UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 8, 2013
Carriage Services, Inc.
(Exact name of registrant as specified in its charter)
Delaware | 1-11961 | 76-0423828 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
3040 Post Oak Boulevard, Suite 300
Houston, Texas 77056
(Address, including zip code, of principal executive offices)
Registrant's telephone number, including area code:
(713) 332-8400
¨ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
In the press release dated August 8, 2013 Carriage Services, Inc. (“the Company”) announced and commented on its financial results for its quarter ended June 30, 2013. A copy of the press release issued by the Company is attached hereto as Exhibit 99.1 and incorporated by this reference. The information being furnished under Item 9.01 Financial Statements and Exhibits, including the press release attached hereto as Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities of that Section.
The Company’s press release dated August 8, 2013 contains non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with United States generally accepted accounting principles, or GAAP. Pursuant to the requirements of Regulation G, the Company has provided quantitative reconciliations within the press release of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
ITEM 9.01 FINANCIAL STATMENTS AND EXHIBITS.
(d) Exhibits. The following are furnished as part of this current report on Form 8-K:
99.1 Press Release dated August 8, 2013
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Carriage Services, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CARRIAGE SERVICES, INC. | |||
Dated: August 8, 2013 | By: | /s/ L. William Heiligbrodt | |
L. William Heiligbrodt | |||
Vice Chairman of the Board, Executive Vice President and Secretary | |||
(Principal Financial Officer) | |||
INDEX TO EXHIBITS
Exhibit | Description | ||
99.1 | Press Release dated August 8, 2013. | ||
 | FOR IMMEDIATE RELEASE |
CARRIAGE SERVICES ANNOUNCES RECORD RESULTS FOR SECOND QUARTER 2013
HOUSTON – August 8, 2013 – Carriage Services, Inc. (NYSE: CSV) today announced record results for the quarter ending June 30, 2013.
Mel Payne, Chief Executive Officer, stated, “Our second quarter performance continued our trend of record quarterly results, as we achieved strong revenue growth of 11.3% to a record $54.2 million, Adjusted Diluted Earnings Per Share growth of 66.7% to a record $0.25 per share, and Free Cash Flow growth of 38.5% to a record $11.8 million. This outstanding performance was driven by substantially higher year over year revenue and Field EBITDA growth in each of our four major profit segments and substantially lower interest costs on our recently refinanced senior debt.”
“Because of our expectation that the strong growth in our field operating and financial results during the first half of 2013 will continue into 2014, and in anticipation of a resumption of accretive acquisitions, we are raising our Rolling Four Quarter Adjusted Earnings Per Share Outlook by 2 cents per share to $1.18 - $1.20 and the Free Cash Flow outlook by $2 million to $32 - $34 million. Our second quarter and year to date comparative highlights are shown below,”
Three Months Ending June 30, 2013
• | Total Revenue up 11.3% to $54.2 million; |
• | Consolidated EBITDA up 11.0% to $13.5 million; |
• | Consolidated EBITDA Margin down 10 basis points to 25.0%; |
• | Adjusted Consolidated EBITDA up 16.5% to $14.7 million; |
• | Adjusted Consolidated EBITDA Margin up 130 basis points to 27.1%; |
• | GAAP Diluted EPS from Continuing Operations up 42.9% to $0.20 in 2013 from $0.14 in 2012; |
• | Adjusted Diluted Earnings Per Share up 66.7% to $0.25 from $0.15 in 2012; |
• | Free Cash Flow up 38.5% to $11.8 million in 2013 from $8.5 million in 2012. |
Six Months Ending June 30, 2013
• | Total Revenue up 12.3% to $111.6 million; |
• | Consolidated EBITDA up 13.0% to $29.3 million; |
• | Consolidated EBITDA Margin up 20 basis points to 26.3%; |
• | Adjusted Consolidated EBITDA up 11.4% to $31.2 million; |
• | Adjusted Consolidated EBITDA Margin down 20 basis points to 28.0%; |
• | GAAP Diluted EPS from Continuing Operations up 31.4% to $0.46 in 2013 from $0.35 in 2012; |
• | Adjusted Diluted Earnings Per Share up 33.3% to $0.56 from $0.42 in 2012; |
• | Free Cash Flow up 89.5% to $21.0 million in 2013 from $11.1 million in 2012. |
The above tables reference certain Non-GAAP financial measurements that are defined and reconciled at the end of the press release.
“Our Total Field EBITDA increased $3.6 million or almost 20% in the quarter on a revenue increase of 11.3%, as our Total Field EBITDA Margin increased 280 basis points to a record 40.5% for a second quarter. However, given the recent major change in the industry landscape and a growing pipeline of quality acquisition candidates, we continued to aggressively invest in upgrading our organizational overhead structure and talent in anticipation of
1
substantially higher acquisition growth over the next 18 months. As a consequence, our Total Overhead increased $2.3 million or 36.7% in the quarter, materially offsetting the $3.6 million of Field EBITDA growth.”
“Our credit profile substantially improved in the first half of 2013, during which we made no acquisitions. Our senior debt to EBITDA ratio declined from 3.06 at the beginning of the year to 2.77 at June 30th because our Adjusted Consolidated EBITDA increased $3.2 million, or 11.4%, to $31.2 million while our senior debt and lease obligations decreased $15.5 million, or 8.7%, to $163.3 million. The senior debt ratio decline below three times at June 30th automatically triggered a 50 basis point rate reduction on all of our outstanding senior debt. Our Free Cash Flow that funded the first half deleveraging increased 89.5% to $21.0 million compared to 2012.”
“Our rapidly improving credit profile, substantial borrowing capacity under our bank revolving credit facility on favorable terms, and the financial flexibility to execute a refinancing transaction of our convertible TIDES security on favorable terms, most likely during the second half, puts our Company in a strong position to be selectively opportunistic in the current environment as to acquisition candidates and capital structure needs and improvements,”
concluded Mr. Payne.
