Carriage Services Announces 2010 Second Quarter Results
HOUSTON, Aug 04, 2010 /PRNewswire via COMTEX News Network/ -- Carriage Services, Inc. (NYSE: CSV) today announced results for the second quarter ended June 30, 2010, as follows:
SECOND QUARTER FINANCIAL RESULTS
- Total Revenue of $44.5 million, essentially flat compared to the second quarter of 2009
- Total Field EBITDA of $15.9 million, an increase of 2.3% compared to $15.6 million in 2009
- Consolidated EBITDA of $11.1 million compared to $10.9 million in 2009
- Consolidated EBITDA Margin of 24.9%, up 40 basis points from 2009
- Net Income of $2.3 million, or $0.13 per diluted share, compared to $2.0 million, or $0.12 per diluted share in 2009
- Free Cash Flow of $9.7 million, an increase of 50% compared to $6.5 million in 2009
"Carriage's near and longer term prospects continue to be on the rise," stated Melvin C. Payne, Chairman and Chief Executive Officer. "We were able to increase earnings per share on flat total revenues as incremental trust funds income more than offset weakness in our preneed cemetery property performance. Moreover, we had one of the strongest Free Cash Flow quarters ever, which financed most of the cash used for our second quarter acquisitions.
"We became increasingly focused during the second quarter on execution of our Strategic Acquisition Model, which is yielding excellent results. We closed four acquisitions in the second quarter of 2010 and are actively evaluating numerous opportunities. As consolidation in our industry continues, we are confident that we can selectively grow by acquisition in 10-15 strategic markets consistent with our five year growth goals.
"As a result of our second quarter acquisitions, increased trust fund performance and stable operational trends, we are increasing our Rolling Four Quarter EPS Outlook range to $0.48 - $0.52 per share from the $0.43 - $0.47 per share previously forecast. The new EPS Outlook range is a material increase to our most recent actual calendar year 2009 EPS of $0.40," concluded Mr. Payne.
TREND REPORTING
Management monitors consolidated same store and acquisition field operating and financial results both on a five year and most recent rolling four quarters basis ("Trend Reports") to reflect long term and short term trends and seasonality. "Acquisition" is defined as businesses acquired since January 1, 2006. 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 the total company performance. The Trend Reports highlight trends in volumes, operating revenues, financial revenues, Field EBITDA (controllable profit), Field EBITDA Margin (controllable profit margin), the components of overhead, and interest expense (capital structure cost). Trend reporting allows management to focus on the key operational and financial drivers relevant to the longer term performance and valuation of the Company's portfolio of deathcare businesses. Please visit the Investor Relations homepage of Carriage Services' web site at www.carriageservices.com for a link to the five year Annual and Quarterly (most recent five quarters) Trend Reports.
