GlobeNewswire Inc | Mar 23, 2021 04:01PM EDT

March 23, 2021

BENSALEM, Pa., March 23, 2021 (GLOBE NEWSWIRE) -- StoneMor Inc. (NYSE: STON) (StoneMor or the Company), a leading owner and operator of cemeteries and funeral homes, today reported operating and financial results for the fourth quarter and year ended December 31, 2020. Investors are encouraged to read the Companys annual report on Form 10-K when it is filed with the Securities and Exchange Commission (the SEC), which will contain additional details, and will be posted at www.stonemor.com.

FOURTH QUARTER AND FULL YEAR 2020 FINANCIAL PERFORMANCE

-- Revenues for the fourth quarter were $74.9 million compared to $58.3 million in the fourth quarter in the prior year. Full year revenues were $279.5 million compared to $257.2 million in the prior year period. -- Cemetery segment operating income for the fourth quarter was $10.9 million compared to an operating loss of $0.6 million in the fourth quarter in the prior year, representing an increase of $11.5 million. Full year cemetery segment operating income was $35.0 million compared to $8.0 million in the prior year period, representing an increase of $27.0 million. -- Funeral home segment operating income for the fourth quarter was $1.5 million compared to $0.9 million in the fourth quarter in the prior year, representing an increase of $0.6 million. Full year funeral home segment operating income was $5.0 million compared to $4.0 million in the prior year period, representing an increase of $1.0 million. -- Corporate overhead expense decreased to $9.0 million in the fourth quarter compared to $13.0 million in the fourth quarter in the prior year. Full year corporate overhead expense decreased to $36.0 million compared to $51.1 million in the prior year period. -- Fourth quarter operating income was $3.4 million, compared to an operating loss of $17.4 million in the fourth quarter in the prior year. Full year operating income was $3.3 million, compared to an operating loss of $47.9 million in the prior year period. -- Fourth quarter net loss from continuing operations was $5.7 million compared to $52.4 million in the fourth quarter in the prior year. Full year net loss from continuing operations was $37.3 million compared to $154.7 million in the prior year period. Full year net loss from continuing operations in the prior year period included a loss on impairment of goodwill of $24.9 million and a loss on debt extinguishment of $8.5 million.

Joe Redling, StoneMors President and Chief Executive Officer said, The groundwork that was laid with our transformation initiatives, allowed StoneMor to produce another very strong quarter financially, while weathering the surge in the COVID-19 pandemic. We saw 29% year-over-year revenue growth, driven by a strong sales performance including a 20% increase in pre-need sales production. The revenue growth coupled with the continued focus on our operating initiatives and cost structure resulted in Adjusted EBITDA of $5.5 million in the fourth quarter, an improvement of $16.1 million versus the prior year.

LIQUIDITY UPDATE

As of December31, 2020, the Company had $60.1 million of cash, including $20.8 million of restricted cash, and $321.0 million of total debt.

During the fourth quarter of 2020, StoneMor generated unlevered free cash flow of $4.9 million and increased the value of its trust assets by $45.6 million (net of income and principal distributions) resulting in a further deleveraging of our balance sheet, said Jeff DiGiovanni, StoneMors Senior Vice President and Chief Financial Officer. For 2021, we have set targets of $40 million in unlevered free cash flow and $50 million in growth in our trust assets (net of income and principal distributions). From a financial standpoint, we are focused on cash generation and trust asset growth as our key drivers of long-term stockholder value creation.

Redling added With the recent financial success, we are excited about our opportunity for future growth. A great deal of thanks and appreciation to the StoneMor team that has persevered through a difficult environment and delivered this high level of performance for the company and the communities and families we serve.

CONFERENCE CALL INFORMATION

StoneMor will conduct a conference call to discuss this news release today, March 23, 2021 at4:30 p.m. Eastern Time. The conference call can be accessed by calling (877) 308-6987. No reservation number is necessary; however, due to the on-going pandemic, it is advised that interested parties access the call-in number 5 to 10 minutes prior to the scheduled start time to avoid delays. StoneMor will also host a live webcast of this conference call. Investors may access the live webcast via the Investors page of the StoneMor website www.stonemor.com under Events & Presentations.

About StoneMor Inc.

StoneMor Inc., headquartered in Bensalem, Pennsylvania, is an owner and operator of cemeteries and funeral homes in the United States, with 313 cemeteries and 80 funeral homes in 26 states and Puerto Rico. StoneMors cemetery products and services, which are sold on both a pre-need (before death) and at-need (at death) basis, include: burial lots, lawn and mausoleum crypts, burial vaults, caskets, memorials, and all services which provide for the installation of this merchandise. For additional information about StoneMor Inc. please visit StoneMors website, and the investors section, at http://www.stonemor.com.