TOTAL FIELD OPERATIONS
For the Three Months Ending June 30, 2013
• | Total Field Revenue increased 11.3% to $54.2 million; |
• | Total Field EBITDA increased 19.6% to $21.9 million; and |
• | Total Field EBITDA Margin increased 280 basis points to 40.5%. |
FUNERAL FIELD OPERATIONS
For the Three Months Ending June 30, 2013
• | Total Funeral Operating Revenue increased 9.4% to $38.1 million; |
• | Total Funeral Field EBITDA increased 14.3% to $13.8 million; |
• | Total Funeral Field EBITDA Margin increased 150 basis points to 36.3%; |
• | Same Store Funeral Revenue increased 1.7% with same store volume increasing 3.1%; |
• | Same Store Field EBITDA increased 9.2% to $11.3 million; |
• | Acquisition Funeral Revenue increased 46.6% with acquisition volume increasing 31.1%; |
• | Acquisition Funeral Field EBITDA increased 43.5% to $2.5 million; |
• | Average revenue per contract increased slightly from $5,379 in 2012 to $5,422 in 2013; and |
• | Cremation rate increased 240 basis points to 47.3%. |
CEMETERY FIELD OPERATIONS
For the Three Months Ending June 30, 2013
• | Total Cemetery Operating Revenue increased 9.2% to $10.9 million; |
• | Total Cemetery Field EBITDA increased 22.7% to $3.3 million; |
• | Total Cemetery Field EBITDA Margin increased 340 basis points to 30.4%; |
• | Cemetery pre-need property sale contracts increased 29.7% to 2,024; and |
• | Average Cemetery pre-need property sale per contract decreased 7.3% to $2,833. |
FINANCIAL OPERATIONS
For the Three Months Ending June 30, 2013
• | Total Financial Revenue increased 33.0% to $5.2 million; |
• | Total Financial EBITDA increased 35.4% to $4.8 million; |
• | Total Financial EBITDA Margin increased 160 basis points to 92.7%. |
• | Funeral Financial Revenue increased 49.7% to $2.7 million; |
• | Cemetery Financial Revenue increased 18.5% to $2.5 million; |
2
FREE CASH FLOW
Carriage produced Free Cash Flow from operations in the first half of 2013 of $21.0 million compared to Free Cash Flow from operations of $11.1 million for the corresponding period in 2012. The sources and uses of cash for the first half of 2012 and 2013 consisted of the following (in millions):
For the Six Months Ending June 30, | |||||||
2012 | 2013 | ||||||
Cash flow provided by operations | $ | 13.4 | $ | 24.0 | |||
Cash used for maintenance capital expenditures | (2.3 | ) | (3.0 | ) | |||
Free Cash Flow | $ | 11.1 | $ | 21.0 | |||
Cash at beginning of period | 1.1 | 1.7 | |||||
Cash used for growth capital expenditures | (3.4 | ) | (1.5 | ) | |||
Cash dividends paid | (0.9 | ) | (0.9 | ) | |||
Proceeds from sale of business | — | 2.7 | |||||
Cash used for acquisitions and new construction | (16.7 | ) | (6.0 | ) | |||
Repurchase of common stock | (4.5 | ) | — | ||||
Cash borrowed from (paid against) the credit facility | 14.2 | (15.1 | ) | ||||
Other investing and financing activities | 0.1 | (0.4 | ) | ||||
Cash at end of period | $ | 1.0 | $ | 1.5 | |||
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ROLLING FOUR QUARTER OUTLOOK RAISED
The Rolling Four Quarter Outlook “(Outlook)” reflects management’s opinion on the performance of the portfolio of businesses for the rolling four quarter period ending June 30, 2014, and the performance of the trusts as well as our view of the financial markets. This outlook does not reflect dilution from conversion or the possible refinancing options the Company may pursue related to our existing convertible subordinated debentures.
ROLLING FOUR QUARTER OUTLOOK – Period Ending June 30, 2014
Range (in millions, except per share amounts) | |
Revenues | $233 – $235 |
Consolidated EBITDA | $60 – $62 |
Adjusted Consolidated EBITDA | $63 – $65 |
Net Income | $19 – $21 |
Adjusted Net Income | $21 – $23 |
Basic GAAP Earnings Per Share | $1.07 – $1.09 |
Basic Adjusted Earnings Per Share | $1.18 – $1.20 |
Cash Flow from Operations | $36 – $38 |
Free Cash Flow | $32– $34 |
Factors affecting our analysis include, among others, acquisitions, 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, Strategic Acquisition Model and Withdrawable Trust Income. Revenues, Consolidated EBITDA, Adjusted Consolidated EBITDA, Net Income, Adjusted Net Income, GAAP Earnings Per Share, Adjusted Earnings Per Share and Free Cash Flow for the four quarter period ending June 30, 2014 are expected to improve relative to the same period in the previous period for the following reasons:
• | Increases in Acquired Funeral Revenue and Acquired Funeral Field EBITDA; |
• | Modest increases in Same Store Funeral Revenue and Same Store Funeral Field EBITDA; |
• | Increases in Cemetery Revenue and Cemetery Field EBITDA; |
• | Increases in Financial Revenue and Financial EBITDA from trust funds; and |
• | Reduced interest expense as a result of the refinancing in September 2012 and the recent reduction in interest rate terms in conjunction with the third amendment to our credit facility, effective April 24, 2013. |
We have not included in our Rolling Four Quarter Outlook a fully diluted EPS calculation using the 4.4 million shares that would be outstanding in the case where all $89.8 million of the TIDES security converts into common shares at $20.44 per share of Carriage common stock. This security, which is callable by us, can be refinanced with a menu of capital structure options on terms consistent with the current equity and debt market environment in general and the outlook for Carriage in particular.
