Delaware | 1-11961 | 76-0423828 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
¨ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
CARRIAGE SERVICES, INC. | |||
Dated: July 31, 2018 | By: | /s/ Viki K. Blinderman | |
Viki K. Blinderman | |||
Senior Vice President, Principal Financial Officer and Secretary | |||
Exhibit | Description | ||
99.1 |
1. | Repurchased in privately negotiated transactions approximately 80% of our $143.75 million 2.75% subordinated convertible notes due May 2021 for approximately $150 million, funded by the issuance of 2.8 million common shares to repurchased convertible holders and $75 million of cash from interim bank financing under our prior credit facility with our previous large bank group. |
2. | Issued $325 million of eight year 6⅝% unsecured senior notes that refinanced all outstanding bank debt (about $290 million including the $75 million interim financing for the convertible note repurchases) under our prior secured term loan and revolving credit bank facilities due March 2021. |
3. | Put in place a new $150 million five year secured Bank Revolving Credit Facility (undrawn) on improved terms with a smaller bank group. |
Wayne Lovelace | Lotz Funeral Home; Vinton, VA |
Michele Wegner | Buckler-Johnston/S.R. Avery Funeral Homes; Westerly, RI |
Dan Simons | Everly Community Funeral Care; Falls Church, VA |
Cyndi Hoots | Schmidt Funeral Homes; Katy, TX |
Lois Keller-Nelson | Cypress-Fairbanks Funeral Home; Houston, TX |
Chris Cordell | Moore Funeral Home; Moore, OK |
Troy Knudson | Austin Funeral Home & Columbia Mortuary; Whitefish, MT |
Investment Performance | |||||||
Investment Performance(1) | Index Performance | ||||||
Discretionary | Total Trust | S&P 500 Stock Index | High Yield Index | 70/30 index Benchmark(2) | |||
6 months ended 06/30/2018 | (1.6%) | (1.5%) | 2.6% | 0.2% | 0.9% | ||
1 year ended 12/31/17 | 13.1% | 12.3% | 21.8% | 7.5% | 11.8% | ||
2 years ended 12/31/17 | 35.3% | 32.9% | 36.4% | 25.9% | 29.1% | ||
3 years ended 12/31/17 | 31.2% | 29.3% | 38.3% | 20.3% | 25.7% | ||
4 years ended 12/31/17 | 42.1% | 39.5% | 58.6% | 23.2% | 33.8% | ||
5 years ended 12/31/17 | 62.4% | 58.6% | 102.3% | 32.4% | 53.4% | ||
(1) Investment performance includes realized income and unrealized appreciation (depreciation). | |||||||
(2) The 70/30 Benchmark is 70% weighted to the High Yield Index and 30% weighted to the S&P 500 Stock Index. |
Asset Allocation as of June 30, 2018 (in thousands) | |||||||||||||||
Discretionary Trust Funds | Total Trust Funds | ||||||||||||||
Asset Class | MV | % | MV | % | |||||||||||
Equities | $ | 77,124 | 40 | % | $ | 79,751 | 35 | % | |||||||
Fixed Income | 97,020 | 50 | % | 108,852 | 47 | % | |||||||||
Cash | 18,481 | 9 | % | 40,148 | 17 | % | |||||||||
Other/Insurance | 2,883 | 1 | % | 3,067 | 1 | % | |||||||||
Total Portfolios | $ | 195,508 | 100 | % | $ | 231,818 | 100 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
Cash flow provided by operations | $ | 12,087 | $ | 11,398 | $ | 20,246 | $ | 26,281 | |||||||
Cash used for maintenance capital expenditures | (2,929 | ) | (2,268 | ) | (4,702 | ) | (3,714 | ) | |||||||
Free Cash Flow | $ | 9,158 | $ | 9,130 | $ | 15,544 | $ | 22,567 |
Range (in millions, except per share amounts) | ||
Revenues | $283 - $287 | |
Adjusted Consolidated EBITDA | $81 - $85 | |
Adjusted Net Income | $27 - $29 | |
Adjusted Basic Earnings Per Share(1) | $1.38 - $1.43 | |
Adjusted Diluted Earnings Per Share(1) | $1.35 - $1.40 |
