Delaware | 1-11961 | 76-0423828 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
¨ | 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)) |
CARRIAGE SERVICES, INC. | |||
Dated: August 5, 2014 | By: | /s/ L. William Heiligbrodt | |
L. William Heiligbrodt | |||
Executive Vice President and Secretary | |||
(Principal Financial Officer) |
Exhibit | Description | ||
99.1 | Press Release dated August 5, 2014. |
FOR IMMEDIATE RELEASE |
• | Total Revenue of $56.5 million, an increase of 5.0%; |
• | Non-GAAP Adjusted Consolidated EBITDA of $16.3 million, an increase of 11.7%; |
• | Non-GAAP Adjusted Consolidated EBITDA Margin up 180 basis points to 28.9%; |
• | Non-GAAP Diluted Earnings Per Share of $0.32, an increase of 28.0%; and |
• | Non-GAAP Adjusted Free Cash Flow of $13.2 million, an increase of 12.8%. |
• | Total Revenue of $112.2 million, an increase of 1.1%; |
• | Non-GAAP Adjusted Consolidated EBITDA of $31.4 million, an increase of 1.0%; |
• | Non-GAAP Adjusted Consolidated EBITDA Margin remained flat at 28.0%; |
• | Non-GAAP Diluted Earnings Per Share of $0.63, an increase of 12.5%; and |
• | Non-GAAP Adjusted Free Cash Flow of $15.5 million, a decrease of 21.7%. |
• | Garden of Memories Funeral Home and Cemetery, Metairie, LA; |
• | Schoen Funeral Home, New Orleans, LA; |
• | Greenwood Funeral Home, New Orleans, LA; |
• | Tharp-Sontheimer-Tharp Funeral Home, Metairie, LA; |
• | Everly Community Funeral Care, Falls Church, VA; and |
• | Everly-Wheatley Funeral Home, Alexandria, VA. |
• | Total Field Revenue increased 5.0% to $56.5 million; |
• | Total Field EBITDA increased 2.1% to $22.4 million; and |
• | Total Field EBITDA Margin decreased 110 basis points to 39.6%. |
• | Total Funeral Operating Revenue increased 5.5% to $39.8 million; |
• | Same Store Funeral Revenue decreased 1.5% with same store volume decreasing 1.1%; |
• | Acquisition Funeral Revenue increased 31.2% with acquisition volume increasing 25.0%; |
• | Total Funeral Field EBITDA Margin decreased 130 basis points to 35.2%; |
• | Total Cemetery Operating Revenue increased 7.5% to $11.7 million; |
• | Cemetery preneed property sale contracts increased 9.3% to 2,212; |
• | Preneed property revenue recognized increased 6.7% and At-need revenue increased 9.7%; |
• | Total Cemetery Field EBITDA Margin increased 120 basis points to 31.6%; |
• | Total Financial Revenue decreased 4.0% to $5.0 million; |
• | Funeral Financial Revenue decreased 12.2% to $2.4 million; |
• | Cemetery Financial Revenue increased 4.9% to $2.6 million; |
• | Total Financial EBITDA Margin increased 60 basis points to 93.3%. |
• | Total Field Revenue increased 1.1% to $112.2 million; |
• | Total Field EBITDA decreased 1.8% to $45.2 million; and |
• | Total Field EBITDA Margin decreased 120 basis points to 40.3%. |
• | Total Funeral Operating Revenue increased 1.2% to $81.3 million; |
• | Same Store Funeral Revenue decreased 4.2% with same store volume decreasing 3.7%; |
• | Acquisition Funeral Revenue increased 20.7% with acquisition volume increasing 14.7%; |
• | Total Funeral Field EBITDA Margin decreased 140 basis points to 36.7%; |
• | Total Cemetery Operating Revenue increased 4.0% to $21.5 million; |
• | Cemetery preneed property sale contracts increased 2.2% to 3,856; |
• | Preneed property revenue recognized increased 1.2% and At-need revenue increased 9.0%; |
• | Total Cemetery Field EBITDA Margin decreased 10 basis points to 30.4%; |
• | Total Financial Revenue decreased 5.4% to $9.4 million; |
• | Funeral Financial Revenue decreased 1.5% to $4.8 million; |
• | Cemetery Financial Revenue decreased 9.3% to $4.5 million; |
• | Total Financial EBITDA Margin increased 190 basis points to 93.5%. |
June 30, | |||||||
2013 | 2014 | ||||||
Cash flow provided by operations | $ | 22.8 | $ | 13.3 | |||
Adjustment for tax benefit from Good to Great stock awards | — | 4.8 | |||||
Cash used for maintenance capital expenditures | (3.0 | ) | (2.6 | ) | |||
Adjusted Free Cash Flow | $ | 19.8 | $ | 15.5 | |||
Cash at beginning of period | 1.7 | 1.4 | |||||
Acquisitions and land for new construction | (6.0 | ) | (54.9 | ) | |||
Proceeds from sale of businesses and other assets | 2.7 | 0.2 | |||||