4
CONFERENCE CALL AND INVESTOR RELATIONS CONTACT
Carriage Services has scheduled a conference call for tomorrow, August 9, 2013 at 9:30 a.m. CDT. To participate in the call, please dial 866-516-3867 (ID-11076879) and ask for the Carriage Services conference call. A replay of the conference call will be available through August 14, 2013 and may be accessed by dialing 855-859-2056 (ID-11076879). The conference call will also be available at www.carriageservices.com. For any investor relations questions, please contact Bill Heiligbrodt at 713-332-8553.
TRUST FUND PERFORMANCE
For the six months ended June 30, 2013, Carriage’s discretionary trust funds gained 5.2% compared to a gain of 13.8% for the S&P 500 and a 1.5% gain for the Barclay’s U.S. Corporate High Yield Index. The current yield on Carriage’s discretionary fixed income portfolio is 8.6% and the estimated annual income for the entire discretionary portfolio is approximately $11.8 million.
The high amount of recurring current income combined with the realized net income in our discretionary trust portfolio will continue to benefit Carriage through the increased value of preneed funeral and cemetery contracts at maturity. Carriage will also benefit from the recurring income from our cemetery perpetual care accounts which are recognized as GAAP revenue and earnings in the current period.
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 | Barclay’s U.S. Corporate High Yield Index | 50/50 index Benchmark(2) | ||||||||
6 months ended 6/30/13 | 5.2 | % | 5.0 | % | 13.8 | % | 1.5 | % | 7.6 | % | ||
1 year ended 12/31/12 | 20.3 | % | 17.1 | % | 16.0 | % | 15.8 | % | 15.9 | % | ||
2 years ended 12/31/12 | 16.8 | % | 14.9 | % | 18.4 | % | 21.6 | % | 20.0 | % | ||
3 years ended 12/31/12 | 41.0 | % | 35.8 | % | 36.3 | % | 40.0 | % | 38.1 | % | ||
4 years ended 12/31/12 | 119.4 | % | 99.8 | % | 72.3 | % | 121.4 | % | 96.9 | % | ||
(1) Investment performance includes realized income and unrealized appreciation (depreciation).
(2) | The 50/50 Benchmark is 50% weighted to the S&P 500 Stock Index and 50% weighted to the Barclay’s U.S. Corporate High Yield Index. |
Asset Allocation as of June 30, 2013 (in thousands) | ||||||||||||||
Discretionary Trust Funds | Total Trust Funds | |||||||||||||
Asset Class | MV | % | MV | % | ||||||||||
Cash | $ | 22,360 | 12 | % | $ | 37,586 | 16 | % | ||||||
Equities | 22,038 | 12 | % | 38,391 | 17 | % | ||||||||
Fixed Income | 139,739 | 75 | % | 154,750 | 66 | % | ||||||||
Other/Insurance | 2,513 | 1 | % | 2,702 | 1 | % | ||||||||
Total Portfolios | $ | 186,650 | 100 | % | $ | 233,429 | 100 | % | ||||||
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CARRIAGE SERVICES, INC. | |||||||||||||||||
OPERATING AND FINANCIAL METRICS TREND REPORT | |||||||||||||||||
FROM CONTINUING OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS) | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2012 | 2013 | % Change | 2012 | 2013 | % Change | ||||||||||||
Same Store Contracts | |||||||||||||||||
Atneed Contracts | 4,266 | 4,394 | 3.0 | % | 8,936 | 9,354 | 4.7 | % | |||||||||
Preneed Contracts | 1,140 | 1,177 | 3.2 | % | 2,390 | 2,549 | 6.7 | % | |||||||||
Total Same Store Funeral Contracts | 5,406 | 5,571 | 3.1 | % | 11,326 | 11,903 | 5.1 | % | |||||||||
Acquisition Contracts | |||||||||||||||||
Atneed Contracts | 1,115 | 1,452 | 30.2 | % | 2,341 | 3,097 | 32.3 | % | |||||||||
Preneed Contracts | 202 | 274 | 35.6 | % | 390 | 604 | 54.9 | % | |||||||||
Total Acquisition Funeral Contracts | 1,317 | 1,726 | 31.1 | % | 2,731 | 3,701 | 35.5 | % | |||||||||
Total Funeral Contracts | 6,723 | 7,297 | 8.5 | % | 14,057 | 15,604 | 11.0 | % | |||||||||
Funeral Operating Revenue | |||||||||||||||||
Same Store Revenue | $ | 28,867 | $ | 29,369 | 1.7 | % | $ | 60,383 | $ | 62,540 | 3.6 | % | |||||
Acquisition Revenue | 5,930 | 8,694 | 46.6 | % | 12,324 | 18,448 | 49.7 | % | |||||||||
Total Funeral Operating Revenue | $ | 34,797 | $ | 38,063 | 9.4 | % | $ | 72,707 | $ | 80,988 | 11.4 | % | |||||
Cemetery Operating Revenue | |||||||||||||||||
Same Store Revenue | $ | 9,978 | $ | 10,826 | 8.5 | % | $ | 18,948 | $ | 20,516 | 8.3 | % | |||||
Acquisition Revenue | — | 74 | — | 143 | |||||||||||||
Total Cemetery Operating Revenue | $ | 9,978 | $ | 10,900 | 9.2 | % | $ | 18,948 | $ | 20,659 | 9.0 | % | |||||
Financial Revenue | |||||||||||||||||
Preneed Funeral Commission Income | $ | 450 | $ | 481 | 6.9 | % | $ | 901 | $ | 989 | 9.8 | % | |||||
Preneed Funeral Trust Earnings | 1,364 | 2,235 | 63.9 | % | 3,037 | 3,960 | 30.4 | % | |||||||||
Cemetery Trust Earnings | 1,626 | 2,087 | 28.4 | % | 2,946 | 4,281 | 45.3 | % | |||||||||
Preneed Cemetery Finance Charges | 462 | 388 | -16.0 | % | 820 | 698 | -14.9 | % | |||||||||
Total Financial Revenue | $ | 3,902 | $ | 5,191 | 33.0 | % | $ | 7,704 | $ | 9,928 | 28.9 | % | |||||
Total Revenue | $ | 48,677 | $ | 54,154 | 11.3 | % | $ | 99,359 | $ | 111,575 | 12.3 | % | |||||
