UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 12, 2019
StoneMor Partners L.P.
(Exact name of Registrant as Specified in Its Charter)
Delaware | 001-32270 | 80-0103159 | ||
(State or other jurisdiction of incorporation) |
(Commission file number) |
(I.R.S. Employer Identification No.) |
||
3600 Horizon Boulevard Trevose, PA | 19053 | |||
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code (215) 826-2800
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ |
Written communications 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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 |
Results of Operations and Financial Condition |
On February 12, 2019, StoneMor Partners L.P. (the Partnership) issued a press release (the Press Release) providing certain preliminary and unaudited financial results for the six months ended June 30, 2018. A copy of the Press Release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in this Item 2.02, including Exhibit 99.1 incorporated by reference herein, is being furnished and shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that Section, nor shall it be incorporated by reference into any filing made by the Partnership pursuant to the Securities Act of 1933, as amended (the Securities Act), or the Exchange Act, other than to the extent that such filing incorporates any or all of such information by express reference thereto.
Item 9.01 |
Financial Statements and Exhibits |
(d) Exhibits.
Exhibit Number |
Description |
|
99.1 | Press Release dated February 12, 2019.* |
* |
Furnished herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 12, 2019 | STONEMOR PARTNERS L.P. | |||||
By: |
StoneMor GP LLC its general partner |
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By: |
/s/ Mark L. Miller |
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Mark L. Miller | ||||||
Chief Financial Officer and Senior Vice President |
Exhibit 99.1
CONTACT: |
John McNamara | |
Director - Investor Relations | ||
StoneMor Partners L.P. | ||
(215) 826-2945 |
STONEMOR PARTNERS L.P. REPORTS FINANCIAL RESULTS FOR 2018 SECOND QUARTER
TREVOSE, PA February 12, 2019 StoneMor Partners L.P. (NYSE: STON) (StoneMor or the Partnership) , a leading owner and operator of cemeteries and funeral homes, today reported financial results for the three and six month periods ended June 30, 2018. Investors are encouraged to read the Partnerships 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 .
Joe Redling, StoneMors President and Chief Executive Officer, said, The second quarter of 2018 generated stable year over year results in many of our key performance metrics such as interments performed, net interment rights sold and cemetery contracts written. As a reminder, our financial results for the period did not yet reflect the impact of our reorganization and cost reduction efforts, which we began in the second half of 2018, and, as we previously disclosed, will take time to deliver the full results we seek. The recently reported amendment to our credit facility and financing agreement are key components of the foundation for future success, and we expect to become current in our financial filings shortly. We believe the actions weve taken to reorganize the business, align expenses and put the company on a better financial foundation will support improvements in 2019.
SECOND QUARTER AND SIX MONTH FINANCIAL PERFORMANCE
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For the three months ended June 30, 2018, revenues were $81.6 million compared to $86.0 million in the prior year period. 2018 six-month revenues were $159.5 million compared to $168.9 million in the prior year period. Two factors were largely responsible for the unfavorable comparison. In the first half of 2017, revenues benefited from a large backlog of preneed cemetery merchandise that became available to be serviced and the adoption of ASC 606 in 2018 which resulted in a reduction associated with the deferral of revenue from document fees, combined with decrease in land sales. |
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Second quarter net loss was $17.0 million compared to $11.6 million in the prior year period. Year-to-date net loss was $34.9 million compared to $20.1 million. The increased losses were driven largely by the unfavorable comparisons previously mentioned, increased expenses related to the adoption of ASC 606, advertising and employee benefits, as well as the continued impact of higher corporate overhead related to professional fees associated with delayed financial filings and legal costs. |
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As of June 30, 2018, year-to-date cash from operations was $15.4 million, largely equal to the prior year period. |
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Merchandise trust value at June 30, 2018 was $511.9 million compared to $515.5 million at December 31, 2017. |
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Deferred revenue at June 30, 2018 was $933.2 million compared to $912.6 million at December 31, 2017. |
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As of June 30, 2018, the Partnership had $15.0 million of cash and cash equivalents and $322.6 million of total debt, including $156.9 million outstanding under its revolving credit facility. |
* * *
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 322 cemeteries and 90 funeral homes in 27 states and Puerto Rico.
StoneMor is the only publicly traded death care company structured as a partnership. StoneMors 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 StoneMors 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 filings and operational improvements, 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 managements 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. StoneMors major risks are related to our substantial secured and unsecured indebtedness, our ability to refinance our secured indebtedness in the near term, uncertainties associated with the cash flow from pre-need and at-need sales, trusts and financings, which may impact StoneMors ability to meet its financial projections, service its debt and resume paying distributions, as well as with StoneMors ability to maintain an effective system of internal control over financial reporting and disclosure controls and procedures.