(1) | The Rolling Four Quarter Outlook on Adjusted Basic Earnings Per Share and Adjusted Diluted Earnings Per Share does not include any changes to our fully diluted share count that could occur related to additional share repurchases or a stock price increase and EPS dilution calculations related to our convertible subordinated notes and outstanding and exercisable stock options. |
CARRIAGE SERVICES, INC. | |||||||||||||||||
OPERATING AND FINANCIAL TREND REPORT | |||||||||||||||||
(IN THOUSANDS - EXCEPT PER SHARE AMOUNTS) | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2017 | 2018 | % Change | 2017 | 2018 | % Change | ||||||||||||
Same Store Contracts | |||||||||||||||||
Atneed Contracts | 5,918 | 5,823 | (1.6 | %) | 12,543 | 12,628 | 0.7 | % | |||||||||
Preneed Contracts | 1,422 | 1,359 | (4.4 | %) | 2,946 | 2,984 | 1.3 | % | |||||||||
Total Same Store Funeral Contracts | 7,340 | 7,182 | (2.2 | %) | 15,489 | 15,612 | 0.8 | % | |||||||||
Acquisition Contracts | |||||||||||||||||
Atneed Contracts | 905 | 1,283 | 41.8 | % | 1,961 | 2,789 | 42.2 | % | |||||||||
Preneed Contracts | 159 | 188 | 18.2 | % | 363 | 364 | 0.3 | % | |||||||||
Total Acquisition Funeral Contracts | 1,064 | 1,471 | 38.3 | % | 2,324 | 3,153 | 35.7 | % | |||||||||
Total Funeral Contracts | 8,404 | 8,653 | 3.0 | % | 17,813 | 18,765 | 5.3 | % | |||||||||
Funeral Operating Revenue | |||||||||||||||||
Same Store Revenue | $ | 39,366 | $ | 37,484 | (4.8 | %) | $ | 83,127 | $ | 82,993 | (0.2 | %) | |||||
Acquisition Revenue | 7,082 | 8,835 | 24.8 | % | 15,220 | 19,608 | 28.8 | % | |||||||||
Total Funeral Operating Revenue | $ | 46,448 | $ | 46,319 | (0.3 | %) | $ | 98,347 | $ | 102,601 | 4.3 | % | |||||
Cemetery Operating Revenue | |||||||||||||||||
Same Store Revenue | $ | 11,935 | $ | 12,176 | 2.0 | % | $ | 22,774 | $ | 23,893 | 4.9 | % | |||||
Acquisition Revenue | 700 | 1,008 | 44.0 | % | 1,609 | 1,878 | 16.7 | % | |||||||||
Total Cemetery Operating Revenue | $ | 12,635 | $ | 13,184 | 4.3 | % | $ | 24,383 | $ | 25,771 | 5.7 | % | |||||
Financial Revenue | |||||||||||||||||
Preneed Funeral Commission Income | $ | 333 | $ | 354 | 6.3 | % | $ | 636 | $ | 614 | (3.5 | %) | |||||
Preneed Funeral Trust Earnings | 1,724 | 1,859 | 7.8 | % | 3,670 | 3,911 | 6.6 | % | |||||||||
Cemetery Trust Earnings | 2,028 | 1,635 | (19.4 | %) | 3,744 | 3,394 | (9.3 | %) | |||||||||
Preneed Cemetery Finance Charges | 450 | 496 | 10.2 | % | 932 | 943 | 1.2 | % | |||||||||
Total Financial Revenue | $ | 4,535 | $ | 4,344 | (4.2 | %) | $ | 8,982 | $ | 8,862 | (1.3 | %) | |||||
Total Divested Revenue | $ | 234 | $ | — | $ | 297 | $ | — | |||||||||
Total Revenue | $ | 63,852 | $ | 63,847 | (0.01 | %) | $ | 132,009 | $ | 137,234 | 4.0 | % | |||||
Field EBITDA | |||||||||||||||||
Same Store Funeral Field EBITDA | $ | 14,742 | $ | 12,970 | (12.0 | %) | $ | 32,976 | $ | 31,727 | (3.8 | %) | |||||
Same Store Funeral Field EBITDA Margin | 37.4 | % | 34.6 | % | (280 bp) | 39.7 | % | 38.2 | % | (150 bp) | |||||||
Acquisition Funeral Field EBITDA | 2,645 | 3,005 | 13.6 | % | 6,149 | 7,296 | 18.7 | % | |||||||||
Acquisition Funeral Field EBITDA Margin | 37.3 | % | 34.0 | % | (330 bp) | 40.4 | % | 37.2 | % | (320 bp) | |||||||
Total Funeral Field EBITDA | $ | 17,387 | $ | 15,975 | (8.1 | %) | $ | 39,125 | $ | 39,023 | (0.3 | %) | |||||
Total Funeral Field EBITDA Margin | 37.4 | % | 34.5 | % | (290 bp) | 39.8 | % | 38.0 | % | (180 bp) | |||||||
Same Store Cemetery Field EBITDA | $ | 3,343 | $ | 3,620 | 8.3 | % | $ | 6,638 | $ | 7,380 | 11.2 | % | |||||
Same Store Cemetery Field EBITDA Margin | 28.0 | % | 29.7 | % | 170 bp | 29.1 | % | 30.9 | % | 180 bp | |||||||