Field EBITDA | |||||||||||||||||
Same Store Funeral Field EBITDA | $ | 10,322 | $ | 11,276 | 9.2 | % | $ | 23,154 | $ | 24,825 | 7.2 | % | |||||
Same Store Funeral Field EBITDA Margin | 35.8 | % | 38.4 | % | 260 bp | 38.3 | % | 39.7 | % | 140 bp | |||||||
Acquisition Funeral Field EBITDA | 1,776 | 2,549 | 43.5 | % | 4,246 | 5,914 | 39.3 | % | |||||||||
Acquisition Funeral Field EBITDA Margin | 29.9 | % | 29.3 | % | -60 bp | 34.5 | % | 32.1 | % | -240 bp | |||||||
Total Funeral Field EBITDA | $ | 12,098 | $ | 13,825 | 14.3 | % | $ | 27,400 | $ | 30,739 | 12.2 | % | |||||
Total Funeral Field EBITDA Margin | 34.8 | % | 36.3 | % | 150 bp | 37.7 | % | 38.0 | % | 30 bp | |||||||
Same Store Cemetery Field EBITDA | $ | 2,705 | $ | 3,328 | 23.0 | % | $ | 4,879 | $ | 6,347 | 30.1 | % | |||||
Same Store Cemetery Field EBITDA Margin | 27.1 | % | 30.7 | % | 360 bp | 25.7 | % | 30.9 | % | 520 bp | |||||||
Acquisition Cemetery Field EBITDA | (9 | ) | (19 | ) | 111.1 | % | (9 | ) | (45 | ) | 400.0 | % | |||||
Acquisition Cemetery Field EBITDA Margin | — | -25.7 | % | — | -31.5 | % | |||||||||||
Total Cemetery Field EBITDA | $ | 2,696 | $ | 3,309 | 22.7 | % | $ | 4,870 | $ | 6,302 | 29.4 | % | |||||
Total Cemetery Field EBITDA Margin | 27.0 | % | 30.4 | % | 340 bp | 25.7 | % | 30.5 | % | 480 bp | |||||||
Funeral Financial EBITDA | $ | 1,465 | $ | 2,383 | 62.7 | % | $ | 3,238 | $ | 4,203 | 29.8 | % | |||||
Cemetery Financial EBITDA | 2,088 | 2,429 | 16.3 | % | 3,766 | 4,884 | 29.7 | % | |||||||||
Total Financial EBITDA | $ | 3,553 | $ | 4,812 | 35.4 | % | $ | 7,004 | $ | 9,087 | 29.7 | % | |||||
Total Financial EBITDA Margin | 91.1 | % | 92.7 | % | 160 bp | 90.9 | % | 91.5 | % | 60 bp | |||||||
Total Field EBITDA | $ | 18,347 | $ | 21,946 | 19.6 | % | $ | 39,274 | $ | 46,128 | 17.5 | % | |||||
Total Field EBITDA Margin | 37.7 | % | 40.5 | % | 280 bp | 39.5 | % | 41.3 | % | 180 bp | |||||||
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OPERATING AND FINANCIAL METRICS TREND REPORT | |||||||||||||||||
FROM CONTINUING OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS) | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2012 | 2013 | % Change | 2012 | 2013 | % Change | ||||||||||||
Overhead | |||||||||||||||||
Total Variable Overhead | $ | 1,410 | $ | 2,373 | 68.3 | % | $ | 3,600 | $ | 4,402 | 22.3 | % | |||||
Total Regional Fixed Overhead | 606 | 882 | 45.5 | % | 1,232 | 1,848 | 50.0 | % | |||||||||
Total Corporate Fixed Overhead | 4,136 | 5,156 | 24.7 | % | 8,493 | 10,554 | 24.3 | % | |||||||||
Total Overhead | $ | 6,152 | $ | 8,411 | 36.7 | % | $ | 13,325 | $ | 16,804 | 26.1 | % | |||||
Overhead as a percent of sales | 12.6 | % | 15.5 | % | 290 bp | 13.4 | % | 15.1 | % | 170 bp | |||||||
Consolidated EBITDA | $ | 12,195 | $ | 13,535 | 11.0 | % | $ | 25,949 | $ | 29,324 | 13.0 | % | |||||
Consolidated EBITDA Margin | 25.1 | % | 25.0 | % | -10 bp | 26.1 | % | 26.3 | % | 20 bp | |||||||
Other Expenses and Interest | |||||||||||||||||
Property Depreciation & Amortization | $ | 2,592 | $ | 3,078 | 18.8 | % | $ | 4,991 | $ | 5,903 | 18.3 | % | |||||
Non Cash Stock Compensation | 780 | 978 | 25.4 | % | 1,182 | 1,624 | 37.4 | % | |||||||||
Interest Expense, Net | 4,518 | 3,664 | -18.9 | % | 9,070 | 6,259 | -31.0 | % | |||||||||
Pretax Income | $ | 4,305 | $ | 5,815 | 35.1 | % | $ | 10,706 | $ | 15,538 | 45.1 | % | |||||
Tax Provision | 1,845 | 2,210 | 4,326 | 6,501 | |||||||||||||
GAAP Net Income | $ | 2,460 | $ | 3,605 | 46.5 | % | $ | 6,380 | $ | 9,037 | 41.6 | % | |||||
Special Items, Net of Tax | |||||||||||||||||
Withdrawable Trust Income | $ | 51 | $ | 141 | $ | 509 | $ | 469 | |||||||||
Acquisition Expenses | 157 | 102 | 406 | 108 | |||||||||||||
Severance Costs | 5 | 325 | 324 | 451 | |||||||||||||
Costs Related to Credit Facility | — | 248 | — | 248 | |||||||||||||
Litigation Settlements and Related Costs | 40 | — | 129 | — | |||||||||||||
Consulting Fees | — | 168 | — | 168 | |||||||||||||
Other Special Items | — | — | — | 54 | |||||||||||||
Prior Period Amortization Adjustment for TIDES | — | — | — | (538 | ) | ||||||||||||
Tax Adjustment from Prior Period | — | — | — | 598 | |||||||||||||
Sum of Special Items, net of tax | $ | 253 | $ | 984 | 288.9 | % | $ | 1,368 | $ | 1,558 | 13.9 | % | |||||
Adjusted Net Income | $ | 2,713 | $ | 4,589 | 69.1 | % | $ | 7,748 | $ | 10,595 | 36.7 | % | |||||
Adjusted Net Profit Margin | 5.6 | % | 8.5 | % | 290 bp | 7.8 | % | 9.5 | % | 170 bp | |||||||
Adjusted Basic Earnings Per Share | $ | 0.15 | $ | 0.25 | 66.7 | % | $ | 0.43 | $ | 0.58 | 34.9 | % | |||||
Adjusted Diluted Earnings Per Share | $ | 0.15 | $ | 0.25 | 66.7 | % | $ | 0.42 | $ | 0.56 | 33.3 | % | |||||
GAAP Basic Earnings Per Share | $ | 0.14 | $ | 0.20 | 42.9 | % | $ | 0.35 | $ | 0.50 | 42.9 | % | |||||
GAAP Diluted Earnings Per Share | $ | 0.14 | $ | 0.20 | 42.9 | % | $ | 0.35 | $ | 0.46 | 31.4 | % | |||||
