Carriage Services, Inc.
Apr 26, 2017

Carriage Services Announces Record First Quarter 2017 Results And Reaffirms Rolling Four Quarter Outlook

HOUSTON, April 26, 2017 /PRNewswire/ -- Carriage Services, Inc. (NYSE: CSV) today announced record results for the first quarter ended March 31, 2017.

Mel Payne, Chief Executive Officer, stated, "Our first quarter performance of 2017 was also the first quarter performance of our second five year timeframe of Carriage's Good To Great Journey that never ends. A more relevant first quarter (century) for long term investors was the first 25 years of Carriage's history, which was covered in my recent shareholder letter titled, The Evolution Of Our Learning Journey.

Our Total Revenue in the first quarter increased 7.6% to a record $68.1 million, and while our Adjusted Consolidated EBITDA of $20.5 million and Adjusted Net Income of $8.1 million were also records, both of these earnings metrics grew only nominally over last year as we brought less of the revenue growth to the bottom line. Our diluted earnings metrics, i.e. GAAP EPS of $0.39 and Adjusted EPS of $0.45, were negatively impacted by a dilution factor of 8.6% related to the share count methodology for our convertible subordinated notes.

We view the first quarter performance as a "glass half full" because the few concentrated operational areas of relative weakness are opportunities to get better in the near term, as we are continuously addressing areas of leadership weakness so that they turn into Right Who sustained high performance strengths in the future.

First quarter highlights are shown below:

Three Months Ended March 31, 2017 compared to Three Months Ended March 31, 2016

  • Record Total Revenue of $68.1 million, an increase of 7.6%;
  • Record Net Income of $7.1 million, an increase of 55.0%;
  • Record GAAP Diluted Earnings Per Share of $0.39, an increase of 44.4%;

  • Record Total Field EBITDA of $29.5 million, an increase of 6.6%;
  • Total Field EBITDA Margin down 40 basis points to 43.3%;
  • Record Adjusted Consolidated EBITDA of $20.5 million, an increase of 3.3%;
  • Adjusted Consolidated EBITDA Margin down 120 basis points to 30.2%;
  • Record Adjusted Net Income of $8.1 million, an increase of 1.8%; and
  • Adjusted Diluted Earnings Per Share of $0.45, a decrease of 4.3%.

Our Total Overhead was about $1 million higher in the first quarter than originally anticipated, as we reorganized our corporate functions toward the end of last year and have since added substantial new leadership talent to critical functional areas to position us for better execution of our three core models over the next five years. In particular, we made substantial leadership investments in Operations, Strategic and Corporate Development and Information Technology, as well as incurred one-time expenses related to a tax strategy project and terminations.

The really good news about the first quarter of 2017 was that it was the first time in memory that our Consolidated EBITDA and Consolidated EBTIDA Margin of $20.5 million and 30.2%, respectively, was the same as our Adjusted Consolidated EBITDA and Adjusted Consolidated EBITDA Margin, meaning that we are "free at last" from confusing Non-GAAP noise. We are intensely focused on sustaining a high performance for the remainder of the year and thereafter consistent with our 2017 theme, "Carriage Services 2017: Owning the Future, Accelerating the Good to Great Journey!"

Listed below are High Performance Hero Managing Partners and Houston Support role models leading us during the first quarter on our Good To Great Journey," concluded Mr. Payne.