UNAUDITED INCOME STATEMENT FROM CONTINUING OPERATIONS
Period Ended June 30, 2010
($000's)
Six Months Six Months
Quarter 2 Quarter 2 Ended Ended
2009 2010 June 2009 June 2010
---- ---- --------- ---------
CONTINUING
OPERATIONS
Same Store
Contracts
Atneed
Contracts 3,981 3,896 8,196 8,156
Preneed
Contracts 940 968 2,014 2,006
--- ---
Total Same
Store Funeral
Contracts 4,921 4,864 10,210 10,162
----- ----- ------ ------
Acquisition
Contracts
Atneed
Contracts 853 899 1,753 1,851
Preneed
Contracts 199 223 417 504
--- --- --- ---
Total
Acquisition
Funeral
Contracts 1,052 1,122 2,170 2,355
----- -----
Total Funeral
Contracts 5,973 5,986 12,380 12,517
===== ===== ====== ======
Funeral
Operating
Revenue
Same Store
Revenue $26,153 $25,752 $54,753 $54,219
Acquisition
Revenue 4,206 4,760 8,723 10,132
----- ----- ----- ------
Total Funeral
Operating
Revenue $30,359 $30,512 $63,476 $64,351
Cemetery
Operating
Revenue
Same Store
Revenue $9,893 $8,916 $18,338 $16,672
Acquisition
Revenue 1,843 1,548 3,268 3,088
----- ----- ----- -----
Total Cemetery
Operating
Revenue $11,736 $10,464 $21,606 $19,760
Financial
Revenue
Preneed Funeral
Commission
Income $502 $497 $1,090 $1,185
Preneed Funeral
Trust Earnings 935 1,426 2,070 2,989
Cemetery Trust
Earnings 613 1,211 1,347 2,248
Preneed
Cemetery
Finance
Charges 405 407 764 831
--- --- --- ---
Total Financial
Revenue $2,455 $3,541 $5,271 $7,253
Total Revenue $44,550 $44,517 $90,353 $91,364
======= ======= ======= =======
Field EBITDA
Same Store
Funeral Field
EBITDA $9,946 $10,186 $22,006 $22,237
Same Store
Funeral Field
EBITDA Margin 36.0% 36.8% 38.0% 38.1%
Acquired
Funeral Field
EBITDA $1,398 $1,495 $2,877 $3,199
Acquired
Funeral Field
EBITDA Margin 33.2% 31.4% 33.0% 31.6%
---- ---- ---- ----
Total Funeral
Field EBITDA $11,344 $11,681 $24,883 $25,436
Total Funeral
Field EBITDA
Margin 35.7% 36.0% 37.3% 37.1%
Same Store
Cemetery Field
EBITDA $3,591 $3,710 $6,123 $6,605
Same Store
Cemetery Field
EBITDA Margin 33.2% 35.6% 30.2% 33.8%
Acquired
Cemetery Field
EBITDA $615 $518 $1,087 $1,101
Acquired
Cemetery Field
EBITDA Margin 31.9% 31.4% 31.6% 33.3%
---- ---- ---- ----
Total Cemetery
Field EBITDA $4,206 $4,228 $7,210 $7,706
Total Cemetery
Field EBITDA
Margin 33.0% 35.0% 30.4% 33.7%
---- ---- ---- ----
Total Field
EBITDA $15,550 $15,909 $32,093 $33,142
Total Field
EBITDA Margin 34.9% 35.7% 35.5% 36.3%
Overhead
Total Variable
Overhead $516 $617 $1,527 $1,658
Total Regional
Fixed Overhead 710 780 1,471 1,557
Total Corporate
Fixed Overhead 3,415 3,430 6,788 7,099
----- ----- ----- -----
Total Overhead $4,641 $4,827 $9,786 $10,314
10.4% 10.8% 10.8% 11.3%
---- ----
Consolidated
EBITDA $10,909 $11,082 $22,307 $22,828
Consolidated
EBITDA Margin 24.5% 24.9% 24.7% 25.0%
Property
Depreciation &
Amortization $2,795 $2,488 $5,399 $4,957
Restricted
Stock
Amortization 256 333 498 612
Interest
Expense 4,660 4,572 9,259 9,125
Other (Income) (220) (252) (223) (469)
---- ---- ---- ----
Pretax Income $3,418 $3,941 $7,374 $8,603
Income tax 1,384 1,642 2,986 3,530
Net income $2,034 $2,299 $4,388 $5,073
====== ====== ====== ======
4.6% 5.2% 4.9% 5.6%
Diluted EPS $0.12 $0.13 $0.25 $0.29
Diluted Shares
Outstanding 17,379,672 17,752,840 17,410,697 17,707,000
CONSOLIDATED OPERATING RESULTS
Total revenue for the second quarter of 2010 was essentially flat at $44.5 million compared to $44.6 million reported in last year's second quarter. Current period increases in Funeral Operating Revenue and Financial Revenue made up for the decline from record Cemetery Revenue in the second quarter of 2009.
