GlobeNewswire Inc | Aug 10, 2021 04:01PM EDT

August 10, 2021

BENSALEM, Pa., Aug. 10, 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 second quarter ended June 30, 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.

SECOND QUARTER FINANCIAL PERFORMANCE

-- Revenues for the second quarter were $83.0 million compared to $66.6 million in the second quarter in the prior year. Six-month revenues were $161.3 million compared to $131.7 million in the prior year period. Cemetery segment operating income for the second quarter was $14.7 million compared to $7.4 million in the second quarter in the prior year, representing an increase of $7.2 million. Six-month cemetery segment operating profit was $26.3 million compared to $12.6 million in the prior year period, representing an increase of $13.7 million.Funeral home segment operating income for the second quarter was $1.2 million compared to $1.0 million in the second quarter in the prior year, representing an increase of $0.2 million. Six-month funeral home segment operating profit was $2.8 million compared to $2.4 million in the prior year period, representing an increase of $0.4 million.Corporate overhead expense increased to $9.5 million in the second quarter compared to $8.8 million in the second quarter in the prior year. Six-month corporate overhead expense increased to $19.1 million compared to $17.3 million in the prior year period. -- Second quarter operating income was $4.1 million, compared to an operating loss of $0.6 million in the second quarter in the prior year. -- Second quarter net loss from continuing operations was $36.2 million compared to $8.8 million in the second quarter in the prior year. -- Second quarter adjusted EBITDA was $32.1 million compared to $15.1 million in the second quarter in the prior year.

Joe Redling, StoneMors President and Chief Executive Officer said, The second quarter continued to build upon the momentum from the second half of 2020 and the first quarter of 2021, with top-line revenue growth of 25% and more than a $17 million increase in our adjusted EBITDA year-over-year. We continue to deliver strong cemetery sales production results, with 26% growth in pre-need cemetery sales production.

LIQUIDITY UPDATE

As of June30, 2021, the Company had $107.0 million of cash, including $16.6 million of restricted cash, and $391.4 million of total debt.

We have made great progress towards our previously announced guidance targets for organic growth in our trusts and unlevered free cash flow, said Jeff DiGiovanni, StoneMors Senior Vice President and Chief Financial Officer. For the six-months ended June 30, 2021, we generated $58 million in trust growth and $26 million in unlevered free cash flow, against $50 million and $40 million annual targets, respectively. This is a testament to the success of our transformation plan and the hard-work of every member of the StoneMor team.

Redling added, While the successful execution of our turnaround strategy was an important step, it was only the first phase of the StoneMor transformation. We are on the right trajectory and have the tools and team in place to execute on the next phase of our transformation which is already in full force a continued focus on growth.

CONFERENCE CALL INFORMATION

StoneMor will conduct a conference call to discuss this news release today, August 10, 2021 at4:30 p.m. Eastern Time. The conference call can be accessed by calling (877) 221-6399. 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 301 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 transformation, 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 ongoing 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 adjusted EBITDA 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 Companys 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 Companys 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 managements 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 and facilitate 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 an alternative 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 Six Months Ended June30, June30, 2021 2020 2021 2020 Net loss from continuing $ (36,245 ) $ (8,798 ) $ (41,458 ) $ (23,570 )operationsIncome tax benefit (9,736 ) (3,492 ) (11,412 ) (2,204 )Interest expense 9,977 11,729 20,450 23,082 Depreciation and 2,027 2,293 4,129 4,607 amortizationEBITDA (33,977 ) 1,732 (28,291 ) 1,915 Loss on debt 40,128 ? 40,128 ? extinguishmentLoss on sale of business 2,220 ? 2,220 ? and other impairmentsOther gains (69 ) ? (69 ) ? Cost of lots sold 2,257 1,547 3,651 2,843 Non-cash stock 508 352 1,013 727 compensationChange in deferred 23,054 13,229 45,652 19,663 revenuesChange in deferredselling and obtaining (2,027 ) (1,790 ) (4,229 ) (2,968 )costsAdjusted EBITDA $ 32,094 $ 15,070 $ 60,075 $ 22,180