Net (payments) borrowings on our revolving credit facility, term loan and long-term debt obligations | (15.4 | ) | 13.0 | ||||
Proceeds from issuance of convertible subordinated notes | — | 143.7 | |||||
Payment of debt issuance costs related to the convertible subordinated notes | — | (4.7 | ) | ||||
Redemption of convertible junior subordinated debentures | — | (89.7 | ) | ||||
Payments for performance-based stock awards | — | (16.2 | ) | ||||
Excess tax benefit of equity compensation, net of benefit from Good to Great stock awards | 1.2 | 0.3 | |||||
Payment of loan origination costs related to the credit facility | (0.6 | ) | (0.8 | ) | |||
Cash used for growth capital expenditures | (1.5 | ) | (7.1 | ) | |||
Dividends on common stock | (0.9 | ) | (0.9 | ) | |||
Other investing and financing activities | 0.5 | 0.9 | |||||
Cash at end of period | $ | 1.5 | $ | 0.7 |
Range (in millions, except per share amounts) | |
Revenues | $237 - $242 |
Adjusted Consolidated EBITDA | $65 - $68 |
Adjusted Net Income | $26 - $28 |
Adjusted Diluted Earnings Per Share | $1.42 - $1.48 |
• | Increases in Acquired Funeral Revenue and Acquired Funeral Field EBITDA; |
• | Increases in Acquired Cemetery Revenue and Acquired Cemetery Field EBITDA; |
• | Modest increases in Same Store Funeral Revenue and Same Store Funeral Field EBITDA; |
• | Increases in Same Store Cemetery Revenue and Same Store Cemetery Field EBITDA; |
• | Increases in Financial Revenue and Financial EBITDA from trust funds; and |
• | Reduced interest expense in conjunction with the fourth and fifth amendments to our bank credit facilities and the redemption of our $90 million 7% convertible junior subordinated debentures. |
Investment Performance | ||||||||||||
Investment Performance(1) | Index Performance | |||||||||||
Discretionary | Total Trust | S&P 500 Stock Index | High Yield Index | 80/20 index Benchmark(2) | ||||||||
6 months ended 6/30/14 | 10.0 | % | 9.0 | % | 7.1 | % | 5.5 | % | 5.8 | % | ||
1 year ended 12/31/13 | 14.2 | % | 13.7 | % | 32.4 | % | 7.5 | % | 12.4 | % | ||
2 years ended 12/31/13 | 37.5 | % | 33.2 | % | 53.0 | % | 24.4 | % | 30.2 | % | ||
3 years ended 12/31/13 | 33.5 | % | 30.7 | % | 56.2 | % | 30.6 | % | 35.7 | % | ||
4 years ended 12/31/13 | 61.1 | % | 54.4 | % | 79.4 | % | 50.4 | % | 56.2 | % | ||
5 years ended 12/31/13 | 150.6 | % | 127.1 | % | 125.8 | % | 137.9 | % | 135.5 | % |
(2) | The 80/20 Benchmark is 80% weighted to the High Yield Index and 20% weighted to the S&P 500 Stock Index. |
Asset Allocation as of June 30, 2014 (in thousands) | ||||||||||||||
Discretionary Trust Funds | Total Trust Funds | |||||||||||||
Asset Class | MV | % | MV | % | ||||||||||
Cash | $ | 5,909 | 3 | % | $ | 20,648 | 8 | % | ||||||
Equities | 50,710 | 26 | % | 68,478 | 28 | % | ||||||||
Fixed Income | 139,016 | 70 | % | 154,289 | 63 | % | ||||||||
Other/Insurance | 2,656 | 1 | % | 2,904 | 1 | % | ||||||||
Total Portfolios | $ | 198,291 | 100 | % | $ | 246,319 | 100 | % |
CARRIAGE SERVICES, INC. | |||||||||||||||||
OPERATING AND FINANCIAL TREND REPORT | |||||||||||||||||
FROM CONTINUING OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS) | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2013 | 2014 | % Change | 2013 | 2014 | % Change | ||||||||||||
Same Store Contracts | |||||||||||||||||
Atneed Contracts | 4,431 | 4,428 | -0.1 | % | 9,440 | 9,223 | -2.3 | % | |||||||||
Preneed Contracts | 1,193 | 1,136 | -4.8 | % | 2,585 | 2,353 | -9.0 | % | |||||||||
Total Same Store Funeral Contracts | 5,624 | 5,564 | -1.1 | % | 12,025 | 11,576 | -3.7 | % | |||||||||
Acquisition Contracts | |||||||||||||||||
Atneed Contracts | 1,377 | 1,712 | 24.3 | % | 2,934 | 3,371 | 14.9 | % | |||||||||
Preneed Contracts | 249 | 321 | 28.9 | % | 550 | 625 | 13.6 | % | |||||||||
Total Acquisition Funeral Contracts | 1,626 | 2,033 | 25.0 | % | 3,484 | 3,996 | 14.7 | % | |||||||||
Total Funeral Contracts | 7,250 | 7,597 | 4.8 | % | 15,509 | 15,572 | 0.4 | % | |||||||||
Funeral Operating Revenue | |||||||||||||||||
Same Store Revenue | $ | 29,612 | $ | 29,163 | -1.5 | % | $ | 63,103 | $ | 60,469 | -4.2 | % | |||||
Acquisition Revenue | 8,121 | 10,657 | 31.2 | % | 17,267 | 20,836 | 20.7 | % | |||||||||