Bob Prindiville

Bright Funeral Home & Cremation Center; Wake Forest, NC

James Bass

Emerald Coast/McLaughlin Mortuaries; Ft. Walton Beach, FL

Wayne Lovelace

Lotz Funeral Home; Vinton, VA

Patrick Schoen

Jacob Schoen & Son Funeral Home; New Orleans, LA

Curtis Ottinger

Heritage Funeral Home; Chattanooga, TN

John Bresnahan

Devanny-Condron Funeral; Pittsfield, MA

Bryan Hardwick

Bryan & Hardwick Funeral Home; Zanesville, OH

Andy Shemwell

Maddux-Fuqua-Hinton Funeral Homes; Hopkinsville, KY

Ashley Vella

Deegan Funeral Chapels; Escalon, CA

Justin Luyben

Evans Brown Mortuaries; Sun City, CA

Joseph Newkirk

West Contra Costa Group; Richmond, CA

Cliff Pope

Havenbrook Funeral Home; Norman, OK

Nicholas Welzenbach

Los Gatos Memorial Park; San Jose, CA

Winnie Hurston

Houston Support - Executive Assistant to Mel Payne

TRUST FUND PERFORMANCE

Shown below are consolidated performance metrics for the combined trust fund portfolios (preneed funeral, cemetery merchandise and services and cemetery perpetual care) at key dates.

Investment Performance



Investment Performance(1)


Index Performance



Discretionary

Total Trust


S&P 500
Stock Index

High Yield
Index

70/30 index
Benchmark(2)









3 months ended 03/31/2017


3.1%

2.9%


6.1%

2.7%

3.7%

1 year ended 12/31/2016


19.7%

18.3%


12.0%

17.6%

15.9%

2 years ended 12/31/2016


16.0%

15.1%


13.5%

12.0%

12.4%

3 years ended 12/31/2016


25.7%

24.2%


28.9%

14.8%

19.0%

4 years ended 12/31/2016


43.6%

41.2%


70.6%

23.4%

37.6%

5 years ended 12/31/2016


72.8%

65.4%


97.8%

42.6%

59.2%









(1) Investment performance includes realized income and unrealized appreciation.

(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 March 31, 2017 (in thousands)




Discretionary
Trust Funds


Total
Trust Funds

Asset Class



MV


%


MV


%

Cash



$

23,706


12%


$

38,976


17%

Equities



47,308


24%


49,895


22%

Fixed Income



123,241


62%


134,378


59%

Other/Insurance



3,315


2%


3,507


2%

Total Portfolios



$

197,570


100%


$

226,756


100%

For the three months ended March 31, 2017, Carriage's discretionary trust funds returned 3.1% versus 3.7% for the 70/30 index benchmark.

The performance of our preneed trust fund portfolio in the first quarter was in line with our expectations and reflected no change in our overall portfolio strategy.

ADJUSTED FREE CASH FLOW

We produced Adjusted Free Cash Flow from operations for the three months ended March 31, 2017 of $6.4 million compared to Adjusted Free Cash Flow from operations of $12.2 million for the corresponding period in 2016. The decrease in Adjusted Free Cash Flow during the first quarter of 2017 reflected less Non-GAAP noise, along with a final payment for the severance of a former executive and the first five-year payment for our Good To Great incentive compensation award.

A reconciliation of Cash Flow Provided by Operations to Adjusted Free Cash Flow for the three months ended March 31, 2017 and 2016 is as follows (in thousands):


For the Three Months
Ended March 31,


2016


2017

Cash Flow Provided by Operations

$

10,233



$

8,159


Cash used for Maintenance Capital Expenditures

(1,618)



(1,773)


Free Cash Flow

$

8,615



$

6,386






Plus: Incremental Special Items:




Acquisition and Divestiture Expenses

516




Severance Costs

2,759




Consulting Fees

268




Adjusted Free Cash Flow

$

12,158



$

6,386


ROLLING FOUR QUARTER OUTLOOK

The Rolling Four Quarter Outlook ("Outlook") reflects management's opinion on the performance of the portfolio of existing businesses, including performance of existing trusts, and excludes size and timing of acquisitions for the Rolling Four Quarter Outlook period ending March 31, 2018 unless we have a signed Letter of Intent and high likelihood of a closing within 90 days. This Outlook is not intended to be management estimates or forecasts of our future performance, as we believe precise estimates will be precisely wrong all the time. Rather our intent and goal is to reflect a "roughly right range" most of the time of future Rolling Four Quarter Outlook performance as we execute our Standards Operating, Strategic Acquisition and 4E Leadership Models over time.

