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StoneMor Inc. Reports Fourth Quarter and Full Year Financial Results

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StoneMor Inc. (NYSE: STON) reported its fourth quarter and full year 2021 financial results, with fourth quarter revenues increasing to $79.3 million from $74.9 million year-over-year. However, the cemetery segment saw a decrease in operating income to $3.4 million from $10.9 million, while the funeral home segment reported an operating loss of $0.1 million. Full year revenues rose to $322.8 million, but the company faced a net loss of $57 million, which included a loss on debt extinguishment of $40.1 million. Adjusted EBITDA for the full year reached $105.2 million.

Positive
  • Fourth quarter revenues increased by 5.9% year-over-year.
  • Full-year revenues rose 15.5% compared to 2020.
  • Full-year adjusted EBITDA improved by $30.3 million year-over-year.
  • Completed three acquisitions for $18 million in Q1 2022, enhancing growth prospects.
Negative
  • Cemetery segment operating income decreased by $7.5 million in Q4.
  • Funeral home segment operating income decreased by $1.4 million for the full year.
  • Corporate overhead expense rose to $10.9 million in Q4.
  • Fourth quarter adjusted EBITDA dropped to $6.6 million from $28.4 million year-over-year.

BENSALEM, Pa., March 30, 2022 (GLOBE NEWSWIRE) -- StoneMor Inc. (NYSE: STON) (“StoneMor” or the “Company”), a leading owner and operator of cemeteries and funeral homes, today reported operating and financial results for the fourth quarter and year ended December 31, 2021.  Investors are encouraged to read the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2021 when it is filed with the Securities and Exchange Commission (the “SEC”), which will contain additional details, and will be posted at www.stonemor.com.

FOURTH QUARTER AND FULL YEAR 2021 FINANCIAL PERFORMANCE

  • Revenues for the fourth quarter were $79.3 million compared to $74.9 million in in the fourth quarter in the prior year.  Full year revenues were $322.8 million compared to $279.5 million in the prior year period.
  • Cemetery segment operating income for the fourth quarter was $3.4 million compared to $10.9 million in the fourth quarter in the prior year, representing a decrease of $7.5 million. Full year cemetery segment operating income was $43.8 million compared to $35.0 million in the prior year period, representing an increase of $8.8 million.
  • Funeral home segment operating loss for the fourth quarter was $0.1 million compared to operating income of $1.5 million in the fourth quarter of the prior year, representing a decrease of $1.6 million.  Full year funeral home segment operating income was $3.7 million compared to $5.0 million in the prior year period, representing a decrease of $1.4 million.
  • Corporate overhead expense increased to $10.9 million in the fourth quarter compared to $9.0 million in the fourth quarter of the prior year.  Full year corporate overhead expense increased to $39.9 million compared to $36.0 million in the prior year period.
  • Fourth quarter operating loss was $8.2 million compared to operating income of $3.4 million in the fourth quarter of the prior year.  Full year operating income was $3.8 million, compared to $3.3 million in the prior year period.
  • Fourth quarter net loss from continuing operations was $10.8 million compared to $5.7 million in the fourth quarter of the prior year.  Full year net loss from continuing operations was $57.0 million compared to $37.3 million in the prior year period.  Full year 2021 net loss from continuing operations included a loss on debt extinguishment of $40.1 million.
  • Fourth quarter adjusted EBITDA was $6.6 million compared to $28.4 million in the fourth quarter of the prior year.  Full year adjusted EBITDA was $105.2 million compared to $74.9 million in the prior year period.  Fourth quarter and Full Year 2021 adjusted EBITDA included a one-time approximately $15 million net adjustment for realized trust losses.

Joe Redling, StoneMor’s President and Chief Executive Officer said, “2021 was a remarkable year for our team, as we continued to weather the impacts of COVID-19, while executing at a high-level in the continued implementation of our strategies and initiatives.  We continued to grow our sales and revenues, with top-line revenue growth of 15.5% for the year ended December 31, 2021 compared to the year ended December 31, 2020 and we have driven a $30.3 million improvement in our adjusted EBITDA year-over-year.”