StoneMors additional risks and uncertainties include, but are not limited to: the consequences of the Partnerships delinquent filing of its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2018 (the Delinquent Report), including that the U.S. Securities and Exchange Commission could institute an administrative proceeding seeking the revocation of the registration of the Partnerships 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 Partnerships amended credit facility if the Delinquent Report is not filed within the period specified therein 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 Partnerships ability to obtain relief from its creditors if it cannot file the Delinquent Report within the period prescribed by the Partnerships amended credit facility or within 120 days after notice from the trustee under 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; uncertainty associated with the consummation of the Partnerships reorganization transactions; StoneMors ability to successfully implement its strategic plan relating to achieving operating improvements, including improving sales productivity and reducing operating expenses; the effect of economic downturns; the impact of StoneMors significant leverage on its operating plans; the decline in the fair value of certain equity and debt securities held in StoneMors trusts; StoneMors 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; StoneMors ability to successfully compete in the cemetery and funeral home industry; litigation or legal proceedings that could expose StoneMor to significant liabilities and damage StoneMors 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 StoneMors significant reliance on information technology; uncertainties relating to the financial condition of third-party insurance companies that fund StoneMors pre-need funeral contracts; and various other uncertainties associated with the death care industry and StoneMors operations in particular.
When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth in StoneMors 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 (UNAUDITED)
(in thousands)
June 30, 2018 | December 31, 2017 | |||||||
Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 14,979 | $ | 6,821 | ||||
Accounts receivable, net of allowance |
66,837 | 79,116 | ||||||
Prepaid expenses |
9,180 | 4,580 | ||||||
Assets held for sale |
1,343 | 1,016 | ||||||
Other current assets |
17,930 | 21,453 | ||||||
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Total current assets |
110,269 | 112,986 | ||||||
Long-term accounts receivable, net of allowance |
95,421 | 105,935 | ||||||
Cemetery property |
335,037 | 333,404 | ||||||
Property and equipment, net of accumulated depreciation |
113,229 | 114,090 | ||||||
Merchandise trusts, restricted, at fair value |
511,852 | 515,456 | ||||||
Perpetual care trusts, restricted, at fair value |
340,364 | 339,928 | ||||||
Deferred selling and obtaining costs |
112,025 | 126,398 | ||||||
Deferred tax assets |
92 | 84 | ||||||
Goodwill |
24,862 | 24,862 | ||||||
Intangible assets, net |
62,342 | 63,244 | ||||||
Other assets |
25,161 | 19,695 | ||||||
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Total assets |
$ | 1,730,654 | $ | 1,756,082 | ||||
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Liabilities and Partners Capital |
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Current liabilities: |
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Accounts payable and accrued liabilities |
$ | 51,926 | $ | 43,023 | ||||
Accrued interest |
1,912 | 1,781 | ||||||
Current portion, long-term debt |
2,139 | 1,002 | ||||||
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Total current liabilities |
55,977 | 45,806 | ||||||
Long-term debt, net of deferred financing costs |
320,495 | 317,693 | ||||||
Deferred revenues, net |
933,159 | 912,626 | ||||||
Deferred tax liabilities |
6,623 | 9,638 | ||||||
Perpetual care trust corpus |
340,364 | 339,928 | ||||||
Other long-term liabilities |
43,464 | 38,695 | ||||||
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Total liabilities |
1,700,082 | 1,664,386 | ||||||
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Commitments and contingencies |
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Partners capital (deficit): |
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General partner interest |
(3,615 | ) | (2,959 | ) | ||||
Common limited partners interest |
34,187 | 94,655 | ||||||
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Total partners capital |
30,572 | 91,696 | ||||||
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Total liabilities and partners capital |
$ | 1,730,654 | $ | 1,756,082 | ||||
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See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
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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, |
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2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues: |
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Cemetery: |
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Interments |
$ | 20,789 | $ | 19,641 | $ | 40,414 | $ | 37,620 | ||||||||
Merchandise |
17,116 | 18,834 | 33,743 | 37,131 | ||||||||||||
Services |
17,737 | 18,619 | 34,228 | 35,132 | ||||||||||||
Investment and other |
12,038 | 13,652 | 21,538 | 26,390 | ||||||||||||
Funeral home: |
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Merchandise |
6,522 | 6,749 | 13,951 | 14,585 | ||||||||||||
Services |
7,369 | 8,457 | 15,642 | 18,040 | ||||||||||||
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Total revenues |
81,571 | 85,952 | 159,516 | 168,898 | ||||||||||||
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Costs and Expenses: |
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Cost of goods sold |
13,086 | 12,043 | 26,521 | 25,562 | ||||||||||||
Cemetery expense |
21,007 | 20,124 | 38,421 | 36,821 | ||||||||||||
Selling expense |
17,166 | 15,623 | 33,422 | 32,082 | ||||||||||||