Tax rate | 42.9 | % | 38.0 | % | -490 bp | 40.4 | % | 41.8 | % | 140 bp | |||||||
Reconciliation to Adjusted Consolidated EBITDA | |||||||||||||||||
Consolidated EBITDA | $ | 12,195 | $ | 13,535 | 11.0 | % | $ | 25,949 | $ | 29,324 | 13.0 | % | |||||
Withdrawable Trust Income | 77 | 213 | 771 | 710 | |||||||||||||
Acquisition Expenses | 238 | 155 | 615 | 163 | |||||||||||||
Severance Costs | 8 | 493 | 491 | 684 | |||||||||||||
Litigation Settlements and Related Costs | 60 | — | 195 | — | |||||||||||||
Consulting Fees | — | 255 | — | 255 | |||||||||||||
Other Special Items | — | — | — | 83 | |||||||||||||
Adjusted Consolidated EBITDA | $ | 12,578 | $ | 14,651 | 16.5 | % | $ | 28,021 | $ | 31,219 | 11.4 | % | |||||
Adjusted Consolidated EBITDA Margin | 25.8 | % | 27.1 | % | 130 bp | 28.2 | % | 28.0 | % | -20 bp | |||||||
7
CARRIAGE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, 2012 | June 30, 2013 | ||||||||
(UNAUDITED) | |||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 1,698 | $ | 1,518 | |||||
Accounts receivable, net | 17,812 | 16,869 | |||||||
Assets held for sale | 1,466 | 20,108 | |||||||
Inventories | 5,133 | 4,736 | |||||||
Prepaid expenses | 5,107 | 3,518 | |||||||
Other current assets | 1,923 | 2,171 | |||||||
Total current assets | $ | 33,139 | $ | 48,920 | |||||
Preneed cemetery trust investments | 70,960 | 66,749 | |||||||
Preneed funeral trust investments | 82,896 | 93,170 | |||||||
Preneed receivables, net | 23,222 | 24,923 | |||||||
Receivables from preneed trusts | 25,871 | 13,557 | |||||||
Property, plant and equipment, net | 152,433 | 154,415 | |||||||
Cemetery property | 75,156 | 73,404 | |||||||
Goodwill | 218,442 | 217,244 | |||||||
Deferred charges and other non-current assets | 9,424 | 8,243 | |||||||
Cemetery perpetual care trust investments | 46,542 | 39,485 | |||||||
Total assets | $ | 738,085 | $ | 740,110 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Current portion of senior long-term debt and capital lease obligations | $ | 11,218 | $ | 12,139 | |||||
Accounts payable | 5,243 | 5,064 | |||||||
Other liabilities | 13,067 | 15,782 | |||||||
Accrued liabilities | 12,278 | 12,199 | |||||||
Liabilities associated with assets held for sale | 369 | 20,158 | |||||||
Total current liabilities | $ | 42,175 | $ | 65,342 | |||||
Long-term debt, net of current portion | 118,841 | 112,621 | |||||||
Revolving credit facility | 44,700 | 34,600 | |||||||
Convertible junior subordinated debentures due in 2029 to an affiliate | 89,770 | 89,770 | |||||||
Obligations under capital leases, net of current portion | 4,013 | 3,900 | |||||||
Deferred preneed cemetery revenue | 63,998 | 56,371 | |||||||
Deferred preneed funeral revenue | 39,794 | 32,838 | |||||||
Deferred preneed cemetery receipts held in trust | 70,960 | 66,749 | |||||||
Deferred preneed funeral receipts held in trust | 82,896 | 93,170 | |||||||
Care trusts’ corpus | 45,920 | 39,133 | |||||||
Total liabilities | $ | 603,067 | $ | 594,494 | |||||
Commitments and contingencies | |||||||||
Redeemable preferred stock | $ | 200 | $ | — | |||||
Stockholders’ equity: | |||||||||
Common stock, $.01 par value; 80,000,000 shares authorized; 22,078,000 and 22,147,000 shares issued at December 31, 2012 and June 30, 2013, respectively | $ | 221 | $ | 221 | |||||
Additional paid-in capital | 202,462 | 203,861 | |||||||
Accumulated deficit | (52,598 | ) | (43,199 | ) | |||||
Treasury stock, at cost; 3,922,000 shares at December 31, 2012 and June 30, 2013 | (15,267 | ) | (15,267 | ) | |||||
Total stockholders’ equity | $ | 134,818 | $ | 145,616 | |||||
Total liabilities and stockholders’ equity | $ | 738,085 | $ | 740,110 | |||||
8
CARRIAGE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except share and per share data)
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||
Revenues | $ | 48,677 | $ | 54,154 | $ | 99,359 | $ | 111,575 | |||||||
Field costs and expenses | 34,746 | 37,226 | 68,978 | 75,705 | |||||||||||
Gross profit | $ | 13,931 | $ | 16,928 | $ | 30,381 | $ | 35,870 | |||||||
General and administrative expenses | 5,108 | 7,449 | 10,605 | 14,073 | |||||||||||
Operating income | $ | 8,823 | $ | 9,479 | $ | 19,776 | $ | 21,797 | |||||||
Interest expense, net | (4,518 | ) | (3,664 | ) | (9,070 | ) | (6,259 | ) | |||||||
Income from continuing operations before income taxes | $ | 4,305 | $ | 5,815 | $ | 10,706 | $ | 15,538 | |||||||
Provision for income taxes | (1,845 | ) | (2,210 | ) | (4,326 | ) | (6,501 | ) | |||||||
Net income from continuing operations | $ | 2,460 | $ | 3,605 | $ | 6,380 | $ | 9,037 | |||||||
Net income from discontinued operations, net of tax | 203 | 539 | 742 | 366 | |||||||||||
Net income | 2,663 | 4,144 | 7,122 | 9,403 | |||||||||||
Preferred stock dividend | 3 | — | 7 | 4 | |||||||||||
Net income available to common stockholders | $ | 2,660 | $ | 4,144 | $ | 7,115 | $ | 9,399 | |||||||
Basic earnings per common share: | |||||||||||||||
