EX-99.1 2 exhibit9912017q2pressrelea.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
  stonemorlogojpg101204a01.jpg
 
 
 
CONTACT:
  
John McNamara
 
  
Director - Investor Relations
 
  
StoneMor Partners L.P.
 
  
(215) 826-2945


STONEMOR PARTNERS L.P. REPORTS 2017 SECOND QUARTER FINANCIAL RESULTS

Improvements to sales revenue impacted by increased corporate overhead and one-time non-operating expenses
To maintain financial flexibility, Partnership will not pay second or third quarter distributions

TREVOSE, PA – December 12, 2017 – StoneMor Partners L.P. (NYSE: STON) (“StoneMor” or the “Partnership”) today announced it has reported financial results for the second quarter 2017. Investors are encouraged to read the Partnership's quarterly report on Form 10-Q filed with the Securities and Exchange Commission (the “SEC”), which contains additional details, and can be found at www.stonemor.com.
Revenues were $86.0 million for the three months ended June 30, 2017, an increase of $7.0 million over the prior year period. The increase was primarily due to growth in the sales of cemetery merchandise and services and an increase in investment and other income. Revenues were $168.9 million for the six months ended June 30, 2017, an increase of $11.7 million over the prior year period. The increase was also due to growth in the sales of cemetery merchandise and services, a reduction in the number of contract cancellations, as well as revenues from properties acquired in August 2016.
Year-to-date net cash from operating activities was $15.5 million,an increase of $7.0 million from $8.5 million during the prior year period. This was primarily due to a $14.3 million increase in working capital resulting from increased focus on delivery of pre-need merchandise, offset by a $7.3 million decrease in net income excluding non-cash items.
Second quarter net loss was $11.6 million, compared to a net loss of $8.1 million for the prior year restated period. Net loss was $20.1 million for the six months ended June 30, 2017 compared to a net loss of $14.5 million for the prior year restated period. The increased loss for the three- and six- month periods was driven largely by increases in corporate overhead costs resulting from the Partnership's accounting review and delayed filing of its Annual Report on Form 10-K for 2016, as well as certain one-time non-operating expenses such as litigation costs offset partially by reductions in funeral home costs.
Unitholder Distributions
As of June 30, 2017, the Partnership had $6.8 million of cash and cash equivalents and $309.9 million of total debt, including $142.9 million outstanding under its revolving credit facility. Given the Partnership’s current level of cash and cash equivalents, to preserve capital resources and liquidity, the Board of Directors of the General Partner has concluded that it is not in the best interest of unitholders to pay a second or third quarter 2017 distribution. The decision provides additional liquidity in future periods and the Board expects to consider appropriate levels of distributions if and as conditions improve.
Paul Grady, StoneMor's President and Chief Executive Officer, commented, "This difficult but prudent decision has been made in light of our commitment to live within the four corners of our balance sheet and ensure the Partnership has sufficient liquidity and funds available. We look forward to sharing information about our operational and financial performance on our investor conference call following the announcement of our third quarter results.”


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The Partnership noted that it is continuing to work to complete the delayed filing of its report on Form 10-Q for the Third Quarter ended September 30, 2017. Consistent with the terms of its recently amended credit facility, the Partnership anticipates filing its Third Quarter 10-Q on or before January 25, 2018.

*    *    *
About StoneMor Partners L.P.
StoneMor Partners L.P., headquartered in Trevose, Pennsylvania, is an owner and operator of cemeteries and funeral homes in the United States, with 316 cemeteries and 94 funeral homes in 27 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.

