77,512		$	62,836
per limited partner unit	$	0.66		$	0.63		$	2.61		$	2.46
Excess of Distributable Available Cash after cash distributions paid⁽¹¹⁾	$	9,630		$	24,800		$	5,469		$	17,302

⁽¹⁾

Although not prescribed under generally accepted accounting principles (“GAAP”), the Partnership’s management believes the presentation of Adjusted EBITDA, Distributable Cash Flow (“DCF”) and Distributable Available Cash is relevant and useful because it helps the Partnership’s investors understand its operating performance, allows for easier comparison of its results with other master limited partnerships (“MLP”), and is a critical component in the determination of quarterly cash distributions. As a MLP, the Partnership is required to distribute 100% of available cash, subject to cash reserves established by its general partner and as defined in its limited partnership agreement (“Available Cash”), to investors on a quarterly basis, in compliance with applicable Delaware law. The Partnership refers to Available Cash prior to the establishment of cash reserves as Distributable Available Cash. Adjusted EBITDA, DCF and Distributable Available Cash should not be considered in isolation of, or as a substitute for, net income as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. While the Partnership’s management believes that its methodology of calculating Adjusted EBITDA, DCF and Distributable Available Cash is generally consistent with the common practice of other MLPs, such metrics may not be consistent and, as such, may not be comparable to measures reported by other MLPs, who may use other adjustments related to their specific businesses. Adjusted EBITDA, DCF and Distributable Available Cash are supplemental financial measures used by the Partnership’s management and by external users of the Partnership’s financial statements such as investors, lenders under the Partnership’s credit facility, research analysts, rating agencies and others to assess its:

•

Operating performance as compared to other publicly traded partnerships, without regard to financing methods, historical cost basis or capital structure;

•

Ability to generate sufficient cash flows to support its distributions to unitholders;

•

Ability to incur and service debt and fund acquisitions and growth opportunities; and

•

Ability to comply with financial covenants in its Credit Facility, which is calculated based upon Adjusted EBITDA with certain adjustments.

DCF is determined by calculating EBITDA, which is defined as net income (loss) plus interest expense, income tax, and depreciation and amortization, then adjusting it for non-cash, non-recurring and other items to achieve Adjusted EBITDA, and then deducting cash interest expense, net cash income tax, maintenance capital expenditures and other items. Distributable Available Cash is then determined by adjusting DCF for discretionary adjustments considered by the Board of Directors of the General Partner in determination of the quarterly cash distribution, and then adding cash on hand at the beginning of the period. The Partnership defines Adjusted EBITDA as net income (loss) plus the following adjustments:

•

Interest expense;

•

Income tax expense;

•

Depreciation and amortization.

•

Asset impairments;

•

Acquisition and related costs;

•

Non-cash stock compensation;

•

(Gains) losses on asset disposal; and

•

Other items.

⁽²⁾	Maintenance capital expenditures include those capitalized costs which the Partnership incurs to maintain its properties and equipment as well as corporate expenditures.

⁽³⁾

Includes adjustments to add back certain revenues and related expenses deferred in accordance with GAAP. The Partnership’s management has provided this data so as to present its results in a manner consistent with its internal managerial accounting practices, which recognizes certain revenue and related expenses when contracts are signed by the customer and accepted by the Partnership. Under GAAP, the Partnership recognizes pre-need cemetery sales for sales of burial lots and mausoleum crypts when the product is constructed and at least 10% of the sales price is collected, while other products are recognized when the criteria for delivery under GAAP are met, which include purchase of the product, delivery and installation, and transfer of title, among other items. The Partnership’s management believes that this data is relevant and useful to its investors so as to better understand its operating performance and allow for easier comparison to other MLPs.

⁽⁴⁾	Excludes non-cash amortization of cemetery property.

⁽⁵⁾	Excludes non-cash stock compensation expense.

⁽⁶⁾	Excludes non-cash amortization of deferred finance costs and other non-cash items.

⁽⁷⁾

Consists of the estimated non-recurring settlement cost and associated legal fees of a litigation matter. The Board of Directors and management of the General Partner deemed this item as non-recurring and excluded the impact in its determination of DCF and Distributable Available Cash for the period after consideration of the item’s characteristics, including, but not limited to, the type of litigation and the amount of the settlement.

⁽⁸⁾

Consists of the non-recurring reduction of pre-need cemetery revenues resulting from the Partnership’s early payment marketing program, which offers certain discounts for installment pre-need sales if paid in full within specific dates. The Board of Directors and management of the General Partner considered this item as non-recurring and excluded the impact in its determination of DCF and Distributable Available Cash for the period as they do not expect to offer such programs in future periods.

⁽⁹⁾	Including the discretionary adjustments by the Board of Directors of the General Partner in the determination of quarterly cash distributions, Adjusted EBITDA would have been $26.6 million and $103.1 million for the three months and year ended December 31, 2015.

⁽¹⁰⁾	Represents cash distributions declared for the respective period and paid by the Partnership within 45 days after the end of each quarter, utilizing the DCF and Distributable Available Cash generated during the respective period.

⁽¹¹⁾

The Partnership seeks to at least maintain its current cash distribution in future quarterly periods, and expects to only increase such cash distributions when future DCF and Distributable Available Cash amounts allow for it and are expected to be sustained. The Partnership’s determination of quarterly cash distributions and its resulting determination of the amount of excess (shortfall) those cash distributions generate in comparison to DCF and Distributable Available Cash are based upon its assessment of numerous factors, including but not limited to the variability of cash flow from the Partnership’s pre-need and at-need sales and its trust investments performance, interest rate movements, and financial leverage. The Partnership also considers its historical trailing four quarters of excess or shortfalls and future forecasted excess or shortfalls that its cash distributions generate in comparison to DCF and Distributable Available Cash due to the variability of its DCF and Distributable Available Cash generated each quarter, which could have more or less excess (shortfalls) generated quarter to quarter.

STONEMOR PARTNERS L.P.

DISTRIBUTION ASSET COVERAGE

(unaudited; in thousands, except ratios)


	December 31,		December 31,
	2015		2014
Selected assets:
Cash and cash equivalents	$	15,153	$	10,401
Accounts receivable, net of allowance		68,415		62,503
Long-term accounts receivable, net of allowance		95,167		89,536
Merchandise trusts, restricted, at fair value		464,676		484,820

Total selected assets		643,411		647,260

Selected liabilities:
Accounts payable and accrued liabilities		31,875		35,382
Accrued interest		1,503		1,219
Long-term debt, current portion		2,440		2,251
Long-term debt		316,399		276,289
Merchandise liability		173,097		150,192

Total selected liabilities		525,314		465,333

Total selected net assets	$	117,897	$	181,927

Distribution asset coverage⁽¹⁾		5.23x		9.58x

⁽¹⁾	Ratio of selected net assets to quarterly cash distributions paid during the most recent quarterly period as of the date noted.

Attached files

Stock widget

Investing forum

STONEMOR PARTNERS LP Reports