LIQUIDITY UPDATE

As of December 31, 2021, the Company had $100.3 million of cash, including $16.4 million of restricted cash, and $390.2 million of total debt.

“During 2021, we exceeded our previously announced guidance target related to organic growth in our trust assets, while achieving 98.4% of our unlevered free cash flow target,” said Jeff DiGiovanni, StoneMor’s Senior Vice President and Chief Financial Officer. “During the fourth quarter of 2021, we accelerated our strategy of reinvesting into our existing locations in an attempt to improve their quality and drive future revenue opportunities.  That acceleration included $6.3 million of capital expenditure spend in the fourth quarter alone.  We were in a position to accelerate this spend because of the prior success of our transformation plan and the hard-work of every member of the StoneMor team.”

Redling added, “We are focused on the next phase of our transformation strategy – a commitment to strategic growth.  During the first quarter of 2022, we completed three separate acquisitions, including 4 new cemeteries and 3 new funeral homes located in Virginia, Florida and West Virginia for a total purchase price of $18 million. We continue to seek out additional opportunities that can deliver high quality operations at accretive multiples.”

CONFERENCE CALL INFORMATION

StoneMor will conduct a conference call to discuss this news release today, March 30, 2022 at 4:30 p.m. Eastern Time.  The conference call can be accessed by calling (888) 383-1618.  No reservation number is necessary; however, due to the on-going pandemic, it is advised that interested parties access the call-in number 5 to 10 minutes prior to the scheduled start time to avoid delays.  StoneMor will also host a live webcast of this conference call.  Investors may access the live webcast via the Investors page of the StoneMor website www.stonemor.com under Events & Presentations.

About StoneMor Inc.

StoneMor Inc., headquartered in Bensalem, Pennsylvania, is an owner and operator of cemeteries and funeral homes in the United States, with 304 cemeteries and 72 funeral homes in 24 states and Puerto Rico. StoneMor’s cemetery products and services, which are sold on both a pre-need (before death) and at-need (at death) basis, include: burial lots, lawn and mausoleum crypts, burial vaults, caskets, memorials, and all services which provide for the installation of this merchandise. For additional information about StoneMor Inc. please visit StoneMor’s website, and the investors section, at http://www.stonemor.com.

CONTACT
Investor Relations
StoneMor Inc.
(215) 826-4438

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this press release, including, but not limited to, information regarding continued implementation of the Company’s transformation including the Company’s pursuit of additional acquisition opportunities, are forward-looking statements. Generally, the words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “project,” “expect,” “predict” and similar expressions identify these forward-looking statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are based on management’s current expectations and estimates. These statements are neither promises nor guarantees and are made subject to certain risks and uncertainties that could cause actual results to differ materially from the results stated or implied in this press release. StoneMor’s major risks are related to uncertainties associated with current business and economic disruptions resulting from the ongoing coronavirus pandemic, including the effect of government regulations issued in connection therewith, its ability to identify, and negotiate acceptable agreements with, sellers of additional properties, uncertainties associated with the cash flow from pre-need and at-need sales, trusts and financings, which may impact StoneMor’s ability to meet its financial projections and service its debt, as well as with StoneMor’s ability to maintain an effective system of internal control over financial reporting and disclosure controls and procedures.

When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth in StoneMor’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and the other reports that StoneMor files with the Securities and Exchange Commission, from time to time. Except as required under applicable law, StoneMor assumes no obligation to update or revise any forward-looking statements made herein or any other forward-looking statements made by it, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures, including adjusted EBITDA, Field EBITDA and unlevered free cash flow, which are intended as supplemental measures of the Company’s performance that are not required by or presented in accordance with GAAP. All business results presented in this release are not prepared in accordance with Article 11 of Regulation S-X.