Acquisition Cemetery Field EBITDA | 190 | 411 | 116.3 | % | 543 | 736 | 35.5 | % | |||||||||
Acquisition Cemetery Field EBITDA Margin | 27.1 | % | 40.8 | % | 1,370 bp | 33.7 | % | 39.2 | % | 550 bp | |||||||
Total Cemetery Field EBITDA | $ | 3,533 | $ | 4,031 | 14.1 | % | $ | 7,181 | $ | 8,116 | 13.0 | % | |||||
Total Cemetery Field EBITDA Margin | 28.0 | % | 30.6 | % | 260 bp | 29.5 | % | 31.5 | % | 200 bp | |||||||
Funeral Financial EBITDA | $ | 1,785 | $ | 1,978 | 10.8 | % | $ | 3,828 | $ | 4,025 | 5.1 | % | |||||
Cemetery Financial EBITDA | 2,418 | 2,012 | (16.8 | %) | 4,505 | 4,077 | (9.5 | %) | |||||||||
Total Financial EBITDA | $ | 4,203 | $ | 3,990 | (5.1 | %) | $ | 8,333 | $ | 8,102 | (2.8 | %) | |||||
Total Financial EBITDA Margin | 92.7 | % | 91.9 | % | (80 bp) | 92.8 | % | 91.4 | % | (140 bp) | |||||||
Total Divested EBITDA | $ | 145 | $ | — | $ | 146 | $ | (3 | ) | ||||||||
Total Divested EBITDA Margin | — | % | — | % | — | % | — | % | |||||||||
Total Field EBITDA | $ | 25,268 | $ | 23,996 | (5.0 | %) | $ | 54,785 | $ | 55,238 | 0.8 | % | |||||
Total Field EBITDA Margin | 39.6 | % | 37.6 | % | (200 bp) | 41.5 | % | 40.3 | % | (120 bp) | |||||||
OPERATING AND FINANCIAL TREND REPORT | |||||||||||||||||
(IN THOUSANDS - EXCEPT PER SHARE AMOUNTS) | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2017 | 2018 | % Change | 2017 | 2018 | % Change | ||||||||||||
Overhead | |||||||||||||||||
Total Variable Overhead | $ | 2,542 | $ | 2,696 | 6.1 | % | $ | 4,708 | $ | 5,256 | 11.6 | % | |||||
Total Regional Fixed Overhead | 826 | 1,063 | 28.7 | % | 1,893 | 2,140 | 13.0 | % | |||||||||
Total Corporate Fixed Overhead | 5,381 | 4,979 | (7.5 | %) | 11,113 | 10,141 | (8.7 | %) | |||||||||
Total Overhead | $ | 8,749 | $ | 8,738 | (0.1 | %) | $ | 17,714 | $ | 17,537 | (1.0 | %) | |||||
Overhead as a percentage of Revenue | 13.7 | % | 13.7 | % | 0 bp | 13.4 | % | 12.8 | % | (60 bp) | |||||||
Consolidated EBITDA | $ | 16,519 | $ | 15,258 | (7.6 | %) | $ | 37,071 | $ | 37,701 | 1.7 | % | |||||
Consolidated EBITDA Margin | 25.9 | % | 23.9 | % | (200 bp) | 28.1 | % | 27.5 | % | (60 bp) | |||||||
Other Expenses and Interest | |||||||||||||||||
Depreciation & Amortization | $ | 4,025 | $ | 4,368 | 8.5 | % | $ | 7,872 | $ | 8,584 | 9.0 | % | |||||
Non-Cash Stock Compensation | 773 | 909 | 17.6 | % | 1,609 | 2,009 | 24.9 | % | |||||||||
Interest Expense | 3,206 | 4,743 | 47.9 | % | 6,235 | 8,478 | 36.0 | % | |||||||||
Accretion of Discount on Convertible Subordinated Notes | 1,066 | 555 | (47.9 | %) | 2,103 | 1,715 | (18.4 | %) | |||||||||
Net Loss on Early Extinguishment of Debt | — | 936 | — | 936 | |||||||||||||
Other, Net | — | — | (3 | ) | (2 | ) | |||||||||||
Pre-Tax Income | $ | 7,449 | $ | 3,747 | (49.7 | %) | $ | 19,255 | $ | 15,981 | (17.0 | %) | |||||
Provision for Income Taxes | 2,980 | 1,030 | 7,702 | 4,395 | |||||||||||||
Tax Adjustment Related to Certain Discrete Items | 59 | (30 | ) | 59 | (517 | ) | |||||||||||
Total Provision for Income Taxes | 3,039 | 1,000 | 7,761 | 3,878 | |||||||||||||
GAAP Net Income | $ | 4,410 | $ | 2,747 | (37.7 | %) | $ | 11,494 | $ | 12,103 | 5.3 | % | |||||
Special Items, Net of Tax, except for ** | |||||||||||||||||
Accretion of Discount on Convertible Subordinated Notes ** | $ | 1,066 | $ | 555 | $ | 2,103 | $ | 1,715 | |||||||||
Net Loss on Earl Extinguishment of Debt | — | 740 | — | 740 | |||||||||||||
Adjusted Net Income | $ | 5,476 | $ | 4,042 | (26.2 | %) | $ | 13,597 | $ | 14,558 | 7.1 | % | |||||
Adjusted Net Profit Margin | 8.6 | % | 6.3 | % | (230 bp) | 10.3 | % | 10.6 | % | 30 bp | |||||||
