Carriage Services Announces Record Third Quarter And Nine Months 2016 Results And Raises Rolling Four Quarter Outlook
Three Months Ended
- Record Total Revenue of
$60.1 million , an increase of 3.0%; - Record Net Income of
$5.7 million , an increase of 27.9%; - Record GAAP Diluted Earnings Per Share of
$0.33 , an increase of 37.5%; - Record Total Field EBITDA of
$24.5 million , an increase of 5.0%; - Record Total Field EBITDA Margin up 80 basis points to 40.7%;
- Record Adjusted Consolidated EBITDA of
$17.1 million , an increase of 4.2%; - Record Adjusted Consolidated EBITDA Margin up 40 basis points to 28.5%;
- Record Adjusted Diluted Earnings Per Share of
$0.43 , an increase of 30.3%; and - Adjusted Free Cash Flow of
$9.2 million , a decrease of 30.8%.
Nine Months Ended
- Record Total Revenue of
$185.3 million , an increase of 2.5%; - Net Income remained flat at
$15.4 million ; - Record GAAP Diluted Earnings Per Share of
$0.91 , an increase of 11.0%; - Record Total Field EBITDA of
$77.2 million , an increase of 3.9%; - Record Total Field EBITDA Margin up 60 basis points to 41.7%;
- Record Adjusted Consolidated EBITDA of
$54.8 million , an increase of 2.8%; - Record Adjusted Consolidated EBITDA Margin up 10 basis points to 29.6%;
- Record Adjusted Diluted Earnings Per Share of
$1.28 , an increase of 17.4%; and - Adjusted Free Cash Flow of
$34.1 million , a decrease of 12.1%.
Secondly,
And finally and most importantly our leadership team has never been as strong, talented and collaboratively aligned as leader owners or the company as well positioned for faster and higher margined consolidated revenue growth and shareholder value creation over the next five year timeframe of our Good To Great Journey. Accordingly, we are raising our Rolling Four Quarter Outlook of Adjusted EPS by
Our Same Store Funeral and Cemetery Portfolios along with our Acquisition Funeral and Cemetery Portfolios all delivered strong performances in the third quarter with respective Revenue and Field EBITDA growth of -0.8% and 2.4% for Same Store Funeral, 5.8% and 8.4% for
Our record third quarter field operating performance together with a lower tax provision fueled an exceptionally strong consolidated earnings performance with record GAAP Diluted EPS of
Our performance for the first nine months of 2016 was simply extraordinary and achieved numerous records, including Total Revenue of
Our Adjusted Consolidated EBITDA Margin, which we consider the "cash earning power margin" of each dollar of revenue, was 29.6% for the first nine months and while a record by 10 basis points would have had a higher basis point spread this year over last year if last year was adjusted on an apples-to-apples basis using our new Non-GAAP reporting methodology. Looking forward into 2017 as we have clean Non-GAAP reporting for the full year, we are confident in our ability to exceed our goal of achieving a 30% Adjusted Consolidated EBITDA Margin, which will be a company and industry milestone that has never been achieved by any public consolidation company in the sixty year history of deathcare consolidation using current accounting methodology.
CARRIAGE HIGH PERFORMANCE CULTURE FRAMEWORK
Since launching the Carriage Good To Great Journey on
- Being The Best at operating funeral homes and cemeteries by Being The Best at providing high value personalized services and sales to the client families and communities in which we operate;
- Being The Best at providing succession plan solutions to the best remaining independent family businesses in the best strategic markets;
- Being The Best at attracting and retaining the best and most entrepreneurial management talent (4E Leadership Characteristics) and employees that align with our Being
The Best Mission and Five Guiding Principles; - Being The Best at allocating our precious capital over the next ten years for maximum long term value creation in alignment with our Vision of becoming a
Built To Last Company .
Our view of the very nature of Carriage as a high performance culture company in our industry is outlined specifically on pages 3 and 4 of my 2015 Shareholder Letter in the section titled "Carriage Framework of High Performance Ideas and Concepts." All of the major elements of our High Performance Culture Framework have been linked and sequenced so that superior execution by our leadership will achieve long term sustainable high operating and financial performance in the face of all the "bad revenue challenges" that we get asked about, i.e. lower death rates (mild flu season, longevity, etc.), higher cremation rates, volatile financial markets, seasonal unpredictability, etc. All of these revenue and earnings challenges have been present throughout the first nine months of 2016 yet we continue to achieve consistently record performance as a
Thus our High Performance Culture conviction is WHO CARES! about the mostly short term uncontrollable vagaries of our industry that have little or nothing to do with long term value creation at Carriage. We prefer to focus on "glass half full" matters over which we have some control, i.e. Market Share, a higher value (and revenue) experience for every client family every time (especially cremation families), Managing Partner Leadership Characteristics, Right Quality and Continuous Upgrading of Staff (both in each business and support departments in
Well, that's a lot to digest, especially for institutional investors who only get the benefit of quarterly updates on our performance, so maybe it would be helpful from a "big picture" perspective to share a recent email excerpt from a very progressive owner of a first class business (over 400 funerals and growing) in a bedroom community of a major metropolitan area that has not been consolidated much over the last sixty years.
"It is not required that I be much clearer to simply say Thank you. My thanks are not only for your hospitality but more importantly for my being able to take a little deeper look at
We will certainly be talking in much greater detail at some point. However, I need to commend you and your team on two things that are evident to me based on this first visit. (1) You are passionate about business enough to have figured out what superficially makes sense is not always the correct path. (2) You appear to be in the midst of assembling a team and process by which you can not only dominate Funeral Service but CHANGE Funeral Service as most know it and that idea in itself is something I absolutely LOVE about the company."