Management uses these non-GAAP measures internally to evaluate and manage the Company’s operations and to better understand its business because they facilitate a comparative assessment of the Company's operating performance relative to its performance based on results calculated under GAAP. These non-GAAP measures also isolate the effects of some items that vary from period to period without any correlation to core operating performance and eliminate certain charges that management believes do not reflect the Company's operations and underlying operational performance. The Compensation, Nominating and Governance Committee of the Company’s board of directors also uses certain of these measures to evaluate management's performance and set its compensation. The Company believes that these non-GAAP measures also provide useful information to investors regarding certain financial and business trends relating to the Company’s financial condition and operating results and facilitate an evaluation of the financial performance of the Company and its operations on a consistent basis. Providing this information therefore allows investors to make independent assessments of the Company’s financial performance, results of operation and trends while viewing the information through the eyes of management.

These non-GAAP measures are subject to limitations. The non-GAAP measures presented in this release may not be comparable to similarly titled measures used by other companies because other companies may not calculate one or more in the same manner. Additionally, the non-GAAP performance measures exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements; do not reflect changes in, or cash requirements for, working capital needs; and do not reflect interest expense, or the requirements necessary to service interest or principal payments on debt. Further, our historical adjusted results are not intended to project our adjusted results of operations or financial position for any future period. To compensate for these limitations, management presents and considers these non-GAAP measures in conjunction with the Company’s GAAP results; no non-GAAP measure should be considered in isolation from or as an alternative to net income, earnings per share or any other measure determined in accordance with GAAP. Readers should review the reconciliations included below, and should not rely on any single financial measure to evaluate the Company’s business.

A reconciliation of each non-GAAP measure to the most directly comparable GAAP measure is set forth below (in thousands):

EBITDA AND ADJUSTED EBITDA

 Three Months Ended December 31,  Year Ended December 31, 
 2021  2020  2021  2020 
Net loss from continuing operations$(10,753) $(5,677) $(56,957) $(37,341)
Income tax benefit (6,718)  (1,522)  (18,370)  (4,855)
Interest expense 9,268   10,585   38,974   45,537 
Depreciation and amortization 1,964   2,277   8,082   9,152 
Non-cash stock compensation 511   401   2,036   1,481 
Loss on debt extinguishment       40,128    
Loss on sale of business and other impairments 17      2,307    
Other losses (gains), net 480   (129)  1,016   (129)
Inventory impairment 1,850      1,850    
Cost of lots sold 1,205   1,450   6,351   5,796 
EBITDA (2,176)  7,385   25,417   19,641 
Change in deferred revenues 10,252   22,373   87,770   61,611 
Change in deferred selling and obtaining costs (1,519)  (1,402)  (8,005)  (6,376)
Adjusted EBITDA$6,557  $28,356  $105,182  $74,876 

FIELD EBITDA

 Three Months Ended December 31,  Year Ended December 31, 
 2021  2020  2021  2020 
EBITDA$(2,176) $7,385  $25,417  $19,641 
Corporate overhead 10,873   8,956   39,930   35,975 
Less: non-cash stock compensation 511   401   2,036   1,481 
Field EBITDA$8,186  $15,940  $63,311  $54,135 

UNLEVERED CASH PROVIDED BY OPERATING ACTIVITIES AND UNLEVERED FREE CASH FLOW

 Three Months Ended December 31,  Year Ended December 31, 
 2021  2020  2021  2020 
Net cash (used in) provided by operating activities$(7,801) $(2,425) $2,626  $1,360 
Cash interest payments 17,480   8,851   48,739   29,212 
Unlevered cash provided by operating activities 9,679   6,426   51,365   30,572 
Less: cash paid for capital expenditures 6,320   1,576   11,995   6,360 
Unlevered free cash flow$3,359  $4,850  $39,370  $24,212 

STONEMOR INC.

