HOUSTON, Nov. 3, 2015 /PRNewswire/ -- Mel Payne, Chief Executive Officer, stated, "We
achieved record third quarter results which accelerated our high
performance growth for the first nine months of 2015 during which
we achieved Total Revenue growth of 8.5% to $180.9 million, Adjusted Consolidated EBITDA
growth of 19.5% to $53.3 million, Adjusted Diluted Earnings Per
Share growth of 12.4% to $1.09 and
Adjusted Free Cash Flow growth of 24.0% to $38.8 million. Excluding a one-time
$1.7 million tax benefit in the
third quarter of 2014, equal to 9.5
cents per share, the Adjusted Diluted Earnings Per Share
growth year over year for the nine months rose to 24.6%. And
excluding the one-time tax benefit last year while including all
the overhead and share count changes this year on a proforma basis
to December 31, 2014 (explained below
and on page 2), the Adjusted Diluted EPS growth year over year for
the nine months rose to 36.0%. Because of the acceleration of our
earnings growth this year, we are raising our Rolling Four Quarter
Outlook of Adjusted Diluted Earnings Per Share by $0.08 to a range of $1.65
- $1.69 for the period ending September 30, 2016.
The third quarter record revenue and earnings performance was
simply remarkable with Total Revenue higher by 7.0%, Total Field
EBITDA up 12.9%, and Adjusted Consolidated EBITDA up an amazing
24.7%, pushing up Adjusted Consolidated EBITDA Margin by 400 basis
points to 28.1% during what has been historically our weakest
seasonal quarter by far - just not this year! Adjusted
Diluted EPS of $0.33 for the third
quarter was 46.7% higher than last year excluding the 2014 one-time
tax benefit. In combination with lower adjusted Total
Overhead, our performance was fueled by substantial contributions
from both the Funeral and Cemetery Same Store and Acquisition
segments with growth rates in Field EBITDA substantially greater
than respective growth rates in revenue because of broadly
increasing Field EBITDA Margins across the portfolio.
Highlights are shown below:
Nine Months Ended September 30,
2015
- Total Revenue of $180.9 million,
an increase of 8.5%;
- Adjusted Consolidated EBITDA of $53.3
million, an increase of 19.5%;
- Adjusted Consolidated EBITDA Margin up 280 basis points to
29.5%;
- Adjusted Diluted Earnings Per Share of $1.09, an increase of 12.4%;
- Adjusted Net Profit Margin up 60 basis points to 11.3%;
and
- Adjusted Free Cash Flow of $38.8
million, an increase of 24.0%.
Three Months Ended September 30,
2015
- Total Revenue of $58.4 million,
an increase of 7.0%;
- Adjusted Consolidated EBITDA of $16.4
million, an increase of 24.7%;
- Adjusted Consolidated EBITDA Margin up 400 basis points to
28.1%;
- Adjusted Diluted Earnings Per Share of $0.33, an increase of 3.1%;
- Adjusted Net Profit Margin down 60 basis points to 10.5%;
and
- Adjusted Free Cash Flow of $13.4
million, an increase of 11.7%.
During May 2015 and again this
past September, our Board of Directors approved the repurchase of
up to an aggregate of $45 million of the Company's common
stock. The repurchases through September 30, 2015
totaled 1.2 million shares at an aggregate cost of $27.3 million and average cost per share of
$22.67. These repurchases
represent about 6.5% of our previous shares outstanding and on a
proforma basis for the first nine months of this year would have
added about $0.08 to our Adjusted
Diluted EPS. As I said in our September 28, 2015 press release announcing
another $20 million to this program, "we view the repurchases
of our shares at this time as a 'no brainer'!" Our goal and
vision for Carriage as a leadership team is simple:
Become recognized by
institutional investors and those in our industry as a superior
Consolidation, Operating and Value Creation Investment Platform by
consistently allocating our precious capital, especially our
growing Free Cash Flow, with disciplined savviness and flexibility
among various investment options so as to maximize the intrinsic
value of Carriage per share over the next ten years.
As I have mentioned repeatedly, both in various publicly
available writings and on conference calls, Carriage has entered an
enterprise value creation "earning power sweet spot" that is
accelerating the Carriage Good To Great Journey.
Notwithstanding that this year we have only made one relatively
small (but good and growing) acquisition through nine months, our
Total Revenue has grown 8.5% (Total Field EBITDA 13.0%), Same Store
Funeral Revenue 3.8% (Same Store Funeral EBITDA 8.1%), and Same
Store Cemetery Revenue 5.3% (Same Store Cemetery Field EBITDA
18.7%). Our Acquisition Portfolio performance for the nine
months is even more impressive, as Acquisition Funeral Revenue
(acquisitions since 2010) has grown 28.2% (Acquisition Funeral
Field EBITDA 37.8%), and Acquisition Cemetery Revenue 144.3%
(Acquisition Cemetery Field EBITDA 236.0%). Our Recognized
Financial Revenue has been flat this year but a powerful
contributor to our growing earning power over time.
We are simply getting better faster this year across the
operating portfolio and leadership platform as a Being The
Best operating company, a Being The Best support
organization and a Being The Best Consolidation Company that
will be patient and disciplined on adding "Only The Best"
businesses to our portfolio. And we have made this high
performance culture leap forward with a substantially smaller group
of 4E senior leaders that comprise the Operations and Strategic
Growth Leadership Team (OSGLT), which has been reduced from fifteen
members in May to nine currently, drastically reducing our adjusted
Total Overhead which we are committed to sustaining going forward
as contractual compensation winds down over time and is not
replaced. Consequently, our Adjusted Consolidated EBITDA for
the first nine months has increased 19.5% on an 8.5% revenue
increase, an amazing performance and reflective of our "sweet spot
cash earning power" as defined by a nine month Adjusted
Consolidated EBITDA Margin of 29.5%, 280 basis points higher
than last year and a level never before reached in the over fifty
year history of deathcare consolidation by any mature deathcare
consolidation company using current accounting methodology.