This top quality business owner observed by taking "a deeper look" that we have innovated and evolved a "process by which you (Carriage) can not only dominate Funeral Service but CHANGE Funeral Service as most know it", a reference to our Standards Operating Model and how we have linked the longer term Qualitative Standards (Market Share, Leadership, People) with shorter term Quantitative Standards through detailed analytical data correlations and trends in each business. This proprietary "process" is intended to enable a top quality local business that ranks high on our Ten Strategic Criteria (plus or minus 70%) and which is located in a Strategic Market to embark on it's own Good To Great Journey over time, joining other elite firms in what is essentially a "continuous improvement ideas and support services laboratory" (Carriage Being The Best Brand) of how to consolidate and operate within our industry better than it's ever been done before.
And finally, consistent with our growth strategy and Ten Year Being The Best Vision of affiliating with the best remaining independent businesses in the best strategic markets, we are proud to announce that on
CARRIAGE HIGH PERFORMANCE HEROES
As an important part of our High Performance Culture tradition and language, listed below are Carriage
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Allison Funeral Service; |
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Evans Brown Mortuaries; |
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McNary-Moore Funeral Service; |
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Houston Support Office: |
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Houston Support-Information Technology |
*Notes |
STANDARDS OPERATING MODEL
As I mentioned in our second quarter earnings release, I will elaborate on one of our three core models in more detail in each quarterly earnings release. While I covered the Standards Operating Model in our second quarter release, we believe it is still not well understood by some institutional investors who have been honest with their constructive feedback to us, so I will cover it again from a slightly different angle. Once again, we highly recommend that any investor that is seriously considering CSV as a long term investment should read (and study) our Company and Investment Profile, my 2015 Shareholder Letter and the section in our second quarter earnings release titled Standards Operating Model. You should then come to visit us in
The two major perception issues expressed by investors about our Standards Operating Model are that (1) decentralized execution implies a lack of rigorous analytical discipline (no centralized control) and therefore is not likely to produce consistently high and sustainable financial outcomes broadly across the portfolio; (2) it does not seem plausible that high and gradually increasing Field EBITDA Margins from new acquisitions that have been integrated into our Standards Operating Model could be sustained and consistently and effectively leveraged over our consolidation platform given our expectation of more rapid growth by acquisitions in the future and therefore would not likely accelerate shareholder value creation.
What our history of operating and financial performance has proved since 2011 is that the exact opposite of the above negative perceptions is the reality. Therefore we will continue to try new ways of explaining the extreme counterintuitive and quantitative nature (Darwinian Discipline) of our High Performance Culture Framework whose core is our Standards Operating Model.
In our second quarter earnings release, I publicly mentioned for the first time the high performance ideas and concepts covered in the book Beyond Budgeting co-authored and published in 2003 by
Photo - http://photos.prnewswire.com/prnh/20161021/431426-INFO
ADJUSTED FREE CASH FLOW
We produced Adjusted Free Cash Flow from operations for the three and nine months ended
For the Three Months |
For the Nine Months | ||||||||||||||
2015 |
2016 |
2015 |
2016 | ||||||||||||
Cash Flow Provided by Operations |
$ |
14,658 |
$ |
9,822 |
$ |
42,988 |
$ |
34,280 |
|||||||
Cash used for Maintenance Capital Expenditures |
(2,092) |
(1,790) |
(6,940) |
(5,163) |
|||||||||||
Free Cash Flow |
$ |
12,566 |
$ |
8,032 |
$ |
36,048 |
$ |
29,117 |
|||||||
Plus: Incremental Special Items: |
|||||||||||||||
Acquisition and Divestiture Expenses |
40 |
— |
577 |
516 |
|||||||||||
Severance Costs |
192 |
1,220 |
808 |
3,979 |
|||||||||||
Consulting Fees |
570 |
— |
1,358 |
496 |
|||||||||||
Adjusted Free Cash Flow |
$ |
13,368 |
$ |
9,252 |
$ |
38,791 |
$ |
34,108 |
The decline in 2016 Free Cash Flow is directly attributable to the timing of tax payments. We anticipate our Adjusted Free Cash Flow for 2016 to be flat to slightly higher than 2015 levels.