CONTACTInvestor RelationsStoneMor Inc.(215) 826-4438

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this press release, including, but not limited to, information regarding unlevered free cash flow and trust asset growth targets, are forward-looking statements. Generally, the words believe, may, will, estimate, continue, anticipate, intend, project, expect, predict and similar expressions identify these forward-looking statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are based on managements current expectations and estimates. These statements are neither promises nor guarantees and are made subject to certain risks and uncertainties that could cause actual results to differ materially from the results stated or implied in this press release. StoneMors major risks are related to uncertainties associated withcurrent business and economic disruptions resulting from the recent coronavirus pandemic, including the effect of government regulations issued in connection therewith, its ability to identify, and negotiate acceptable agreements with, purchasers of additional properties, uncertainties associated with the cash flow frompre-need andat-needsales, trusts and financings, which may impact StoneMors ability to meet its financial projections and service its debt, as well as with StoneMors ability to maintain an effective system of internal control over financial reporting and disclosure controls and procedures.

When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth in StoneMors Annual Report on Form10-Kand Quarterly Reports on Form10-Qand the other reports that StoneMor files with the Securities and Exchange Commission, from time to time. Except as required under applicable law, StoneMor assumes no obligation to update or revise any forward-looking statements made herein or any other forward-looking statements made by it, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures, including adjusted operating income, EBITDA, adjusted EBITDA, field EBITDA, unlevered cash provided by operating activities and unlevered free cash flow, which are intended as supplemental measures of the Companys performance that are not required by or presented in accordance with GAAP. All business results presented in this release are not prepared in accordance with Article 11 of Regulation S-X.

Management uses these non-GAAP measures internally to evaluate and manage the Companys operations and to better understand its business because they facilitate a comparative assessment of the Company's operating performance relative to its performance based on results calculated under GAAP. These non-GAAP measures also isolate the effects of some items that vary from period to period without any correlation to core operating performance and eliminate certain charges that management believes do not reflect the Company's operations and underlying operational performance. The Compensation, Nominating and Governance Committee of the Companys board of directors also uses certain of these measures to evaluate management's performance and set its compensation. The Company believes that these non-GAAP measures also provide useful information to investors regarding certain financial and business trends relating to the Companys financial condition and operating results facilitates an evaluation of the financial performance of the Company and its operations on a consistent basis. Providing this information therefore allows investors to make independent assessments of the Companys financial performance, results of operation and trends while viewing the information through the eyes of management.

These non-GAAP measures are subject to limitations. The non-GAAP measures presented in this release may not be comparable to similarly titled measures used by other companies because other companies may not calculate one or more in the same manner. Additionally, the non-GAAP performance measures exclude significant expenses and income that are required by GAAP to be recorded in the Companys financial statements; do not reflect changes in, or cash requirements for, working capital needs; and do not reflect interest expense, or the requirements necessary to service interest or principal payments on debt. Further, our historical adjusted results are not intended to project our adjusted results of operations or financial position for any future period. To compensate for these limitations, management presents and considers these non-GAAP measures in conjunction with the Companys GAAP results; no non-GAAP measure should be considered in isolation from or as alternatives to net income, earnings per share or any other measure determined in accordance with GAAP. Readers should review the reconciliations included below, and should not rely on any single financial measure to evaluate the Companys business.

A reconciliation of each non-GAAP measure to the most directly comparable GAAP measure is set forth below (in thousands):

ADJUSTED OPERATING INCOME (LOSS)

Three Months Ended Year Ended December31, December31, 2020 2019 2020 2019 Operatingincome (loss) $ 3,386 $ (17,374 ) $ 3,341 $ (47,928 )from continuingoperationsLess: Othergains (losses), 129 (4,355 ) 129 (7,913 )netAdjustedoperating $ 3,257 $ (13,019 ) $ 3,212 $ (40,015 )income (loss)