Similarly, we self-publish a Company and Investment Profile, available on our website, that includes a Five Year "Roughly Right Scenario" of our future performance which together with our Five Year Trend Report provides investors a ten year past and future profile of our financial value creation dynamics and condition, making it easier to judge whether our "trends will continue to be the friend" of long term investors.

We are reaffirming our Rolling Four Quarter Outlook of Adjusted Diluted Earnings Per Share range of $1.73 - $1.77 for the period ending March 31, 2018.

ROLLING FOUR QUARTER OUTLOOK - Period Ending March 31, 2018



Range
(in millions, except per share amounts)

Revenues


$263 - $267

Adjusted Consolidated EBITDA


$79 - $83

Adjusted Net Income


$30 - $32

Adjusted Basic Earnings Per Share


$1.84 - $1.88

Adjusted Diluted Earnings Per Share(1)


$1.73 - $1.77

Factors affecting our analysis include, among others, funeral contract volumes, average revenue per funeral service, cemetery interment volumes, preneed cemetery sales, capital expenditures, execution of our funeral and cemetery Standards Operating Model, market volatility and changes in Federal Reserve monetary policy. Revenues, Adjusted Consolidated EBITDA, Adjusted Net Income, Adjusted Basic Earnings Per Share and Adjusted Diluted Earnings Per Share for the four quarter period ending March 31, 2018 are expected to improve relative to the trailing four quarter period ended March 31, 2017 due to increases in our existing Funeral Home and Cemetery portfolio and modest decreases in overhead as a percentage of revenue.

(1)

The Rolling Four Quarter Outlook on 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.

CONFERENCE CALL AND INVESTOR RELATIONS CONTACT

Carriage Services has scheduled a conference call for tomorrow, April 27, 2017 at 9:30 a.m. central time. To participate in the call, please dial 866-516-3867 (ID-8035998) and ask for the Carriage Services conference call.  A replay of the conference call will be available through May 1, 2017 and may be accessed by dialing 855-859-2056 (ID-8035998). The conference call will also be available at www.carriageservices.com.

For any investor relations questions, please contact Viki Blinderman at 713-332-8568 or Ben Brink at 713-332-8441 or email InvestorRelations@carriageservices.com.

CARRIAGE SERVICES, INC.

OPERATING AND FINANCIAL TREND REPORT

(in thousands, except per share amounts)






Three Months Ended March 31,


2016

2017

% Change





Same Store Contracts




Atneed Contracts

6,298


6,498


3.2%

Preneed Contracts

1,504


1,496


(0.5%)

Total Same Store Funeral Contracts

7,802


7,994


2.5%

Acquisition Contracts




Atneed Contracts

720


1,189


65.1%

Preneed Contracts

139


232


66.9%

Total Acquisition Funeral Contracts

859


1,421


65.4%

Total Funeral Contracts

8,661


9,415


8.7%





Funeral Operating Revenue




Same Store Revenue

$

41,352


$

42,717


3.3%

Acquisition Revenue

5,562


9,245


66.2%

Total Funeral Operating Revenue

$

46,914


$

51,962


10.8%





Cemetery Operating Revenue




Same Store Revenue

$

11,132


$

10,839


(2.6%)

Acquisition Revenue

709


909


28.2%

Total Cemetery Operating Revenue

$

11,841


$

11,748


(0.8%)





Financial Revenue




Preneed Funeral Commission Income

$

421


$

303


(28.0%)

Preneed Funeral Trust Earnings

1,967


1,946


(1.1%)

Cemetery Trust Earnings

1,766


1,716


(2.8%)

Preneed Cemetery Finance Charges

422


482


14.2%

Total Financial Revenue

$

4,576


$

4,447


(2.8%)