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
The Rolling Four Quarter Outlook ending
ROLLING FOUR QUARTER OUTLOOK - Period Ending
Range (in millions, except per share amounts) | ||
Revenues |
| |
Adjusted Consolidated EBITDA |
| |
Adjusted Net Income |
| |
Adjusted Diluted Earnings Per Share(1) |
|
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
(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. |
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 |
|
S&P 500 |
High Yield |
70/30 index Benchmark(2) | |||
9 months ended |
10.2% |
9.3% |
7.8% |
15.5% |
13.2% | ||
1 year ended |
(3.1%) |
(2.7%) |
1.4% |
(4.7%) |
(2.9%) | ||
2 years ended |
5.0% |
5.0% |
15.2% |
(2.3%) |
3.0% | ||
3 years ended |
20.0% |
19.4% |
52.5% |
5.0% |
19.3% | ||
4 years ended |
44.4% |
39.9% |
76.9% |
21.4% |
38.0% | ||
5 years ended |
40.2% |
37.2% |
80.6% |
26.7% |
42.8% |
(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 | |||||||||||||
Discretionary |
Total | ||||||||||||
Asset Class |
MV |
% |
MV |
% | |||||||||
Cash |
$ |
20,576 |
11% |
$ |
37,371 |
17% |
|||||||
Equities |
24,609 |
13% |
27,010 |
13% |
|||||||||
Fixed Income(1) |
136,845 |
74% |
147,700 |
68% |
|||||||||
Other/Insurance |
3,333 |
2% |
3,524 |
2% |
|||||||||
Total Portfolios |
$ |
185,363 |
100% |
$ |
215,605 |
100% |
(1) |
|
Industry/Sector |
% | |
Basic Materials |
1.5% | |
Communications |
8.9% | |
Consumer |
8.0% | |
Energy |
12.0% | |
Financial |
46.2% | |
Government |
1.0% | |
Media |
10.6% | |
|
0.5% | |
Technology |
8.5% | |
Utilities |
2.8% | |
Total |
100% |
For the nine months ended
Our overall trust fund performance for the first nine months of 2016 was driven by our fixed income portfolio and by a rebound in our 10 year warrant portfolio of five "Too Big To Fail" banks and insurance companies. The performance of our fixed income portfolio was largely attributable to the execution of our portfolio repositioning strategy of individual credit selection and rotation we began at the beginning of the year. Through individual security selection we have increased the recurring annual income by
While we will no longer report Withdrawable Trust Income in our Non-GAAP Trend reporting, for the sake of full transparency we will disclose the total throughout 2016 in this section. The Withdrawable Trust Income for the first nine months of 2016 would have been approximately
CONFERENCE CALL AND INVESTOR RELATIONS CONTACT
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OPERATING AND FINANCIAL TREND REPORT | |||||||||||||||||
(IN THOUSANDS - EXCEPT PER SHARE AMOUNTS) | |||||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||||
2015 |
2016 |
% Change |
2015 |
2016 |
% Change | ||||||||||||
Same Store Contracts |
|||||||||||||||||
Atneed Contracts |
5,067 |
5,129 |
1.2% |
16,334 |
16,158 |
(1.1%) |
|||||||||||
Preneed Contracts |
1,251 |
1,235 |
(1.3%) |
4,037 |
3,920 |
(2.9%) |
|||||||||||
Total Same Store Funeral Contracts |
6,318 |
6,364 |
0.7% |
20,371 |
20,078 |
(1.4%) |
|||||||||||
Acquisition Contracts |
|||||||||||||||||
Atneed Contracts |
1,044 |
1,381 |
32.3% |
3,317 |
4,006 |
20.8% |
|||||||||||
Preneed Contracts |
255 |
239 |
(6.3%) |
757 |
703 |
(7.1%) |
|||||||||||
Total Acquisition Funeral Contracts |
1,299 |
1,620 |
24.7% |
4,074 |
4,709 |
15.6% |
|||||||||||
Total Funeral Contracts |
7,617 |
7,984 |
4.8% |
24,445 |
24,787 |
1.4% |
|||||||||||
Funeral Operating Revenue |
|||||||||||||||||
Same Store Revenue |
$ |
33,617 |
$ |
33,356 |
(0.8%) |
$ |
106,777 |
$ |
105,449 |
(1.2%) |
|||||||
Acquisition Revenue |
8,214 |
9,734 |
18.5% |
24,920 |
28,883 |
15.9% |
|||||||||||
Total Funeral Operating Revenue |
$ |
41,831 |
$ |
43,090 |
3.0% |
$ |
131,697 |
$ |
134,332 |
2.0% |
|||||||
Cemetery Operating Revenue |
|||||||||||||||||
Same Store Revenue |
$ |
10,726 |
$ |
11,351 |
5.8% |
$ |
32,260 |
$ |
34,771 |
7.8% |
|||||||
Acquisition Revenue |
774 |
1,094 |
41.3% |
2,526 |
2,634 |
4.3% |
|||||||||||
Total Cemetery Operating Revenue |
$ |
11,500 |
$ |
12,445 |
8.2% |
$ |
34,786 |
$ |
37,405 |
7.5% |
|||||||
Financial Revenue |
|||||||||||||||||
Preneed Funeral Commission Income |
$ |
346 |
$ |
361 |
4.3% |
$ |
1,071 |
$ |
1,138 |
6.3% |
|||||||
Preneed Funeral Trust Earnings |
1,912 |
1,732 |
(9.4%) |
5,959 |
5,482 |
(8.0%) |
|||||||||||
Cemetery Trust Earnings |