Adjusted Basic Earnings Per Share | $ | 0.33 | $ | 0.22 | (33.3 | %) | $ | 0.82 | $ | 0.85 | 3.7 | % | |||||
Adjusted Diluted Earnings Per Share | $ | 0.30 | $ | 0.22 | (26.7 | %) | $ | 0.75 | $ | 0.81 | 8.0 | % | |||||
GAAP Basic Earnings Per Share | $ | 0.26 | $ | 0.15 | (42.3 | %) | $ | 0.69 | $ | 0.71 | 2.9 | % | |||||
GAAP Diluted Earnings Per Share | $ | 0.24 | $ | 0.15 | (37.5 | %) | $ | 0.63 | $ | 0.67 | 6.3 | % | |||||
Weighted Average Basic Shares Outstanding | 16,652 | 17,916 | 16,625 | 17,010 | |||||||||||||
Weighted Average Diluted Shares Outstanding | 18,093 | 18,245 | 18,083 | 17,924 |
(unaudited) | |||||||
December 31, 2017 | June 30, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 952 | $ | 40,531 | |||
Accounts receivable, net | 19,655 | 17,026 | |||||
Inventories | 6,519 | 6,616 | |||||
Prepaid expenses | 2,028 | 1,571 | |||||
Other current assets | 986 | 2,460 | |||||
Total current assets | 30,140 | 68,204 | |||||
Preneed cemetery trust investments | 73,853 | 70,278 | |||||
Preneed funeral trust investments | 90,682 | 91,203 | |||||
Preneed receivables, net | 31,644 | 21,327 | |||||
Receivables from preneed trusts | 15,287 | 16,313 | |||||
Property, plant and equipment, net | 247,294 | 244,579 | |||||
Cemetery property, net | 76,331 | 75,599 | |||||
Goodwill | 287,956 | 287,956 | |||||
Intangible and other non-current assets | 18,117 | 21,552 | |||||
Cemetery perpetual care trust investments | 50,229 | 48,600 | |||||
Total assets | $ | 921,533 | $ | 945,611 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt and capital lease obligations | $ | 17,251 | $ | 2,402 | |||
Accounts payable | 6,547 | 5,788 | |||||
Other liabilities | 1,361 | 875 | |||||
Accrued liabilities | 17,559 | 17,021 | |||||
Total current liabilities | 42,718 | 26,086 | |||||
Long-term debt, net of current portion | 212,154 | 7,818 | |||||
Convertible subordinated notes due 2021 | 124,441 | 25,425 | |||||
Senior notes due 2026 | — | 318,807 | |||||
Obligations under capital leases, net of current portion | 6,361 | 6,287 | |||||
Deferred preneed cemetery revenue | 54,690 | 50,699 | |||||
Deferred preneed funeral revenue | 34,585 | 27,740 | |||||
Deferred tax liability | 31,159 | 30,293 | |||||
Other long-term liabilities | 3,378 | 2,843 | |||||
Deferred preneed cemetery receipts held in trust | 73,853 | 70,278 | |||||
Deferred preneed funeral receipts held in trust | 90,682 | 91,203 | |||||
Care trusts’ corpus | 49,856 | 48,154 | |||||
Total liabilities | 723,877 | 705,633 | |||||
Commitments and contingencies: | |||||||
Stockholders’ equity: | |||||||
Common stock | 226 | 257 | |||||
Additional paid-in capital | 216,158 | 244,215 | |||||
Retained earnings | 57,904 | 72,138 | |||||
Treasury stock | (76,632 | ) | (76,632 | ) | |||
Total stockholders’ equity | 197,656 | 239,978 | |||||
Total liabilities and stockholders’ equity | $ | 921,533 | $ | 945,611 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
Revenues: | |||||||||||||||
Funeral | $ | 48,739 | $ | 48,532 | $ | 102,950 | $ | 107,126 | |||||||
Cemetery | 15,113 | 15,315 | 29,059 | 30,108 | |||||||||||
63,852 | 63,847 | 132,009 | 137,234 | ||||||||||||
Field costs and expenses: | |||||||||||||||
Funeral | 29,422 | 30,579 | 59,851 | 64,081 | |||||||||||
Cemetery | 9,162 | 9,272 | 17,373 | 17,915 | |||||||||||
Depreciation and amortization | 3,647 | 3,904 | 7,118 | 7,677 | |||||||||||
Regional and unallocated funeral and cemetery costs | 2,954 | 3,267 | 5,908 | 6,548 | |||||||||||
45,185 | 47,022 | 90,250 | 96,221 | ||||||||||||
Gross profit | 18,667 | 16,825 | 41,759 | 41,013 | |||||||||||