Consolidated EBITDA in the 2010 second quarter was up slightly to $11.1 million versus $10.9 million in last year's second quarter and Consolidated EBITDA Margin increased to 24.9% compared to Consolidated EBITDA Margin of 24.5% in the second quarter last year primarily because of the higher trust fund earnings. Carriage earned $0.13 per diluted share for the second quarter of 2010 compared to $0.12 per diluted share in the same period last year as Net Income increased 13%.
FUNERAL OPERATIONS
Second quarter Total Funeral Operating Revenue was $30.5 million compared to $30.4 million in the prior year quarter. Same Store contract volume was down 1.2%, while Total Funeral contracts were slightly higher compared to the prior year quarter because of our new acquisitions, and the average revenue per contract increased 1.8%. The cremation rate for the second quarter increased to 42.9% compared to 41.8% last year. An initiative to increase the average revenue per cremation contract, largely by converting direct cremations to cremations with services, continues to gain traction and helped not only the cremation average but also customer satisfaction levels with cremation families. Cremations with services have grown from 44.7% of total cremation contracts in the second quarter of 2009 to 45.9% for the second quarter of 2010. As a result of this continuing initiative, which includes new training and new merchandise options for client families, the average revenue per cremation contract in the current quarter increased 8.3% to $2,969 from the second quarter of 2009.
Total Funeral Field EBITDA increased to $11.7 million compared to $11.3 million in the second quarter of 2009 as Funeral Financial Revenue contributed an incremental $0.5 million to Total Funeral Field EBITDA, and the related Total Funeral Field EBITDA Margin increased from 35.7% to 36.0%.
CEMETERY OPERATIONS
Cemetery Operating Revenue totaled $10.5 million in the second quarter of 2010 compared to $11.7 million last year, a decline of 10.3%. We set successive monthly records in April and May 2009 for preneed cemetery property sales during last year's second quarter which made for a difficult revenue comparison. While our second quarter preneed property revenue declined by 23.6%, our atneed interments were up by 6%, atneed revenues increased by 11%, and trust fund earnings increased 100% to $1.2 million. Notwithstanding the lower cemetery operating revenue, Cemetery Field EBITDA was flat at $4.2 million and Cemetery Field EBITDA Margin increased 200 basis points from 33% to 35% due to higher atneed gross profit and higher trust fund earnings. Since the beginning of the year, we have upgraded the Managing Partners in several of our largest cemeteries, as we are attracting higher quality, proven leadership compared to the past. As these Managing Partners settle into their new roles, we expect improving preneed property sales and financial performance over the remainder of the year and thereafter.
FINANCIAL REVENUE
Our Total Financial Revenue includes preneed funeral insurance commission income, earnings from three types of trust funds and finance charges on our preneed cemetery receivables portfolio. Total Financial Revenue increased by approximately $1.1 million because of higher income from the trust funds, a benefit from the successful repositioning strategy we executed during the last 18 months. While the higher contribution to earnings from our trust funds is difficult to forecast on a monthly or quarterly basis, we expect a significantly higher contribution in the future versus the past on a year over year basis over a multi-year timeframe.
ACQUISITIONS
We acquired one cemetery and three funeral home businesses during the second quarter of 2010 for approximately $15.5 million: Glacier Memorial Gardens in Kalispell, Montana on April 28, 2010; Austin Funeral Home in Whitefish, Montana and Columbia Mortuary in Columbia Falls, Montana on June 9, 2010; Heritage Memorial Services in Huntington Beach, California on June 15, 2010; and Fuller Funeral Homes and Cremation Services in Cape Coral and Naples, Florida on June 30, 2010.