Including all the overhead and share count changes on a proforma
basis to December 31, 2014, we would have produced about
$1.19 of Adjusted Diluted Non-GAAP
EPS for the nine months ending September
30th (versus $0.88
for 2014 excluding one-time tax benefit) compared to $1.09 that we have reported, a year over year
increase of 36.0% and in our view a more accurate reading of the
comparative normalized sustainable earning power of our company at
this point. Notwithstanding the $27.3
million cash used for share repurchases and a large amount
of growth capital expenditures this year concentrated on
construction of a few showcase new funeral homes, substantial
capital investment for new growth in the six businesses we acquired
from SCI in 2014, and unusually high new product development for a
few large cemeteries, our exceptionally strong operating and Free
Cash Flow performance this year has enabled us to reduce our total
leverage ratio from 5.0x at the beginning of this year to 4.7x at
September 30, 2015. Moreover, our
Adjusted Free Cash Flow of $46.1
million for the last four quarters beginning October 1, 2014 and ending September 30, 2015 is equivalent to $2.48 per GAAP diluted share (higher if adjusted
for recent share repurchases), producing a current Free Cash Flow
Equity Yield of about 11.6% at our
current price of $21.46. Buying shares at recent prices
from Mr. Market of a company getting better fast across the board
is indeed "a no brainer" and benefits all remaining long term
shareholders "forever!".
More recently, Viki, Ben and I have attended investor
conferences for the first time since assuming responsibility for
Investor Relations and had the opportunity to hear up close and
personal what is on the mind of many of our existing and
prospective institutional investors. The growing dichotomy
between our increasing performance metrics and declining
performance valuation multiples have led to frustration for some of
you over why this fundamental gap between performance and valuation
remains the case. From what we have learned, the major areas
which you believe should be clarified are listed below:
Shareholder Clarification Areas
- Non-GAAP Reporting / Noise / Consistency;
- Reasoning for a Convertible / Dilution from Convertible / Share
Count Management, etc.;
- Capital Structure Five Year Strategy / Components / Cost;
- Leverage Policy and Five Year Outlook;
- Growth / Maintenance Capital Outlook 2016 / ROIC Standard
related to Growth CapEx vs. Acquisitions, Dividends, Share
Repurchases, etc.;
- Market Risk related to Recognized Financial Revenue
/EBITDA;
- Acquisition Strategy / Methodology / Acquisitions in Four
Quarter Rolling Outlook / ROIC Standard;
- Capital Allocation Priorities; and
- CEO Succession Plan / OSGLT / Board.
We will be speaking to all of the above areas on the conference
call to address and ultimately close the valuation discount that
currently exists in our common shares. We hope you join us
for the call", concluded Mr. Payne.
FIELD OPERATIONS
Nine Months Ended September 30,
2015 compared to Nine Months Ended September 30, 2014
- Total Field Revenue increased 8.5% to $180.9 million;
- Total Field EBITDA increased 13.0% to $74.4 million;
- Total Field EBITDA Margin increased 160 basis points to
41.1%;
- Total Funeral Operating Revenue increased 9.0% to $131.7 million;
- Same Store Funeral Revenue increased 3.8% with same store
volume increasing 1.4%;
- Acquisition Funeral Revenue increased 28.2% with acquisition
volume increasing 23.0%;
- Total Funeral Field EBITDA increased 14.5% to $50.1 million;
- Total Funeral Field EBITDA Margin increased 180 basis points to
38.0%;
- Total Cemetery Operating Revenue increased 9.8% to $34.8 million;
- Cemetery pre-need property sale contracts increased 12.3% to
6,191;
- Preneed property revenue recognized increased 15.2% and At-need
revenue increased 4.5%;
- Total Cemetery Field EBITDA increased 24.6% to $10.9 million;
- Total Cemetery Field EBITDA Margin increased 370 basis points
to 31.5%;
- Total Financial Revenue increased 1.1% to $14.4 million;
- Funeral Financial Revenue decreased 1.4% to $7.0 million;
- Cemetery Financial Revenue increased 3.7% to $7.4 million;
- Total Financial EBITDA increased 0.4% to $13.3 million;
- Total Financial EBITDA Margin decreased 70 basis points to
92.6%.
Three Months Ended September 30,
2015 compared to Three Months Ended September 30, 2014
- Total Field Revenue increased 7.0% to $58.4 million;
- Total Field EBITDA increased 12.9% to $23.3 million;
- Total Field EBITDA Margin increased 210 basis points to
39.9%;
- Total Funeral Operating Revenue increased 5.9% to $41.8 million;
- Same Store Funeral Revenue increased 2.9% with same store
volume decreasing 1.1%;
- Acquisition Funeral Revenue increased 15.7% with acquisition
volume increasing 5.3%;
- Total Funeral Field EBITDA increased 10.6% to $15.3 million;
- Total Funeral Field EBITDA Margin increased 160 basis points to
36.6%;
- Total Cemetery Operating Revenue increased 12.9% to
$11.5 million;
- Cemetery pre-need property sale contracts increased 17.3% to
1,941;
- Preneed property revenue recognized increased 23.4% and At-need
revenue increased 1.6%;
- Total Cemetery Field EBITDA increased 45.0% to $3.3 million;
- Total Cemetery Field EBITDA Margin increased 630 basis points
to 28.5%;
- Total Financial Revenue increased 3.5% to $5.0 million;
- Funeral Financial Revenue decreased 1.0% to $2.2 million;
- Cemetery Financial Revenue increased 7.5% to $2.8 million;
- Total Financial EBITDA increased 3.7% to $4.7 million;
- Total Financial EBITDA Margin increased 20 basis points to
93.1%.
