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: February 16, 2016 | By: | /s/ Viki K. Blinderman | |
Viki K. Blinderman | |||
Chief Accounting Officer, Co-Chief Financial Officer and Secretary | |||
(Principal Accounting Officer) |
Exhibit | Description | ||
99.1 | Press Release dated February 16, 2016. |
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• | Total Revenue of $242.5 million, an increase of 7.2%; |
• | Adjusted Consolidated EBITDA of $71.1 million, an increase of 15.4%; |
• | Adjusted Consolidated EBITDA Margin up 200 basis points to 29.3%; |
• | Adjusted Diluted Earnings Per Share of $1.48, an increase of 10.4%; |
• | Adjusted Net Profit Margin up 30 basis points to 11.3%; and |
• | Adjusted Free Cash Flow of $43.7 million, an increase of 13.0%. |
• | Total Revenue of $61.6 million, an increase of 3.7%; |
• | Adjusted Consolidated EBITDA of $17.8 million, an increase of 4.6%; |
• | Adjusted Consolidated EBITDA Margin up 30 basis points to 29.0%; |
• | Adjusted Diluted Earnings Per Share of $0.39, an increase of 2.6%; |
• | Adjusted Net Profit Margin down 60 basis points to 11.1%; and |
• | Adjusted Free Cash Flow of $4.9 million, a decrease of 33.4%. |
Carriage Good To Great Journey | ||||||||||||||||||||||||
Years Ending December 31 | ||||||||||||||||||||||||
(in Millions Except Per Share and Percentage Amounts) | CAGR | |||||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | % | |||||||||||||||||||
Total Revenue | $ | 182.3 | $ | 198.2 | $ | 213.1 | $ | 226.1 | $ | 242.5 | 7.4 | % | ||||||||||||
Adjusted Consolidated EBITDA | $ | 48.6 | $ | 52.6 | $ | 56.0 | $ | 61.7 | $ | 71.1 | 10.0 | % | ||||||||||||
Adjusted Consolidated EBITDA Margin | 26.6 | % | 26.5 | % | 26.3 | % | 27.3 | % | 29.3 | % | 2.4 | % | ||||||||||||
Adjusted Diluted Earnings Per Share | $ | 0.64 | $ | 0.80 | $ | 0.98 | $ 1.24(1) | $ | 1.48 | 23.3 | % | |||||||||||||
Adjusted Free Cash Flow | $ | 29.1 | $ | 22.9 | $ | 36.2 | $ | 38.6 | $ | 43.7 | 10.7 | % | ||||||||||||
Share Price at December 31 | $ | 5.60 | $ | 11.87 | $ | 19.53 | $ | 20.95 | $ | 24.10 | 44.0 | % | ||||||||||||
(1) Adjusted for one time tax benefit of 10 cents per share |
• | Total Field Revenue increased 7.2% to $242.5 million; |
• | Total Field EBITDA increased 12.4% to $101.5 million; |
• | Total Field EBITDA Margin increased 190 basis points to 41.9%; |
• | Total Funeral Operating Revenue increased 7.4% to $176.4 million; |
• | Same Store Funeral Revenue increased 3.3% with same store volume increasing 0.9%; |
• | Acquisition Funeral Revenue increased 21.4% with acquisition volume increasing 15.6%; |
• | Total Funeral Field EBITDA increased 13.0% to $68.3 million; |
• | Total Funeral Field EBITDA Margin increased 190 basis points to 38.7%; |
• | Total Cemetery Operating Revenue increased 8.9% to $46.7 million; |
• | Cemetery preneed property sale contracts increased 9.6% to 8,121; |
• | Preneed property revenue recognized increased 13.3% and At-need revenue increased 4.2%; |
• | Total Cemetery Field EBITDA increased 24.1% to $15.1 million; |
• | Total Cemetery Field EBITDA Margin increased 390 basis points to 32.4%; |
• | Total Financial Revenue increased 2.4% to $19.5 million; |
• | Funeral Financial Revenue remained flat at $9.5 million; |
• | Cemetery Financial Revenue increased 5.2% to $10.0 million; |
• | Total Financial EBITDA increased 2.3% to $18.1 million; |
• | Total Financial EBITDA Margin decreased 10 basis points to 92.9%. |
• | Total Field Revenue increased 3.7% to $61.6 million; |
• | Total Field EBITDA increased 10.6% to $27.2 million; |
• | Total Field EBITDA Margin increased 280 basis points to 44.1%; |
• | Total Funeral Operating Revenue increased 2.8% to $44.7 million; |
• | Same Store Funeral Revenue increased 2.0% with same store volume decreasing 0.4%; |
• | Acquisition Funeral Revenue increased 5.1% with acquisition volume decreasing 1.7%; |
• | Total Funeral Field EBITDA increased 8.8% to $18.2 million; |