Glacier Memorial Gardens, Austin Funeral Home and Columbia Mortuary will be integrated into one of our top performing businesses, Johnson-Gloschat Funeral Home and Crematory in Kalispell, Montana. These businesses complement each other as we expand our presence in the Flathead Valley near Glacier National Park, a rapidly growing market which is one of our designated strategic markets. We estimate that these three businesses, once fully integrated, should annually perform 130 interments, 180 funeral services, and produce revenue in the range of $0.9 to $1.0 million with Field EBITDA of approximately $0.2 to $0.3 million.
Heritage Memorial Services currently performs approximately 570 funeral services annually and is forecast to generate annual revenue in the range of $1.8 to $2.0 million and Funeral Field EBITDA in the range of $0.5 to $0.7 million upon completion of its integration. This acquisition expands our presence in the greater Los Angeles market which has become one of our high priority strategic markets.
Fuller Funeral Homes and Cremation Services consists of five facilities, currently performs approximately 1,800 funeral services annually and is forecast to generate annual revenue in the range of $5.5 to $5.8 million and Funeral Field EBITDA in the range of $1.3 to $1.6 million upon completion of the integration process. With this transaction, Carriage secured the vast majority of the Naples, Florida market. We view the Central Florida market in and around Tampa/St. Petersburg to Orlando as a large strategic market with strong demographic trends and numerous large, quality independent businesses. We will focus our acquisition efforts in this area and expect to make other acquisitions in the future.
These acquisitions are expected to add materially to our new acquisition portfolio performance (those businesses acquired since 2006) and the company's diluted EPS. Accordingly, we have updated and increased our Rolling Four Quarter Outlook. These acquisitions closed too late in the second quarter to have a material impact on our current results. Looking forward over the next four quarters, we expect these acquisitions to add approximately $0.05 to diluted earnings per share depending on the degree to which our integration process is complete.
We are encouraged by the current level of acquisition activity and the quality and size of the candidates, as the acquisition landscape and Carriage's relative positioning and opportunity continues to improve. We have established a policy of announcing acquisitions when we have closed the transaction and integrating expected proforma results of newly announced acquisitions into our Rolling Four Quarter Outlook in conjunction with the subsequent quarterly earnings release.
TRUST FUND PERFORMANCE
Last year we reported on the significant increase in the market value and income in our three types of trust funds that was a result of a repositioning strategy coordinated with our investment advisor. The market value of our discretionary accounts (about 80% of total) decreased by $1.4 million or 0.9% during the first six months of 2010 to $153.6 million, as both the corporate equity and fixed income markets underwent a significant correction in the second quarter. As a result of the substantial unrealized gains at the end of the first quarter of 2010, we began to take selective gains in our discretionary trusts during the second quarter which had a meaningful impact on our financial revenue for the quarter. Total equity gains realized were in excess of $10 million, all of which were reinvested into our fixed income portfolio during the second quarter, increasing our annual income from $7.1 million at March 31, 2010 to $8.1 million at June 30, 2010 in our discretionary trust portfolio.
We plan to realize additional selective gains in our preneed funeral and cemetery merchandise and service trusts over the balance of 2010, causing the gains to be allocated to individual contracts which will be reflected as higher financial revenue as these contracts mature in the future.
We expect that realization of our unrealized gains will increasingly be reflected over time in the new Total Financial Revenue section of our trend reports. Together with our much higher and sustainable level of interest income from our fixed income portfolio, Total Financial Revenue should become an increasingly material contributor to Carriage's EPS in future years. Shown below are consolidated performance metrics for the combined trust fund portfolios (preneed funeral, cemetery merchandise and services and cemetery perpetual care) at key dates.