Continuing operations | $ | 0.14 | $ | 0.20 | $ | 0.35 | $ | 0.50 | |||||||
Discontinued operations | 0.01 | 0.03 | 0.04 | 0.02 | |||||||||||
Basic earnings per common share | $ | 0.15 | $ | 0.23 | $ | 0.39 | $ | 0.52 | |||||||
Diluted earnings per common share: | |||||||||||||||
Continuing operations | $ | 0.14 | $ | 0.20 | $ | 0.35 | $ | 0.46 | |||||||
Discontinued operations | 0.01 | 0.03 | 0.04 | 0.02 | |||||||||||
Diluted earnings per common share | $ | 0.15 | $ | 0.23 | $ | 0.39 | $ | 0.48 | |||||||
Dividends declared per common share | $ | 0.025 | $ | 0.025 | $ | 0.050 | $ | 0.050 | |||||||
Weighted average number of common and common equivalent shares outstanding: | |||||||||||||||
Basic | 18,077 | 18,201 | 18,171 | 18,170 | |||||||||||
Diluted | 18,153 | 18,365 | 18,237 | 22,743 | |||||||||||
The GAAP Diluted EPS and Adjusted Diluted EPS for the six months ended June 30, 2013 includes 4.4 million shares that
would be issued upon conversion of our convertible subordinated debentures (TIDES) as a result of the if-converted method
prescribed by accounting standards.
9
CARRIAGE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
For the Six Months Ended June 30, | |||||||
2012 | 2013 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 7,122 | $ | 9,403 | |||
Adjustments to reconcile net income to net cash provided (used) by operating activities: | |||||||
Gain on sale of assets | (428 | ) | (146 | ) | |||
Impairment of goodwill | — | 100 | |||||
Depreciation and amortization | 5,050 | 5,953 | |||||
Amortization and write-off of deferred financing costs | 348 | (36 | ) | ||||
Provision for losses on accounts receivable | 1,102 | 782 | |||||
Stock-based compensation expense | 1,182 | 1,624 | |||||
Deferred income taxes | 2,266 | 1,894 | |||||
Other | 38 | 208 | |||||
Changes in operating assets and liabilities that provided (required) cash: | |||||||
Accounts and preneed receivables | (1,414 | ) | (2,070 | ) | |||
Inventories and other current assets | 740 | 1,211 | |||||
Deferred charges and other | 75 | 24 | |||||
Preneed funeral and cemetery trust investments | (146 | ) | (1,363 | ) | |||
Accounts payable and accrued liabilities | (2,552 | ) | 2,285 | ||||
Deferred preneed funeral and cemetery revenue | (177 | ) | (9,755 | ) | |||
Deferred preneed funeral and cemetery receipts held in trust | 168 | 13,879 | |||||
Net cash provided by operating activities | 13,374 | 23,993 | |||||
Cash flows from investing activities: | |||||||
Acquisitions and new construction | (16,729 | ) | (6,051 | ) | |||
Capital expenditures | (5,651 | ) | (4,468 | ) | |||
Proceeds from the sale of businesses | — | 2,736 | |||||
Net cash used in investing activities | (22,380 | ) | (7,783 | ) | |||
Cash flows from financing activities: | |||||||
Net borrowings from (payments against) the bank credit facility | 14,200 | (15,100 | ) | ||||
Payments on other long-term debt and obligations under capital leases | (342 | ) | (307 | ) | |||
Proceeds from the exercise of stock options and employee stock purchase plan | 440 | 492 | |||||
Stock option benefit | 24 | — | |||||
Dividends on common stock and redeemable preferred stock | (910 | ) | (910 | ) | |||
Payment of loan origination costs | — | (565 | ) | ||||
Purchase of treasury stock | (4,531 | ) | — | ||||
Net cash provided by (used in) financing activities | 8,881 | (16,390 | ) | ||||
Net decrease in cash and cash equivalents | (125 | ) | (180 | ) | |||
Cash and cash equivalents at beginning of period | 1,137 | 1,698 | |||||
Cash and cash equivalents at end of period | $ | 1,012 | $ | 1,518 | |||
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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 “Adjusted Net Income”, “Adjusted Basic Earnings Per Share”, “Adjusted Diluted Earnings Per Share”, “Consolidated EBITDA”, “Adjusted Consolidated EBITDA”, “Free Cash Flow”, “Funeral, Cemetery and Financial EBITDA”, “Total Field EBITDA” and “Special Items” 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:
• | Adjusted Net Income is defined as net income from continuing operations plus adjustments for special items and other non-recurring expenses or credits. |
• | Consolidated EBITDA is defined as net income from continuing operations before income taxes, interest expenses, non-cash stock compensation, depreciation and amortization, and interest income and other, net. |
• | Adjusted Consolidated EBITDA as Consolidated EBITDA plus adjustments for special items and non-recurring expenses or credits. |
• | Free Cash Flow as net cash provided by operations less cash for maintenance capital expenditures. |
• | Funeral Field EBITDA is defined as Funeral Gross Profit less depreciation and amortization, regional and unallocated overhead expenses and net financial income. |
• | Cemetery Field EBITDA is defined as Cemetery Gross Profit less depreciation and amortization, regional and unallocated overhead expenses and net financial income. |