• | Total Funeral Field EBITDA Margin increased 220 basis points to 40.8%; |
• | Total Cemetery Operating Revenue increased 6.1% to $11.9 million; |
• | Cemetery pre-need property sale contracts increased 1.7% to 1,930; |
• | Preneed property revenue recognized increased 8.3% and At-need revenue increased 3.2%; |
• | Total Cemetery Field EBITDA increased 22.8% to $4.2 million; |
• | Total Cemetery Field EBITDA Margin increased 480 basis points to 35.2%; |
• | Total Financial Revenue increased 6.2% to $5.0 million; |
• | Funeral Financial Revenue increased 3.0% to $2.4 million; |
• | Cemetery Financial Revenue increased 9.4% to $2.6 million; |
• | Total Financial EBITDA increased 7.9% to $4.7 million; |
• | Total Financial EBITDA Margin increased 140 basis points to 93.6%. |
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2014 | 2015 | 2014 | 2015 | ||||||||||||
Cash flow provided by operations | $ | 8,915 | $ | 6,916 | $ | 36,565 | $ | 49,904 | |||||||
Cash used for maintenance capital expenditures | (1,904 | ) | (2,795 | ) | (7,212 | ) | (9,735 | ) | |||||||
Free Cash Flow | $ | 7,011 | $ | 4,121 | $ | 29,353 | $ | 40,169 | |||||||
Plus: Incremental Special Items: | |||||||||||||||
Adjustment for tax benefit from Good To Great stock awards | — | — | 4,815 | — | |||||||||||
Acquisition and divestiture expenses | 74 | 37 | 1,158 | 614 | |||||||||||
Severance costs | 153 | 151 | 1,056 | 959 | |||||||||||
Consulting fees | 62 | 555 | 419 | 1,913 | |||||||||||
Other incentive compensation | — | — | 1,000 | — | |||||||||||
Premium paid for the redemption of convertible junior subordinated debentures | — | — | 847 | — | |||||||||||
Adjusted Free Cash Flow | $ | 7,300 | $ | 4,864 | $ | 38,648 | $ | 43,655 |
Range (in millions, except per share amounts) | ||
Revenues | $249 - $253 | |
Adjusted Consolidated EBITDA | $73 - $77 | |
Adjusted Net Income | $29 - $31 | |
Adjusted Diluted Earnings Per Share(1) | $1.69 - $1.73 |
(1) | The Rolling Four Quarter Outlook on Adjusted Diluted Earnings Per Share does not include any changes to our fully diluted share count that could occur related to additional share repurchases or a stock price increase and EPS dilution calculations related to our convertible subordinated notes and outstanding and exercisable stock options. |
Investment Performance | |||||||
Investment Performance(1) | Index Performance | ||||||
Discretionary | Total Trust | S&P 500 Stock Index | High Yield Index | 70/30 index Benchmark(2) | |||
1 year ended 12/31/15 | (3.1)% | (2.7)% | 1.4% | (4.7)% | (2.9)% | ||
2 years ended 12/31/15 | 5.0% | 5.0% | 15.2% | (2.3)% | 3.0% | ||
3 years ended 12/31/15 | 20.0% | 19.4% | 52.5% | 5.0% | 19.3% | ||
4 years ended 12/31/15 | 44.4% | 39.9% | 76.9% | 21.4% | 38.0% | ||
5 years ended 12/31/15 | 40.2% | 37.2% | 80.6% | 26.7% | 42.8% |
(1) | Investment performance includes realized income and unrealized appreciation (depreciation). |
(2) | The 70/30 Benchmark is 70% weighted to the High Yield Index and 30% weighted to the S&P 500 Stock Index. |
Asset Allocation as of December 31, 2015 (in thousands) | ||||||||||||||
Discretionary Trust Funds | Total Trust Funds | |||||||||||||
Asset Class | MV | % | MV | % | ||||||||||
Cash | $ | 22,352 | 12 | % | $ | 38,431 | 18 | % | ||||||
Equities | 47,235 | 26 | % | 49,820 | 24 | % | ||||||||
Fixed Income(1) | 108,135 | 60 | % | 119,157 | 56 | % | ||||||||
Other/Insurance | 3,420 | 2 | % | 3,612 | 2 | % | ||||||||
Total Portfolios | $ | 181,142 | 100 | % | $ | 211,020 | 100 | % |
(1) | Discretionary Trust - Fixed Income Portfolio Profile . |
Industry/Sector | % | |
Communications | 9.5% | |
Consumer | 11.1% | |
Energy | 7.1% | |
Financial | 48.3% | |
Government | 1.0% | |
Industrial | 0.8% | |
Media | 10.5% | |
Technology | 3.2% | |
Utilities | 8.5% | |
Total | 100% |
CARRIAGE SERVICES, INC. | |||||||||||||||||
OPERATING AND FINANCIAL TREND REPORT | |||||||||||||||||