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Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this press release, including, but not limited to, information regarding the expected timing of filing the Third Quarter 10-Q, providing information about unitholder distributions, and its next investor call are forward-looking statements. Generally, the words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend (including, but not limited to StoneMor’s intent to maintain or increase its distributions),” “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 the cash flow from pre-need and at-need sales, trusts and financings, which may impact StoneMor’s ability to meet its financial projections, service its debt, pay distributions, and increase its distributions, as well as with StoneMor’s ability to maintain an effective system of internal control over financial reporting and disclosure controls and procedures.
StoneMor’s additional risks and uncertainties include, but are not limited to, risks and uncertainties related to the following: the consequences of the Partnership’s delinquent filing of its Third Quarter Form 10-Q, including that the U.S. Securities and Exchange Commission could institute an administrative proceeding seeking the revocation of the registration of the Partnership’s common units under the Exchange Act, and that the Partnership remains delinquent in its required filings with the New York Stock Exchange (“NYSE”) and could ultimately face the possible delisting of its common units from the NYSE; the potential for defaults under the Partnership’s amended credit facility if the Third Quarter 10-Q is not filed within the specified period or the indenture governing its senior notes if the Partnership fails to file it within 120 days after notice from the trustee under the indenture; the Partnership’s ability to obtain relief from its creditors if it cannot file the Third Quarter 10-Q within the period prescribed by the Partnership’s amended credit facility or the indenture governing its senior notes, the terms on which such relief might be granted and any restrictions that might be imposed in connection with any relief that might be obtained; uncertainties associated with future revenue and revenue growth; uncertainties associated with the integration or anticipated benefits of recent acquisitions or any future acquisitions; StoneMor’s ability to complete and fund additional acquisitions; the effect of economic downturns; the impact of StoneMor’s significant leverage on its operating plans; the decline in the fair value of certain equity and debt securities held in StoneMor’s trusts; StoneMor’s 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; StoneMor’s ability to successfully implement a strategic plan relating to achieving operating improvements, including improving sales productivity and reversing negative trends in costs of goods sold, certain expenses, cemetery billings and investment income from trusts, strong cash flows, further deleveraging and liquidity enhancement; StoneMor’s ability to successfully compete in the cemetery and funeral home industry; litigation or legal proceedings that could expose StoneMor to significant liabilities and damage StoneMor’s reputation, including but not limited to litigation and governmental investigations or proceedings arising out of or related to accounting and financial reporting matters; the effects of cyber security attacks due to StoneMor’s significant reliance on information technology; uncertainties relating to the financial condition of third-party insurance companies that fund StoneMor’s pre-need funeral contracts; and various other uncertainties associated with the death care industry and StoneMor’s operations in particular.
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 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.

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STONEMOR PARTNERS L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
June 30, 2017
 
December 31, 2016
Assets
(Unaudited)
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
6,826

 
$
12,570

Accounts receivable, net of allowance
77,127

 
77,253

Prepaid expenses
7,708

 
5,532

Assets held for sale
1,169

 
—

Other current assets
22,883

 
23,466

Total current assets
115,713

 
118,821

 
 
 
 
Long-term accounts receivable, net of allowance
100,710

 
98,886

Cemetery property
334,456

 
337,315

Property and equipment, net of accumulated depreciation
113,058

 
118,281

Merchandise trusts, restricted, at fair value
512,423

 
507,079

Perpetual care trusts, restricted, at fair value
337,684

 
333,780

Deferred selling and obtaining costs
123,177

 
116,890

Deferred tax assets
67

 
64

Goodwill
70,436

 
70,436

Intangible assets
64,266

 
65,438

Other assets
20,660

 
20,023

Total assets
$
1,792,650

 
$
1,787,013

 
 
 
 
Liabilities and Partners' Capital
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued liabilities
$
39,642

 
$
35,547

Accrued interest
1,815

 
1,571

Current portion, long-term debt
3,251

 
1,775

Total current liabilities
44,708

 
38,893

 
 
 
 
Long-term debt, net of deferred financing costs
306,696

 
300,351

Deferred revenues
898,256

 
866,633

Deferred tax liabilities
21,004

 
20,058

Perpetual care trust corpus
337,684

 
333,780

Other long-term liabilities
38,148

 
36,944

Total liabilities
1,646,496

 
1,596,659

Commitments and contingencies
 
 
 
Partners' capital (deficit):
 
 
 
General partner interest
(2,387
)
 
(1,914
)
Common limited partners' interest
148,541

 
192,268

Total partners' capital
146,154

 
190,354

Total liabilities and partners' capital
$
1,792,650

 
$
1,787,013

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (the "Second Quarter 10-Q").

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STONEMOR PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per unit data)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
 
 
(As restated)*
 
 
 
(As restated)*
Revenues:
 
 
 
 
 
 
 
Cemetery:
 
 
 
 
 
 
 
Merchandise
$
40,895

 
$
38,420

 
$
78,898

 
$
72,110

Services
16,340

 
13,733

 
31,289

 
27,452

Investment and other
13,511

 
12,051

 
26,086

 
26,465

Funeral home:
 
 
 
 
 
 
 
Merchandise
6,749

 
6,604

 
14,585

 
14,086

Services
8,457

 
8,170

 
18,040

 
17,037

Total revenues
85,952

 
78,978

 
168,898

 
157,150

 
 
 
 
 
 
 
 
Costs and Expenses:
 
 
 
 
 
 
 