EBITDA, ADJUSTED EBITDA AND FIELD EBITDA

Three Months Ended Year Ended December31, December31, 2020 2019 2020 2019 Net loss from continuing $ (5,677 ) $ (52,373 ) $ (37,341 ) $ (154,718 )operationsIncome tax benefit (1,522 ) 23,363 (4,855 ) 28,204 (expense)Interest expense 10,585 11,636 45,537 45,246 Depreciation and 2,277 2,498 9,152 10,154 amortizationEBITDA 5,663 (14,876 ) 12,493 (71,114 )Less: Other gains 129 (4,355 ) 129 (7,913 )(losses), netLess: Loss on debt ? ? ? (8,478 )extinguishmentLess: Loss on impairment ? ? ? (24,862 )of goodwillAdjusted EBITDA 5,534 (10,521 ) 12,364 (29,861 )Less: Investment and 14,168 10,072 43,732 36,998 other incomePlus: Corporate overhead 8,956 12,962 35,975 51,107 Field EBITDA $ 322 $ (7,631 ) $ 4,607 $ (15,752 )

UNLEVERED CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES AND UNLEVERED FREE CASH FLOW

Three Months Ended Year Ended December31, December31, 2020 2019 2020 2019 Net cashprovided by(used in) $ (2,425 ) $ (11,231 ) $ 1,360 $ (37,986 )operatingactivitiesCash interest 8,851 7,795 29,212 32,239 paymentsUnleveredcash providedby (used in) 6,426 (3,436 ) 30,572 (5,747 )operatingactivitiesLess: cashpaid for 1,576 675 6,360 6,418 capitalexpendituresUnleveredfree cash $ 4,850 $ (4,111 ) $ 24,212 $ (12,165 )flow

STONEMOR INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)(in thousands, except share and per share data)

December31, December 31, 2020 2019 Assets Current assets: Cash and cash equivalents, excluding $ 39,244 $ 34,867 restricted cashRestricted cash 20,846 21,900 Accounts receivable, net of allowance 57,869 54,014 Prepaid expenses 5,290 4,619 Assets held for sale 28,575 136,695 Other current assets 16,884 16,882 Total current assets 168,708 268,977 Long-term accounts receivable, net of 75,301 72,808 allowanceCemetery property 299,526 300,486 Property and equipment, net of accumulated 83,496 91,611 depreciationMerchandise trusts, restricted, at fair value 501,453 477,165 Perpetual care trusts, restricted, at fair 312,228 314,400 valueDeferred selling and obtaining costs 116,900 110,684 Deferred tax assets 9 81 Intangible assets, net 55,094 56,246 Other assets 22,248 26,910 Total assets $ 1,634,963 $ 1,719,368 Liabilities and Owners' Equity Current liabilities: Accounts payable and accrued liabilities $ 51,718 $ 54,854 Liabilities held for sale 23,406 101,704 Accrued interest 95 125 Current portion, long-term debt 317 374 Total current liabilities 75,536 157,057 Long-term debt, net of deferred financing 320,715 367,963 costsDeferred revenues 949,164 899,989 Deferred tax liabilities 29,652 34,613 Perpetual care trust corpus 312,228 314,400 Other long-term liabilities 40,081 47,836 Total liabilities 1,727,376 1,821,858 Commitments and contingencies Owners' equity: Common stock, par value $0.01 per share,200,000,000 shares authorized, 117,871,141 and 1,178 944 94,447,356 shares issued and outstanding,respectivelyPaid-in capital in excess of par value (85,232 ) (103,434 )Accumulated deficit (8,359 ) ? Total owners' equity (92,413 ) (102,490 )Total liabilities and owners' equity $ 1,634,963 $ 1,719,368

STONEMOR INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)(in thousands, except per share data)