2,385 |
2,025 |
(15.1%) |
6,202 |
5,622 |
(9.4%) |
|||||||||||
Preneed Cemetery Finance Charges |
404 |
487 |
20.5% |
1,177 |
1,357 |
15.3% |
|||||||||||
Total Financial Revenue |
$ |
5,047 |
$ |
4,605 |
(8.8%) |
$ |
14,409 |
$ |
13,599 |
(5.6%) |
|||||||
Total Revenue |
$ |
58,378 |
$ |
60,140 |
3.0% |
$ |
180,892 |
$ |
185,336 |
2.5% |
|||||||
Field EBITDA |
|||||||||||||||||
Same Store Funeral Field EBITDA |
$ |
12,108 |
$ |
12,403 |
2.4% |
$ |
40,123 |
$ |
40,410 |
0.7% |
|||||||
Same Store Funeral Field EBITDA Margin |
36.0% |
37.2% |
120 bp |
37.6% |
38.3% |
70 bp |
|||||||||||
Acquisition Funeral Field EBITDA |
3,201 |
3,922 |
22.5% |
9,950 |
12,002 |
20.6% |
|||||||||||
Acquisition Funeral Field EBITDA Margin |
39.0% |
40.3% |
130 bp |
39.9% |
41.6% |
170 bp |
|||||||||||
Total Funeral Field EBITDA |
$ |
15,309 |
$ |
16,325 |
6.6% |
$ |
50,073 |
$ |
52,412 |
4.7% |
|||||||
Total Funeral Field EBITDA Margin |
36.6% |
37.9% |
130 bp |
38.0% |
39.0% |
100 bp |
|||||||||||
Same Store Cemetery Field EBITDA |
$ |
3,066 |
$ |
3,324 |
8.4% |
$ |
10,153 |
$ |
11,216 |
10.5% |
|||||||
Same Store Cemetery Field EBITDA Margin |
28.6% |
29.3% |
70 bp |
31.5% |
32.3% |
80 bp |
|||||||||||
Acquisition Cemetery Field EBITDA |
215 |
497 |
131.2% |
803 |
858 |
6.8% |
|||||||||||
Acquisition Cemetery Field EBITDA Margin |
27.8% |
45.4% |
1,760 bp |
31.8% |
32.6% |
80 bp |
|||||||||||
Total Cemetery Field EBITDA |
$ |
3,281 |
$ |
3,821 |
16.5% |
$ |
10,956 |
$ |
12,074 |
10.2% |
|||||||
Total Cemetery Field EBITDA Margin |
28.5% |
30.7% |
220 bp |
31.5% |
32.3% |
80 bp |
|||||||||||
Funeral Financial EBITDA |
$ |
1,982 |
$ |
1,876 |
(5.3%) |
$ |
6,178 |
$ |
5,994 |
(3.0%) |
|||||||
Cemetery Financial EBITDA |
2,716 |
2,441 |
(10.1%) |
7,169 |
6,764 |
(5.6%) |
|||||||||||
Total Financial EBITDA |
$ |
4,698 |
$ |
4,317 |
(8.1%) |
$ |
13,347 |
$ |
12,758 |
(4.4%) |
|||||||
Total Financial EBITDA Margin |
93.1% |
93.7% |
60 bp |
92.6% |
93.8% |
120 bp |
|||||||||||
Total Field EBITDA |
$ |
23,288 |
$ |
24,463 |
5.0% |
$ |
74,376 |
$ |
77,244 |
3.9% |
|||||||
Total Field EBITDA Margin |
39.9% |
40.7% |
80 bp |
41.1% |
41.7% |
60 bp |
|||||||||||
OPERATING AND FINANCIAL TREND REPORT | |||||||||||||||||
(IN THOUSANDS - EXCEPT PER SHARE AMOUNTS) | |||||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||||
2015 |
2016 |
% Change |
2015 |
2016 |
% Change | ||||||||||||
Overhead |
|||||||||||||||||
Total Variable Overhead |
$ |
2,573 |
$ |
3,086 |
19.9% |
$ |
6,769 |
$ |
10,672 |
57.7% |
|||||||
Total Regional Fixed Overhead |
842 |
940 |
11.6% |
2,549 |
2,659 |
4.3% |
|||||||||||
Total Corporate Fixed Overhead |
4,660 |
4,545 |
(2.5%) |
15,273 |
14,118 |
(7.6%) |
|||||||||||
Total Overhead |
$ |
8,075 |
$ |
8,571 |
6.1% |
$ |
24,591 |
$ |
27,449 |
11.6% |
|||||||
Overhead as a percentage of Revenue |
13.8% |
14.3% |
50 bp |
13.6% |
14.8% |
120 bp |
|||||||||||
Consolidated EBITDA |
$ |
15,213 |
$ |
15,892 |
4.5% |
$ |
49,785 |
$ |
49,795 |
—% |
|||||||
Consolidated EBITDA Margin |
26.1% |
26.4% |
30 bp |
27.5% |
26.9% |
(60 bp) |
|||||||||||
Other Expenses and Interest |
|||||||||||||||||
Depreciation & Amortization |
$ |
3,437 |
$ |
3,807 |
10.8% |
$ |
10,124 |
$ |
11,498 |
13.6% |
|||||||
Non-Cash Stock Compensation |
1,072 |
342 |
(68.1%) |
3,448 |
2,306 |
(33.1%) |
|||||||||||
Interest Expense |
2,629 |
2,903 |
10.4% |
7,671 |
8,722 |
13.7% |
|||||||||||
Accretion of Discount on Convertible Subordinated Notes |
876 |
981 |
12.0% |
2,554 |
2,862 |
12.1% |
|||||||||||
Loss on Early Extinguishment of Debt |
— |
— |
— |
567 |
|||||||||||||
Other, Net |
(52) |
285 |
54 |
(20) |
|||||||||||||
Pretax Income |
$ |
7,251 |
$ |
7,574 |
4.5% |
$ |
25,934 |
$ |
23,860 |
(8.0%) |
|||||||
Provision for income taxes |
2,807 |
3,030 |
10,515 |
9,545 |
|||||||||||||
Income tax benefit related to state tax returns |
— |
(1,139) |
— |
(1,139) |
|||||||||||||
Net Tax Provision |
2,807 |
1,891 |
10,515 |
8,406 |
|||||||||||||
GAAP Net Income |
$ |
4,444 |
$ |
5,683 |
27.9% |
$ |
15,419 |
$ |
15,454 |
0.2% |
|||||||
Special Items, Net of tax except for ** |
|||||||||||||||||
Withdrawable Trust Income |
$ |
136 |
n/a |
$ |
366 |
n/a |
|||||||||||
Acquisition and Divestiture Expenses |
27 |
— |
381 |
336 |
|||||||||||||
Severance and Retirement Costs |
126 |
793 |
533 |
2,587 |