Total Revenue

$

63,331


$

68,157


7.6%





Field EBITDA




Same Store Funeral Field EBITDA

$

16,911


$

17,725


4.8%

Same Store Funeral Field EBITDA Margin

40.9%


41.5%


60 bp

Acquisition Funeral Field EBITDA

2,413


4,014


66.3%

Acquisition Funeral Field EBITDA Margin

43.4%


43.4%


0 bp

Total Funeral Field EBITDA

$

19,324


$

21,739


12.5%

Total Funeral Field EBITDA Margin

41.2%


41.8%


60 bp





Same Store Cemetery Field EBITDA

$

3,843


$

3,295


(14.3%)

Same Store Cemetery Field EBITDA Margin

34.5%


30.4%


(410 bp)

Acquisition Cemetery Field EBITDA

221


353


59.7%

Acquisition Cemetery Field EBITDA Margin

31.2%


38.8%


760 bp

Total Cemetery Field EBITDA

$

4,064


$

3,648


(10.2%)

Total Cemetery Field EBITDA Margin

34.3%


31.1%


(320 bp)





Funeral Financial EBITDA

$

2,197


$

2,043


(7.0%)

Cemetery Financial EBITDA

2,103


2,087


(0.8%)

Total Financial EBITDA

$

4,300


$

4,130


(4.0%)

Total Financial EBITDA Margin

94.0%


92.9%


(110 bp)





Total Field EBITDA

$

27,688


$

29,517


6.6%

Total Field EBITDA Margin

43.7%


43.3%


(40 bp)

 

OPERATING AND FINANCIAL TREND REPORT

(in thousands, except per share amounts)






Three Months Ended March 31,


2016

2017

% Change





Overhead




Total Variable Overhead

$

5,400


$

2,166


(59.9%)

Total Regional Fixed Overhead

875


1,067


21.9%

Total Corporate Fixed Overhead

5,063


5,732


13.2%

Total Overhead

$

11,338


$

8,965


(20.9%)

Overhead as a Percentage of Revenue

17.9%


13.2%


(470 bp)





Consolidated EBITDA

$

16,350


$

20,552


25.7%

Consolidated EBITDA Margin

25.8%


30.2%


440 bp





Other Expenses and Interest




Depreciation & Amortization

$

3,734


$

3,847


3.0%

Non-Cash Stock Compensation

958


836


(12.7%)

Interest Expense

2,851


3,029


6.2%

Accretion of Discount on Convertible Subordinated Notes

927


1,037


11.9%

Loss on Early Extinguishment of Debt

567




Other, Net

(305)


(3)



Pretax Income

$

7,618


$

11,806


55.0%

Net Tax Provision

3,047


4,722



GAAP Net Income

$

4,571


$

7,084


55.0%





Special Items, Net of Tax except for **




Acquisition and Divestiture Expenses

$

336


$



Severance and Retirement Costs

1,794




Consulting Fees

175




Accretion of Discount on Convertible Subordinated Notes **

927


1,037



Loss on Early Extinguishment of Debt

369




Gain on Sale of Assets

(198)




Sum of Special Items, Net of Tax

$

3,403


$

1,037







Adjusted Net Income

$

7,974


$

8,121


1.8%

Adjusted Net Profit Margin

12.6%


11.9%


(70 bp)





Adjusted Basic Earnings Per Share

$

0.48


$

0.48


—%

Adjusted Diluted Earnings Per Share

$

0.47


$

0.45


(4.3%)





GAAP Basic Earnings Per Share

$

0.27


$

0.42


55.6%

GAAP Diluted Earnings Per Share

$

0.27


$

0.39


44.4%





Weighted Average Basic Shares Outstanding

16,459


16,597



Weighted Average Diluted Shares Outstanding

16,650


18,082







Reconciliation to Adjusted Consolidated EBITDA




Consolidated EBITDA

$

16,350


$

20,552


25.7%

Acquisition and Divestiture Expenses

516




Severance and Retirement Costs

2,759




Consulting Fees

268




Adjusted Consolidated EBITDA

$

19,893


$

20,552


3.3%

Adjusted Consolidated EBITDA Margin

31.4%


30.2%


(120 bp)