Total Funeral Operating Revenue | $ | 37,733 | $ | 39,820 | 5.5 | % | $ | 80,370 | $ | 81,305 | 1.2 | % | |||||
Cemetery Operating Revenue | |||||||||||||||||
Same Store Revenue | $ | 10,827 | $ | 11,382 | 5.1 | % | $ | 20,518 | $ | 21,094 | 2.8 | % | |||||
Acquisition Revenue | 74 | 334 | 351.4 | % | 143 | 389 | 172.0 | % | |||||||||
Total Cemetery Operating Revenue | $ | 10,901 | $ | 11,716 | 7.5 | % | $ | 20,661 | $ | 21,483 | 4.0 | % | |||||
Financial Revenue | |||||||||||||||||
Preneed Funeral Commission Income | $ | 481 | $ | 563 | 17.0 | % | $ | 989 | $ | 1,127 | 14.0 | % | |||||
Preneed Funeral Trust Earnings | 2,222 | 1,809 | -18.6 | % | 3,936 | 3,725 | -5.4 | % | |||||||||
Cemetery Trust Earnings | 2,086 | 2,276 | 9.1 | % | 4,280 | 3,860 | -9.8 | % | |||||||||
Preneed Cemetery Finance Charges | 388 | 320 | -17.5 | % | 698 | 657 | -5.9 | % | |||||||||
Total Financial Revenue | $ | 5,177 | $ | 4,968 | -4.0 | % | $ | 9,903 | $ | 9,369 | -5.4 | % | |||||
Total Revenue | $ | 53,811 | $ | 56,504 | 5.0 | % | $ | 110,934 | $ | 112,157 | 1.1 | % | |||||
Field EBITDA | |||||||||||||||||
Same Store Funeral Field EBITDA | $ | 11,344 | $ | 10,388 | -8.4 | % | $ | 24,999 | $ | 22,471 | -10.1 | % | |||||
Same Store Funeral Field EBITDA Margin | 38.3 | % | 35.6 | % | -270 bp | 39.6 | % | 37.2 | % | -240 bp | |||||||
Acquisition Funeral Field EBITDA | 2,432 | 3,632 | 49.3 | % | 5,645 | 7,405 | 31.2 | % | |||||||||
Acquisition Funeral Field EBITDA Margin | 29.9 | % | 34.1 | % | 420 bp | 32.7 | % | 35.5 | % | 280 bp | |||||||
Total Funeral Field EBITDA | $ | 13,776 | $ | 14,020 | 1.8 | % | $ | 30,644 | $ | 29,876 | -2.5 | % | |||||
Total Funeral Field EBITDA Margin | 36.5 | % | 35.2 | % | -130 bp | 38.1 | % | 36.7 | % | -140 bp | |||||||
Same Store Cemetery Field EBITDA | $ | 3,329 | $ | 3,568 | 7.2 | % | $ | 6,349 | $ | 6,408 | 0.9 | % | |||||
Same Store Cemetery Field EBITDA Margin | 30.7 | % | 31.3 | % | 60 bp | 30.9 | % | 30.4 | % | -50 bp | |||||||
Acquisition Cemetery Field EBITDA | (19 | ) | 134 | 805.3 | % | (46 | ) | 125 | 371.7 | % | |||||||
Acquisition Cemetery Field EBITDA Margin | -25.7 | % | 40.1 | % | 6,580 bp | -32.2 | % | 32.1 | % | 6,430 bp | |||||||
Total Cemetery Field EBITDA | $ | 3,310 | $ | 3,702 | 11.8 | % | $ | 6,303 | $ | 6,533 | 3.6 | % | |||||
Total Cemetery Field EBITDA Margin | 30.4 | % | 31.6 | % | 120 bp | 30.5 | % | 30.4 | % | -10 bp | |||||||
Funeral Financial EBITDA | $ | 2,373 | $ | 2,079 | -12.4 | % | $ | 4,188 | $ | 4,305 | 2.8 | % | |||||
Cemetery Financial EBITDA | 2,428 | 2,556 | 5.3 | % | 4,884 | 4,454 | -8.8 | % | |||||||||
Total Financial EBITDA | $ | 4,801 | $ | 4,635 | -3.5 | % | $ | 9,072 | $ | 8,759 | -3.5 | % | |||||
Total Financial EBITDA Margin | 92.7 | % | 93.3 | % | 60 bp | 91.6 | % | 93.5 | % | 190 bp | |||||||
Total Field EBITDA | $ | 21,887 | $ | 22,357 | 2.1 | % | $ | 46,019 | $ | 45,168 | -1.8 | % | |||||
Total Field EBITDA Margin | 40.7 | % | 39.6 | % | -110 bp | 41.5 | % | 40.3 | % | -120 bp | |||||||
OPERATING AND FINANCIAL TREND REPORT | |||||||||||||||||
FROM CONTINUING OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS) | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2013 | 2014 | % Change | 2013 | 2014 | % Change | ||||||||||||
Overhead | |||||||||||||||||
Total Variable Overhead | $ | 2,373 | $ | 1,411 | -40.5 | % | $ | 4,402 | $ | 5,274 | 19.8 | % | |||||
Total Regional Fixed Overhead | 882 | 781 | -11.5 | % | 1,848 | 1,567 | -15.2 | % | |||||||||
Total Corporate Fixed Overhead | 5,156 | 5,085 | -1.4 | % | 10,556 | 10,659 | 1.0 | % | |||||||||
Total Overhead | $ | 8,411 | $ | 7,277 | -13.5 | % | $ | 16,806 | $ | 17,500 | 4.1 | % | |||||
Overhead as a percent of sales | 15.6 | % | 12.9 | % | -270 bp | 15.1 | % | 15.6 | % | 50 bp | |||||||
Consolidated EBITDA | $ | 13,476 | $ | 15,080 | 11.9 | % | $ | 29,213 | $ | 27,668 | -5.3 | % | |||||
Consolidated EBITDA Margin | 25.0 | % | 26.7 | % | 170 bp | 26.3 | % | 24.7 | % | -160 bp | |||||||
Other Expenses and Interest | |||||||||||||||||
Property Depreciation & Amortization | $ | 3,066 | $ | 3,029 | -1.2 | % | $ | 5,881 | $ | 5,785 | -1.6 | % | |||||