|||||||||||||
Consulting Fees |
377 |
— |
898 |
323 |
|||||||||||||
Accretion of Discount on Convertible Subordinated Notes ** |
876 |
981 |
2,554 |
2,862 |
|||||||||||||
Loss on Early Extinguishment of Debt |
— |
— |
— |
369 |
|||||||||||||
Gain on Asset Purchase |
— |
— |
— |
(198) |
|||||||||||||
Other Special Items |
132 |
— |
230 |
— |
|||||||||||||
Tax Adjustment from Prior Period ** |
— |
— |
141 |
— |
|||||||||||||
Sum of Special Items, Net of tax |
$ |
1,674 |
$ |
1,774 |
6.0% |
$ |
5,103 |
$ |
6,279 |
23.0% |
|||||||
Adjusted Net Income |
$ |
6,118 |
$ |
7,457 |
21.9% |
$ |
20,522 |
$ |
21,733 |
5.9% |
|||||||
Adjusted Net Profit Margin |
10.5% |
12.4% |
190 bp |
11.3% |
11.7% |
40 bp |
|||||||||||
Adjusted Basic Earnings Per Share |
$ |
0.33 |
$ |
0.45 |
36.4% |
$ |
1.12 |
$ |
1.31 |
17.0% |
|||||||
Adjusted Diluted Earnings Per Share |
$ |
0.33 |
$ |
0.43 |
30.3% |
$ |
1.09 |
$ |
1.28 |
17.4% |
|||||||
GAAP Basic Earnings Per Share |
$ |
0.24 |
$ |
0.34 |
41.7% |
$ |
0.84 |
$ |
0.93 |
10.7% |
|||||||
GAAP Diluted Earnings Per Share |
$ |
0.24 |
$ |
0.33 |
37.5% |
$ |
0.82 |
$ |
0.91 |
11.0% |
|||||||
Weighted Average Basic Shares Outstanding |
17,874 |
16,529 |
18,115 |
16,502 |
|||||||||||||
Weighted Average Diluted Shares Outstanding |
18,083 |
17,101 |
18,588 |
16,962 |
|||||||||||||
Reconciliation to Adjusted Consolidated EBITDA |
|||||||||||||||||
Consolidated EBITDA |
$ |
15,213 |
$ |
15,892 |
4.5% |
$ |
49,785 |
$ |
49,795 |
—% |
|||||||
Withdrawable Trust Income |
207 |
n/a |
555 |
n/a |
|||||||||||||
Acquisition and Divestiture Expenses |
40 |
— |
577 |
516 |
|||||||||||||
Severance and Retirement Costs |
192 |
1,220 |
808 |
3,979 |
|||||||||||||
Consulting Fees |
570 |
— |
1,358 |
496 |
|||||||||||||
Other Special Items |
200 |
— |
200 |
— |
|||||||||||||
Adjusted Consolidated EBITDA |
$ |
16,422 |
$ |
17,112 |
4.2% |
$ |
53,283 |
$ |
54,786 |
2.8% |
|||||||
Adjusted Consolidated EBITDA Margin |
28.1% |
28.5% |
40 bp |
29.5% |
29.6% |
10 bp |
| |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(unaudited and in thousands, except share data) | |||||||
|
| ||||||
ASSETS |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
535 |
$ |
855 |
|||
Accounts receivable, net |
18,181 |
18,023 |
|||||
Inventories |
5,654 |
5,853 |
|||||
Prepaid expenses |
4,684 |
3,599 |
|||||
Other current assets |
4,707 |
838 |
|||||
Total current assets |
33,761 |
29,168 |
|||||
Preneed cemetery trust investments |
63,291 |
65,896 |
|||||
Preneed funeral trust investments |
85,553 |
85,560 |
|||||
Preneed receivables, net |
27,998 |
30,579 |
|||||
Receivables from preneed trusts |
13,544 |
13,839 |
|||||
Property, plant and equipment, net |
214,874 |
231,465 |
|||||
Cemetery property, net |
75,597 |
75,692 |
|||||
|
264,416 |
267,788 |
|||||
Intangible and other non-current assets |
10,978 |
14,476 |
|||||
Cemetery perpetual care trust investments |
43,127 |
45,048 |
|||||
Total assets |
$ |
833,139 |
$ |
859,511 |
|||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
Current liabilities: |
|||||||
Current portion of long-term debt and capital lease obligations |
$ |
12,236 |
$ |
12,633 |
|||
Accounts payable |
7,917 |
5,857 |
|||||
Other liabilities |
524 |
2,546 |
|||||
Accrued liabilities |
16,541 |
17,714 |
|||||
Total current liabilities |
37,218 |
38,750 |
|||||
Long-term debt, net of current portion |
103,495 |
136,628 |
|||||
Revolving credit facility |
91,514 |
62,073 |
|||||
Convertible subordinated notes due 2021 |
115,227 |
118,461 |
|||||
Obligations under capital leases, net of current portion |
2,875 |
2,689 |
|||||
Deferred preneed cemetery revenue |
56,721 |
55,953 |
|||||
Deferred preneed funeral revenue |
31,748 |
33,258 |
|||||
Deferred tax liability |
39,956 |
39,318 |
|||||
Other long-term liabilities |
5,531 |
2,629 |
|||||
Deferred preneed cemetery receipts held in trust |
63,291 |
65,896 |
|||||
Deferred preneed funeral receipts held in trust |
85,553 |
85,560 |
|||||
Care trusts' corpus |
42,416 |
44,345 |
|||||
Total liabilities |
675,545 |
685,560 |
|||||
Commitments and contingencies: |
|||||||
Stockholders' equity: |
|||||||
Common stock, |
225 |
225 |
|||||
Additional paid-in capital |
214,250 |
215,153 |
|||||
Retained earnings |
3,385 |
18,839 |
|||||
|
(60,266) |
(60,266) |
|||||
Total stockholders' equity |