($ in 000's)
Discretionary Accounts
----------------------
CSV Trust Funds Market Value, Income and Yield
Est. Yield Unrealized
Market Annual on Gain /
Date Value Income* Cost (Loss)
---- ------ ------- ----- ----------
12/31/08 $101,554 $5,431 5.27% ($25,753)
12/31/09 $155,053 $7,170 7.65% $34,965
03/31/10 $165,368 $7,063 7.42% $43,578
06/30/10 $153,621 $8,064 6.95% $25,416
($ in 000's)
Total Trust Funds
-----------------
CSV Trust Funds Cost, Market Value, Gain (Loss)
Unrealized
Cost Market Gain /
Date Basis Value (Loss)
---- ----- ------ ----------
12/31/08 $167,242 $138,537 ($28,705)
12/31/09 $163,079 $198,113 $35,034
03/31/10 $164,519 $208,637 $44,118
06/30/10 $185,586 $203,047 $17,461
*Estimated Annual Income adjusted starting Q4 2009 to reflect current
portfolio holdings.
Investment Performance
Discretionary Total Trust
Accounts Funds Investment
------------- ----------- Performance(1)
--------------
% %
Growth Growth Growth Growth CSV Total
Trust Funds
Amount in MV Amount in MV (1)
Timeframe ------ ----- ------ ----- ------------
---------
1 year
ending
12/31/09 $53,499 52.7% $59,576 43.0% 47.4%
6 months
ending
06/30/10 ($1,432) -0.9% $4,934 3.1% 0.2%
Index Performance(1)
--------------------
S&P 50/50
DJIA 500 NASDAQ index
---- ---- ------ Benchmark
Timeframe ---------
---------
1 year
ending
12/31/09 18.8% 23.5% 43.9% 16.2%
6 months
ending
06/30/10 -6.3% -6.7% -7.0% -0.7%
(1) Investment performance includes realized income and unrealized
appreciation.
CSV Trust Funds: Portfolio Profile
-----------------------------------
06/30/2010 06/30/2010
---------- ----------
Discretionary Total Trust
Trust Funds Funds
-------------- ------------
Asset
Class MV % MV %
------ --- --- --- ---
Equities $62,593 41% $73,169 36%
Fixed
Income $86,940 56% $110,428 54%
Cash $4,088 3% $19,450 10%
---- ------ --- ------- ---
Total
Portfolios $153,621 100% $203,047 100%
CASH FLOW
Carriage produced Free Cash Flow (defined as cash flow from operations less maintenance capital expenditures) of $9.7 million during the second quarter of 2010 compared to Free Cash Flow of $6.5 million for the corresponding 2009 period, an increase of $3.2 million. The sources and uses of cash for the first six months of 2010 consisted of the following (in millions):
Cash flow provided by operations $14.5
Cash used for maintenance capital expenditures (3.4)
----
Free Cash Flow $11.1
Cash at beginning of year 3.6
Acquisitions (15.5)
Borrowings under credit facility 3.2
Cash used for growth capital expenditures -
funeral homes (0.1)
Cash used for growth capital expenditures -
cemeteries (0.9)
Other investing and financing activities, net (0.1)
----
Cash at June 30, 2010 $1.3
====
Credit Facility borrowing at June 30, 2010 $3.2
====
FOUR QUARTER OUTLOOK
The Four Quarter Outlook ranges for the rolling four quarter period ending June 30, 2011 are intended to approximate what the Company believes will be the sustainable earning power of its portfolio of deathcare assets over the next four quarters as its three models are effectively executed. Performance drivers include funeral contract volumes, cremation mix, preneed sales, preneed maturities and deliveries, average revenue per service, financial revenue and overhead items. Other variables include the outstanding amounts under our bank credit facility, our effective tax rate which is currently estimated to be approximately 40%, and the estimated number of diluted shares outstanding which is currently estimated to be approximately 17.8 million.
We have revised upward our Rolling Four Quarter Outlook primarily because of the acquisitions that closed during the second quarter of 2010. Though we expect to acquire additional businesses during the next twelve months, we have not forecast any acquisitions in the Four Quarter Outlook ending June 30, 2011 because of the uncertainty as to the timing and size of acquisitions.