ADJUSTED FREE CASH FLOW
We produced Adjusted
Free Cash Flow from operations for the three and nine months ended
September 30, 2015 of $13.4 million and $38.8
million, respectively, compared to Adjusted Free Cash Flow
from operations of $12.0 million and
$31.3 million for the corresponding
periods in 2014. A reconciliation of Cash Flow Provided by
Operations to Adjusted Free Cash Flow for the three and nine months
ended September 30, 2014 and 2015 is
as follows (in millions):
|
Three Months
Ended September
30,
|
|
Nine Months
Ended September
30,
|
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Cash flow provided by
operations
|
$
|
14.3
|
|
|
$
|
14.7
|
|
|
$
|
27.6
|
|
|
$
|
43.0
|
|
Cash used for
maintenance capital expenditures
|
(2.7)
|
|
|
(2.1)
|
|
|
(5.3)
|
|
|
(6.9)
|
|
Free Cash
Flow
|
$
|
11.6
|
|
|
$
|
12.6
|
|
|
$
|
22.3
|
|
|
$
|
36.1
|
|
|
|
|
|
|
|
|
|
Plus: Incremental
Special Items:
|
|
|
|
|
|
|
|
Adjustment for tax
benefit from Good to Great stock awards
|
—
|
|
|
—
|
|
|
4.8
|
|
|
—
|
|
Acquisition and
divestiture expenses
|
0.1
|
|
|
—
|
|
|
1.1
|
|
|
0.6
|
|
Severance
costs
|
0.2
|
|
|
0.2
|
|
|
0.9
|
|
|
0.8
|
|
Consulting
fees
|
0.1
|
|
|
0.6
|
|
|
0.3
|
|
|
1.3
|
|
Other incentive
compensation
|
—
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
Premium paid for the
redemption of convertible junior subordinated debentures
|
—
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
Adjusted Free Cash
Flow
|
$
|
12.0
|
|
|
$
|
13.4
|
|
|
$
|
31.3
|
|
|
$
|
38.8
|
|
For the last four quarters ending September 30, 2015, we have generated
$46.1 million in Adjusted Free Cash
Flow equal to $2.48 per diluted
share, producing a Free Cash Flow Equity Yield of about 11.6% at our current price per share
of $21.46. Our record operating performance
coupled with the growth in Adjusted Free Cash Flow has enabled us
to finance the majority of our dividends, capital expenditures,
share repurchases and acquisition activity through internally
generated sources, simultaneously reducing our total leverage ratio
from 5.0x at the end of 2014 to 4.7x at September 30, 2015.
ROLLING FOUR QUARTER OUTLOOK
The Rolling Four Quarter Outlook ("Outlook") reflects
management's opinion on the performance of the portfolio of
existing businesses, including performance of existing trusts, and
excludes size and timing of acquisitions for the Rolling Four
Quarter Outlook period ending September 30, 2016 unless we
have a signed Letter of Intent and high likelihood of a closing
within 90 days. This Outlook is not intended to be management
estimates or forecasts of our future performance, as we believe
such precise rolling estimates will be precisely wrong all the
time. Rather our intent and goal is to reflect a "roughly right
range" most of the time of future Rolling Four Quarter Outlook
performance as we execute our Standards Operating, Strategic
Acquisition and 4E Leadership Models over time.
ROLLING FOUR QUARTER OUTLOOK – Period Ending September 30, 2016
|
|
Range
(in millions, except
per share amounts)
|
Revenues
|
|
$248 -
$252
|
Adjusted Consolidated
EBITDA
|
|
$72 - $76
|
Adjusted Net
Income
|
|
$29 - $31
|
Adjusted Diluted
Earnings Per Share(1)
|
|
$1.65 -
$1.69
|
Factors affecting our analysis include, among others, funeral
contract volumes, average revenue per funeral service, cemetery
interment volumes, preneed cemetery sales, capital expenditures,
execution of our funeral and cemetery Standards Operating Model,
Withdrawable Trust Income and changes in Federal Reserve monetary
policy. Revenues, Adjusted Consolidated EBITDA, Adjusted Net Income
and Adjusted Diluted Earnings Per Share for the four quarter period
ending September 30, 2016 are expected to improve relative to
the trailing four quarter period ending September 30, 2015 due to increases in our
existing Funeral Home and Cemetery portfolio, one acquisition
in the fourth quarter of 2015, modest increases in the financial
performance of our trust funds and modest decreases in overhead as
a percentage of revenue.
(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.
|
TRUST FUND PERFORMANCE
For the nine months ended September 30, 2015, Carriage's
discretionary trust funds returned (4.5%) versus (3.4%) for the
70/30 index benchmark. The overall performance year-to-date was
affected by weakness in the equity markets in the third quarter,
and as a result negatively impacted Carriage's discretionary equity
portfolio. The equity portion accounts for 29% of Carriage's
discretionary trust assets. Year-to-date, the fixed income
investments in our discretionary portfolio continued to outperform
the High Yield Index. The current yield on the discretionary fixed
income portfolio, which comprises 66% of discretionary trust
assets, is 8.0% and the estimated annual income for the
discretionary portfolio is approximately $11.5 million.