 

CARRIAGE SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)





(unaudited)


December 31, 2016


March 31, 2017

ASSETS




Current assets:




Cash and cash equivalents

$

3,286



$

806


Accounts receivable, net

18,860



17,712


Inventories

6,147



6,313


Prepaid expenses

2,640



2,426


Other current assets

2,034



106


Total current assets

32,967



27,363


Preneed cemetery trust investments

69,696



69,975


Preneed funeral trust investments

89,240



89,104


Preneed receivables, net

30,383



30,839


Receivables from preneed trusts

14,218



14,652


Property, plant and equipment, net

235,113



234,416


Cemetery property, net

76,119



76,543


Goodwill

275,487



275,487


Intangible and other non-current assets

14,957



14,878


Cemetery perpetual care trust investments

46,889



47,716


Total assets

$

885,069



$

880,973


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Current portion of long-term debt and capital lease obligations

$

13,267



$

14,265


Accounts payable

10,198



7,419


Other liabilities

717



3,285


Accrued liabilities

20,091



11,394


Total current liabilities

44,273



36,363


Long-term debt, net of current portion

137,862



133,741


Revolving credit facility

66,542



64,011


Convertible subordinated notes due 2021

119,596



120,760


Obligations under capital leases, net of current portion

2,630



2,580


Deferred preneed cemetery revenue

54,631



55,156


Deferred preneed funeral revenue

33,198



33,981


Deferred tax liability

40,555



40,717


Other long-term liabilities

2,567



1,798


Deferred preneed cemetery receipts held in trust

69,696



69,975


Deferred preneed funeral receipts held in trust

89,240



89,104


Care trusts' corpus

46,290



47,250


Total liabilities

707,080



695,436


Commitments and contingencies:




Stockholders' equity:




Common stock, $.01 par value; 80,000,000 shares authorized; 22,490,855 and 22,552,667 shares issued at December 31, 2016 and March 31, 2017, respectively

225



226


Additional paid-in capital

215,064



215,527


Retained earnings

22,966



30,050


Treasury stock, at cost; 5,849,316 shares at December 31, 2016 and March 31, 2017

(60,266)



(60,266)


Total stockholders' equity

177,989



185,537


Total liabilities and stockholders' equity

$

885,069



$

880,973


 

CARRIAGE SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share data)



For the Three Months
Ended March 31,


2016


2017





Revenues:




Funeral

$

49,302



$

54,211


Cemetery

14,029



13,946



63,331



68,157


Field costs and expenses:




Funeral

27,781



30,429


Cemetery

7,862



8,211


Depreciation and amortization

3,336



3,471


Regional and unallocated funeral and cemetery costs

3,049



2,954



42,028



45,065


Gross profit

21,303



23,092


Corporate costs and expenses:




General, administrative and other

9,247



6,847


Home office depreciation and amortization

398



376



9,645



7,223


Operating income

11,658



15,869


Interest expense

(2,851)



(3,029)


Accretion of discount on convertible subordinated notes

(927)



(1,037)


Loss on early extinguishment of debt

(567)




Other, net

305



3


Income before income taxes

7,618



11,806


Provision for income taxes

(3,047)



(4,722)


Net income

$

4,571



$

7,084






Basic earnings per common share:

$

0.27



$

0.42


Diluted earnings per common share:

$

0.27



$

0.39






Dividends declared per common share:

$

0.025



$

0.050






Weighted average number of common and common equivalent shares outstanding:




Basic

16,459



16,597


Diluted

16,650



18,082


 

CARRIAGE SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)



For the Three Months
Ended March 31,


2016


2017

Cash flows from operating activities:




Net income

$

4,571



$

7,084


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

3,734



3,847


Provision for losses on accounts receivable

523



389


Stock-based compensation expense

1,297



836


Deferred income tax expense

379



162


Amortization of deferred financing costs

221



203


Accretion of discount on convertible subordinated notes

927



1,037


Loss on early extinguishment of debt

567




Net (gain) loss on sale and disposal of other assets

(187)



155






Changes in operating assets and liabilities that provided (required) cash:




Accounts and preneed receivables

(479)



303


Inventories and other current assets

(727)



1,976


Intangible and other non-current assets

230



80


Preneed funeral and cemetery trust investments

7,560



(1,404)


Accounts payable

(1,755)



(2,778)


Accrued and other liabilities

344



(6,142)


Deferred preneed funeral and cemetery revenue

(568)



1,308


Deferred preneed funeral and cemetery receipts held in trust

(6,404)



1,103


Net cash provided by operating activities

10,233



8,159






Cash flows from investing activities:




Acquisitions and land for new construction

(2,685)




Net proceeds from the sale of other assets

555




Capital expenditures

(3,595)



(3,730)


Net cash used in investing activities

(5,725)



(3,730)






Cash flows from financing activities:




Borrowings from the revolving credit facility

11,500



18,800


Payments against the revolving credit facility

(50,100)



(21,400)


Borrowings from the term loan

39,063




Payments against the term loan

(2,813)



(2,813)


Payments on other long-term debt and obligations under capital leases

(321)



(368)


Payments on contingent consideration recorded at acquisition date



(101)


Proceeds from the exercise of stock options and employee stock purchase plan contributions

228



315


Taxes paid on restricted stock vestings and exercise of non-qualified options

(491)



(509)


Dividends paid on common stock

(415)



(833)


Payment of loan origination costs related to the credit facility

(717)




Excess tax deficiency of equity compensation

(106)




Net cash used in financing activities

(4,172)



(6,909)






Net increase (decrease) in cash and cash equivalents

336



(2,480)


Cash and cash equivalents at beginning of period

535



3,286


Cash and cash equivalents at end of period

$

871



$

806






NON-GAAP FINANCIAL MEASURES

This press release uses Non-GAAP financial measures to present the financial performance of the Company.  Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported operating results or cash flow from operations or any other measure of performance as determined in accordance with GAAP.  We believe the Non-GAAP results are useful to investors because such results help investors compare our results to previous periods and provide insights into underlying trends in our business. The Company's GAAP financial statements accompany this release.  Reconciliations of the Non-GAAP financial measures to GAAP measures are provided in this press release.

The Non-GAAP financial measures include "Special Items", "Adjusted Net Income", "Consolidated EBITDA", "Adjusted Consolidated EBITDA", "Adjusted Consolidated EBITDA Margin", "Adjusted Free Cash Flow", "Funeral, Cemetery and Financial EBITDA", "Total Field EBITDA", "Total Field EBITDA Margin", "Adjusted Basic Earnings Per Share" and "Adjusted Diluted Earnings Per Share" in this press release.  These financial measurements are defined as similar GAAP items adjusted for Special Items and are reconciled to GAAP in this press release.  In addition, the Company's presentation of these measures may not be comparable to similarly titled measures in other companies' reports. The definitions used by the Company for our internal management purposes and in this press release are as follows:

  • 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 taxed at the federal statutory rate of 35 percent for both the three months ended March 31, 2016 and 2017, except for the accretion of the discount on the Convertible Notes as this is a non-tax deductible item.
  • Adjusted Net Income is defined as net income plus adjustments for Special Items and other non-recurring expenses or credits.
  • 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 non-recurring expenses or credits.
  • 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, which is funeral revenue minus funeral field costs and expenses, less depreciation and amortization, regional and unallocated funeral costs and Funeral Financial EBITDA.
  • Cemetery Field EBITDA is defined as Cemetery Gross Profit, which is cemetery revenue minus cemetery field costs and expenses, less depreciation and amortization, regional and unallocated cemetery costs and Cemetery Financial EBITDA.
  • 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 less 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.
  • 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.