UNLEVERED CASH PROVIDED BY OPERATING ACTIVITIES AND UNLEVERED FREE CASH FLOW

Three Months Ended Six Months Ended June30, June30, 2021 2020 2021 2020 Net cash (usedin) provided by $ (6,198 ) $ 6,439 $ (1,567 ) $ 1,201 operatingactivitiesCash interest 22,502 6,660 31,141 13,675 paymentsUnlevered cashprovided by 16,304 13,099 29,574 14,876 operatingactivitiesLess: cash paidfor capital 1,587 1,718 3,361 3,791 expendituresUnlevered free $ 14,717 $ 11,381 $ 26,213 $ 11,085 cash flow

STONEMOR INC.

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

June30, December 31, 2021 2020 Assets Current assets: Cash and cash equivalents, excluding restricted $ 90,398 $ 39,244 cashRestricted cash 16,575 20,846 Accounts receivable, net of allowance 58,661 57,869 Prepaid expenses 6,911 5,290 Assets held for sale ? 28,575 Other current assets 15,178 16,884 Total current assets 187,723 168,708 Long-term accounts receivable, net of allowance 76,599 75,301 Cemetery property 296,529 299,526 Property and equipment, net of accumulated 80,392 83,496 depreciationMerchandise trusts, restricted, at fair value 544,268 501,453 Perpetual care trusts, restricted, at fair 326,958 312,228 valueDeferred selling and obtaining costs 120,229 116,900 Deferred tax assets 7 9 Intangible assets, net 54,559 55,094 Other assets 24,924 22,248 Total assets $ 1,712,188 $ 1,634,963 Liabilities and Stockholders? Equity Current liabilities: Accounts payable and accrued liabilities $ 45,943 $ 51,718 Liabilities held for sale ? 23,406 Accrued interest 4,722 95 Current portion, long-term debt 1,859 317 Total current liabilities 52,524 75,536 Long-term debt, net of deferred financing costs 389,559 320,715 Deferred revenues 1,013,653 949,164 Deferred tax liabilities 18,127 29,652 Perpetual care trust corpus 326,958 312,228 Other long-term liabilities 42,776 40,081 Total liabilities 1,843,597 1,727,376 Commitments and contingencies Stockholders? equity: Common stock, par value $0.01 per share, 200,000,000 shares authorized, 117,964,891and 117,871,141 shares issued and outstanding, 1,180 1,178 respectivelyPaid-in capital in excess of par value (84,221 ) (85,232 )Accumulated deficit (48,368 ) (8,359 )Total stockholders? equity (131,409 ) (92,413 )Total liabilities and stockholders? equity $ 1,712,188 $ 1,634,963

STONEMOR INC.