Corporate costs and expenses: | |||||||||||||||
General, administrative and other | 6,568 | 6,380 | 13,415 | 12,998 | |||||||||||
Home office depreciation and amortization | 378 | 464 | 754 | 907 | |||||||||||
6,946 | 6,844 | 14,169 | 13,905 | ||||||||||||
Operating income | 11,721 | 9,981 | 27,590 | 27,108 | |||||||||||
Interest expense | (3,206 | ) | (4,743 | ) | (6,235 | ) | (8,478 | ) | |||||||
Accretion of discount on convertible subordinated notes | (1,066 | ) | (555 | ) | (2,103 | ) | (1,715 | ) | |||||||
Net loss on early extinguishment of debt | — | (936 | ) | — | (936 | ) | |||||||||
Other, net | — | — | 3 | 2 | |||||||||||
Income before income taxes | 7,449 | 3,747 | 19,255 | 15,981 | |||||||||||
Provision for income taxes | (2,980 | ) | (1,030 | ) | (7,702 | ) | (4,395 | ) | |||||||
Tax adjustment related to certain discrete items | (59 | ) | 30 | (59 | ) | 517 | |||||||||
Net provision for income taxes | (3,039 | ) | (1,000 | ) | (7,761 | ) | (3,878 | ) | |||||||
Net income | $ | 4,410 | $ | 2,747 | $ | 11,494 | $ | 12,103 | |||||||
Basic earnings per common share: | $ | 0.26 | $ | 0.15 | $ | 0.69 | $ | 0.71 | |||||||
Diluted earnings per common share: | $ | 0.24 | $ | 0.15 | $ | 0.63 | $ | 0.67 | |||||||
Dividends declared per common share | $ | 0.050 | $ | 0.075 | $ | 0.100 | $ | 0.150 | |||||||
Weighted average number of common and common equivalent shares outstanding: | |||||||||||||||
Basic | 16,652 | 17,916 | 16,625 | 17,010 | |||||||||||
Diluted | 18,093 | 18,245 | 18,083 | 17,924 |
Six Months Ended June 30, | |||||||
2017 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 11,494 | $ | 12,103 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 7,872 | 8,584 | |||||
Provision for losses on accounts receivable | 1,112 | 883 | |||||
Stock-based compensation expense | 1,609 | 2,009 | |||||
Deferred income tax expense | 406 | 2,044 | |||||
Amortization of deferred financing costs | 408 | 320 | |||||
Amortization of capitalized commissions on preneed contracts | — | 293 | |||||
Accretion of discount on convertible subordinated notes | 2,103 | 1,715 | |||||
Amortization of debt discount on senior notes | — | 38 | |||||
Net loss on early extinguishment of debt | — | 936 | |||||
Net loss on sale of businesses and disposal of other assets | 311 | 45 | |||||
Changes in operating assets and liabilities that provided (required) cash: | |||||||
Accounts and preneed receivables | (468 | ) | (779 | ) | |||
Inventories and other current assets | 2,804 | (1,139 | ) | ||||
Intangible and other non-current assets | 211 | (102 | ) | ||||
Preneed funeral and cemetery trust investments | (1,252 | ) | 3,657 | ||||
Accounts payable | (3,750 | ) | (758 | ) | |||
Accrued and other liabilities | (5,102 | ) | (819 | ) | |||
Deferred preneed funeral and cemetery revenue | 2,020 | 2,007 | |||||
Deferred preneed funeral and cemetery receipts held in trust | 468 | (4,756 | ) | ||||
Net cash provided by operating activities | 20,246 | 26,281 | |||||
Cash flows from investing activities: | |||||||
Acquisition and land for new construction | (625 | ) | — | ||||
Capital expenditures | (8,790 | ) | (5,080 | ) | |||
Net cash used in investing activities | (9,415 | ) | (5,080 | ) | |||
Cash flows from financing activities: | |||||||
Payments against the term loan | (5,625 | ) | (127,500 | ) | |||
Borrowings from the revolving credit facility | 36,800 | 96,000 | |||||
Payments against the revolving credit facility | (42,400 | ) | (188,000 | ) | |||
Payment of debt issuance costs related to long-term debt | — | (1,551 | ) | ||||