157,594 |
173,951 |
|||||
Total liabilities and stockholders' equity |
$ |
833,139 |
$ |
859,511 |
| ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(unaudited and in thousands, except per share data) | ||||||||||||||||
For the Three Months |
For the Nine Months | |||||||||||||||
2015 |
2016 |
2015 |
2016 | |||||||||||||
Revenues: |
||||||||||||||||
Funeral |
$ |
44,089 |
$ |
45,183 |
$ |
138,727 |
$ |
140,952 |
||||||||
Cemetery |
14,289 |
14,957 |
42,165 |
44,384 |
||||||||||||
58,378 |
60,140 |
180,892 |
185,336 |
|||||||||||||
Field costs and expenses: |
||||||||||||||||
Funeral |
26,798 |
26,982 |
82,476 |
82,546 |
||||||||||||
Cemetery |
8,292 |
8,695 |
24,040 |
25,546 |
||||||||||||
Depreciation and amortization |
3,019 |
3,452 |
8,814 |
10,359 |
||||||||||||
Regional and unallocated funeral and cemetery costs |
2,909 |
2,783 |
7,745 |
8,547 |
||||||||||||
41,018 |
41,912 |
123,075 |
126,998 |
|||||||||||||
Gross profit |
17,360 |
18,228 |
57,817 |
58,338 |
||||||||||||
Corporate costs and expenses: |
||||||||||||||||
General and administrative costs and expenses |
6,238 |
6,130 |
20,294 |
21,208 |
||||||||||||
Home office depreciation and amortization |
418 |
355 |
1,310 |
1,139 |
||||||||||||
6,656 |
6,485 |
21,604 |
22,347 |
|||||||||||||
Operating income |
10,704 |
11,743 |
36,213 |
35,991 |
||||||||||||
Interest expense |
(2,629) |
(2,903) |
(7,671) |
(8,722) |
||||||||||||
Accretion of discount on convertible subordinated notes |
(876) |
(981) |
(2,554) |
(2,862) |
||||||||||||
Loss on early extinguishment of debt |
— |
— |
— |
(567) |
||||||||||||
Other income (expense) |
52 |
(285) |
(54) |
20 |
||||||||||||
Income before income taxes |
7,251 |
7,574 |
25,934 |
23,860 |
||||||||||||
Provision for income taxes |
(2,807) |
(3,030) |
(10,515) |
(9,545) |
||||||||||||
Income tax benefit related to state tax returns |
— |
1,139 |
— |
1,139 |
||||||||||||
Net provision for income taxes |
(2,807) |
(1,891) |
(10,515) |
(8,406) |
||||||||||||
Net income |
$ |
4,444 |
$ |
5,683 |
$ |
15,419 |
$ |
15,454 |
||||||||
Basic earnings per common share: |
$ |
0.24 |
$ |
0.34 |
$ |
0.84 |
$ |
0.93 |
||||||||
Diluted earnings per common share: |
$ |
0.24 |
$ |
0.33 |
$ |
0.82 |
$ |
0.91 |
||||||||
Dividends declared per common share |
$ |
0.025 |
$ |
0.050 |
$ |
0.075 |
$ |
0.100 |
||||||||
Weighted average number of common and common equivalent shares outstanding: |
||||||||||||||||
Basic |
17,874 |
16,529 |
18,115 |
16,502 |
||||||||||||
Diluted |
18,083 |
17,101 |
18,588 |
16,962 |
||||||||||||
| |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(unaudited and in thousands) | |||||||
For the Nine Months | |||||||
2015 |
2016 | ||||||
Cash flows from operating activities: |
|||||||
Net income |
$ |
15,419 |
$ |
15,454 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation and amortization |
10,124 |
11,498 |
|||||
Provision for losses on accounts receivable |
1,332 |
1,522 |
|||||
Stock-based compensation expense |
3,448 |
2,645 |
|||||
Deferred income tax expense |
2,065 |
3,618 |
|||||
Amortization of deferred financing costs |
688 |
622 |
|||||
Accretion of discount on convertible subordinated notes |
2,554 |
2,862 |
|||||
Loss on early extinguishment of debt |
— |
567 |
|||||
Net (gain) loss on sale and disposal of other assets |
(49) |
186 |
|||||
Impairment of intangible assets |
— |
145 |
|||||
Changes in operating assets and liabilities that provided (required) cash: |
|||||||
Accounts and preneed receivables |
(779) |
(3,945) |
|||||
Inventories and other current assets |
3,277 |
682 |
|||||
Intangible and other non-current assets |
114 |
386 |
|||||
Preneed funeral and cemetery trust investments |
21,234 |
(4,828) |
|||||
Accounts payable |
368 |
(2,149) |
|||||
Accrued and other liabilities |
4,408 |
(268) |
|||||
Deferred preneed funeral and cemetery revenue |
432 |
742 |
|||||
Deferred preneed funeral and cemetery receipts held in trust |
(21,647) |
4,541 |
|||||
Net cash provided by operating activities |
42,988 |
34,280 |
|||||
Cash flows from investing activities: |
|||||||
Acquisitions and land for new construction |
(4,250) |
(15,056) |
|||||
Purchase of land and buildings previously leased |
(6,080) |
(6,258) |
|||||
Net proceeds from the sale of other assets |
65 |
955 |
|||||
Capital expenditures |
(22,823) |
(12,039) |