Non Cash Stock Compensation | 978 | 1,263 | 29.1 | % | 1,624 | 1,993 | 22.7 | % | |||||||||
Interest Expense | 3,693 | 2,691 | -27.1 | % | 7,121 | 5,536 | -22.3 | % | |||||||||
Accretion on Convertible Subordinated Notes | — | 694 | — | 865 | |||||||||||||
Loss on Early Extinguishment of Debt | — | 1,042 | — | 1,042 | |||||||||||||
Loss on Redemption of Convertible Junior Subordinated Notes | — | — | — | 3,779 | |||||||||||||
Other, Net | (29 | ) | (5 | ) | -82.8 | % | (862 | ) | (373 | ) | -56.7 | % | |||||
Pretax Income | $ | 5,768 | $ | 6,366 | 10.4 | % | $ | 15,449 | $ | 9,041 | -41.5 | % | |||||
Tax Provision | 2,192 | 2,483 | 6,469 | 3,526 | |||||||||||||
GAAP Net Income | $ | 3,576 | $ | 3,883 | 8.6 | % | $ | 8,980 | $ | 5,515 | -38.6 | % | |||||
Special Items, Net of tax | |||||||||||||||||
Withdrawable Trust Income | $ | 141 | $ | 366 | $ | 469 | $ | 515 | |||||||||
Acquisition and Divestiture Expenses | 102 | 168 | 107 | 659 | |||||||||||||
Severance Costs | 325 | 268 | 451 | 477 | |||||||||||||
Consulting Fees | 168 | 6 | 168 | 165 | |||||||||||||
Other Incentive Compensation | — | — | — | 660 | |||||||||||||
Accretion on Convertible Subordinated Notes | — | 458 | — | 571 | |||||||||||||
Costs Related to Credit Facility | 248 | 688 | 248 | 688 | |||||||||||||
Loss on Redemption of Convertible Junior Subordinated Notes | — | — | — | 2,493 | |||||||||||||
Gain on Asset Purchase | — | — | — | (746 | ) | ||||||||||||
Other Special Items | — | — | (484 | ) | 503 | ||||||||||||
Tax Adjustment from Prior Period | — | — | 598 | — | |||||||||||||
Sum of Special Items, Net of tax | $ | 984 | $ | 1,954 | 98.6 | % | $ | 1,557 | $ | 5,985 | 284.4 | % | |||||
Adjusted Net Income | $ | 4,560 | $ | 5,837 | 28.0 | % | $ | 10,537 | $ | 11,500 | 9.1 | % | |||||
Adjusted Net Profit Margin | 8.5 | % | 10.3 | % | 180 bp | 9.5 | % | 10.3 | % | 80 bp | |||||||
Adjusted Basic Earnings Per Share | $ | 0.26 | $ | 0.32 | 23.1 | % | $ | 0.59 | $ | 0.63 | 6.8 | % | |||||
Adjusted Diluted Earnings Per Share | $ | 0.25 | $ | 0.32 | 28.0 | % | $ | 0.56 | $ | 0.63 | 12.5 | % | |||||
GAAP Basic Earnings Per Share | $ | 0.20 | $ | 0.21 | 5.0 | % | $ | 0.50 | $ | 0.30 | -40.0 | % | |||||
GAAP Diluted Earnings Per Share | $ | 0.20 | $ | 0.21 | 5.0 | % | $ | 0.46 | $ | 0.30 | -34.8 | % | |||||
Effective Tax Rate | 38.0 | % | 39.0 | % | 100 bp | 41.9 | % | 39.0 | % | -290 bp | |||||||
Reconciliation to Adjusted Consolidated EBITDA | |||||||||||||||||
Consolidated EBITDA | $ | 13,476 | $ | 15,080 | 11.9 | % | $ | 29,213 | $ | 27,668 | -5.3 | % | |||||
Withdrawable Trust Income | 213 | 554 | 710 | 779 | |||||||||||||
Acquisition and Divestiture Expenses | 155 | 255 | 163 | 999 | |||||||||||||
Severance Costs | 493 | 406 | 684 | 723 | |||||||||||||
Consulting Fees | 255 | 9 | 255 | 250 | |||||||||||||
Other Incentive Compensation | — | — | — | 1,000 | |||||||||||||
Other Special Items | — | — | 83 | — | |||||||||||||
Adjusted Consolidated EBITDA | $ | 14,592 | $ | 16,304 | 11.7 | % | $ | 31,108 | $ | 31,419 | 1.0 | % | |||||
Adjusted Consolidated EBITDA Margin | 27.1 | % | 28.9 | % | 180 bp | 28.0 | % | 28.0 | % | 0 bp |
(unaudited) | |||||||
December 31, 2013 | June 30, 2014 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,377 | $ | 731 | |||
Accounts receivable, net | 17,950 | 18,252 | |||||
Assets held for sale | 3,544 | 1,354 | |||||
Inventories | 5,300 | 5,345 | |||||
Prepaid expenses | 4,421 | 3,345 | |||||
Other current assets | 3,525 | 3,130 | |||||
Total current assets | 36,117 | 32,157 | |||||
Preneed cemetery trust investments | 68,341 | 75,646 | |||||
Preneed funeral trust investments | 97,144 | 100,347 | |||||
Preneed receivables, net | 24,521 | 26,439 | |||||
Receivables from preneed trusts | 11,166 | 11,780 | |||||
Property, plant and equipment, net | 160,690 | 176,283 | |||||
Cemetery property | 72,911 | 75,459 | |||||
Goodwill | 221,087 | 253,573 | |||||
Deferred charges and other non-current assets | 12,280 | 18,657 | |||||
Cemetery perpetual care trust investments | 42,342 | 52,812 | |||||
Total assets | $ | 746,599 | $ | 823,153 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt and capital lease obligations | $ | 13,424 | $ | 9,908 | |||