Cost of goods sold
12,043

 
12,042

 
25,562

 
22,762

Cemetery expense
20,124

 
17,485

 
36,821

 
33,341

Selling expense
15,623

 
16,575

 
32,082

 
31,308

General and administrative expense
9,753

 
8,993

 
19,710

 
18,197

Corporate overhead
16,067

 
9,737

 
27,171

 
20,048

Depreciation and amortization
3,391

 
3,155

 
6,846

 
6,220

Funeral home expenses:
 
 
 
 
 
 
 
Merchandise
1,623

 
1,835

 
3,383

 
3,984

Services
5,454

 
6,156

 
11,153

 
12,611

Other
4,987

 
4,746

 
10,332

 
9,886

Total costs and expenses
89,065

 
80,724

 
173,060

 
158,357

 
 
 
 
 
 
 
 
Other gains (losses), net
(1,071
)
 
(191
)
 
(1,071
)
 
(1,073
)
Interest expense
(6,741
)
 
(5,707
)
 
(13,447
)
 
(11,497
)
Loss from continuing operations before income taxes
(10,925
)
 
(7,644
)
 
(18,680
)
 
(13,777
)
Income tax expense
(657
)
 
(500
)
 
(1,463
)
 
(760
)
Net loss
$
(11,582
)
 
$
(8,144
)
 
$
(20,143
)
 
$
(14,537
)
General partner's interest
$
(121
)
 
$
1,091

 
$
(210
)
 
$
2,192

Limited partners' interest
$
(11,461
)
 
$
(9,235
)
 
$
(19,933
)
 
$
(16,729
)
Net loss per limited partner unit (basic and diluted)
$
(0.30
)
 
$
(0.27
)
 
$
(0.53
)
 
$
(0.50
)
Weighted average number of limited partners' units outstanding (basic and diluted)
37,957

 
34,837

 
37,938

 
33,688

*Refer to Note 1 in Part I, Item 1 of the Second Quarter 10-Q for further detail regarding the restatement.
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements in the Second Quarter Form 10-Q

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STONEMOR PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
 
 
Six Months Ended June 30,
 
2017
 
2016
 
 
 
(As restated)*
Cash Flows From Operating Activities:
 
 
 
Net loss
$
(20,143
)
 
$
(14,537
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Cost of lots sold
5,661

 
4,443

Depreciation and amortization
6,846

 
6,220

Provision for cancellations
2,682

 
6,324

Non-cash compensation expense
488

 
819

Non-cash interest expense
2,195

 
1,534

Other (gains) losses, net
872

 
1,073

Changes in assets and liabilities:
 
 
 
Accounts receivable, net of allowance
(4,946
)
 
(12,191
)
Merchandise trust fund
43,915

 
(10,517
)
Other assets
(3,125
)
 
(2,715
)
Deferred selling and obtaining costs
(6,287
)
 
(6,519
)
Deferred revenues
(17,633
)
 
30,579

Deferred taxes, net
944

 
81

Payables and other liabilities
4,031

 
3,865

Net cash provided by operating activities
15,500

 
8,459

Cash Flows From Investing Activities:
 
 
 
Cash paid for capital expenditures
(3,311
)
 
(7,504
)
Cash paid for acquisitions
—

 
(1,500
)
Proceeds from divestitures
451

 
—

Proceeds from asset sales
401

 
1,848

Net cash used in investing activities
(2,459
)
 
(7,156
)
Cash Flows From Financing Activities:
 
 
 
Cash distributions
(24,545
)
 
(44,703
)
Proceeds from borrowings
62,792

 
38,744

Repayments of debt
(56,256
)
 
(75,247
)
Proceeds from issuance of common units, net of costs
—

 
74,537

Cost of financing activities
(776
)
 
(351
)
Net cash used in financing activities
(18,785
)
 
(7,020
)
Net decrease in cash and cash equivalents
(5,744
)
 
(5,717
)
Cash and cash equivalents - Beginning of period
12,570

 
15,153

Cash and cash equivalents - End of period
$
6,826

 
$
9,436

Supplemental disclosure of cash flow information:
 
 
 
Cash paid during the period for interest
$
11,118

 
$
9,994

Cash paid during the period for income taxes
$
2,630

 
$
2,325

Non-cash investing and financing activities:
 
 
 
Acquisition of assets by financing
$
1,384

 
$
137

Classification of assets as held for sale
$
1,169

 
$
—

*Refer to Note 1 in Part I, Item 1 of the Second Quarter 10-Q for further detail regarding the restatement.
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements in the Second Quarter Form 10-Q

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