Reconciliation of Non-GAAP Financial Measures:

This press release includes the use of certain financial measures that are not GAAP measures.  The Non-GAAP financial measures are presented for additional information and are reconciled to their most comparable GAAP measures below.

Reconciliation of Net Income to Adjusted Net Income for the three months ended March 31, 2016 and 2017 (in thousands):


For the Three Months
Ended March 31,


2016


2017

Net Income

$

4,571



$

7,084


Special Items, Net of Tax except for **




Acquisition and Divestiture Expenses

336




Severance and Retirement Costs

1,794




Consulting Fees

175




Accretion of Discount on Convertible Subordinated Notes **

927



1,037


Loss on Early Extinguishment of Debt

369




Gain on Sale of Assets

(198)




     Total Special Items affecting Net Income

$

3,403



$

1,037


Adjusted Net Income

$

7,974



$

8,121


Reconciliation of Net Income to Consolidated EBITDA and Adjusted Consolidated EBITDA for the three months ended March 31, 2016 and 2017 (in thousands):


For the Three Months
Ended March 31,


2016


2017

Net Income

$

4,571



$

7,084


Net Tax Provision

3,047



4,722


Pretax Income

$

7,618



$

11,806


Interest Expense

2,851



3,029


Accretion of Discount on Convertible Subordinated Notes

927



1,037


Loss on Early Extinguishment of Debt

567




Non-Cash Stock Compensation

958



836


Depreciation & Amortization

3,734



3,847


Other, Net

(305)



(3)


Consolidated EBITDA

$

16,350



$

20,552


Adjusted For:




Acquisition and Divestiture Expenses

516




Severance and Retirement Costs

2,759




Consulting Fees

268




Adjusted Consolidated EBITDA

$

19,893



$

20,552


Revenue

$

63,331



$

68,157


Adjusted Consolidated EBITDA Margin

31.4%



30.2%


Reconciliation of Funeral and Cemetery Gross Profit to Field EBITDA for the three months ended March 31, 2016 and 2017 (in thousands):

Funeral Field EBITDA

For the Three Months
Ended March 31,


2016


2017

Gross Profit (GAAP)

$

16,968



$

18,969


Depreciation & Amortization

2,078



2,369


Regional & Unallocated Costs

2,475



2,444


Funeral Financial EBITDA

(2,197)



(2,043)


Funeral Field EBITDA

$

19,324



$

21,739



Cemetery Field EBITDA

For the Three Months
Ended March 31,


2016


2017

Gross Profit (GAAP)

$

4,335



$

4,123


Depreciation & Amortization

1,258



1,102


Regional & Unallocated Costs

574



510


Cemetery Financial EBITDA

(2,103)



(2,087)


Cemetery Field EBITDA

$

4,064



$

3,648



Total Field EBITDA

For the Three Months
Ended March 31,


2016


2017

Funeral Field EBITDA

$

19,324



$

21,739


Cemetery Field EBITDA

4,064



3,648


Funeral Financial EBITDA

2,197



2,043


Cemetery Financial EBITDA

2,103



2,087


Total Field EBITDA

$

27,688



$

29,517


Reconciliation of GAAP Basic Earnings Per Share to Adjusted Basic Earnings Per Share for the three months ended March 31, 2016 and 2017:


For the Three Months
Ended March 31,


2016


2017

GAAP Basic Earnings Per Share

$

0.27



$

0.42


Special Items Affecting Net Income

0.21



0.06


Adjusted Basic Earnings Per Share

$

0.48



$

0.48


Reconciliation of GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share for the three months ended March 31, 2016 and 2017:


For the Three Months
Ended March 31,


2016


2017

GAAP Diluted Earnings Per Share

$

0.27



$

0.39


Special Items Affecting Net Income

0.20



0.06


Adjusted Diluted Earnings Per Share

$

0.47



$

0.45


Earlier in this press release, we present the Rolling Four Quarter Outlook ("Outlook") which reflects management's opinion on the performance of the portfolio of existing businesses, including performance of existing trusts, and excludes size and timing of acquisitions for the Rolling Four Quarter Outlook period ending March 31, 2018 unless we have a signed Letter of Intent and high likelihood of a closing within 90 days. This Outlook is not intended to be management estimates or forecasts of our future performance, as we believe precise estimates will be precisely wrong all the time.  The following four reconciliations are presented at the midpoint of the range in this Outlook.