Accounts payable | 7,046 | 6,162 | |||||
Other liabilities | 9,939 | 9,329 | |||||
Accrued liabilities | 12,854 | 13,301 | |||||
Liabilities associated with assets held for sale | 4,357 | 360 | |||||
Total current liabilities | 47,620 | 39,060 | |||||
Long-term debt, net of current portion | 105,642 | 116,699 | |||||
Revolving credit facility | 36,900 | 42,400 | |||||
Convertible junior subordinated debentures due in 2029 to an affiliate | 89,770 | — | |||||
Convertible subordinated notes due 2021 | — | 112,955 | |||||
Obligations under capital leases, net of current portion | 3,786 | 3,201 | |||||
Deferred preneed cemetery revenue | 55,479 | 57,394 | |||||
Deferred preneed funeral revenue | 30,588 | 30,597 | |||||
Deferred tax liability | 11,915 | 21,890 | |||||
Other long-term liabilities | 1,548 | 1,220 | |||||
Deferred preneed cemetery receipts held in trust | 68,341 | 75,646 | |||||
Deferred preneed funeral receipts held in trust | 97,144 | 100,347 | |||||
Care trusts’ corpus | 41,893 | 52,304 | |||||
Total liabilities | 590,626 | 653,713 | |||||
Commitments and contingencies: | |||||||
Stockholders’ equity: | |||||||
Common stock, $.01 par value; 80,000,000 shares authorized; 22,183,000 and 22,427,000 shares issued at December 31, 2013 and June 30, 2014, respectively | 222 | 224 | |||||
Additional paid-in capital | 204,324 | 212,325 | |||||
Accumulated deficit | (33,306 | ) | (27,842 | ) | |||
Treasury stock, at cost; 3,922,000 shares at December 31, 2013 and June 30, 2014 | (15,267 | ) | (15,267 | ) | |||
Total stockholders’ equity | 155,973 | 169,440 | |||||
Total liabilities and stockholders’ equity | $ | 746,599 | $ | 823,153 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||
Revenues | $ | 53,811 | $ | 56,504 | $ | 110,934 | $ | 112,157 | |||||||
Field costs and expenses | 36,931 | 38,515 | 75,149 | 76,152 | |||||||||||
Gross profit | $ | 16,880 | $ | 17,989 | $ | 35,785 | $ | 36,005 | |||||||
General and administrative expenses | 7,448 | 7,201 | 14,077 | 16,877 | |||||||||||
Operating income | $ | 9,432 | $ | 10,788 | $ | 21,708 | $ | 19,128 | |||||||
Interest expense, net | (3,664 | ) | (2,686 | ) | (6,259 | ) | (5,531 | ) | |||||||
Accretion of discount on convertible subordinated notes | — | (694 | ) | — | (865 | ) | |||||||||
Loss on early extinguishment of debt and other costs | — | (1,042 | ) | — | (1,042 | ) | |||||||||
Loss on redemption of convertible junior subordinated debentures | — | — | — | (3,779 | ) | ||||||||||
Other income | — | — | — | 1,130 | |||||||||||
Income from continuing operations before income taxes | $ | 5,768 | $ | 6,366 | $ | 15,449 | $ | 9,041 | |||||||
Provision for income taxes | (2,192 | ) | (2,483 | ) | (6,469 | ) | (3,526 | ) | |||||||
Net income from continuing operations | $ | 3,576 | $ | 3,883 | $ | 8,980 | $ | 5,515 | |||||||
Net income (loss) from discontinued operations, net of tax | 568 | (637 | ) | 423 | (51 | ) | |||||||||
Net income | $ | 4,144 | $ | 3,246 | $ | 9,403 | $ | 5,464 | |||||||
Preferred stock dividend | — | — | (4 | ) | — | ||||||||||
Net income available to common stockholders | $ | 4,144 | $ | 3,246 | $ | 9,399 | $ | 5,464 | |||||||
Basic earnings (loss) per common share: | |||||||||||||||
Continuing operations | $ | 0.20 | $ | 0.21 | $ | 0.50 | $ | 0.30 | |||||||
Discontinued operations | 0.03 | (0.03 | ) | 0.02 | — | ||||||||||
Basic earnings per common share | $ | 0.23 | $ | 0.18 | $ | 0.52 | $ | 0.30 | |||||||
Diluted earnings (loss) per common share: | |||||||||||||||
Continuing operations | $ | 0.20 | $ | 0.21 | $ | 0.46 | $ | 0.30 | |||||||
Discontinued operations | 0.03 | (0.04 | ) | 0.02 | (0.01 | ) | |||||||||
Diluted earnings per common share | $ | 0.23 | $ | 0.17 | $ | 0.48 | $ | 0.29 | |||||||
Dividends declared per common share | $ | 0.025 | $ | 0.025 | $ | 0.05 | $ | 0.05 | |||||||
Weighted average number of common and common equivalent shares outstanding: | |||||||||||||||
Basic | 17,830 | 18,123 | 17,744 | 18,054 | |||||||||||
Diluted | 17,994 | 18,247 | 22,316 | 18,195 |
For the Six Months Ended June 30, | |||||||
2013 | 2014 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 9,403 | $ | 5,464 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Gain on sale of businesses and purchase of other assets | (146 | ) | (2,039 | ) | |||