Redemption of the 2.75% convertible subordinated notes | — | (75,229 | ) | ||||
Payment of transaction costs related to the redemption of the 2.75% convertible subordinated notes | — | (845 | ) | ||||
Proceeds from the issuance of the 6.625% senior notes | — | 320,125 | |||||
Payments of debt issuance costs related to the 6.625% senior notes | — | (1,367 | ) | ||||
Payments on other long-term debt and obligations under capital leases | (723 | ) | (828 | ) | |||
Payments on contingent consideration recorded at acquisition date | (101 | ) | (138 | ) | |||
Proceeds from the exercise of stock options and employee stock purchase plan contributions | 544 | 846 | |||||
Taxes paid on restricted stock vestings and exercises of non-qualified options | (509 | ) | (495 | ) | |||
Dividends on common stock | (1,668 | ) | (2,640 | ) | |||
Net cash provided by (used in) financing activities | (13,682 | ) | 18,378 | ||||
Net increase (decrease) in cash and cash equivalents | (2,851 | ) | 39,579 | ||||
Cash and cash equivalents at beginning of period | 3,286 | 952 | |||||
Cash and cash equivalents at end of period | $ | 435 | $ | 40,531 |
• | Special Items are defined as charges or credits included in our GAAP financial statements that can vary from period to period and are not reflective of costs incurred in the ordinary course of our operations. Special Items are typically taxed at the federal statutory rate, except for the accretion of the discount on Convertible Subordinated Notes, as this is a non-tax deductible item. |
• | Adjusted Net Income is defined as net income plus adjustments for Special Items and other expenses or gains that we believe do not directly reflect our core operations and may not be indicative of our normal business operations. |
• | Consolidated EBITDA is defined as net income before income taxes, interest expenses, non-cash stock compensation, depreciation and amortization, and interest income and other, net. |
• | Adjusted Consolidated EBITDA is defined as Consolidated EBITDA plus adjustments for Special Items and other expenses or gains that we believe do not directly reflect our core operations and may not be indicative of our normal business operations. |
• | Adjusted Consolidated EBITDA Margin is defined as Adjusted Consolidated EBITDA as a percentage of revenue. |
• | Adjusted Free Cash Flow is defined as net cash provided by operations, adjusted by Special Items as deemed necessary, less cash for maintenance capital expenditures. |
• | Funeral Field EBITDA is defined as Funeral Gross Profit, excluding depreciation and amortization, regional and unallocated funeral costs and Financial EBITDA related to the Funeral Home segment. |
• | Cemetery Field EBITDA is defined as Cemetery Gross Profit, excluding depreciation and amortization, regional and unallocated cemetery costs and Cemetery Financial EBITDA related to the Cemetery segment. |
• | Funeral Financial EBITDA is defined as Funeral Financial Revenue less Funeral Financial Expenses. |
• | Cemetery Financial EBITDA is defined as Cemetery Financial Revenue less Cemetery Financial Expenses. |
• | Total Field EBITDA is defined as Gross Profit, excluding depreciation and amortization, regional and unallocated funeral and cemetery costs. |
• | Total Field EBITDA Margin is defined as Total Field EBITDA as a percentage of revenue. |
• | Divested Revenue is defined as revenues from one business sold during 2017. |
• | Divested EBITDA is defined as Divested Revenue, less field level and financial expenses related to the sold business noted above. |