• | Financial EBITDA is defined as Financial Revenue less Financial expenses. |
• | Total Field EBITDA is defined as Gross Profit less depreciation and amortization, regional and unallocated overhead expenses. |
• | Special Items is defined as charges or credits that are non-GAAP yet can be non-recurring such as withdrawable trust income, acquisition expenses, litigation settlements, severance costs, discrete tax items and other non-recurring amounts. |
• | Adjusted Basic Earnings Per Share is defined as adjusted net income divided by basic shares outstanding. |
• | Adjusted Diluted Earnings Per Share is defined as Adjusted Net Income divided by diluted shares outstanding after factoring in the effect of any stock options or the effect of any dilution from convertible debt. |
Certain state regulations allow the withdrawal of financial income from preneed cemetery merchandise and services trust funds when realized in the trust. Under current generally accepted accounting principles, trust income is only recognized in the Company’s financial statements at a later time when the related merchandise and services sold on the preneed contract is delivered at the time of death. Carriage has provided financial income from the trusts, termed “Withdrawable Trust Income” and reported on a Non-GAAP proforma basis within Special Items in the accompanying Operating and Financial Metrics Trend Report (a Non-GAAP Unaudited Income Statement), to reflect the current cash results. Management believes that the Withdrawable Trust Income provides useful information to investors because it presents income and cash flow when earned by the trusts.
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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 from continuing operations to Adjusted Net Income for the three and six months ended June 30, 2012 and 2013 (thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||
Net Income from continuing operations | $ | 2,460 | $ | 3,605 | $ | 6,380 | $ | 9,037 | |||||||
Special items, net of tax | |||||||||||||||
Withdrawable Trust Income | 51 | 141 | 509 | 469 | |||||||||||
Acquisition Expenses | 157 | 102 | 406 | 108 | |||||||||||
Severance Costs | 5 | 325 | 324 | 451 | |||||||||||
Costs Related to Credit Facility | — | 248 | — | 248 | |||||||||||
Litigation Settlements and Related Costs | 40 | — | 129 | — | |||||||||||
Consulting Fees | — | 168 | — | 168 | |||||||||||
Other Special Items | — | — | — | 54 | |||||||||||
Prior Period Amortization Adjustment for TIDES | — | — | — | (538 | ) | ||||||||||
Tax Adjustment from Prior Period | — | — | — | 598 | |||||||||||
Total Special items affecting net income | $ | 253 | $ | 984 | $ | 1,368 | $ | 1,558 | |||||||
Adjusted Net Income | $ | 2,713 | $ | 4,589 | $ | 7,748 | $ | 10,595 | |||||||
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Reconciliation of Net Income from continuing operations to Consolidated EBITDA and Adjusted Consolidated EBITDA for the three and six months ended June 30, 2012 and 2013 (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||
Net income from continuing operations | $ | 2,460 | $ | 3,605 | $ | 6,380 | $ | 9,037 | |||||||
Provision for income taxes | 1,845 | 2,210 | 4,326 | 6,501 | |||||||||||
Pre-tax earnings from continuing operations | $ | 4,305 | $ | 5,815 | $ | 10,706 | $ | 15,538 | |||||||
Interest expense, net | 4,518 | 3,664 | 9,070 | 6,259 | |||||||||||
Non-cash stock compensation | 780 | 978 | 1,182 | 1,624 | |||||||||||
Depreciation & amortization | 2,592 | 3,078 | 4,991 | 5,903 | |||||||||||
Consolidated EBITDA | $ | 12,195 | $ | 13,535 | $ | 25,949 | $ | 29,324 | |||||||
Adjusted For: | |||||||||||||||
Withdrawable Trust Income | $ | 77 | $ | 213 | $ | 771 | $ | 710 | |||||||
Acquisition Expenses | 238 | 155 | 615 | 163 | |||||||||||
Severance Costs | 8 | 493 | 491 | 684 | |||||||||||
Litigation Settlement and Related Costs | 60 | — | 195 | — | |||||||||||
Consulting Fees | — | 255 | — | 255 | |||||||||||
Other Special Items | — | — | — | 83 | |||||||||||
Adjusted Consolidated EBITDA | $ | 12,578 | $ | 14,651 | $ | 28,021 | $ | 31,219 | |||||||
Revenue | $ | 48,677 | $ | 54,154 | $ | 99,359 | $ | 111,575 | |||||||
Adjusted Consolidated EBITDA Margin | 25.8 | % | 27.1 | % | 28.2 | % | 28.0 | % | |||||||
13
Reconciliation of funeral and cemetery income before income taxes to Field EBITDA for the three and six months ended June 30, 2012 and 2013 (in thousands):
Funeral Field EBITDA | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||
Gross Profit (GAAP) | $ | 10,567 | $ | 12,822 | $ | 24,434 | $ | 27,692 | |||||||
Depreciation & amortization | 1,472 | 1,623 | 2,909 | 3,236 | |||||||||||
Regional & unallocated costs | 1,524 | 1,763 | 3,295 | 4,014 | |||||||||||
Net financial income | (1,465 | ) | (2,383 | ) | (3,238 | ) | (4,203 | ) | |||||||
Funeral Field EBITDA | $ | 12,098 | $ | 13,825 | $ | 27,400 | $ | 30,739 | |||||||