Impairment of goodwill | 100 | 1,180 | |||||
Loss on early extinguishment of debt and other costs | — | 1,042 | |||||
Depreciation and amortization | 5,953 | 5,801 | |||||
Amortization of deferred financing costs | (36 | ) | 456 | ||||
Accretion of discount on convertible subordinated notes | — | 865 | |||||
Provision for losses on accounts receivable | 782 | 1,338 | |||||
Stock-based compensation expense | 1,624 | 2,782 | |||||
Deferred income tax expense (benefit) | 1,894 | (1,884 | ) | ||||
Loss on redemption of convertible junior subordinated debentures | — | 2,932 | |||||
Other | 210 | (8 | ) | ||||
Changes in operating assets and liabilities that provided (required) cash: | |||||||
Accounts and preneed receivables | (2,070 | ) | (1,783 | ) | |||
Inventories and other current assets | 1,211 | 818 | |||||
Deferred charges and other | 24 | (174 | ) | ||||
Preneed funeral and cemetery trust investments | (1,363 | ) | (10,057 | ) | |||
Accounts payable | (160 | ) | (871 | ) | |||
Accrued and other liabilities | 1,265 | (2,117 | ) | ||||
Deferred preneed funeral and cemetery revenue | (9,755 | ) | 345 | ||||
Deferred preneed funeral and cemetery receipts held in trust | 13,879 | 9,229 | |||||
Net cash provided by operating activities | 22,815 | 13,319 | |||||
Cash flows from investing activities: | |||||||
Acquisitions and land for new construction | (6,051 | ) | (54,850 | ) | |||
Net proceeds from the sale of businesses and other assets | 2,736 | 200 | |||||
Capital expenditures | (4,468 | ) | (9,693 | ) | |||
Net cash used in investing activities | (7,783 | ) | (64,343 | ) | |||
Cash flows from financing activities: | |||||||
Net (payments) borrowings on the revolving credit facility | (10,100 | ) | 5,500 | ||||
Net (payments) borrowings on the term loan | (5,000 | ) | 8,000 | ||||
Proceeds from the issuance of convertible subordinated notes | — | 143,750 | |||||
Payment of debt issuance costs related to the convertible subordinated notes | — | (4,650 | ) | ||||
Payments on other long-term debt and obligations under capital leases | (307 | ) | (542 | ) | |||
Redemption of convertible junior subordinated debentures | — | (89,748 | ) | ||||
Payments for performance-based stock awards | — | (16,150 | ) | ||||
Proceeds from the exercise of stock options and employee stock purchase plan contributions | 492 | 863 | |||||
Dividends on common stock | (906 | ) | (917 | ) | |||
Dividend on redeemable preferred stock | (4 | ) | — | ||||
Payment of loan origination costs related to the credit facility | (565 | ) | (797 | ) | |||
Excess tax benefit of equity compensation | 1,178 | 5,069 | |||||
Net cash provided by (used in) financing activities | (15,212 | ) | 50,378 | ||||
Net decrease in cash and cash equivalents | (180 | ) | (646 | ) | |||
Cash and cash equivalents at beginning of period | 1,698 | 1,377 | |||||
Cash and cash equivalents at end of period | $ | 1,518 | $ | 731 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||
Numerator for basic earnings per share: | |||||||||||||||
Numerator from continuing operations | |||||||||||||||
Income from continuing operations | $ | 3,576 | $ | 3,883 | $ | 8,980 | $ | 5,515 | |||||||
Less: Earnings allocated to unvested restricted stock | (72 | ) | (76 | ) | (209 | ) | (115 | ) | |||||||
Income attributable to continuing operations | $ | 3,504 | $ | 3,807 | 8,771 | 5,400 | |||||||||
Numerator from discontinued operations | |||||||||||||||
Income (loss) from discontinued operations | $ | 568 | $ | (637 | ) | $ | 423 | $ | (51 | ) | |||||
Less: (Earnings) loss allocated to unvested restricted stock | (11 | ) | 13 | (10 | ) | 1 | |||||||||
Income (loss) attributable to discontinued operations | $ | 557 | $ | (624 | ) | $ | 413 | $ | (50 | ) | |||||
Numerator for diluted earnings per share: | |||||||||||||||
Adjustment for diluted earnings per share: | |||||||||||||||
Interest on convertible junior subordinated debentures, net of tax | $ | — | $ | — | $ | 1,472 | $ | — | |||||||
$ | — | $ | — | $ | 1,472 | $ | — | ||||||||
Income attributable to continuing operations | $ | 3,504 | $ | 3,807 | $ | 10,243 | $ | 5,400 | |||||||