• | Divested EBITDA Margin is defined as Divested EBITDA as a percentage of Divested Revenue. |
• | Adjusted Basic Earnings Per Share is defined as GAAP Basic Earnings Per Share, adjusted for Special Items. |
• | Adjusted Diluted Earnings Per Share is defined as GAAP Diluted Earnings Per Share, adjusted for Special Items. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
Net Income | $ | 4,410 | $ | 2,747 | $ | 11,494 | $ | 12,103 | |||||||
Special Items, Net of Tax, except for ** | |||||||||||||||
Accretion of Discount on Convertible Subordinated Notes ** | 1,066 | 555 | 2,103 | 1,715 | |||||||||||
Net Loss on Early Extinguishment of Debt | — | 740 | — | 740 | |||||||||||
Adjusted Net Income | $ | 5,476 | $ | 4,042 | $ | 13,597 | $ | 14,558 | |||||||
** Special items are typically taxed at the federal statutory rate, except for the Accretion of the Discount on Convertible Subordinated Notes, as this is a non-tax deductible item. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
Net Income | $ | 4,410 | $ | 2,747 | $ | 11,494 | $ | 12,103 | |||||||
Net Tax Provision | 3,039 | 1,000 | 7,761 | 3,878 | |||||||||||
Pre-Tax Income | 7,449 | 3,747 | 19,255 | 15,981 | |||||||||||
Interest Expense | 3,206 | 4,743 | 6,235 | 8,478 | |||||||||||
Accretion of Discount on Convertible Subordinated Notes | 1,066 | 555 | 2,103 | 1,715 | |||||||||||
Net Loss on Early Extinguishment of Debt | — | 936 | — | 936 | |||||||||||
Non-Cash Stock Compensation | 773 | 909 | 1,609 | 2,009 | |||||||||||
Depreciation & Amortization | 4,025 | 4,368 | 7,872 | 8,584 | |||||||||||
Other, Net | — | — | (3 | ) | (2 | ) | |||||||||
Consolidated EBITDA | $ | 16,519 | $ | 15,258 | $ | 37,071 | $ | 37,701 | |||||||
Revenue | $ | 63,852 | $ | 63,847 | $ | 132,009 | $ | 137,234 | |||||||
Consolidated EBITDA Margin | 25.9 | % | 23.9 | % | 28.1 | % | 27.5 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
Funeral Gross Profit (GAAP) | $ | 14,412 | $ | 12,654 | $ | 33,381 | $ | 32,318 | |||||||
Depreciation & Amortization | 2,529 | 2,640 | 4,898 | 5,204 | |||||||||||
Regional & Unallocated Costs | 2,376 | 2,659 | 4,820 | 5,523 | |||||||||||
Funeral Financial EBITDA | (1,785 | ) | (1,978 | ) | (3,828 | ) | (4,025 | ) | |||||||
Divested EBITDA | (145 | ) | — | (146 | ) | 3 | |||||||||
Funeral Field EBITDA | $ | 17,387 | $ | 15,975 | $ | 39,125 | $ | 39,023 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
Cemetery Gross Profit (GAAP) | $ | 4,255 | $ | 4,171 | $ | 8,378 | $ | 8,695 | |||||||
Depreciation & Amortization | 1,118 | 1,264 | 2,220 | 2,473 | |||||||||||
Regional & Unallocated Costs | 578 | 608 | 1,088 | 1,025 | |||||||||||
Cemetery Financial EBITDA | (2,418 | ) | (2,012 | ) | (4,505 | ) | (4,077 | ) | |||||||
Cemetery Field EBITDA | $ | 3,533 | $ | 4,031 | $ | 7,181 | $ | 8,116 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
Funeral Field EBITDA | $ | 17,387 | $ | 15,975 | $ | 39,125 | $ | 39,023 | |||||||
Cemetery Field EBITDA | 3,533 | 4,031 | 7,181 | 8,116 | |||||||||||
Funeral Financial EBITDA | 1,785 | 1,978 | 3,828 | 4,025 | |||||||||||
Cemetery Financial EBITDA | 2,418 | 2,012 | 4,505 | 4,077 | |||||||||||
Divested EBITDA | 145 | — | 146 | (3 | ) | ||||||||||
Total Field EBITDA | $ | 25,268 | $ | 23,996 | $ | 54,785 | $ | 55,238 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
GAAP Basic Earnings Per Share | $ | 0.26 | $ | 0.15 | $ | 0.69 | $ | 0.71 | |||||||
Special Items | 0.07 | 0.07 | 0.13 | 0.14 | |||||||||||
Adjusted Basic Earnings Per Share | $ | 0.33 | $ | 0.22 | $ | 0.82 | $ | 0.85 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