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

 December 31,  December 31, 
 2021  2020 
Assets     
Current assets:     
Cash and cash equivalents, excluding restricted cash$83,882  $39,244 
Restricted cash 16,415   20,846 
Accounts receivable, net of allowance 62,220   57,869 
Prepaid expenses 6,971   5,290 
Assets held for sale    28,575 
Other current assets 11,459   16,884 
Total current assets 180,947   168,708 
      
Long-term accounts receivable, net of allowance 72,309   75,301 
Cemetery property 296,758   299,526 
Property and equipment, net of accumulated depreciation 82,610   83,496 
Merchandise trusts, restricted, at fair value 567,853   501,453 
Perpetual care trusts, restricted, at fair value 339,138   312,228 
Deferred selling and obtaining costs 124,023   116,900 
Deferred tax assets 21   9 
Intangible assets, net 54,023   55,094 
Other assets 23,462   22,248 
Total assets$1,741,144  $1,634,963 
      
Liabilities and Stockholders' Equity     
Current liabilities:     
Accounts payable and accrued liabilities$44,704  $51,718 
Liabilities held for sale    23,406 
Accrued interest 4,344   95 
Current portion, long-term debt 762   317 
Total current liabilities 49,810   75,536 
      
Long-term debt, net of deferred financing costs 389,401   320,715 
Deferred revenues 1,056,260   949,164 
Deferred tax liabilities 10,878   29,652 
Perpetual care trust corpus 339,138   312,228 
Other long-term liabilities 41,399   40,081 
Total liabilities 1,886,886   1,727,376 
Commitments and contingencies     
      
Stockholders' equity:     
Common stock, par value $0.01 per share, 200,000,000 shares authorized, 118,290,600 and 117,871,141 shares issued and outstanding, respectively 1,182   1,178 
Paid-in capital in excess of par value (83,286)  (85,232)
Accumulated deficit (63,638)  (8,359)
Total stockholders' equity (145,742)  (92,413)
Total liabilities and stockholders' equity$1,741,144  $1,634,963 

STONEMOR INC.

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

 Three Months Ended December 31,  Year Ended December 31, 
 2021  2020  2021  2020 
Revenues:           
Cemetery:           
Interments$20,355  $16,311  $85,734  $67,853 
Merchandise 17,091   15,682   68,095   60,600 
Services 18,095   18,045   70,314   65,701 
Investment and other 13,487   14,168   54,807   43,732 
Funeral home:           
Merchandise 5,407   5,536   22,949   21,637 
Services 4,818   5,164   20,943   20,016 
Total revenues 79,253   74,906   322,842   279,539 
Costs and Expenses:           
Cost of goods sold 17,104   11,812   51,746   40,119 
Cemetery expense 20,927   18,279   76,464   68,654 
Selling expense 15,528   12,292   58,962   49,668 
General and administrative expense 10,641   9,298   42,018   37,970 
Corporate overhead 10,873   8,956   39,930   35,975 
Depreciation and amortization 1,964   2,277   8,082   9,152 
Funeral home expenses:           
Merchandise 1,478   1,602   6,285   5,872 
Services 5,271   4,398   19,283   18,078 
Other 3,173   2,735   12,974   10,839 
Total costs and expenses 86,959   71,649   315,744   276,327 
            
Loss on sale of business and other impairments (17)     (2,307)   
Other (losses) gains, net (480)  129   (1,016)  129 
Operating (loss) income (8,203)  3,386   3,775   3,341 
Interest expense (9,268)  (10,585)  (38,974)  (45,537)
Loss on debt extinguishment       (40,128)   
Loss from continuing operations before income taxes (17,471)  (7,199)  (75,327)  (42,196)
Income tax benefit 6,718   1,522   18,370   4,855 
Net loss from continuing operations (10,753)  (5,677)  (56,957)  (37,341)
Discontinued operations:           
Income from operations of discontinued businesses 332   86   1,678   28,982 
Income tax expense           
Net income from discontinued operations 332   86   1,678   28,982 
Net loss$(10,421) $(5,591) $(55,279) $(8,359)
            
Net loss from continuing operations per common share (basic)$(0.09) $(0.05) $(0.48) $(0.35)
Net income from discontinued operations per common share (basic) 0.00   0.00   0.01   0.27 
Net loss per common share (basic)$(0.09) $(0.05) $(0.47) $(0.08)
            