Income (loss) attributable to discontinued operations | $ | 557 | $ | (624 | ) | $ | 413 | $ | (50 | ) | |||||
Denominator | |||||||||||||||
Denominator for basic earnings per common share - weighted average shares outstanding | 17,830 | 18,123 | 17,744 | 18,054 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Stock options | 164 | 124 | 180 | 141 | |||||||||||
Convertible junior subordinated debentures | — | — | 4,392 | — | |||||||||||
Denominator for diluted earnings per common share - weighted average shares outstanding | 17,994 | 18,247 | 22,316 | 18,195 | |||||||||||
Basic earnings (loss) per common share: | |||||||||||||||
Continuing operations | $ | 0.20 | $ | 0.21 | $ | 0.50 | $ | 0.30 | |||||||
Discontinued operations | 0.03 | (0.03 | ) | 0.02 | — | ||||||||||
Basic earnings per common share | $ | 0.23 | $ | 0.18 | $ | 0.52 | $ | 0.30 | |||||||
Diluted earnings (loss) per common share: | |||||||||||||||
Continuing operations | $ | 0.20 | $ | 0.21 | $ | 0.46 | $ | 0.30 | |||||||
Discontinued operations | 0.03 | (0.04 | ) | 0.02 | (0.01 | ) | |||||||||
Diluted earnings per common share | $ | 0.23 | $ | 0.17 | $ | 0.48 | $ | 0.29 |
• | 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 is defined as Consolidated EBITDA plus adjustments for special items and non-recurring expenses or credits. |
• | 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 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 deemed as Non-GAAP items such as withdrawable trust income, acquisition and divestiture expenses, litigation settlements, 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 six months ended June 30, 2013 and 2014. |
• | 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. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||
Net Income from continuing operations | $ | 3,576 | $ | 3,883 | $ | 8,980 | $ | 5,515 | |||||||
Special items, net of tax | |||||||||||||||
Withdrawable Trust Income | 141 | 366 | 469 | 515 | |||||||||||
Acquisition and Divestiture Expenses | 102 | 168 | 107 | 659 | |||||||||||
Severance Costs | 325 | 268 | 451 | 477 | |||||||||||
Consulting Fees | 168 | 6 | 168 | 165 | |||||||||||
Other Incentive Compensation | — | — | — | 660 | |||||||||||
Accretion of Discount on Convertible Subordinated Notes | — | 458 | — | 571 | |||||||||||
Costs Related to the Credit Facility | 248 | 688 | 248 | 688 | |||||||||||
Loss on Redemption of Convertible Junior Subordinated Debentures | — | — | — | 2,493 | |||||||||||
Gain on Asset Purchase | — | — | — | (746 | ) | ||||||||||
Other Special Items | — | — | (484 | ) | 503 | ||||||||||
Tax Adjustment from Prior Period | — | — | 598 | — | |||||||||||
Total Special items affecting net income | $ | 984 | $ | 1,954 | $ | 1,557 | $ | 5,985 | |||||||
Adjusted Net Income | $ | 4,560 | $ | 5,837 | $ | 10,537 | $ | 11,500 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||
Net income from continuing operations | $ | 3,576 | $ | 3,883 | $ | 8,980 | $ | 5,515 | |||||||
Provision for income taxes | 2,192 | 2,483 | 6,469 | 3,526 | |||||||||||
Pre-tax earnings from continuing operations | $ | 5,768 | $ | 6,366 | $ | 15,449 | $ | 9,041 | |||||||
Interest expense | 3,693 | 2,691 | 7,121 | 5,536 | |||||||||||
Accretion of discount on convertible subordinated notes | — | 694 | — | 865 | |||||||||||
Loss on early extinguishment of debt and other costs | — | 1,042 | — | 1,042 | |||||||||||
Loss on redemption of convertible junior subordinated debentures | — | — | — | 3,779 | |||||||||||
Non-cash stock compensation | 978 | 1,263 | 1,624 | 1,993 | |||||||||||
Depreciation & amortization | 3,066 | 3,029 | 5,881 | 5,785 | |||||||||||
Other, net | (29 | ) | (5 | ) | (862 | ) | (373 | ) | |||||||
Consolidated EBITDA | $ | 13,476 | $ | 15,080 | $ | 29,213 | $ | 27,668 | |||||||
Adjusted For: | |||||||||||||||
Withdrawable Trust Income | $ | 213 | $ | 554 | $ | 710 | $ | 779 | |||||||
Acquisition and Divestiture Expenses | 155 | 255 | 163 | 999 | |||||||||||
Severance Costs | 493 | 406 | 684 | 723 | |||||||||||
Consulting Fees | 255 | 9 | 255 | 250 | |||||||||||
Other Incentive Compensation | — | — | — | 1,000 | |||||||||||