FROM CONTINUING OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS) | |||||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||
2014 | 2015 | % Change | 2014 | 2015 | % Change | ||||||||||||
Same Store Contracts | |||||||||||||||||
Atneed Contracts | 5,056 | 5,082 | 0.5 | % | 20,046 | 20,223 | 0.9 | % | |||||||||
Preneed Contracts | 1,287 | 1,238 | -3.8 | % | 4,994 | 5,047 | 1.1 | % | |||||||||
Total Same Store Funeral Contracts | 6,343 | 6,320 | -0.4 | % | 25,040 | 25,270 | 0.9 | % | |||||||||
Acquisition Contracts | |||||||||||||||||
Atneed Contracts | 1,601 | 1,566 | -2.2 | % | 5,347 | 6,076 | 13.6 | % | |||||||||
Preneed Contracts | 293 | 296 | 1.0 | % | 1,015 | 1,281 | 26.2 | % | |||||||||
Total Acquisition Funeral Contracts | 1,894 | 1,862 | -1.7 | % | 6,362 | 7,357 | 15.6 | % | |||||||||
Total Funeral Contracts | 8,237 | 8,182 | -0.7 | % | 31,402 | 32,627 | 3.9 | % | |||||||||
Funeral Operating Revenue | |||||||||||||||||
Same Store Revenue | $ | 32,623 | $ | 33,278 | 2.0 | % | $ | 127,487 | $ | 131,740 | 3.3 | % | |||||
Acquisition Revenue | 10,837 | 11,393 | 5.1 | % | 36,765 | 44,628 | 21.4 | % | |||||||||
Total Funeral Operating Revenue | $ | 43,460 | $ | 44,671 | 2.8 | % | $ | 164,252 | $ | 176,368 | 7.4 | % | |||||
Cemetery Operating Revenue | |||||||||||||||||
Same Store Revenue | $ | 10,624 | $ | 11,076 | 4.3 | % | $ | 41,257 | $ | 43,336 | 5.0 | % | |||||
Acquisition Revenue | 565 | 795 | 40.7 | % | 1,599 | 3,321 | 107.7 | % | |||||||||
Total Cemetery Operating Revenue | $ | 11,189 | $ | 11,871 | 6.1 | % | $ | 42,856 | $ | 46,657 | 8.9 | % | |||||
Financial Revenue | |||||||||||||||||
Preneed Funeral Commission Income | $ | 400 | $ | 413 | 3.3 | % | $ | 2,036 | $ | 1,484 | -27.1 | % | |||||
Preneed Funeral Trust Earnings | 1,949 | 2,007 | 3.0 | % | 7,447 | 7,966 | 7.0 | % | |||||||||
Cemetery Trust Earnings | 2,051 | 2,238 | 9.1 | % | 8,123 | 8,440 | 3.9 | % | |||||||||
Preneed Cemetery Finance Charges | 370 | 410 | 10.8 | % | 1,410 | 1,587 | 12.6 | % | |||||||||
Total Financial Revenue | $ | 4,770 | $ | 5,068 | 6.2 | % | $ | 19,016 | $ | 19,477 | 2.4 | % | |||||
Total Revenue | $ | 59,419 | $ | 61,610 | 3.7 | % | $ | 226,124 | $ | 242,502 | 7.2 | % | |||||
Field EBITDA | |||||||||||||||||
Same Store Funeral Field EBITDA | $ | 12,442 | $ | 13,513 | 8.6 | % | $ | 46,707 | $ | 50,563 | 8.3 | % | |||||
Same Store Funeral Field EBITDA Margin | 38.1 | % | 40.6 | % | 250 bp | 36.6 | % | 38.4 | % | 180 bp | |||||||
Acquisition Funeral Field EBITDA | 4,319 | 4,727 | 9.4 | % | 13,767 | 17,750 | 28.9 | % | |||||||||
Acquisition Funeral Field EBITDA Margin | 39.9 | % | 41.5 | % | 160 bp | 37.4 | % | 39.8 | % | 240 bp | |||||||
Total Funeral Field EBITDA | $ | 16,761 | $ | 18,240 | 8.8 | % | $ | 60,474 | $ | 68,313 | 13.0 | % | |||||
Total Funeral Field EBITDA Margin | 38.6 | % | 40.8 | % | 220 bp | 36.8 | % | 38.7 | % | 190 bp | |||||||
Same Store Cemetery Field EBITDA | $ | 3,290 | $ | 3,892 | 18.3 | % | $ | 11,845 | $ | 14,045 | 18.6 | % | |||||
Same Store Cemetery Field EBITDA Margin | 31.0 | % | 35.1 | % | 410 bp | 28.7 | % | 32.4 | % | 370 bp | |||||||
Acquisition Cemetery Field EBITDA | 112 | 285 | 154.5 | % | 351 | 1,088 | 210.0 | % | |||||||||
Acquisition Cemetery Field EBITDA Margin | 19.8 | % | 35.8 | % | 1,600 bp | 22.0 | % | 32.8 | % | 1,080 bp | |||||||
Total Cemetery Field EBITDA | $ | 3,402 | $ | 4,177 | 22.8 | % | $ | 12,196 | $ | 15,133 | 24.1 | % | |||||
Total Cemetery Field EBITDA Margin | 30.4 | % | 35.2 | % | 480 bp | 28.5 | % | 32.4 | % | 390 bp | |||||||
Funeral Financial EBITDA | $ | 2,041 | $ | 2,161 | 5.9 | % | $ | 8,348 | $ | 8,339 | -0.1 | % | |||||
Cemetery Financial EBITDA | 2,358 | 2,585 | 9.6 | % | 9,341 | 9,754 | 4.4 | % | |||||||||
Total Financial EBITDA | $ | 4,399 | $ | 4,746 | 7.9 | % | $ | 17,689 | $ | 18,093 | 2.3 | % | |||||
Total Financial EBITDA Margin | 92.2 | % | 93.6 | % | 140 bp | 93.0 | % | 92.9 | % | -10 bp | |||||||
Total Field EBITDA | $ | 24,562 | $ | 27,163 | 10.6 | % | $ | 90,359 | $ | 101,539 | 12.4 | % | |||||