ROLLING FOUR QUARTER OUTLOOK - Period Ending June 30, 2011
(amounts in millions, except per share amounts)
Range
-----
Revenues $187 - $193
Field EBITDA $64.5 - $67.5
Field EBITDA Margin 34% - 35%
Total Overhead $21 - $22
Consolidated EBITDA $44.4 - $45.6
Consolidated EBITDA Margin 23% - 24%
Interest $18.5
Depreciation & Amortization $11.7
Income Taxes $5.7 - $6.2
Net Income $8.5 - $9.2
Diluted Earnings Per Share $0.48 - $0.52
Free Cash Flow $15.6 - $16.8
Revenue and earnings for the four quarter period ending June 30, 2011 are expected to increase materially relative to the full calendar year ended December 31, 2009, in which Carriage earned $0.40 per diluted share, for the following reasons:
- Increase in Funeral Revenue and Funeral Field EBITDA from the four acquisitions in 2nd quarter 2010
- Increase in the average revenue per funeral service
- Higher financial revenue
Long Term Outlook - Through 2014 (Base Year 2009)
Revenue growth of 6-7% annually, including acquisitions
-------------------------------------------------------
Consolidated EBITDA growth of 8-10% annually, including
acquisitions
-------------------------------------------------------
Consolidated EBITDA Margin range of 24-26%
------------------------------------------
EPS growth of 14-16% annually, including acquisitions
-----------------------------------------------------
CONFERENCE CALL
Carriage Services has scheduled a conference call for tomorrow, Thursday, August 5, 2010 at 10:30 a.m. eastern time. To participate in the call, please dial 480-629-9773 at least ten minutes before the conference call begins and ask for the Carriage Services conference call. A telephonic replay of the conference call will be available through August 12, 2010 and may be accessed by dialing 303-590-3030 and using pass code 4331223#. An audio archive will also be available on the company's website at www.carriageservices.com shortly after the call and will be accessible for approximately 90 days.
Carriage Services is a leading provider of deathcare services and products. Carriage operates 145 funeral homes in 25 states and 33 cemeteries in 12 states.
USE OF NON-GAAP FINANCIAL MEASURES
This press release uses the following Non-GAAP financial measures "free cash flow" and "EBITDA". Both free cash flow and EBITDA are used by investors to value common stock. The Company considers free cash flow to be an important indicator of its ability to generate cash for acquisitions and other strategic investments. The Company has included EBITDA in this press release because it is widely used by investors to compare the Company's financial performance with the performance of other deathcare companies. The Company also uses Field EBITDA and Field EBITDA Margin to monitor and compare the financial performance of the individual funeral and cemetery field businesses. EBITDA does not give effect to the cash the Company must use to service its debt or pay its income taxes and thus does not reflect the funds actually available for capital expenditures. In addition, the Company's presentation of EBITDA may not be comparable to similarly titled measures other companies report. 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. Reconciliations of the Non-GAAP financial measures to GAAP measures are provided at the back of the press release.
The Company categorizes its general and administrative expenses into three categories of overhead: (1) variable overhead, (2) regional fixed overhead and (3) corporate fixed overhead. Variable overhead consists of cost and expense such as incentive compensation which will vary with profitability and legal expense unrelated to day to day operations. Regional fixed overhead and corporate fixed overhead represent the cost and expenses of regional operations leaders and the home office and will not vary as a result of profitability.
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. These statements are based on assumptions that the Company believes are reasonable; however, many important factors, as discussed under "Forward-Looking Statements and Cautionary Statements" in the Company's Annual Report and Form 10-K for the year ended December 31, 2009, could cause the Company's results in the future to differ materially from the forward-looking statements made herein and in any other documents or oral presentations made by, or on behalf of, the Company. The Company assumes no obligation to update or publicly release any revisions to forward-looking statements made herein or any other forward-looking statements made by, or on behalf of, the Company. A copy of the Company's Form 10-K, and other Carriage Services information and news releases, are available at www.carriageservices.com.