Reconciliation of Net Income to Consolidated EBITDA and Adjusted Consolidated EBITDA for the estimated Rolling Four Quarters ending March 31, 2018 (in thousands):


Rolling Four Quarter Outlook



March 31, 2018E


Net Income



$

26,800




Net Tax Provision



17,800




Pretax Income



$

44,600




Net Interest Expense, including Accretion of Discount on Convertible Subordinated Notes



16,500




Depreciation & Amortization, including Non-cash Stock Compensation



19,600




Consolidated EBITDA



$

80,700




Adjusted for Special Items






Adjusted Consolidated EBITDA



$

80,700




Reconciliation of Net Income to Adjusted Net Income for the estimated Rolling Four Quarters ending March 31, 2018 (in thousands):


Rolling Four Quarter Outlook



March 31, 2018E


Net Income



$

26,800




Special Items



4,300




Adjusted Net Income



$

31,100




Reconciliation of GAAP Basic Earnings Per Share to Adjusted Basic Earnings Per Share for the estimated Rolling Four Quarters ending March 31, 2018:


Rolling Four Quarter Outlook



March 31, 2018E


GAAP Basic Earnings Per Share



$

1.60




Special Items Affecting Net Income



0.26




Adjusted Basic Earnings Per Share



$

1.86




Reconciliation of GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share for the estimated Rolling Four Quarters ending March 31, 2018:


Rolling Four Quarter Outlook



March 31, 2018E


GAAP Diluted Earnings Per Share



$

1.50




Special Items Affecting Net Income



0.25




Adjusted Diluted Earnings Per Share



$

1.75




Supplemental Information:

Funeral homes and cemeteries purchased after December 31, 2012 are referred to as "Acquired" in our Trend Report. This classification of acquisitions has been important to management and investors in monitoring the results of these businesses and to gauge the leveraging performance contribution that a selective acquisition program can have on total company performance.

The presentation below highlights the impact of our 2012 Acquired Portfolio that moved from Acquired to Same Store beginning January 1, 2017 (in thousands):


For the Three Months Ended March 31, 2016






Revenue


EBITDA

2012 Acquired Portfolio

$

4,115



$

1,759


CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

Certain statements made herein or elsewhere by, or on behalf of, the Company that are not historical facts are intended to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  In addition to historical information, this Press Release contains certain statements and information that may constitute forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding any projections of earnings, revenues, asset sales, cash flow, debt levels or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing and are based on our current expectations and beliefs concerning future developments and their potential effect on us. The words "may", "will", "estimate", "intend", "believe", "expect", "seek", "project", "forecast", "foresee", "should", "would", "could", "plan", "anticipate" and other similar words or expressions are intended to identify forward-looking statements, which are generally not historical in nature. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those summarized below:

  • 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;
  • 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;
  • effects of the application of 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.

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see "Risk Factors" in our most recent Annual Report on Form 10-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. A copy of the Company's Form 10-K, other Carriage Services information and news releases are available at www.carriageservices.com.

This press release includes the use of certain financial measures that are not GAAP measures.  The Non-GAAP financial measures are presented for additional information and are reconciled to their most comparable GAAP measures in the tables presented above.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/carriage-services-announces-record-first-quarter-2017-results-and-reaffirms-rolling-four-quarter-outlook-300446531.html

SOURCE Carriage Services, Inc.

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