Total Field EBITDA Margin | 41.3 | % | 44.1 | % | 280 bp | 40.0 | % | 41.9 | % | 190 bp | |||||||
OPERATING AND FINANCIAL TREND REPORT | |||||||||||||||||
FROM CONTINUING OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS) | |||||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||
2014 | 2015 | % Change | 2014 | 2015 | % Change | ||||||||||||
Overhead | |||||||||||||||||
Total Variable Overhead | $ | 2,425 | $ | 4,109 | 69.4 | % | $ | 10,764 | $ | 10,878 | 1.1 | % | |||||
Total Regional Fixed Overhead | 758 | 886 | 16.9 | % | 3,136 | 3,435 | 9.5 | % | |||||||||
Total Corporate Fixed Overhead | 4,902 | 5,081 | 3.7 | % | 20,227 | 20,354 | 0.6 | % | |||||||||
Total Overhead | $ | 8,085 | $ | 10,076 | 24.6 | % | $ | 34,127 | $ | 34,667 | 1.6 | % | |||||
Overhead as a percent of sales | 13.6 | % | 16.4 | % | 280 bp | 15.1 | % | 14.3 | % | -80 bp | |||||||
Consolidated EBITDA | $ | 16,477 | $ | 17,087 | 3.7 | % | $ | 56,232 | $ | 66,872 | 18.9 | % | |||||
Consolidated EBITDA Margin | 27.7 | % | 27.7 | % | 0 bp | 24.9 | % | 27.6 | % | 270 bp | |||||||
Other Expenses and Interest | |||||||||||||||||
Depreciation & Amortization | $ | 3,142 | $ | 3,656 | 16.4 | % | $ | 11,923 | $ | 13,780 | 15.6 | % | |||||
Non-Cash Stock Compensation | 920 | 996 | 8.3 | % | 3,832 | 4,444 | 16.0 | % | |||||||||
Interest Expense | 2,593 | 2,888 | 11.4 | % | 10,308 | 10,559 | 2.4 | % | |||||||||
Accretion of Discount on Convertible Subordinated Notes | 805 | 900 | 2,452 | 3,454 | |||||||||||||
Loss on Early Extinguishment of Debt | — | — | 1,042 | — | |||||||||||||
Loss on Redemption of Convertible Junior Subordinated Debentures | — | — | 3,779 | — | |||||||||||||
Other, Net | 571 | (9 | ) | 195 | 45 | ||||||||||||
Pretax Income | $ | 8,446 | $ | 8,656 | 2.5 | % | $ | 22,701 | $ | 34,590 | 52.4 | % | |||||
Net Tax Provision | 3,079 | 3,222 | 7,255 | 13,737 | |||||||||||||
GAAP Net Income | $ | 5,367 | $ | 5,434 | 1.2 | % | $ | 15,446 | $ | 20,853 | 35.0 | % | |||||
Special Items, Net of tax except for** | |||||||||||||||||
Withdrawable Trust Income | $ | 198 | $ | — | $ | 1,181 | $ | 366 | |||||||||
Acquisition and Divestiture Expenses | 49 | 24 | 764 | 405 | |||||||||||||
Severance Costs | 101 | 100 | 697 | 633 | |||||||||||||
Consulting Fees | 41 | 367 | 277 | 1,265 | |||||||||||||
Other Incentive Compensation | — | — | 660 | — | |||||||||||||
Accretion on Convertible Subordinated Notes** | 805 | 900 | 2,452 | 3,454 | |||||||||||||
Costs Related to Credit Facility | — | — | 688 | — | |||||||||||||
Loss on Redemption of Convertible Junior Subordinated Debentures | — | — | 2,493 | — | |||||||||||||
Loss (Gain) on Asset Purchase/Sale | 379 | — | (367 | ) | — | ||||||||||||
Other Special Items | — | 14 | 503 | 244 | |||||||||||||
Tax Adjustment from Prior Period** | — | — | — | 141 | |||||||||||||
Sum of Special Items, Net of tax | $ | 1,573 | $ | 1,405 | -10.7 | % | $ | 9,348 | $ | 6,508 | -30.4 | % | |||||
Adjusted Net Income | $ | 6,940 | $ | 6,839 | -1.5 | % | $ | 24,794 | $ | 27,361 | 10.4 | % | |||||
Adjusted Net Profit Margin | 11.7 | % | 11.1 | % | -60 bp | 11.0 | % | 11.3 | % | 30 bp | |||||||
Adjusted Basic Earnings Per Share | $ | 0.38 | $ | 0.40 | 5.3 | % | $ | 1.35 | $ | 1.52 | 12.6 | % | |||||
Adjusted Diluted Earnings Per Share | $ | 0.38 | $ | 0.39 | 2.6 | % | $ | 1.34 | $ | 1.48 | 10.4 | % | |||||
GAAP Basic Earnings Per Share | $ | 0.29 | $ | 0.32 | 10.3 | % | $ | 0.84 | $ | 1.16 | 38.1 | % | |||||
GAAP Diluted Earnings Per Share | $ | 0.29 | $ | 0.31 | 6.9 | % | $ | 0.83 | $ | 1.12 | 34.9 | % | |||||
Weighted Average Basic Shares Outstanding | 18,170 | 16,828 | 18,108 | 17,791 | |||||||||||||
Weighted Average Diluted Shares Outstanding | 18,358 | 17,499 | 18,257 | 18,313 | |||||||||||||
Reconciliation to Adjusted Consolidated EBITDA | |||||||||||||||||
Consolidated EBITDA | $ | 16,477 | $ | 17,087 | 3.7 | % | $ | 56,232 | $ | 66,872 | 18.9 | % | |||||
