GlobeNewswire Inc | May 13, 2021 04:02PM EDT

May 13, 2021

BENSALEM, Pa., May 13, 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 first quarter ended March 31, 2021. Investors are encouraged to read the Companys quarterly report on Form 10-Q 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.

FIRST QUARTER FINANCIAL PERFORMANCE

-- Revenues for the first quarter were $78.3 million compared to $65.1 million in the first quarter in the prior year. -- Cemetery segment operating income for the first quarter was $11.7 million compared to $5.2 million in the first quarter in the prior year, representing an increase of $6.4 million. -- Funeral home segment operating income for the first quarter was $1.6 million compared to $1.4 million in the first quarter in the prior year, representing an increase of $0.2 million. -- Corporate overhead expense increased to $9.5 million in the first quarter compared to $8.5 million in the first quarter in the prior year. -- First quarter operating income was $3.6 million, compared to an operating loss of $2.1 million in the first quarter in the prior year. -- First quarter net loss from continuing operations was $5.2 million compared to $14.8 million in the first quarter in the prior year. -- First quarter adjusted EBITDA was $28.0 million compared to $7.1 million in the first quarter in the prior year.

Joe Redling, StoneMors President and Chief Executive Officer said, the first quarter of 2021 has continued to build upon the groundwork that was laid with our transformation initiatives, with top-line revenue growth of 20% and more than a $20 million increase in our adjusted EBITDA, year-over-year. We continue to deliver strong sales results, including 45% growth in cemetery sales production in the quarter. We have made great progress towards our previously announced guidance targets for organic growth in our trusts and unlevered free cash flow. During the first quarter, we generated more than $30 million in trust growth and $11.5 million in unlevered free cash flow against $50 million and $40 million annual targets, respectively.

LIQUIDITY UPDATE

As of March31, 2021, the Company had $65.3 million of cash, including $16.6 million of restricted cash, and $325.4 million of total debt.

On May 11, 2021, the Company closed its private offering of $400 million aggregate principal amount of its 8.500% Senior Secured Notes due 2029. The Company used the net proceeds of the offering to fund the redemption in full of approximately $338.1 million aggregate principal amount of the outstanding 9.875%/11.500% Senior Secured PIK Toggle Notes due 2024, together with an approximately $18.5 million prepayment premiums and pay fees and expenses incurred in connection with the offering. The remaining proceeds will be used for general corporate purposes, which may include acquisitions.

Earlier this week, we completed a transformational transaction for the Company by fortifying our balance sheet through a refinancing of all of our outstanding indebtedness. The new Notes dramatically increase our financial flexibility and improve our liquidity, including eliminating the maintenance covenants, extending maturity to 8 years, reducing our rate of interest and allowing us to enter into a super senior credit facility of up to $40 million, said Jeff DiGiovanni, StoneMors Senior Vice President and Chief Financial Officer. As a result of this transaction, StoneMor netted approximately $30 million in new cash to its balance sheet, resulting in approximately $78 million in cash on a pro forma basis at March 31, 2021, adjusted for the sale of the notes and the use of the proceeds thereof.

Redling added our transformation and cost savings initiatives set us on the right path and trajectory and the sales culture and production have powered the engine. The refinancing has substantially reduced potential structural limitations as we are now well positioned both operationally and financially to better serve our customers, employees and stockholders.

CONFERENCE CALL INFORMATION

StoneMor will conduct a conference call to discuss this news release today, May 13, 2021 at4:30 p.m. Eastern Time. The conference call can be accessed by calling (800) 786-5706. 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 304 cemeteries and 70 funeral homes in 24 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 continued implementation of the Companys performance and cost structure improvement efforts and the anticipated use of the remaining proceeds from the issuance of the notes, 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, sellers 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 EBITDA, adjusted 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):

EBITDA AND ADJUSTED EBITDA

Three Months Ended March31, 2021 2020 Net loss from continuing operations $ (5,213 ) $ (14,772 )Income tax benefit (expense) (1,676 ) 1,288 Interest expense 10,473 11,353 Depreciation and amortization 2,102 2,314 EBITDA 5,686 183 Cost of lots sold 1,394 1,296 Non-cash stock compensation 505 375 Change in deferred revenues 22,598 6,434 Change in deferred selling and obtaining (2,202 ) (1,178 )costsAdjusted EBITDA $ 27,981 $ 7,110

UNLEVERED CASH PROVIDED BY OPERATING ACTIVITIES AND UNLEVERED FREE CASH FLOW

Three Months Ended March31, 2021 2020 Net cash provided by (used in) operating $ 4,631 $ (5,238 )activitiesCash interest payments 8,639 7,015 Unlevered cash provided by operating 13,270 1,777 activitiesLess: cash paid for capital expenditures 1,774 2,073 Unlevered free cash flow $ 11,496 $ (296 )

STONEMOR INC.