Other Special Items | — | — | 83 | — | |||||||||||
Adjusted Consolidated EBITDA | $ | 14,592 | $ | 16,304 | $ | 31,108 | $ | 31,419 | |||||||
Revenue | $ | 53,811 | $ | 56,504 | $ | 110,934 | $ | 112,157 | |||||||
Adjusted Consolidated EBITDA Margin | 27.1 | % | 28.9 | % | 28.0 | % | 28.0 | % |
Funeral Field EBITDA | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||
Gross Profit (GAAP) | $ | 12,773 | $ | 13,214 | $ | 27,604 | $ | 27,735 | |||||||
Depreciation & amortization | 1,612 | 1,683 | 3,214 | 3,297 | |||||||||||
Regional & unallocated costs | 1,764 | 1,202 | 4,014 | 3,149 | |||||||||||
Net financial income | (2,373 | ) | (2,079 | ) | (4,188 | ) | (4,305 | ) | |||||||
Funeral Field EBITDA | $ | 13,776 | $ | 14,020 | $ | 30,644 | $ | 29,876 | |||||||
Funeral Field Operating Revenue | $ | 37,733 | $ | 39,820 | $ | 80,370 | $ | 81,305 | |||||||
Funeral Field EBITDA Margin | 36.5 | % | 35.2 | % | 38.1 | % | 36.7 | % |
Cemetery Field EBITDA | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||
Gross Profit (GAAP) | $ | 4,107 | $ | 4,775 | $ | 8,181 | $ | 8,270 | |||||||
Depreciation & amortization | 1,082 | 992 | 1,948 | 1,793 | |||||||||||
Regional & unallocated costs | 549 | 491 | 1,058 | 924 | |||||||||||
Net financial income | (2,428 | ) | (2,556 | ) | (4,884 | ) | (4,454 | ) | |||||||
Cemetery Field EBITDA | $ | 3,310 | $ | 3,702 | $ | 6,303 | $ | 6,533 | |||||||
Cemetery Field Operating Revenue | $ | 10,901 | $ | 11,716 | $ | 20,661 | $ | 21,483 | |||||||
Cemetery Field EBITDA Margin | 30.4 | % | 31.6 | % | 30.5 | % | 30.4 | % |
Total Field EBITDA | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||
Funeral Field EBITDA | $ | 13,776 | $ | 14,020 | $ | 30,644 | $ | 29,876 | |||||||
Cemetery Field EBITDA | 3,310 | 3,702 | 6,303 | 6,533 | |||||||||||
Funeral Financial EBITDA | 2,373 | 2,079 | 4,188 | 4,305 | |||||||||||
Cemetery Financial EBITDA | 2,428 | 2,556 | 4,884 | 4,454 | |||||||||||
Total Field EBITDA | $ | 21,887 | $ | 22,357 | $ | 46,019 | $ | 45,168 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||
Cash flow provided by operations | $ | 12,902 | $ | 14,937 | $ | 22,815 | $ | 13,319 | |||||||
Adjustment for tax benefit from Good to Great stock awards | — | — | — | 4,802 | |||||||||||
Cash used for maintenance capital expenditures | (1,238 | ) | (1,689 | ) | (3,025 | ) | (2,572 | ) | |||||||
Adjusted Free Cash Flow | $ | 11,664 | $ | 13,248 | $ | 19,790 | $ | 15,549 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||
GAAP basic earnings per share from continuing operations | $ | 0.20 | $ | 0.21 | $ | 0.50 | $ | 0.30 | |||||||
Special items affecting net income | 0.06 | 0.11 | 0.09 | 0.33 | |||||||||||
Adjusted basic earnings per share | $ | 0.26 | $ | 0.32 | $ | 0.59 | $ | 0.63 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||
GAAP diluted earnings per share from continuing operations | $ | 0.20 | $ | 0.21 | $ | 0.46 | $ | 0.30 | |||||||
Special items affecting net income | 0.05 | 0.11 | 0.07 | 0.33 | |||||||||||
Dilution effect of convertible junior subordinated debentures | — | — | 0.03 | — | |||||||||||
Adjusted diluted earnings per share | $ | 0.25 | $ | 0.32 | $ | 0.56 | $ | 0.63 |
Rolling Four Quarter Outlook | |||||||
June 30, 2015E | |||||||
Net income from continuing operations | $ | 19,000 | |||||
Provision for income taxes | 12,300 | ||||||
Pre-tax earnings from continuing operations | $ | 31,300 | |||||
Net interest expense, including loan cost amortization | 14,200 | ||||||
Depreciation & amortization, including stock compensation | 16,000 | ||||||
Consolidated EBITDA | $ | 61,500 | |||||
Adjusted For: | |||||||
Special items | 5,000 | ||||||
Adjusted Consolidated EBITDA | $ | 66,500 |
Rolling Four Quarter Outlook | |||||||
June 30, 2015E | |||||||
Net income from continuing operations | $ | 19,000 | |||||
Special items, net of tax | 8,000 | ||||||
Adjusted Net Income | $ | 27,000 |
Rolling Four Quarter Outlook | |||||||
June 30, 2015E | |||||||
GAAP diluted earnings per share from continuing operations | $ | 1.04 | |||||
Special items affecting net income | 0.41 | ||||||
Adjusted diluted earnings per share | $ | 1.45 |
• | 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. |