Withdrawable Trust Income | 300 | — | 1,788 | 555 | |||||||||||||
Acquisition and Divestiture Expenses | 74 | 37 | 1,158 | 614 | |||||||||||||
Severance Costs | 153 | 151 | 1,056 | 959 | |||||||||||||
Consulting Fees | 62 | 555 | 419 | 1,913 | |||||||||||||
Other Incentive Compensation | — | — | 1,000 | — | |||||||||||||
Other Special Items | — | 20 | — | 220 | |||||||||||||
Adjusted Consolidated EBITDA | $ | 17,066 | $ | 17,850 | 4.6 | % | $ | 61,653 | $ | 71,133 | 15.4 | % | |||||
Adjusted Consolidated EBITDA Margin | 28.7 | % | 29.0 | % | 30 bp | 27.3 | % | 29.3 | % | 200 bp |
December 31, | |||||||
2014 | 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 413 | $ | 535 | |||
Accounts receivable, net | 19,264 | 18,181 | |||||
Inventories | 5,294 | 5,654 | |||||
Prepaid expenses | 4,590 | 4,684 | |||||
Other current assets | 7,144 | 4,707 | |||||
Total current assets | 36,705 | 33,761 | |||||
Preneed cemetery trust investments | 71,972 | 63,291 | |||||
Preneed funeral trust investments | 97,607 | 85,553 | |||||
Preneed receivables, net | 26,284 | 27,998 | |||||
Receivables from preneed trusts | 12,809 | 13,544 | |||||
Property, plant and equipment, net | 186,211 | 214,874 | |||||
Cemetery property | 75,564 | 75,597 | |||||
Goodwill | 257,442 | 264,416 | |||||
Deferred charges and other non-current assets | 14,264 | 15,192 | |||||
Cemetery perpetual care trust investments | 48,670 | 43,127 | |||||
Total assets | $ | 827,528 | $ | 837,353 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt and capital lease obligations | $ | 9,838 | $ | 12,236 | |||
Accounts payable | 6,472 | 7,917 | |||||
Other liabilities | 1,437 | 524 | |||||
Accrued liabilities | 15,203 | 16,541 | |||||
Total current liabilities | 32,950 | 37,218 | |||||
Long-term debt, net of current portion | 111,887 | 103,854 | |||||
Revolving credit facility | 40,500 | 92,600 | |||||
Convertible subordinated notes due 2021 | 114,542 | 117,996 | |||||
Obligations under capital leases, net of current portion | 3,098 | 2,875 | |||||
Deferred preneed cemetery revenue | 56,875 | 56,721 | |||||
Deferred preneed funeral revenue | 31,265 | 31,748 | |||||
Deferred tax liability | 36,414 | 39,956 | |||||
Other long-term liabilities | 2,401 | 5,531 | |||||
Deferred preneed cemetery receipts held in trust | 71,972 | 63,291 | |||||
Deferred preneed funeral receipts held in trust | 97,607 | 85,553 | |||||
Care trusts’ corpus | 48,142 | 42,416 | |||||
Total liabilities | 647,653 | 679,759 | |||||
Commitments and contingencies: | |||||||
Stockholders’ equity: | |||||||
Common stock, $.01 par value; 80,000,000 shares authorized; 22,434,609 and 22,497,873 issued as of December 31, 2014 and 2015, respectively | 224 | 225 | |||||
Additional paid-in capital | 212,386 | 214,250 | |||||
Retained earnings (deficit) | (17,468 | ) | 3,385 | ||||
Treasury stock, at cost; 3,921,651 shares at December 31, 2014 and 5,849,316 shares at December 31, 2015 | (15,267 | ) | (60,266 | ) | |||
Total stockholders’ equity | 179,875 | 157,594 | |||||
Total liabilities and stockholders’ equity | $ | 827,528 | $ | 837,353 |
(unaudited) | |||||||||||||||
For the Three Months Ended December 31, | For the Years Ended December 31, | ||||||||||||||
2014 | 2015 | 2014 | 2015 | ||||||||||||
Revenues: | |||||||||||||||
Funeral | $ | 45,809 | $ | 47,091 | $ | 173,735 | $ | 185,818 | |||||||
Cemetery | 13,610 | 14,519 | 52,389 | 56,684 | |||||||||||
59,419 | 61,610 | 226,124 | 242,502 | ||||||||||||
Field costs and expenses: | |||||||||||||||
Funeral | 27,007 | 26,690 | 104,913 | 109,166 | |||||||||||
Cemetery | 7,850 | 7,757 | 30,852 | 31,797 | |||||||||||
Depreciation and amortization | 2,801 | 3,220 | 10,545 | 12,034 | |||||||||||
Regional and unallocated funeral and cemetery costs | 2,834 | 4,252 | 9,806 | 11,997 | |||||||||||
Gross profit | 18,927 | 19,691 | 70,008 | 77,508 | |||||||||||
Corporate costs and expenses: | |||||||||||||||
General and administrative costs and expenses | 6,171 | 6,820 | 28,915 | 27,114 | |||||||||||