Contacts: Terry Sanford, EVP & CFO
Carriage Services, Inc.
713-332-8400
- Financial Statements and Tables to Follow -
CARRIAGE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, expect share data)
December
31, June 30,
ASSETS 2009 2010
---- ----
Current assets:
Cash and cash equivalents $3,616 $1,338
Accounts receivable, net of allowance for bad
debts 15,177 14,233
Inventories and other current assets 14,683 12,567
------ ------
Total current assets 33,476 28,138
------ ------
Preneed cemetery and funeral trust
investments 183,484 175,806
Preneed receivables, net of allowance for bad
debts 16,782 23,843
Receivables from preneed funeral trusts 14,629 22,794
Property, plant and equipment, net of
accumulated depreciation 124,800 125,517
Cemetery property 71,661 71,364
Goodwill 166,930 181,502
Deferred charges and other non-current assets 7,536 8,747
----- -----
Total assets $619,298 $637,711
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt and
obligations under capital leases $558 $597
Accounts payable and accrued liabilities 20,914 24,000
------ ------
Total current liabilities 21,472 24,597
Senior long-term debt, net of current portion 131,898 131,981
Bank credit facility - 3,200
Convertible junior subordinated debenture due
in 2029 to an affiliated trust 93,750 92,858
Obligations under capital leases, net of
current portion 4,418 4,352
Deferred preneed cemetery and funeral revenue 75,834 90,349
Deferred preneed cemetery and funeral
receipts held in trust 143,101 135,661
Care trusts' corpus 40,403 39,985
------ ------
Total liabilities 510,876 522,983
------- -------
Commitments and contingencies
Redeemable Preferred Stock 200 200
Stockholders' equity
Common Stock 204 208
Additional paid-in capital 197,034 198,270
Accumulated deficit (79,016) (73,950)
Treasury stock (10,000) (10,000)
------- -------
Total stockholders' equity 108,222 114,528
------- -------
Total liabilities and stockholders' equity $619,298 $637,711
======== ========
CARRIAGE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
For the three months For the six months
ended June 30, ended June 30,
-------------------- ------------------
2009 2010 2009 2010
---- ---- ---- ----
Revenues $44,550 $44,517 $90,353 $91,364
Field costs and expenses 32,749 32,485 66,026 65,814
------ ------ ------ ------
Gross profit 11,801 12,032 24,327 25,550
Corporate costs and
expenses 3,943 3,771 7,917 8,291
----- ----- ----- -----
Operating income 7,858 8,261 16,410 17,259
Interest expense, net of
interest and other
income (4,440) (4,320) (9,036) (8,656)
------ ------
Income before income
taxes 3,418 3,941 7,374 8,603
Provision for income
taxes (1,384) (1,642) (2,986) (3,530)
------ ------ ------ ------
Net income 2,034 2,299 4,388 5,073
Preferred stock dividend 4 3 7 7
--- --- --- ---
Net income available to
common stockholders $2,030 $2,296 $4,381 $5,066
====== ====== ====== ======
Basic earnings per
common share: $0.12 $0.13 $0.25 $0.29
===== =====
Diluted earnings per
common share: $0.12 $0.13 $0.25 $0.29
===== =====
Weighted average number
of common and common
equivalent shares
outstanding:
Basic 17,119 17,504 17,235 17,472
====== ====== ====== ======
Diluted 17,379 17,752 17,410 17,707
====== ====== ====== ======
CARRIAGE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands, except per share data)
For the six months
ended June 30,
2009 2010
----
Cash flows from operating activities:
Net income $4,388 $5,073
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,799 5,318
Provision for losses on accounts receivable 1,954 1,903
Stock-based compensation expense 907 949
Deferred income taxes 2,986 3,282
Other (108) (465)
Changes in operating assets and liabilities
that provided (required) cash:
Accounts and preneed receivables (1,226) (1,306)
Inventories and other current assets (22) 88