|||||
Net cash used in investing activities |
(33,088) |
(32,398) |
|||||
Cash flows from financing activities: |
|||||||
Borrowings from the revolving credit facility |
56,200 |
45,500 |
|||||
Payments against the revolving credit facility |
(33,700) |
(74,800) |
|||||
Borrowings from the term loan |
— |
39,063 |
|||||
Payments against the term loan |
(7,032) |
(8,438) |
|||||
Payments on other long-term debt and obligations under capital leases |
(679) |
(987) |
|||||
Proceeds from the exercise of stock options and employee stock purchase plan contributions |
575 |
686 |
|||||
Dividends on common stock |
(1,385) |
(1,662) |
|||||
Payment of loan origination costs related to the credit facility |
(13) |
(717) |
|||||
Purchase of treasury stock |
(23,940) |
— |
|||||
Excess tax benefit (deficiency) of equity compensation |
57 |
(207) |
|||||
Net cash used in financing activities |
(9,917) |
(1,562) |
|||||
Net increase (decrease) in cash and cash equivalents |
(17) |
320 |
|||||
Cash and cash equivalents at beginning of period |
413 |
535 |
|||||
Cash and cash equivalents at end of period |
$ |
396 |
$ |
855 |
|||
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 such as withdrawable trust income (prior to 2016), acquisition and divestiture expenses, severance costs, loss on early retirement of debt and other costs, discrete tax items and other non-recurring amounts. Special Items are taxed at the federal statutory rate of 34 percent for the three and nine months ended
September 30, 2015 and 35 percent for the three and nine months endedSeptember 30, 2016 , except for the accretion of the discount on Convertible Notes as this is a non-tax deductible item and the tax adjustment from prior period. - 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 overhead expenses 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 overhead expenses 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 overhead expenses.
- 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 and nine months ended
For the Three Months |
For the Nine Months | ||||||||||||||
2015 |
2016 |
2015 |
2016 | ||||||||||||
Net Income |
$ |
4,444 |
$ |
5,683 |
$ |
15,419 |
$ |
15,454 |
|||||||
Special Items, net of tax except for ** |
|||||||||||||||
Withdrawable Trust Income |
136 |
n/a |
366 |
n/a | |||||||||||
Acquisition and Divestiture Expenses |
27 |
— |
381 |
336 |
|||||||||||
Severance and Retirement Costs |
126 |
793 |
533 |
2,587 |
|||||||||||
Consulting Fees |
377 |
— |
898 |
323 |
|||||||||||
Accretion of Discount on Convertible Subordinated Notes ** |
876 |
981 |
2,554 |
2,862 |
|||||||||||
Loss on Early Extinguishment of Debt |
— |
— |
— |
369 |
|||||||||||
Gain on Sale of Asset |
— |
— |
— |
(198) |
|||||||||||
Other Special Items |
132 |
— |
230 |
— |
|||||||||||
Tax Adjustment from Prior Period ** |
— |
— |
141 |
— |
|||||||||||
Total Special Items affecting Net Income |
$ |
1,674 |
$ |
1,774 |
$ |
5,103 |
$ |
6,279 |
|||||||
Adjusted Net Income |
$ |
6,118 |
$ |
7,457 |
$ |
20,522 |
$ |
21,733 |
Reconciliation of Net Income to Consolidated EBITDA and Adjusted Consolidated EBITDA for the three and nine months ended
For the Three Months |
For the Nine Months | |||||||||||||||
2015 |
2016 |
2015 |
2016 | |||||||||||||
Net Income |
$ |
4,444 |
$ |
5,683 |
$ |
15,419 |
$ |
15,454 | ||||||||
Net Tax Provision |
2,807 |
1,891 |
10,515 |
8,406 | ||||||||||||
Pretax Income |
$ |
7,251 |
$ |
7,574 |
$ |
25,934 |
$ |
23,860 | ||||||||
Interest Expense |
2,629 |
2,903 |
7,671 |
8,722 | ||||||||||||
Accretion of Discount on Convertible Subordinated Notes |
876 |
981 |
2,554 |
2,862 | ||||||||||||
Loss on Early Extinguishment of Debt |
— |
— |
— |
567 | ||||||||||||
Non-cash Stock Compensation |
1,072 |
342 |
3,448 |
2,306 | ||||||||||||
Depreciation & Amortization |
3,437 |
3,807 |
10,124 |
11,498 | ||||||||||||
Other, Net |
(52) |
285 |
54 |
(20) | ||||||||||||
Consolidated EBITDA |
$ |
15,213 |
$ |
15,892 |
$ |
49,785 |
$ |
49,795 | ||||||||
Adjusted For: |
||||||||||||||||
Withdrawable Trust Income |
207 |
n/a |
555 |
n/a | ||||||||||||
Acquisition and Divestiture Expenses |
40 |
— |
577 |
516 | ||||||||||||
Severance and Retirement Costs |
192 |
1,220 |
808 |
3,979 | ||||||||||||
Consulting Fees |
570 |
— |
1,358 |
496 | ||||||||||||
Other Special Items |
200 |
— |