GAAP Diluted Earnings Per Share | $ | 0.24 | $ | 0.15 | $ | 0.63 | $ | 0.67 | |||||||
Special Items | 0.06 | 0.07 | 0.12 | 0.14 | |||||||||||
Adjusted Diluted Earnings Per Share | $ | 0.30 | $ | 0.22 | $ | 0.75 | $ | 0.81 |
June 30, 2019E | |||
Net Income | $ | 26,000 | |
Total Tax Provision | 7,150 | ||
Pretax Income | 33,150 | ||
Net Interest Expense, including Accretion of Discount on Convertible Subordinated Notes | 27,000 | ||
Depreciation & Amortization, including Non-cash Stock Compensation | 22,000 | ||
Consolidated EBITDA | $ | 82,150 |
June 30, 2019E | |||
Net Income | $ | 26,000 | |
Special Items | 1,700 | ||
Adjusted Net Income | $ | 27,700 |
June 30, 2019E | |||
GAAP Basic Earnings Per Share | $ | 1.33 | |
Special Items | 0.09 | ||
Adjusted Basic Earnings Per Share | $ | 1.42 |
June 30, 2019E | |||
GAAP Diluted Earnings Per Share | $ | 1.30 | |
Special Items | 0.09 | ||
Adjusted Diluted Earnings Per Share | $ | 1.39 |
Three Months Ended June 30, 2017 | Six Months Ended June 30, 2017 | ||||||||||||||
Revenue | EBITDA | Revenue | EBITDA | ||||||||||||
2013 Acquired Portfolio | $ | 1,036 | $ | 438 | $ | 2,144 | $ | 948 |
• | our ability to find and retain skilled personnel; |
• | our ability to execute our growth strategy; |
• | the effects of competition; |
• | the execution of our Standards Operating, 4E Leadership and Strategic Acquisition Models; |
• | changes in the number of deaths in our markets; |
• | changes in consumer preferences; |
• | our ability to generate preneed sales; |
• | the investment performance of our funeral and cemetery trust funds; |
• | fluctuations in interest rates; |
• | our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness; |
• | the timely and full payment of death benefits related to preneed funeral contracts funded through life insurance contracts; |
• | the financial condition of third-party insurance companies that fund our preneed funeral contracts; |
• | increased or unanticipated costs, such as insurance or taxes; |
• | our level of indebtedness and the cash required to service our indebtedness; |
• | recent changes in federal income tax laws and regulations and the implementation and interpretation of these laws and regulations by the Internal Revenue Service; |
• | effects of the application of other applicable laws and regulations, including changes in such regulations or the interpretation thereof; |
• | consolidation of the deathcare industry; and |
• | other factors and uncertainties inherent in the deathcare industry. |
?6,5]V_\%6_VM%_X)>?\$_3J'P_TO3=)U&2>V\*>%K>*T7['I4CQ
M2,'$0&W$4$$K*K J75 P8$@_SZ6D7Q?_ ."A?QGEA^U^*/B=XXN+.ZO4BNKT
MW5W)!!&\\J0K(W.U%8I#%R3A40DA:ZYTZ=-\K5V=U2E2HM0:TT/2Y)A!:7JZS93QZ@Q) \E4E,CG W%0FY%(+!00:[S]DOX7
M_M??L9_%C2/%'@OX4_'K3UL;Z&ZO=-@\,ZM#9ZS$CJS6]Q&L6V2-U&T[@<9!
M&" 1D_MW:/\ M3?M,>.=:^*7QB^'/Q2LK:V4L9KSPI?V.C^'[7=\L$/F1[(8
M5) RS%F)W.SNS,I_5%X
M^_Y$36O^O"?_ -%M7\TM?TM>/O\ D1-:_P"O"?\ ]%M7\TM?#>)/\2AZ2_0_
MH+PU_AXCUC^IZY^RQ_S'O^W?_P!JT4?LL?\ ,>_[=_\ VK17QN#_ (*_KJ?:
M8S^,_P"NAYU\0/\ D?-;_P"O^?\ ]&-7U[_P08_Y/DG_ .Q:O?\ T9!7R%\0
M/^1\UO\ Z_Y__1C5]>_\$&/^3Y)_^Q:O?_1D%/A__D;4/\:_,GB#_D4U_P#
M_P C[5_X+_?\HC_BU_W!_P#T\V-?S55_2K_P7^_Y1'_%K_N#_P#IYL:_FJK]
MTQWQKT/Y8S+^*O3]6%%%%<9YY]3?\$
/B'_P5-^ ?QY\9'Q=\1/V.?#.N^-;R3[1J.HZ5XYOM%MM0G)W-*]M%
M"49F;)8R%V;)W%LG/BW[>G[>_P#PW)X@T>X_X5C\._A_:^&[:/3M+_X1^SDB
MNDLHHQ'%;32;Q'*D:JH3]TNQ4"KM!8-4Y:/WK_>54EH_?O?U/GRBBBL3G"OW
M^_:,UC2]$_X(L?LUS:M\??$W[.=LVC>&$7Q)H>G:A?7%\_\ 84A%BR6,D
,?MF_M.>)O!5S;>'_ O[77Q2^.7A7Q%H\\.LRZA/JVFVO[TR0R6DEG=S/O4
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MOV:1K#W