During the third quarter, we took advantage of the recent market
volatility to deploy the higher-than-normal cash position we had
built in our portfolio during the first half of the year. The
activity in our portfolio in the third quarter was consistent with
our long-term strategy: to make investments in blue chip companies
and high-quality, income-producing securities that will contribute
to the recurring Financial Revenue and EBITDA of Carriage.
Shown below are consolidated performance metrics for the
combined trust fund portfolios (preneed funeral, cemetery
merchandise and services and cemetery perpetual care) at key
dates.
Investment
Performance
|
|
|
Investment
Performance(1)
|
|
Index
Performance
|
|
|
Discretionary
|
Total
Trust
|
|
S&P 500 Stock
Index
|
High Yield
Index
|
70/30
index
Benchmark(2)
|
|
|
|
|
|
|
|
|
9 months ended
9/30/15
|
|
(4.5)%
|
(4.0)%
|
|
(5.3)%
|
(2.5)%
|
(3.4)%
|
1 year ended
12/31/14
|
|
8.3%
|
7.9%
|
|
13.7%
|
2.5%
|
5.8%
|
2 years ended
12/31/14
|
|
23.8%
|
22.7%
|
|
50.4%
|
10.1%
|
22.2%
|
3 years ended
12/31/14
|
|
48.9%
|
43.7%
|
|
74.5%
|
27.5%
|
41.6%
|
4 years ended
12/31/14
|
|
44.6%
|
41.0%
|
|
78.1%
|
33.8%
|
47.1%
|
5 years ended
12/31/14
|
|
74.5%
|
66.6%
|
|
105.0%
|
54.1%
|
69.3%
|
|
|
(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 September 30, 2015 (in thousands)
|
|
|
|
Discretionary Trust Funds
|
|
Total Trust
Funds
|
Asset
Class
|
|
|
MV
|
%
|
|
MV
|
%
|
Cash
|
|
|
$
|
5,000
|
|
3
|
%
|
|
$
|
20,637
|
|
10
|
%
|
Equities
|
|
|
54,464
|
|
29
|
%
|
|
57,023
|
|
26
|
%
|
Fixed
Income
|
|
|
122,978
|
|
66
|
%
|
|
134,164
|
|
62
|
%
|
Other/Insurance
|
|
|
3,463
|
|
2
|
%
|
|
3,654
|
|
2
|
%
|
Total
Portfolios
|
|
|
$
|
185,905
|
|
100
|
%
|
|
$
|
215,478
|
|
100
|
%
|
CONFERENCE CALL AND INVESTOR RELATIONS CONTACT
Carriage Services has scheduled a conference call for tomorrow,
November 4, 2015 at 9:30 a.m. central time. To participate in the
call, please dial 866-516-3867 (ID-57625001) and ask for the
Carriage Services conference call. A replay of the conference
call will be available through November 8, 2015 and may be
accessed by dialing 855-859-2056 (ID-57625001). The conference call
will also be available at www.carriageservices.com. For any
investor relations questions, please contact Ben Brink at 713-332-8441 or Viki Blinderman at 713-332-8568.
CARRIAGE SERVICES,
INC.
|
OPERATING AND
FINANCIAL TREND REPORT
|
FROM CONTINUING
OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2014
|
2015
|
%
Change
|
|
2014
|
2015
|
%
Change
|
|
|
|
|
|
|
|
|
Same Store
Contracts
|
|
|
|
|
|
|
|
Atneed
Contracts
|
4,762
|
|
4,686
|
|
-1.6
|
%
|
|
14,990
|
|
15,141
|
|
1.0
|
%
|
Preneed
Contracts
|
1,167
|
|
1,179
|
|
1.0
|
%
|
|
3,707
|
|
3,809
|
|
2.8
|
%
|
Total Same Store
Funeral Contracts
|
5,929
|
|
5,865
|
|
-1.1
|
%
|
|
18,697
|
|
18,950
|
|
1.4
|
%
|
Acquisition
Contracts
|
|
|
|
|
|
|
|
Atneed
Contracts
|
1,380
|
|
1,425
|
|
3.3
|
%
|
|
3,746
|
|
4,510
|
|
20.4
|
%
|
Preneed
Contracts
|
284
|
|
327
|
|
15.1
|
%
|
|
722
|
|
985
|
|
36.4
|
%
|
Total Acquisition
Funeral Contracts
|
1,664
|
|
1,752
|
|
5.3
|
%
|
|
4,468
|
|
5,495
|
|
23.0
|
%
|
Total Funeral
Contracts
|
7,593
|
|
7,617
|
|
0.3
|
%
|
|
23,165
|
|
24,445
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|
Funeral Operating
Revenue
|
|
|
|
|
|
|
|
Same Store
Revenue
|
$
|
30,001
|
|
$
|
30,858
|
|
2.9
|
%
|
|
$
|
94,863
|
|
$
|
98,462
|
|
3.8
|
%
|
Acquisition
Revenue