Funeral Field Operating Revenue | $ | 34,797 | $ | 38,063 | $ | 72,707 | $ | 80,988 | |||||||
Funeral Field EBITDA Margin | 34.8 | % | 36.3 | % | 37.7 | % | 38.0 | % | |||||||
Cemetery Field EBITDA | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||
Gross Profit (GAAP) | $ | 3,364 | $ | 4,106 | $ | 5,947 | $ | 8,178 | |||||||
Depreciation & amortization | 864 | 1,083 | 1,571 | 1,949 | |||||||||||
Regional & unallocated costs | 556 | 549 | 1,118 | 1,059 | |||||||||||
Net financial income | (2,088 | ) | (2,429 | ) | (3,766 | ) | (4,884 | ) | |||||||
Cemetery Field EBITDA | $ | 2,696 | $ | 3,309 | $ | 4,870 | $ | 6,302 | |||||||
Cemetery Field Operating Revenue | $ | 9,978 | $ | 10,900 | $ | 18,948 | $ | 20,659 | |||||||
Cemetery Field EBITDA Margin | 27.0 | % | 30.4 | % | 25.7 | % | 30.5 | % | |||||||
Reconciliation of cash provided by operating activities to Free Cash Flow from operations for the three and six months ended June 30, 2012 and 2013 (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||
Cash provided by operating activities | $ | 9,851 | $ | 13,008 | $ | 13,374 | $ | 23,993 | |||||||
Less maintenance capital expenditures | (1,331 | ) | (1,210 | ) | (2,292 | ) | (2,996 | ) | |||||||
Free Cash Flow from operating activities | $ | 8,520 | $ | 11,798 | $ | 11,082 | $ | 20,997 | |||||||
14
Reconciliation of GAAP basic earnings per share to Adjusted basic earnings per share for the three and six months ended June 30, 2012 and 2013:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||
GAAP basic earnings per share from continuing operations | $ | 0.14 | $ | 0.20 | $ | 0.35 | $ | 0.50 | |||||||
Special items affecting net income | 0.01 | 0.05 | 0.08 | 0.08 | |||||||||||
Adjusted basic earnings per share | $ | 0.15 | $ | 0.25 | $ | 0.43 | $ | 0.58 | |||||||
Reconciliation of GAAP diluted earnings per share to Adjusted diluted earnings per share for the three and six months ended June 30, 2012 and 2013:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||
GAAP diluted earnings per share from continuing operations | $ | 0.14 | $ | 0.20 | $ | 0.35 | $ | 0.46 | |||||||
Special items affecting net income | 0.01 | 0.05 | 0.07 | 0.07 | |||||||||||
Dilution effect of convertible junior subordinated debentures | - | - | - | 0.03 | |||||||||||
Adjusted diluted earnings per share | $ | 0.15 | $ | 0.25 | $ | 0.42 | $ | 0.56 | |||||||
Reconciliation of Net Income from continuing operations to Consolidated EBITDA and Adjusted Consolidated EBITDA for the estimated rolling four quarters ended June 30, 2014 (in thousands):
Rolling Four Quarter Outlook | ||||||
June 30, 2014E | ||||||
Net income from continuing operations | $ | 20,000 | ||||
Provision for income taxes | 12,100 | |||||
Pre-tax earnings from continuing operations | 32,100 | |||||
Net interest expense, including loan cost amortization | 13,200 | |||||
Depreciation & amortization, including stock compensation | 15,700 | |||||
Consolidated EBITDA | $ | 61,000 | ||||
Adjusted For: | ||||||
Special items | $ | 3,000 | ||||
Adjusted Consolidated EBITDA | $ | 64,000 | ||||
Reconciliation of Net Income from continuing operations to Adjusted Net Income for the estimated rolling four quarters ended June 30, 2014 (in thousands):
Rolling Four Quarter Outlook | |||||||
June 30, 2014E | |||||||
Net income from continuing operations | $ | 20,000 | |||||
Special items, net of tax | 1,980 | ||||||
Adjusted Net Income | $ | 21,980 | |||||
15
Reconciliation of GAAP basic earnings per share to Adjusted basic earnings per share for the estimated rolling four quarters ending June 30, 2014:
Rolling Four Quarter Outlook | |||||
June 30, 2014E | |||||
GAAP basic earnings per share from continuing operations | $ | 1.08 | |||
Special items affecting net income | 0.11 | ||||
Adjusted basic earnings per share | $ | 1.19 | |||
Reconciliation of Cash Flow from Operations to Free Cash Flow for the estimated rolling four quarters ending June 30, 2014 (in 000's):
Rolling Four Quarter Outlook | |||||||
June 30, 2014E | |||||||
Cash flow from operations | $ | 37,000 | |||||
Maintenance Capital Expenditures | (4,000 | ) | |||||
Free Cash Flow | $ | 33,000 | |||||
16
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 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”, “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 execution of our Standards Operating Model; |
• | changes in the number of deaths in our markets; |
• | changes in consumer preferences; |
• | ability to find and retain skilled personnel; |
• | the effects of competition; |
• | 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; |
• | our ability to generate preneed sales; |
• | 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 Annual Report on Form 10-K for the year ended December 31, 2012. 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, and other Carriage Services information and news releases, are available at www.carriageservices.com.
17