Preneed funeral and cemetery trust
investments (4,502) (837)
Accounts payable and accrued liabilities (2,789) (32)
Litigation settlement (3,300) -
Deferred preneed funeral and cemetery
revenue 248 601
Deferred preneed funeral and cemetery
receipts held in trust 2,616 (57)
Net cash provided by operating activities 6,951 14,517
Cash flows from investing activities:
Net proceeds from the sale of assets 655 400
Acquisitions - (15,519)
Growth capital expenditures (2,166) (949)
Maintenance capital expenditures (1,646) (3,438)
Net cash used in investing activities (3,157) (19,506)
Cash flows from financing activities:
Net borrowings under credit facility - 3,200
Payments on senior long-term debt and
obligations under capital leases (413) (212)
Purchase of convertible junior subordinated
debenture - (576)
Proceeds from the exercise of stock options
and employee stock purchase plan 152 349
Purchase of treasury stock (2,841) -
Dividend on redeemable preferred stock (7) (7)
Other financing expenses (94) (43)
--- ---
Net cash provided by (used in) financing
activities (3,203) 2,711
------ -----
Net increase (decrease) in cash and cash
equivalents 591 (2,278)
Cash and cash equivalents at beginning of
period 5,007 3,616
----- -----
Cash and cash equivalents at end of period $5,598 $1,338
====== ======
CARRIAGE SERVICES, INC.
Selected Financial Data
June 30, 2010
(unaudited)
December
31, June 30,
Selected Balance Sheet Data: 2009 2010
---- ----
Cash and short-term
investments $3,616 $1,338
Total Senior Debt (a) 136,874 140,130
Days sales in funeral
accounts receivable 20.0 20.1
Senior Debt to total
capitalization 39.9 40.3
Senior Debt to EBITDA
(rolling twelve months) 3.3 3.3
a) -Senior debt does not include the convertible junior subordinated
debentures.
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 EBITDA for the three and six months ended June 30, 2009 and 2010 and the estimated rolling four quarters ended June 30, 2011 (presented at approximately the midpoint of the range identified in the release) (in 000's):
Three months ended
June 30,
2009 2010
---- ----
Net income $2,034 $2,299
Provision for income taxes 1,384 1,642
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Pre-tax earnings 3,418 3,941
Net interest expense, including
loan cost amortization 4,440 4,320
Depreciation & amortization 3,051 2,821
----- -----
EBITDA $10,909 $11,082
======= =======
Revenue $44,550 $44,517
EBITDA margin 24.5% 24.9%
Rolling
Four
Quarter
Six months ended
June 30, Outlook
-------
June 30,
2009 2010 2011 E
---- ---- ---------
Net income $4,388 $5,073 $8,900
Provision for income taxes 2,986 3,530 5,900
----- ----- -----
Pre-tax earnings 7,374 8,603 14,800
Net interest expense,
including loan cost
amortization 9,036 8,656 18,500
Depreciation & amortization 5,897 5,569 11,700
----- ----- ------
EBITDA $22,307 $22,828 $45,000
======= ======= =======
Revenue $90,353 $91,364 $190,000
EBITDA margin 24.7% 25% 23.7%
Reconciliation of Non-GAAP Financial Measures, Continued:
Reconciliation of cash provided by operating activities to free cash flow (in 000's):
Three months ended
June 30,
2009 2010
---- ----
Cash provided by
operating activities $7,507 $11,593
Less maintenance
capital expenditures (1,025) (1,900)
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Free cash flow $6,482 $9,693
====== ======
Six months ended June 30,
2009(1) 2010
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Cash provided by operating
activities $10,251 $14,517
Less maintenance capital
expenditures (1,646) (3,438)
------ ------
Free cash flow $8,605 $11,079
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(1) Included in cash flow for the six months ended June 30, 2009 is
a $3.3 million litigation settlement payment.
SOURCE Carriage Services, Inc.
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