|
9,487
|
|
10,973
|
|
15.7
|
%
|
|
25,929
|
|
33,235
|
|
28.2
|
%
|
Total Funeral
Operating Revenue
|
$
|
39,488
|
|
$
|
41,831
|
|
5.9
|
%
|
|
$
|
120,792
|
|
$
|
131,697
|
|
9.0
|
%
|
|
|
|
|
|
|
|
|
Cemetery Operating
Revenue
|
|
|
|
|
|
|
|
Same Store
Revenue
|
$
|
9,539
|
|
$
|
10,726
|
|
12.4
|
%
|
|
$
|
30,633
|
|
$
|
32,260
|
|
5.3
|
%
|
Acquisition
Revenue
|
645
|
|
774
|
|
20.0
|
%
|
|
1,034
|
|
2,526
|
|
144.3
|
%
|
Total Cemetery
Operating Revenue
|
$
|
10,184
|
|
$
|
11,500
|
|
12.9
|
%
|
|
$
|
31,667
|
|
$
|
34,786
|
|
9.8
|
%
|
|
|
|
|
|
|
|
|
Financial
Revenue
|
|
|
|
|
|
|
|
Preneed Funeral
Commission Income
|
$
|
509
|
|
$
|
346
|
|
-32.0
|
%
|
|
$
|
1,636
|
|
$
|
1,071
|
|
-34.5
|
%
|
Preneed Funeral Trust
Earnings
|
1,773
|
|
1,912
|
|
7.8
|
%
|
|
5,498
|
|
5,959
|
|
8.4
|
%
|
Cemetery Trust
Earnings
|
2,212
|
|
2,385
|
|
7.8
|
%
|
|
6,072
|
|
6,202
|
|
2.1
|
%
|
Preneed Cemetery
Finance Charges
|
383
|
|
404
|
|
5.5
|
%
|
|
1,040
|
|
1,177
|
|
13.2
|
%
|
Total Financial
Revenue
|
$
|
4,877
|
|
$
|
5,047
|
|
3.5
|
%
|
|
$
|
14,246
|
|
$
|
14,409
|
|
1.1
|
%
|
Total
Revenue
|
$
|
54,549
|
|
$
|
58,378
|
|
7.0
|
%
|
|
$
|
166,705
|
|
$
|
180,892
|
|
8.5
|
%
|
|
|
|
|
|
|
|
|
Field
EBITDA
|
|
|
|
|
|
|
|
Same Store Funeral
Field EBITDA
|
$
|
10,497
|
|
$
|
11,097
|
|
5.7
|
%
|
|
$
|
34,264
|
|
$
|
37,050
|
|
8.1
|
%
|
Same Store Funeral
Field EBITDA Margin
|
35.0
|
%
|
36.0
|
%
|
100 bp
|
|
|
36.1
|
%
|
37.6
|
%
|
150 bp
|
|
Acquisition Funeral
Field EBITDA
|
3,341
|
|
4,212
|
|
26.1
|
%
|
|
9,449
|
|
13,023
|
|
37.8
|
%
|
Acquisition Funeral
Field EBITDA Margin
|
35.2
|
%
|
38.4
|
%
|
320 bp
|
|
|
36.4
|
%
|
39.2
|
%
|
280 bp
|
|
Total Funeral
Field EBITDA
|
$
|
13,838
|
|
$
|
15,309
|
|
10.6
|
%
|
|
$
|
43,713
|
|
$
|
50,073
|
|
14.5
|
%
|
Total Funeral
Field EBITDA Margin
|
35.0
|
%
|
36.6
|
%
|
160
bp
|
|
|
36.2
|
%
|
38.0
|
%
|
180
bp
|
|
|
|
|
|
|
|
|
|
Same Store Cemetery
Field EBITDA
|
$
|
2,148
|
|
$
|
3,066
|
|
42.7
|
%
|
|
$
|
8,555
|
|
$
|
10,153
|
|
18.7
|
%
|
Same Store Cemetery
Field EBITDA Margin
|
22.5
|
%
|
28.6
|
%
|
610 bp
|
|
|
27.9
|
%
|
31.5
|
%
|
360 bp
|
|
Acquisition Cemetery
Field EBITDA
|
114
|
|
215
|
|
88.6
|
%
|
|
239
|
|
803
|
|
236.0
|
%
|
Acquisition Cemetery
Field EBITDA Margin
|
17.7
|
%
|
27.8
|
%
|
1010 bp
|
|
|
23.1
|
%
|
31.8
|
%
|
870 bp
|
|
Total Cemetery
Field EBITDA
|
$
|
2,262
|
|
$
|
3,281
|
|
45.0
|
%
|
|
$
|
8,794
|
|
$
|
10,956
|
|
24.6
|
%
|
Total Cemetery
Field EBITDA Margin
|
22.2
|
%
|
28.5
|
%
|
630
bp
|
|
|
27.8
|
%
|
31.5
|
%
|
370
bp
|
|
|
|
|
|
|
|
|
|
Funeral Financial
EBITDA
|
$
|
2,002
|
|
$
|
1,982
|
|
-1.0
|
%
|
|
$
|
6,307
|
|
$
|
6,178
|
|
-2.0
|
%
|
Cemetery Financial
EBITDA
|
2,529
|
|
2,716
|
|
7.4
|
%
|
|
6,983
|
|
7,169
|
|
2.7
|
%
|
Total Financial
EBITDA
|
$
|
4,531
|
|
$
|
4,698
|
|
3.7
|
%
|
|
$
|
13,290
|
|
$
|
13,347
|
|
0.4
|
%
|
Total Financial
EBITDA Margin
|
92.9
|
%
|
93.1
|
%
|
20
bp
|
|
|
93.3
|
%
|
92.6
|
%
|
-70
bp
|
|
|
|
|
|
|
|
|
|
Total Field
EBITDA
|
$
|
20,631
|
|
$
|
23,288
|
|
12.9
|
%
|
|
$
|
65,797
|
|
$
|
74,376
|
|
13.0
|
%
|
Total Field EBITDA
Margin
|
37.8
|
%
|
39.9
|
%
|
210
bp
|
|
|
39.5
|
%
|
41.1
|
%
|
160
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING AND
FINANCIAL TREND REPORT
|
FROM CONTINUING
OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2014
|
2015
|
%
Change
|
|
2014
|
2015
|
%
Change
|
|
|
|
|
|
|
|
|
Overhead
|
|
|
|
|
|
|
|
Total Variable