Home office depreciation and amortization | 341 | 436 | 1,378 | 1,746 | |||||||||||
6,512 | 7,256 | 30,293 | 28,860 | ||||||||||||
Operating income | $ | 12,415 | $ | 12,435 | $ | 39,715 | $ | 48,648 | |||||||
Interest expense, net | (2,593 | ) | (2,888 | ) | (10,308 | ) | (10,559 | ) | |||||||
Accretion of discount on convertible subordinated notes | (805 | ) | (900 | ) | (2,452 | ) | (3,454 | ) | |||||||
Loss on early extinguishment of debt and other costs | — | — | (1,042 | ) | — | ||||||||||
Loss on redemption of convertible junior subordinated debentures | — | — | (3,779 | ) | — | ||||||||||
Other, net | (571 | ) | 9 | 567 | (45 | ) | |||||||||
Income from continuing operations before income taxes | $ | 8,446 | $ | 8,656 | $ | 22,701 | $ | 34,590 | |||||||
Provision for income taxes | (3,079 | ) | (3,222 | ) | (8,995 | ) | (13,737 | ) | |||||||
Income tax benefit related to uncertain tax provisions | — | — | 1,740 | — | |||||||||||
Net provision for income taxes | (3,079 | ) | (3,222 | ) | (7,255 | ) | (13,737 | ) | |||||||
Net income from continuing operations | $ | 5,367 | $ | 5,434 | $ | 15,446 | $ | 20,853 | |||||||
Net income from discontinued operations, net of tax | 11 | — | 392 | — | |||||||||||
Net income available to common stockholders | $ | 5,378 | $ | 5,434 | $ | 15,838 | $ | 20,853 | |||||||
Basic earnings per common share: | |||||||||||||||
Continuing operations | $ | 0.29 | $ | 0.32 | $ | 0.84 | $ | 1.16 | |||||||
Discontinued operations | — | — | 0.02 | — | |||||||||||
Basic earnings per common share | $ | 0.29 | $ | 0.32 | $ | 0.86 | $ | 1.16 | |||||||
Diluted earnings per common share: | |||||||||||||||
Continuing operations | $ | 0.29 | $ | 0.31 | $ | 0.83 | $ | 1.12 | |||||||
Discontinued operations | — | — | 0.02 | — | |||||||||||
Diluted earnings per common share | $ | 0.29 | $ | 0.31 | $ | 0.85 | $ | 1.12 | |||||||
Dividends declared per common share | $ | 0.025 | $ | 0.025 | $ | 0.100 | $ | 0.100 | |||||||
Weighted average number of common and common equivalent shares outstanding: | |||||||||||||||
Basic | 18,170 | 16,828 | 18,108 | 17,791 | |||||||||||
Diluted | 18,358 | 17,499 | 18,257 | 18,313 |
For the Years Ended December 31, | ||||||||
2014 | 2015 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 15,838 | $ | 20,853 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 11,945 | 13,780 | ||||||
Gain on sale of businesses and purchase of assets | (2,150 | ) | (49 | ) | ||||
Impairment of goodwill | 1,180 | — | ||||||
Loss on early extinguishment of debt and other costs | 1,042 | — | ||||||
Amortization of deferred financing costs | 908 | 921 | ||||||
Accretion of discount on convertible subordinated notes | 2,452 | 3,454 | ||||||
Provision for losses on accounts receivable | 2,877 | 1,679 | ||||||
Stock-based compensation expense | 4,622 | 4,444 | ||||||
Deferred income tax expense | 5,295 | 3,035 | ||||||
Loss on redemption of convertible junior subordinated debentures | 2,932 | — | ||||||
Changes in operating assets and liabilities that provided (required) cash: | ||||||||
Accounts and preneed receivables | (4,146 | ) | (2,310 | ) | ||||
Inventories and other current assets | (2,590 | ) | 2,582 | |||||
Deferred charges and other | (165 | ) | 150 | |||||
Preneed funeral and cemetery trust investments | (203 | ) | 25,543 | |||||
Accounts payable | (562 | ) | 1,445 | |||||
Accrued and other liabilities | (1,529 | ) | 509 | |||||
Deferred preneed funeral and cemetery revenue | 303 | 329 | ||||||
Deferred preneed funeral and cemetery receipts held in trust | (1,484 | ) | (26,461 | ) | ||||
Net cash provided by operating activities | 36,565 | 49,904 | ||||||
Cash flows from investing activities: | ||||||||
Acquisitions and land for new construction | (57,874 | ) | (9,725 | ) | ||||
Purchase of land and buildings previously leased | (7,600 | ) | (6,080 | ) | ||||
Net proceeds from sale of businesses and other assets | 2,192 | 65 | ||||||