General and administrative expense |
10,163 | 9,753 | 21,121 | 19,710 | ||||||||||||
Corporate overhead |
15,165 | 16,067 | 26,992 | 27,171 | ||||||||||||
Depreciation and amortization |
3,071 | 3,391 | 6,116 | 6,846 | ||||||||||||
Funeral home expenses: |
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Merchandise |
1,108 | 1,623 | 3,586 | 3,383 | ||||||||||||
Services |
5,582 | 5,454 | 11,100 | 11,153 | ||||||||||||
Other |
3,961 | 4,987 | 9,001 | 10,332 | ||||||||||||
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Total costs and expenses |
90,309 | 89,065 | 176,280 | 173,060 | ||||||||||||
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Other losses |
| (1,071 | ) | (5,205 | ) | (1,071 | ) | |||||||||
Interest expense |
(8,107 | ) | (6,741 | ) | (15,220 | ) | (13,447 | ) | ||||||||
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Loss before income taxes |
(16,845 | ) | (10,925 | ) | (37,189 | ) | (18,680 | ) | ||||||||
Income tax benefit (expense) |
(172 | ) | (657 | ) | 2,249 | (1,463 | ) | |||||||||
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Net loss |
$ | (17,017 | ) | $ | (11,582 | ) | $ | (34,940 | ) | $ | (20,143 | ) | ||||
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General partners interest |
$ | (177 | ) | $ | (121 | ) | $ | (364 | ) | $ | (210 | ) | ||||
Limited partners interest |
$ | (16,840 | ) | $ | (11,461 | ) | $ | (34,576 | ) | $ | (19,933 | ) | ||||
Net loss per limited partner unit (basic and diluted) |
$ | (0.44 | ) | $ | (0.30 | ) | $ | (0.91 | ) | $ | (0.53 | ) | ||||
Weighted average number of limited partners units outstanding (basic and diluted) |
37,958 | 37,957 | 37,958 | 37,938 |
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
5
STONEMOR PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Six Months Ended June 30, | ||||||||
2018 | 2017 | |||||||
Cash Flows From Operating Activities: |
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Net loss |
$ | (34,940 | ) | $ | (20,143 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
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Cost of lots sold |
3,489 | 5,661 | ||||||
Depreciation and amortization |
6,116 | 6,846 | ||||||
Provision for bad debt |
1,644 | 2,682 | ||||||
Non-cash compensation expense |
1,913 | 488 | ||||||
Non-cash interest expense |
3,215 | 2,195 | ||||||
Non-cash impairment charge and other losses |
5,205 | 872 | ||||||
Changes in assets and liabilities: |
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Accounts receivable, net of allowance |
1,195 | (4,946 | ) | |||||
Merchandise trust fund |
(4,181 | ) | 43,915 | |||||
Other assets |
(1,395 | ) | (3,125 | ) | ||||
Deferred selling and obtaining costs |
(4,184 | ) | (6,287 | ) | ||||
Deferred revenues, net |
33,599 | (17,633 | ) | |||||
Deferred taxes, net |
(2,649 | ) | 944 | |||||
Payables and other liabilities |
6,377 | 4,031 | ||||||
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Net cash provided by operating activities |
15,404 | 15,500 | ||||||
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Cash Flows From Investing Activities: |
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Cash paid for capital expenditures |
(7,626 | ) | (3,311 | ) | ||||
Cash paid for acquisitions |
(833 | ) | | |||||
Proceeds from divestitures |
| 451 | ||||||
Proceeds from asset sales |
401 | |||||||
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Net cash used in investing activities |
(8,459 | ) | (2,459 | ) | ||||
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Cash Flows From Financing Activities: |
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Cash distributions |
| (24,545 | ) | |||||
Proceeds from borrowings |
16,880 | 62,792 | ||||||
Repayments of debt |
(12,896 | ) | (56,256 | ) | ||||
Cost of financing activities |
(2,771 | ) | (776 | ) | ||||
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Net cash provided by (used in) financing activities |
1,213 | (18,785 | ) | |||||
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Net increase (decrease) in cash and cash equivalents |
8,158 | (5,744 | ) | |||||
Cash and cash equivalents - Beginning of period |
6,821 | 12,570 | ||||||
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Cash and cash equivalents - End of period |
$ | 14,979 | $ | 6,826 | ||||
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Supplemental disclosure of cash flow information: |
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Cash paid during the period for interest |
$ | 12,865 | $ | 11,118 | ||||
Cash paid during the period for income taxes |
$ | 709 | $ | 2,630 | ||||
Non-cash investing and financing activities: |
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Acquisition of assets by financing |
$ | 688 | $ | 1,384 | ||||
Classification of assets as held for sale |
$ | 543 | $ | 1,169 |
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
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SUPPLEMENTAL OPERATING DATA
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Interments performed |
14,102 | 13,627 | 28,674 | 28,057 | ||||||||||||
Interment rights sold (1) |
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Lots |
8,941 | 8,604 | 15,477 | 15,856 | ||||||||||||
Mausoleum crypts (including pre-construction) |
301 | 553 | 847 | 1,083 | ||||||||||||
Niches |
430 | 492 | 859 | 962 | ||||||||||||
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Net interment rights sold (1) |
9,672 | 9,649 | 17,183 | 17,901 | ||||||||||||
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Number of pre-need cemetery contracts written |
11,547 | 12,087 | 21,709 | 23,523 | ||||||||||||
Number of at-need cemetery contracts written |
15,276 | 15,575 | 30,003 | 30,859 | ||||||||||||
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Number of cemetery contracts written |
26,823 | 27,662 | 51,712 | 54,382 | ||||||||||||
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(1) |
Net of cancellations. Sales of double-depth burial lots are counted as two sales |
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