Overhead
|
$
|
3,065
|
|
$
|
2,573
|
|
-16.1
|
%
|
|
$
|
8,339
|
|
$
|
6,769
|
|
-18.8
|
%
|
Total Regional Fixed
Overhead
|
811
|
|
842
|
|
3.8
|
%
|
|
2,378
|
|
2,549
|
|
7.2
|
%
|
Total Corporate Fixed
Overhead
|
4,666
|
|
4,660
|
|
-0.1
|
%
|
|
15,325
|
|
15,273
|
|
-0.3
|
%
|
Total
Overhead
|
$
|
8,542
|
|
$
|
8,075
|
|
-5.5
|
%
|
|
$
|
26,042
|
|
$
|
24,591
|
|
-5.6
|
%
|
Overhead as a
percent of sales
|
15.7
|
%
|
13.8
|
%
|
-190
bp
|
|
|
15.6
|
%
|
13.6
|
%
|
-200
bp
|
|
|
|
|
|
|
|
|
|
Consolidated
EBITDA
|
$
|
12,089
|
|
$
|
15,213
|
|
25.8
|
%
|
|
$
|
39,755
|
|
$
|
49,785
|
|
25.2
|
%
|
Consolidated
EBITDA Margin
|
22.2
|
%
|
26.1
|
%
|
390
bp
|
|
|
23.8
|
%
|
27.5
|
%
|
370
bp
|
|
|
|
|
|
|
|
|
|
Other Expenses and
Interest
|
|
|
|
|
|
|
|
Depreciation &
Amortization
|
$
|
2,995
|
|
$
|
3,437
|
|
14.8
|
%
|
|
$
|
8,781
|
|
$
|
10,124
|
|
15.3
|
%
|
Non-Cash Stock
Compensation
|
920
|
|
1,072
|
|
16.5
|
%
|
|
2,912
|
|
3,448
|
|
18.4
|
%
|
Interest
Expense
|
2,180
|
|
2,629
|
|
20.6
|
%
|
|
7,715
|
|
7,671
|
|
-0.6
|
%
|
Accretion of Discount
on Convertible Subordinated Notes
|
782
|
|
876
|
|
12.0
|
%
|
|
1,647
|
|
2,554
|
|
55.1
|
%
|
Loss on Early
Extinguishment of Debt
|
—
|
|
—
|
|
|
|
1,042
|
|
—
|
|
-100.0
|
%
|
Loss on Redemption of
Convertible Junior Subordinated Debentures
|
—
|
|
—
|
|
|
|
3,779
|
|
—
|
|
-100.0
|
%
|
Other, Net
|
(3)
|
|
(52)
|
|
1633.3
|
%
|
|
(376)
|
|
54
|
|
-114.4
|
%
|
Pretax
Income
|
$
|
5,215
|
|
$
|
7,251
|
|
39.0
|
%
|
|
$
|
14,255
|
|
$
|
25,934
|
|
81.9
|
%
|
Net Tax
Provision
|
650
|
|
2,807
|
|
331.8
|
%
|
|
4,175
|
|
10,515
|
|
151.9
|
%
|
GAAP Net
Income
|
$
|
4,565
|
|
$
|
4,444
|
|
-2.7
|
%
|
|
$
|
10,080
|
|
$
|
15,419
|
|
53.0
|
%
|
|
|
|
|
|
|
|
|
Special Items, Net
of tax except for **
|
|
|
|
|
|
|
|
Withdrawable Trust
Income
|
$
|
468
|
|
$
|
136
|
|
|
|
$
|
983
|
|
$
|
366
|
|
|
Acquisition and
Divestiture Expenses
|
56
|
|
27
|
|
|
|
715
|
|
381
|
|
|
Severance
Costs
|
119
|
|
126
|
|
|
|
596
|
|
533
|
|
|
Consulting
Fees
|
71
|
|
377
|
|
|
|
236
|
|
898
|
|
|
Other Incentive
Compensation
|
—
|
|
—
|
|
|
|
660
|
|
—
|
|
|
Accretion of Discount
on Convertible Subordinated Notes **
|
782
|
|
876
|
|
|
|
1,647
|
|
2,554
|
|
|
Costs Related to
Credit Facility
|
—
|
|
—
|
|
|
|
688
|
|
—
|
|
|
Loss on Redemption of
Convertible Junior Subordinated Debentures
|
—
|
|
—
|
|
|
|
2,493
|
|
—
|
|
|
Gain on Asset
Purchase
|
—
|
|
—
|
|
|
|
(746)
|
|
—
|
|
|
Other Special
Items
|
—
|
|
132
|
|
|
|
503
|
|
230
|
|
|
Tax Adjustment from
Prior Period **
|
—
|
|
—
|
|
|
|
—
|
|
141
|
|
|
Sum of Special
Items, Net of tax
|
$
|
1,496
|
|
$
|
1,674
|
|
11.9
|
%
|
|
$
|
7,775
|
|
$
|
5,103
|
|
-34.4
|
%
|
|
|
|
|
|
|
|
|
Adjusted Net
Income
|
$
|
6,061
|
|
$
|
6,118
|
|
0.9
|
%
|
|
$
|
17,855
|
|
$
|
20,522
|
|
14.9
|
%
|
Adjusted Net
Profit Margin
|
11.1
|
%
|
10.5
|
%
|
-60
bp
|
|
|
10.7
|
%
|
11.3
|
%
|
60
bp
|
|
|
|
|
|
|
|
|
|
Adjusted Basic
Earnings Per Share
|
$
|
0.33
|
|
$
|
0.33
|
|
—
|
%
|
|
$
|
0.98
|
|
$
|
1.12
|
|
14.3
|
%
|
Adjusted Diluted
Earnings Per Share
|
$
|
0.32
|
|
$
|
0.33
|
|
3.1
|
%
|
|
$
|
0.97
|
|
$
|
1.09
|
|
12.4
|
%
|
|
|
|
|
|
|
|
|
GAAP Basic Earnings
Per Share
|
$
|
0.25
|
|
$
|
0.24
|
|
-4.0
|
%
|
|
$
|
0.55
|
|
$
|
0.84
|
|
52.7
|
%
|
GAAP Diluted Earnings
Per Share
|
$
|
0.24
|
|
$
|
0.24
|
|
—
|
%
|
|
$
|
0.54
|
|
$
|
0.82
|
|
51.9
|
%
|
|
|
|
|
|
|
|
|
Weighted Average
Basic Shares Outstanding
|
18,150