Capital expenditures | (16,075 | ) | (29,744 | ) | ||||
Net cash used in investing activities | (79,357 | ) | (45,484 | ) | ||||
Cash flows from financing activities: | ||||||||
Net borrowings on the revolving credit facility | 3,600 | 52,100 | ||||||
Net borrowings (payments) on the term loan | 3,313 | (9,375 | ) | |||||
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 long-term debt and obligations under capital leases | (840 | ) | (1,014 | ) | ||||
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 | 1,228 | 758 | ||||||
Dividends on common stock | (1,840 | ) | (1,819 | ) | ||||
Payment of loan origination costs | (825 | ) | (13 | ) | ||||
Excess tax benefit of equity compensation | 3,990 | 64 | ||||||
Purchase of treasury stock | — | (44,999 | ) | |||||
Net cash provided by (used in) financing activities | 41,828 | (4,298 | ) | |||||
Net increase (decrease) in cash and cash equivalents | (964 | ) | 122 | |||||
Cash and cash equivalents at beginning of year | 1,377 | 413 | ||||||
Cash and cash equivalents at end of year | $ | 413 | $ | 535 |
• | 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 are defined as charges or credits such as withdrawable trust income, acquisition and divestiture expenses, severance costs, loss on early retirement of debt and other costs, discrete tax items and other non-recurring amounts. Special items are taxed at the federal statutory rate of 34 percent for the three months and years ended December 31, 2014 and 2015, except for the accretion of the discount on Convertible Notes as this is a non-tax deductible item and the tax adjustment from prior period. |
• | Adjusted 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 December 31, | Years Ended December 31, | ||||||||||||||
2014 | 2015 | 2014 | 2015 | ||||||||||||
Net Income from continuing operations | $ | 5,367 | $ | 5,434 | $ | 15,446 | $ | 20,853 | |||||||
Special items, net of tax except for ** | |||||||||||||||
Withdrawable Trust Income | $ | 198 | $ | — | $ | 1,181 | $ | 366 | |||||||
Acquisition and Divestiture Expenses | 49 | 24 | 764 | 405 | |||||||||||
Severance Costs | 101 | 100 | 697 | 633 | |||||||||||
Consulting Fees | 41 | 367 | 277 | 1,265 | |||||||||||
Other Incentive Compensation | — | — | 660 | — | |||||||||||
Accretion of Discount on Convertible Subordinated Notes ** | 805 | 900 | 2,452 | 3,454 | |||||||||||
Costs Related to the Credit Facility | — | — | 688 | — | |||||||||||
Loss on Redemption of Convertible Junior Subordinated Debentures | — | — | 2,493 | — | |||||||||||
Loss (Gain) on Asset Purchase/Sale | 379 | — | (367 | ) | — | ||||||||||
Other Special Items | — | 14 | 503 | 244 | |||||||||||
Tax Adjustment from Prior Period ** | — | — | — | 141 | |||||||||||
Total Special items affecting net income | $ | 1,573 | $ | 1,405 | $ | 9,348 | $ | 6,508 | |||||||
Adjusted Net Income | $ | 6,940 | $ | 6,839 | $ | 24,794 | $ | 27,361 |
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2014 | 2015 | 2014 | 2015 | ||||||||||||
Net income from continuing operations | $ | 5,367 | $ | 5,434 | $ | 15,446 | $ | 20,853 | |||||||
Net provision for income taxes | 3,079 | 3,222 | 7,255 | 13,737 | |||||||||||
Pre-tax earnings from continuing operations | $ | 8,446 | $ | 8,656 | $ | 22,701 | $ | 34,590 | |||||||
Interest expense | 2,593 | 2,888 | 10,308 | 10,559 | |||||||||||
Accretion of discount on convertible subordinated notes | 805 | 900 | 2,452 | 3,454 | |||||||||||
Loss on early extinguishment of debt and other costs | — | — | 1,042 | — | |||||||||||
Loss on redemption of convertible junior subordinated debentures | — | — | 3,779 | — | |||||||||||
Non-cash stock compensation | 920 | 996 | 3,832 | 4,444 | |||||||||||
Depreciation & amortization | 3,142 | 3,656 | 11,923 | 13,780 | |||||||||||
Other, net | 571 | (9 | ) | 195 | 45 | ||||||||||
Consolidated EBITDA | $ | 16,477 | $ | 17,087 | $ | 56,232 | $ | 66,872 | |||||||
Adjusted For: | |||||||||||||||