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

March31, December 31, 2021 2020 Assets Current assets: Cash and cash equivalents, excluding $ 48,696 $ 39,244 restricted cashRestricted cash 16,575 20,846 Accounts receivable, net of allowance 58,912 57,869 Prepaid expenses 9,622 5,290 Assets held for sale 29,258 28,575 Other current assets 16,532 16,884 Total current assets 179,595 168,708 Long-term accounts receivable, net of 75,985 75,301 allowanceCemetery property 299,824 299,526 Property and equipment, net of 81,967 83,496 accumulated depreciationMerchandise trusts, restricted, at fair 524,623 501,453 valuePerpetual care trusts, restricted, at 319,175 312,228 fair valueDeferred selling and obtaining costs 119,068 116,900 Deferred tax assets 9 9 Intangible assets, net 54,826 55,094 Other assets 22,028 22,248 Total assets $ 1,677,100 $ 1,634,963 Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued liabilities $ 50,836 $ 51,718 Liabilities held for sale 24,146 23,406 Accrued interest 95 95 Current portion, long-term debt 3,226 317 Total current liabilities 78,303 75,536 Long-term debt, net of deferred financing 322,144 320,715 costsDeferred revenues 986,044 949,164 Deferred tax liabilities 27,926 29,652 Perpetual care trust corpus 319,175 312,228 Other long-term liabilities 40,040 40,081 Total liabilities 1,773,632 1,727,376 Commitments and contingencies Stockholders' equity: Common stock, par value $0.01 per share,200,000,000 shares authorized,117,918,016 1,179 1,178 and 117,871,141 shares issued andoutstanding, respectivelyPaid-in capital in excess of par value (84,728 ) (85,232 )Accumulated deficit (12,983 ) (8,359 )Total stockholders' equity (96,532 ) (92,413 )Total liabilities and stockholders' $ 1,677,100 $ 1,634,963 equity

STONEMOR INC.

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

Three Months Ended March31, 2021 2020 Revenues: Cemetery: Interments $ 20,519 $ 14,759 Merchandise 16,282 14,378 Services 17,281 15,027 Investment and other 12,898 10,633 Funeral home: Merchandise 5,973 5,386 Services 5,360 4,919 Total revenues 78,313 65,102 Costs and Expenses: Cost of goods sold 11,184 9,414 Cemetery expense 18,161 16,948 Selling expense 14,207 12,051 General and administrative expense 10,193 9,515 Corporate overhead 9,541 8,501 Depreciation and amortization 2,102 2,314 Funeral home expenses: Merchandise 1,661 1,336 Services 4,661 4,394 Other 3,019 2,760 Total costs and expenses 74,729 67,233 Operating income (loss) 3,584 (2,131 )Interest expense (10,473 ) (11,353 )Loss from continuing operations before income taxes (6,889 ) (13,484 )Income tax benefit (expense) 1,676 (1,288 )Net loss from continuing operations (5,213 ) (14,772 )Discontinued operations: Income from operations of discontinued businesses 589 23,775 Income tax expense ? ? Net income from discontinued operations 589 23,775 Net (loss) income $ (4,624 ) $ 9,003 Net loss from continuing operations per common $ (0.04 ) $ (0.16 )share (basic)Net income from discontinued operations per common 0.00 0.25 share (basic)Net loss per common share (basic) $ (0.04 ) $ 0.10 Net loss from continuing operations per common $ (0.04 ) $ (0.16 )share (diluted)Net income from discontinued operations per common 0.00 0.25 share (diluted)Net loss per common share (diluted) $ (0.04 ) $ 0.10 Weighted average number of common shares 117,909 94,472 outstanding - basicWeighted average number of common shares 117,909 94,472 outstanding - diluted

STONEMOR INC.

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

Three Months Ended March31, 2021 2020 Cash Flows From Operating Activities: Net (loss) income $ (4,624 ) $ 9,003 Adjustments to reconcile net (loss) income to netcash provided by (used in) operating activities:Cost of lots sold 1,394 1,296 Depreciation and amortization 2,142 2,459 Provision for bad debt 2,212 1,144 Non-cash compensation expense 505 375 Non-cash interest expense 1,880 5,260 Gain on sale of businesses (7 ) (24,086 ) Changes in assets and liabilities: Accounts receivable, net of allowance (6,843 ) (1,595 ) Merchandise trust fund (6,145 ) (1,829 ) Other assets (3,754 ) 2,338 Deferred selling and obtaining costs (2,202 ) (1,178 ) Deferred revenues 22,598 6,434 Deferred taxes, net (1,726 ) 1,228 Payables and other liabilities (799 ) (6,087 ) Net cash provided by (used in) operating 4,631 (5,238 ) activitiesCash Flows From Investing Activities: Cash paid for capital expenditures (1,774 ) (2,073 ) Proceeds from divestitures ? 28,190 Net cash (used in) provided by investing (1,774 ) 26,117 activitiesCash Flows From Financing Activities: Proceeds from borrowings 4,433 2,639 Repayments of debt (1,541 ) (32,181 ) Principal payment on finance leases (299 ) (425 ) Cost of financing activities (269 ) (213 ) Net cash provided (used in) by financing 2,324 (30,180 ) activitiesNet increase in cash, cash equivalents and 5,181 (9,301 ) restricted cashCash, cash equivalents and restricted 60,090 56,767 cash?Beginning of periodCash, cash equivalents and restricted cash?End of $ 65,271 $ 47,466 periodSupplemental disclosure of cash flow information: Cash paid during the period for interest $ 8,639 $ 7,015 Cash paid during the period for income taxes 505 ? Cash paid for amounts included in the measurement of lease liabilities:Operating cash flows from operating leases $ 473 $ 848 Operating cash flows from finance leases 87 116 Financing cash flows from finance leases 299 425 Non-cash investing and financing activities: Accrued paid-in-kind interest on 2024 Notes $ ? $ 3,615