|
|
17,874
|
|
|
|
18,086
|
|
18,115
|
|
|
Weighted Average
Diluted Shares Outstanding
|
18,276
|
|
18,083
|
|
|
|
18,223
|
|
18,588
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to
Adjusted Consolidated EBITDA
|
|
|
|
|
|
|
|
Consolidated
EBITDA
|
$
|
12,089
|
|
$
|
15,213
|
|
25.8
|
%
|
|
$
|
39,755
|
|
$
|
49,785
|
|
25.2
|
%
|
Withdrawable Trust
Income
|
709
|
|
207
|
|
|
|
1,488
|
|
555
|
|
|
Acquisition and
Divestiture Expenses
|
85
|
|
40
|
|
|
|
1,084
|
|
577
|
|
|
Severance
Costs
|
180
|
|
192
|
|
|
|
903
|
|
808
|
|
|
Consulting
Fees
|
107
|
|
570
|
|
|
|
357
|
|
1,358
|
|
|
Other Special
Items
|
—
|
|
200
|
|
|
|
—
|
|
200
|
|
|
Other Incentive
Compensation
|
—
|
|
—
|
|
|
|
1,000
|
|
—
|
|
|
Adjusted
Consolidated EBITDA
|
$
|
13,170
|
|
$
|
16,422
|
|
24.7
|
%
|
|
$
|
44,587
|
|
$
|
53,283
|
|
19.5
|
%
|
Adjusted
Consolidated EBITDA Margin
|
24.1
|
%
|
28.1
|
%
|
400
bp
|
|
|
26.7
|
%
|
29.5
|
%
|
280
bp
|
|
CARRIAGE SERVICES,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands,
except share data)
|
|
|
|
(unaudited)
|
|
December 31,
2014
|
|
September 30,
2015
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
413
|
|
|
$
|
396
|
|
Accounts receivable,
net
|
19,264
|
|
|
18,093
|
|
Inventories
|
5,294
|
|
|
5,947
|
|
Prepaid
expenses
|
4,590
|
|
|
3,709
|
|
Other current
assets
|
7,144
|
|
|
2,517
|
|
Total current
assets
|
36,705
|
|
|
30,662
|
|
Preneed cemetery
trust investments
|
71,972
|
|
|
64,737
|
|
Preneed funeral trust
investments
|
97,607
|
|
|
87,491
|
|
Preneed receivables,
net
|
26,284
|
|
|
26,902
|
|
Receivables from
preneed trusts, net
|
12,809
|
|
|
13,450
|
|
Property, plant and
equipment, net
|
186,211
|
|
|
209,151
|
|
Cemetery property,
net
|
75,564
|
|
|
75,577
|
|
Goodwill
|
257,442
|
|
|
261,291
|
|
Deferred charges and
other non-current assets
|
14,264
|
|
|
14,670
|
|
Cemetery perpetual
care trust investments
|
48,670
|
|
|
44,146
|
|
Total
assets
|
$
|
827,528
|
|
|
$
|
828,077
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term debt and capital lease obligations
|
$
|
9,838
|
|
|
$
|
11,468
|
|
Accounts
payable
|
6,472
|
|
|
10,222
|
|
Other
liabilities
|
1,437
|
|
|
6,286
|
|
Accrued
liabilities
|
15,203
|
|
|
15,397
|
|
Total current
liabilities
|
32,950
|
|
|
43,373
|
|
Long-term debt, net
of current portion
|
111,887
|
|
|
107,242
|
|
Revolving credit
facility
|
40,500
|
|
|
63,000
|
|
Convertible
subordinated notes due 2021
|
114,542
|
|
|
117,096
|
|
Obligations under
capital leases, net of current portion
|
3,098
|
|
|
2,933
|
|
Deferred preneed
cemetery revenue
|
56,875
|
|
|
56,786
|
|
Deferred preneed
funeral revenue
|
31,265
|
|
|
31,786
|
|
Deferred tax
liability
|
36,414
|
|
|
36,653
|
|
Other long-term
liabilities
|
2,401
|
|
|
4,041
|
|
Deferred preneed
cemetery receipts held in trust
|
71,972
|
|
|
64,737
|
|
Deferred preneed
funeral receipts held in trust
|
97,607
|
|
|
87,491
|
|
Care trusts'
corpus
|
48,142
|
|
|
43,846
|
|
Total
liabilities
|
647,653
|
|
|
658,984
|
|
Commitments and
contingencies:
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common stock, $.01
par value; 80,000,000 shares authorized; 22,434,609 and 22,458,450
shares issued at December 31, 2014 and September 30,
2015
|
224
|
|
|
225
|
|
Additional paid-in
capital
|
212,386
|
|
|
213,506
|
|
Accumulated
deficit
|
(17,468)
|
|
|
(2,049)
|
|
Treasury stock, at
cost; 3,921,651 and 5,126,636 shares at December 31, 2014 and
September 30, 2015