Withdrawable Trust Income | $ | 300 | $ | — | $ | 1,788 | $ | 555 | |||||||
Acquisition and Divestiture Expenses | 74 | 37 | 1,158 | 614 | |||||||||||
Severance Costs | 153 | 151 | 1,056 | 959 | |||||||||||
Consulting Fees | 62 | 555 | 419 | 1,913 | |||||||||||
Other Incentive Compensation | — | — | 1,000 | — | |||||||||||
Other Special Items | — | 20 | — | 220 | |||||||||||
Adjusted Consolidated EBITDA | $ | 17,066 | $ | 17,850 | $ | 61,653 | $ | 71,133 | |||||||
Revenue | $ | 59,419 | $ | 61,610 | $ | 226,124 | $ | 242,502 | |||||||
Adjusted Consolidated EBITDA Margin | 28.7 | % | 29.0 | % | 27.3 | % | 29.3 | % |
Funeral Field EBITDA | Three Months Ended December 31, | Years Ended December 31, | |||||||||||||
2014 | 2015 | 2014 | 2015 | ||||||||||||
Gross Profit (GAAP) | $ | 14,537 | $ | 14,885 | $ | 54,102 | $ | 59,434 | |||||||
Depreciation & amortization | 1,782 | 2,038 | 6,841 | 7,614 | |||||||||||
Regional & unallocated costs | 2,483 | 3,478 | 7,879 | 9,604 | |||||||||||
Net financial income | (2,041 | ) | (2,161 | ) | (8,348 | ) | (8,339 | ) | |||||||
Funeral Field EBITDA | $ | 16,761 | $ | 18,240 | $ | 60,474 | $ | 68,313 |
Cemetery Field EBITDA | Three Months Ended December 31, | Years Ended December 31, | |||||||||||||
2014 | 2015 | 2014 | 2015 | ||||||||||||
Gross Profit (GAAP) | $ | 4,390 | $ | 4,806 | $ | 15,906 | $ | 18,074 | |||||||
Depreciation & amortization | 1,019 | 1,182 | 3,704 | 4,420 | |||||||||||
Regional & unallocated costs | 351 | 774 | 1,927 | 2,393 | |||||||||||
Net financial income | (2,358 | ) | (2,585 | ) | (9,341 | ) | (9,754 | ) | |||||||
Cemetery Field EBITDA | $ | 3,402 | $ | 4,177 | $ | 12,196 | $ | 15,133 |
Total Field EBITDA | Three Months Ended December 31, | Years Ended December 31, | |||||||||||||
2014 | 2015 | 2014 | 2015 | ||||||||||||
Funeral Field EBITDA | $ | 16,761 | $ | 18,240 | $ | 60,474 | $ | 68,313 | |||||||
Cemetery Field EBITDA | 3,402 | 4,177 | 12,196 | 15,133 | |||||||||||
Funeral Financial EBITDA | 2,041 | 2,161 | 8,348 | 8,339 | |||||||||||
Cemetery Financial EBITDA | 2,358 | 2,585 | 9,341 | 9,754 | |||||||||||
Total Field EBITDA | $ | 24,562 | $ | 27,163 | $ | 90,359 | $ | 101,539 |
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2014 | 2015 | 2014 | 2015 | ||||||||||||
GAAP basic earnings per share from continuing operations | $ | 0.29 | $ | 0.32 | $ | 0.84 | $ | 1.16 | |||||||
Special items affecting net income | 0.09 | 0.08 | 0.51 | 0.36 | |||||||||||
Adjusted basic earnings per share | $ | 0.38 | $ | 0.40 | $ | 1.35 | $ | 1.52 |
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2014 | 2015 | 2014 | 2015 | ||||||||||||
GAAP diluted earnings per share from continuing operations | $ | 0.29 | $ | 0.31 | $ | 0.83 | $ | 1.12 | |||||||
Special items affecting net income | 0.09 | 0.08 | 0.51 | 0.36 | |||||||||||
Adjusted diluted earnings per share | $ | 0.38 | $ | 0.39 | $ | 1.34 | $ | 1.48 |
• | the ability to find and retain skilled personnel; |
• | the effects of competition; |
• | the execution of our Standards Operating, 4E leadership and Standard Acquisition Models; |
• | changes in the number of deaths in our markets; |
• | changes in consumer preferences; |
• | our ability to generate preneed sales; |
• | the investment performance of our funeral and cemetery trust funds; |
• | fluctuations in interest rates; |
• | our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness; |
• | death benefits related to preneed funeral contracts funded through life insurance contracts; |
• | the financial condition of third-party insurance companies that fund our preneed funeral contracts; |
• | increased or unanticipated costs, such as insurance or taxes; |
• | effects of the application of applicable laws and regulations, including changes in such regulations or the interpretation thereof; |
• | consolidation of the deathcare industry; and |
• | other factors and uncertainties inherent in the deathcare industry. |
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