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

Three Months Ended Six Months Ended June30, June30, 2021 2020 2021 2020 Revenues: Cemetery: Interments $ 22,906 $ 16,467 $ 43,425 $ 31,226 Merchandise 17,787 14,591 34,069 28,969 Services 17,698 16,551 34,979 31,578 Investment and other 13,737 9,254 26,635 19,887 Funeral home: Merchandise 5,449 4,825 11,422 10,211 Services 5,404 4,913 10,764 9,832 Total revenues 82,981 66,601 161,294 131,703 Costs and Expenses: Cost of goods sold 12,435 9,269 23,619 18,683 Cemetery expense 18,090 17,229 36,251 34,177 Selling expense 14,776 12,206 28,983 24,257 General and 10,650 9,130 20,843 18,645 administrative expenseCorporate overhead 9,534 8,756 19,075 17,257 Depreciation and 2,027 2,293 4,129 4,607 amortizationFuneral home expenses: Merchandise 1,478 1,364 3,139 2,700 Services 4,477 4,425 9,138 8,819 Other 3,239 2,490 6,258 5,250 Total costs and 76,706 67,162 151,435 134,395 expenses Loss on sale ofbusiness and other (2,220 ) ? (2,220 ) ? impairmentsOther gains 69 ? 69 ? Operating income (loss) 4,124 (561 ) 7,708 (2,692 )Interest expense (9,977 ) (11,729 ) (20,450 ) (23,082 )Loss on debt (40,128 ) ? (40,128 ) ? extinguishmentLoss from continuingoperations before (45,981 ) (12,290 ) (52,870 ) (25,774 )income taxesIncome tax benefit 9,736 3,492 11,412 2,204 Net loss from (36,245 ) (8,798 ) (41,458 ) (23,570 )continuing operationsDiscontinued operations (Note 2):Income from operationsof discontinued 860 4,884 1,449 28,659 businessesIncome tax expense ? ? ? ? Net income from 860 4,884 1,449 28,659 discontinued operationsNet (loss) income $ (35,385 ) $ (3,914 ) $ (40,009 ) $ 5,089 Net loss fromcontinuing operations $ (0.31 ) $ (0.09 ) $ (0.35 ) $ (0.25 )per common share(basic)Net income fromdiscontinued operations 0.01 0.05 0.01 0.30 per common share(basic)Net (loss) income per $ (0.30 ) $ (0.04 ) $ (0.34 ) $ 0.05 common share (basic) Net loss fromcontinuing operations $ (0.31 ) $ (0.09 ) $ (0.35 ) $ (0.25 )per common share(diluted)Net income fromdiscontinued operations 0.01 0.05 0.01 0.30 per common share(diluted)Net (loss) income per $ (0.30 ) $ (0.04 ) $ (0.34 ) $ 0.05 common share (diluted)Weighted average numberof common shares 117,956 97,572 117,933 96,022 outstanding - basicWeighted average numberof common shares 117,956 97,572 117,933 96,022 outstanding - diluted

STONEMOR INC.

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

Six Months Ended June30, 2021 2020 Cash Flows From Operating Activities: Net (loss) income $ (40,009 ) $ 5,089 Adjustments to reconcile net (loss) income to net cash (used in) provided byoperating activities: Cost of lots sold 3,651 2,843 Depreciation and amortization 4,169 4,793 Provision for bad debt 3,519 3,807 Non-cash compensation expense 1,013 727 Loss on debt extinguishment 40,128 ? Non-cash interest expense 3,160 10,506 Loss (gain) on sale of businesses 1,353 (28,951 )Other gains (69 ) ? Payment-in-kind interest premium (18,440 ) ? Changes in assets and liabilities: Accounts receivable, net of allowance (11,522 ) (8,234 )Merchandise trust fund (17,378 ) (2,242 )Other assets (2,942 ) 4,746 Deferred selling and obtaining costs (4,229 ) (2,968 )Deferred revenues 45,652 19,663 Deferred taxes, net (11,523 ) (2,340 )Payables and other liabilities 1,900 (6,238 )Net cash (used in) provided by operating activities (1,567 ) 1,201 Cash Flows From Investing Activities: Cash paid for capital expenditures (3,361 ) (3,791 )Proceeds from divestitures 6,578 48,336 Net cash provided by investing activities 3,217 44,545 Cash Flows From Financing Activities: Proceeds from issuance of Series A Preferred Stock ? 8,800 Proceeds from issuance of Common Stock ? 8,200 Proceeds from borrowings 404,433 2,639 Repayments of debt (329,294 ) (53,572 )Principal payment on finance leases (796 ) (749 )Early redemption premium (18,478 ) ? Cost of financing activities (10,632 ) (4,236 )Shares repurchased related to share-based ? (35 )compensationNet cash provided by (used in) financing activities 45,233 (38,953 )Net increase in cash, cash equivalents and 46,883 6,793 restricted cashCash, cash equivalents and restricted cash?Beginning 60,090 56,767 of periodCash, cash equivalents and restricted cash?End of $ 106,973 $ 63,560 periodSupplemental disclosure of cash flow information: Cash paid during the period for interest $ 31,141 $ 13,675 Cash paid during the period for income taxes 1,989 ? Cash paid for amounts included in the measurement of lease liabilities:Operating cash flows from operating leases $ 961 $ 1,611 Operating cash flows from finance leases 166 225 Financing cash flows from finance leases 796 749 Non-cash investing and financing activities: Accrued paid-in-kind interest on 2024 Notes $ ? $ 7,077