Three Months Ended Year Ended December31, December31, 2020 2019 2020 2019 Revenues: Cemetery: Interments $ 16,311 $ 12,345 $ 67,853 $ 57,010 Merchandise 15,682 11,497 60,600 59,938 Services 18,045 14,361 65,701 62,676 Investment and other 14,168 10,072 43,732 36,998 Funeral home: Merchandise 5,536 4,792 21,637 19,682 Services 5,164 5,213 20,016 20,938 Total revenues 74,906 58,280 279,539 257,242 Costs and Expenses: Cost of goods sold 11,812 8,216 40,119 37,088 Cemetery expense 18,279 16,010 68,654 69,828 Selling expense 12,292 13,279 49,668 53,710 General and 9,298 9,764 37,970 40,830 administrative expenseCorporate overhead 8,956 12,962 35,975 51,107 Depreciation and 2,277 2,498 9,152 10,154 amortizationFuneral home expenses: Merchandise 1,602 1,418 5,872 5,725 Services 4,398 4,255 18,078 17,144 Other 2,735 2,897 10,839 11,671 Total costs and 71,649 71,299 276,327 297,257 expenses Other gains (losses), 129 (4,355 ) 129 (7,913 )netOperating income 3,386 (17,374 ) 3,341 (47,928 )(loss)Interest expense (10,585 ) (11,636 ) (45,537 ) (45,246 )Loss on debt ? ? ? (8,478 )extinguishmentLoss on goodwill ? ? ? (24,862 )impairmentLoss from continuingoperations before (7,199 ) (29,010 ) (42,196 ) (126,514 )income taxesIncome tax benefit 1,522 (23,363 ) 4,855 (28,204 )(expense)Net loss from (5,677 ) (52,373 ) (37,341 ) (154,718 )continuing operationsDiscontinued operations:Income from operationsof discontinued 86 15 28,982 2,776 businessesIncome tax expense ? ? ? ? Net income fromdiscontinued 86 15 28,982 2,776 operationsNet loss $ (5,591 ) $ (52,358 ) $ (8,359 ) $ (151,942 ) Net loss fromcontinuing operations $ (0.05 ) $ (1.24 ) $ (0.35 ) $ (3.91 )per common share(basic)Net income fromdiscontinued 0.00 0.00 0.27 0.07 operations per commonshare (basic)Net loss per common $ (0.05 ) $ (1.23 ) $ (0.08 ) $ (3.84 )share (basic) Net loss fromcontinuing operations $ (0.05 ) $ (1.24 ) $ (0.35 ) $ (3.90 )per common share(diluted)Net income fromdiscontinued 0.00 0.00 0.27 0.07 operations per commonshare (diluted)Net loss per common $ (0.05 ) $ (1.23 ) $ (0.08 ) $ (3.83 )share (diluted) Weighted averagenumber of common 117,862 42,401 106,991 39,614 shares outstanding -basicWeighted averagenumber of common 117,955 42,401 107,001 39,677 shares outstanding -diluted

STONEMOR INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)

Year Ended December31, 2020 2019 Cash Flows From Operating Activities: Net loss $ (8,359 ) $ (151,942 )Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Cost of lots sold 5,796 7,027 Depreciation and amortization 9,395 10,782 Provision for bad debt 6,275 7,559 Non-cash compensation expense 1,481 3,623 Loss on debt extinguishment ? 8,478 Loss on goodwill impairment ? 24,862 Non-cash interest expense 17,884 18,095 Gain on sale of businesses (29,429 ) ? Other (gains) losses, net (129 ) 8,106 Changes in assets and liabilities: Accounts receivable, net of allowance (20,453 ) (8,633 ) Merchandise trust fund (25,988 ) (17,916 ) Other assets 1,675 (56 ) Deferred selling and obtaining costs (6,376 ) (3,598 ) Deferred revenues 61,611 36,656 Deferred taxes, net (4,888 ) 27,943 Payables and other liabilities (7,135 ) (8,972 ) Net cash provided by (used in) operating 1,360 (37,986 )activitiesCash Flows From Investing Activities: Cash paid for capital expenditures (6,360 ) (6,418 )Proceeds from divestitures 57,343 6,255 Net cash provided by (used in) investing 50,983 (163 )activitiesCash Flows From Financing Activities: Proceeds from issuance of Series A Preferred Stock 8,800 ? - related partyProceeds from issuance of Common Stock - related 8,200 ? partyProceeds from issuance of redeemable convertible ? 12,500 preferred unitsProceeds from issuance of redeemable convertible ? 45,000 preferred units - related partyProceeds from borrowings 3,672 406,087 Repayments of debt (63,915 ) (366,905 )Principal payment on finance leases (1,561 ) (1,464 )Cost of financing activities (4,170 ) (17,396 )Reduction to GP Holdings' Merger consideration due ? (250 )to SEC settlement - related partyUnits repurchased related to unit-based (46 ) (803 )compensation Net cash (used in) provided by financing (49,020 ) 76,769 activitiesNet increase in cash, cash equivalents and 3,323 38,620 restricted cashCash, cash equivalents and restricted 56,767 18,147 cash?Beginning of periodCash, cash equivalents and restricted cash?End of $ 60,090 $ 56,767 periodSupplemental disclosure of cash flow information: Cash paid during the period for interest $ 29,212 $ 32,239 Cash paid during the period for income taxes 1,154 1,419 Cash paid for amounts included in the measurement of lease liabilities:Operating cash flows from operating leases $ 3,187 $ 3,638 Operating cash flows from finance leases 421 495 Financing cash flows from finance leases 1,561 1,464 Non-cash investing and financing activities: Acquisition of assets by financing $ 62 $ 2,277 Accrued paid-in-kind interest on Senior Secured 10,572 7,867 Notes (defined within)