Net loss from continuing operations per common share (diluted)$(0.09) $(0.05) $(0.48) $(0.35)
Net income from discontinued operations per common share (diluted) 0.00   0.00   0.01   0.27 
Net loss per common share (diluted)$(0.09) $(0.05) $(0.47) $(0.08)
            
Weighted average number of common shares outstanding - basic 118,123   117,862   117,998   106,991 
Weighted average number of common shares outstanding - diluted 118,123   117,955   117,998   106,991 

STONEMOR INC.

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

 Year Ended December 31, 
 2021  2020 
Cash Flows From Operating Activities:     
Net loss$(55,279) $(8,359)
Adjustments to reconcile net loss to net cash provided by operating activities:     
Cost of lots sold 6,351   5,796 
Depreciation and amortization 8,122   9,395 
Provision for bad debt 6,354   6,275 
Non-cash compensation expense 2,036   1,481 
Loss on debt extinguishment 40,128    
Non-cash interest expense 4,341   17,884 
Loss (gain) on sale of businesses 1,486   (29,429)
Other losses (gains), net 1,016   (129)
Changes in assets and liabilities:     
Payment of paid-in-kind interest (18,440)   
Accounts receivable, net of allowance (17,529)  (20,453)
Merchandise trust fund (36,992)  (25,988)
Other assets 1,070   1,675 
Deferred selling and obtaining costs (8,005)  (6,376)
Deferred revenues 87,770   61,611 
Deferred taxes, net (18,786)  (4,888)
Payables and other liabilities (1,017)  (7,135)
Net cash provided by operating activities 2,626   1,360 
Cash Flows From Investing Activities:     
Cash paid for capital expenditures (11,995)  (6,360)
Proceeds from divestitures 6,979   57,343 
Net cash (used in) provided by investing activities (5,016)  50,983 
Cash Flows From Financing Activities:     
Proceeds from issuance of Series A Preferred Stock - related party    8,800 
Proceeds from issuance of Common Stock - related party    8,200 
Proceeds from borrowings 406,235   3,672 
Repayments of debt (332,203)  (63,915)
Principal payment on finance leases (1,401)  (1,561)
Early redemption premium (18,478)   
Cost of financing activities (11,470)  (4,170)
Shares repurchased related to share-based compensation (86)  (46)
Net cash provided by (used in) financing activities 42,597   (49,020)
Net increase in cash, cash equivalents and restricted cash 40,207   3,323 
Cash, cash equivalents and restricted cash—Beginning of period 60,090   56,767 
Cash, cash equivalents and restricted cash—End of period$100,297  $60,090 
Supplemental disclosure of cash flow information:     
Cash paid during the period for interest$48,739  $29,212 
Cash paid during the period for income taxes 2,908   1,154 
Cash paid for amounts included in the measurement of lease liabilities:     
Operating cash flows from operating leases$1,917  $3,187 
Operating cash flows from finance leases 337   421 
Financing cash flows from finance leases 1,401   1,561 
Non-cash investing and financing activities:     
Right-of-use assets obtained in exchange for new operating lease liabilities$3,425  $467 
Right-of-use assets obtained in exchange for new finance lease liabilities 334   62 
Accrued paid-in-kind interest on 2024 Notes    10,572 


FAQ

What were StoneMor's revenue figures for Q4 2021?

StoneMor reported revenues of $79.3 million for the fourth quarter of 2021.

What is StoneMor's net loss for the full year 2021?

The net loss from continuing operations for full year 2021 was $57 million.

How much did StoneMor improve its adjusted EBITDA in 2021?

StoneMor increased its adjusted EBITDA by $30.3 million year-over-year, reaching $105.2 million.

What acquisitions did StoneMor make in early 2022?

In the first quarter of 2022, StoneMor completed three acquisitions, including four cemeteries and three funeral homes for $18 million.

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Bensalem