200 |
— | ||||||||||||
Adjusted Consolidated EBITDA |
$ |
16,422 |
$ |
17,112 |
$ |
53,283 |
$ |
54,786 | ||||||||
Revenue |
$ |
58,378 |
$ |
60,140 |
$ |
180,892 |
$ |
185,336 | ||||||||
Adjusted Consolidated EBITDA Margin |
28.1% |
28.5% |
29.5% |
29.6% | ||||||||||||
Reconciliation of funeral and cemetery income before income taxes to Field EBITDA for the three and nine months ended
Funeral Field EBITDA |
For the Three Months |
For the Nine Months | |||||||||||||
2015 |
2016 |
2015 |
2016 | ||||||||||||
Gross Profit (GAAP) |
$ |
12,909 |
$ |
13,786 |
$ |
44,549 |
$ |
45,142 |
|||||||
Depreciation & Amortization |
1,911 |
2,238 |
5,576 |
6,454 |
|||||||||||
Regional & Unallocated Costs |
2,471 |
2,177 |
6,126 |
6,810 |
|||||||||||
Funeral Financial EBITDA |
(1,982) |
(1,876) |
(6,178) |
(5,994) |
|||||||||||
Funeral Field EBITDA |
$ |
15,309 |
$ |
16,325 |
$ |
50,073 |
$ |
52,412 |
Cemetery Field EBITDA |
For the Three Months |
For the Nine Months | |||||||||||||
2015 |
2016 |
2015 |
2016 | ||||||||||||
Gross Profit (GAAP) |
$ |
4,451 |
$ |
4,442 |
$ |
13,268 |
$ |
13,196 |
|||||||
Depreciation & Amortization |
1,108 |
1,214 |
3,238 |
3,905 |
|||||||||||
Regional & Unallocated Costs |
438 |
606 |
1,619 |
1,737 |
|||||||||||
Cemetery Financial EBITDA |
(2,716) |
(2,441) |
(7,169) |
(6,764) |
|||||||||||
Cemetery Field EBITDA |
$ |
3,281 |
$ |
3,821 |
$ |
10,956 |
$ |
12,074 |
Total Field EBITDA |
For the Three Months |
For the Nine Months | |||||||||||||
2015 |
2016 |
2015 |
2016 | ||||||||||||
Funeral Field EBITDA |
$ |
15,309 |
$ |
16,325 |
$ |
50,073 |
$ |
52,412 |
|||||||
Cemetery Field EBITDA |
3,281 |
3,821 |
10,956 |
12,074 |
|||||||||||
Funeral Financial EBITDA |
1,982 |
1,876 |
6,178 |
5,994 |
|||||||||||
Cemetery Financial EBITDA |
2,716 |
2,441 |
7,169 |
6,764 |
|||||||||||
Total Field EBITDA |
$ |
23,288 |
$ |
24,463 |
$ |
74,376 |
$ |
77,244 |
Reconciliation of GAAP Basic Earnings Per Share to Adjusted Basic Earnings Per Share for the three and nine months ended
For the Three Months |
For the Nine Months | ||||||||||||||
2015 |
2016 |
2015 |
2016 | ||||||||||||
GAAP Basic Earnings Per Share |
$ |
0.24 |
$ |
0.34 |
$ |
0.84 |
$ |
0.93 |
|||||||
Special Items Affecting Net Income |
0.09 |
0.11 |
0.28 |
0.38 |
|||||||||||
Adjusted Basic Earnings Per Share |
$ |
0.33 |
$ |
0.45 |
$ |
1.12 |
$ |
1.31 |
Reconciliation of GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share for the three and nine months ended
For the Three Months |
For the Nine Months | ||||||||||||||
2015 |
2016 |
2015 |
2016 | ||||||||||||
GAAP Diluted Earnings Per Share |
$ |
0.24 |
$ |
0.33 |
$ |
0.82 |
$ |
0.91 |
|||||||
Special Items Affecting Net Income |
0.09 |
0.10 |
0.27 |
0.37 |
|||||||||||
Adjusted Diluted Earnings Per Share |
$ |
0.33 |
$ |
0.43 |
$ |
1.09 |
$ |
1.28 |
On page seven of 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
Reconciliation of Net Income to Consolidated EBITDA and Adjusted Consolidated EBITDA for the estimated Rolling Four Quarters ending
Rolling Four Quarter Outlook | |||||||
|
|||||||
Net Income |
$ |
27,200 |
|||||
Net Tax Provision |
17,400 |
||||||
Pretax Income |
$ |
44,600 |
|||||
Net Interest Expense, including Accretion of Discount on Convertible Subordinated Notes |
16,300 |
||||||
Depreciation & Amortization, including Non-cash Stock Compensation |
19,100 |
||||||
Consolidated EBITDA |
$ |
80,000 |
|||||
Adjusted for Special Items |
— |
||||||
Adjusted Consolidated EBITDA |
$ |
80,000 |
Reconciliation of Net Income to Adjusted Net Income for the estimated Rolling Four Quarters ending
Rolling Four Quarter Outlook | |||||||
|
|||||||
Net Income |
$ |
27,200 |
|||||
Special Items |
4,250 |
||||||
Adjusted Net Income |
$ |
31,450 |
Reconciliation of GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share for the estimated Rolling Four Quarters ending
Rolling Four Quarter Outlook | |||||||
|
|||||||
GAAP Diluted Earnings Per Share |
$ |
1.58 |
|||||
Special Items Affecting Net Income |
0.25 |
||||||
Adjusted Diluted Earnings Per Share |
$ |
1.83 |
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:
- the ability to find and retain skilled personnel;
- 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
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.
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