|
(15,267)
|
|
|
(42,589)
|
|
Total stockholders'
equity
|
179,875
|
|
|
169,093
|
|
Total liabilities and
stockholders' equity
|
$
|
827,528
|
|
|
$
|
828,077
|
|
CARRIAGE SERVICES,
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands,
except per share data)
|
|
|
|
|
|
For the Three
Months Ended
September 30,
|
|
For the Nine
Months Ended
September 30,
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Revenues:
|
|
|
|
|
|
|
|
Funeral
|
$
|
41,770
|
|
|
$
|
44,089
|
|
|
$
|
127,926
|
|
|
$
|
138,727
|
|
Cemetery
|
12,779
|
|
|
14,289
|
|
|
38,779
|
|
|
42,165
|
|
|
54,549
|
|
|
58,378
|
|
|
166,705
|
|
|
180,892
|
|
Field costs and
expenses:
|
|
|
|
|
|
|
|
Funeral
|
25,930
|
|
|
26,798
|
|
|
77,906
|
|
|
82,476
|
|
Cemetery
|
7,988
|
|
|
8,292
|
|
|
23,002
|
|
|
24,040
|
|
Depreciation and
amortization
|
2,654
|
|
|
3,019
|
|
|
7,744
|
|
|
8,814
|
|
Regional and
unallocated funeral and cemetery costs
|
2,900
|
|
|
2,909
|
|
|
6,972
|
|
|
7,745
|
|
|
39,472
|
|
|
41,018
|
|
|
115,624
|
|
|
123,075
|
|
Gross
profit
|
$
|
15,077
|
|
|
$
|
17,360
|
|
|
$
|
51,081
|
|
|
$
|
57,817
|
|
Corporate costs and
expenses:
|
|
|
|
|
|
|
|
General and
administrative costs and expenses
|
6,562
|
|
|
6,238
|
|
|
22,744
|
|
|
20,294
|
|
Home office
depreciation and amortization
|
341
|
|
|
418
|
|
|
1,037
|
|
|
1,310
|
|
|
6,903
|
|
|
6,656
|
|
|
23,781
|
|
|
21,604
|
|
Operating
income
|
$
|
8,174
|
|
|
$
|
10,704
|
|
|
$
|
27,300
|
|
|
$
|
36,213
|
|
Interest
expense
|
(2,177)
|
|
|
(2,577)
|
|
|
(7,707)
|
|
|
(7,725)
|
|
Accretion of discount
on convertible subordinated notes
|
(782)
|
|
|
(876)
|
|
|
(1,647)
|
|
|
(2,554)
|
|
Loss on early
extinguishment of debt
|
—
|
|
|
—
|
|
|
(1,042)
|
|
|
—
|
|
Loss on redemption of
convertible junior subordinated debentures
|
—
|
|
|
—
|
|
|
(3,779)
|
|
|
—
|
|
Other
income
|
—
|
|
|
—
|
|
|
1,130
|
|
|
—
|
|
Income from
continuing operations before income taxes
|
$
|
5,215
|
|
|
$
|
7,251
|
|
|
$
|
14,255
|
|
|
$
|
25,934
|
|
Provision for income
taxes
|
(2,390)
|
|
|
(2,807)
|
|
|
(5,915)
|
|
|
(10,515)
|
|
Income tax benefit
related to uncertain tax positions
|
1,740
|
|
|
—
|
|
|
1,740
|
|
|
—
|
|
Net provision for
income taxes
|
(650)
|
|
|
(2,807)
|
|
|
(4,175)
|
|
|
(10,515)
|
|
Net income from
continuing operations
|
$
|
4,565
|
|
|
$
|
4,444
|
|
|
$
|
10,080
|
|
|
$
|
15,419
|
|
Income from
discontinued operations, net of tax
|
431
|
|
|
—
|
|
|
381
|
|
|
—
|
|
Net income available
to common stockholders
|
$
|
4,996
|
|
|
$
|
4,444
|
|
|
$
|
10,461
|
|
|
$
|
15,419
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.25
|
|
|
$
|
0.24
|
|
|
$
|
0.55
|
|
|
$
|
0.84
|
|
Discontinued
operations
|
0.02
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
Basic earnings per
common share
|
$
|
0.27
|
|
|
$
|
0.24
|
|
|
$
|
0.57
|
|
|
$
|
0.84
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.54
|
|
|
$
|
0.82
|
|
Discontinued
operations
|
0.02
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
Diluted earnings per
common share
|
$
|
0.26
|
|
|
$
|
0.24
|
|
|
$
|
0.56
|
|
|
$
|
0.82
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
|
0.025
|
|
|
$
|
0.025
|
|
|
$
|
0.075
|
|
|
$
|
0.075
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
18,150
|
|
|
17,874
|
|
|
18,086
|
|
|
18,115
|
|
Diluted
|
18,276
|
|
|
18,083
|
|
|
18,223
|
|
|
18,588
|
|
CARRIAGE SERVICES,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited and in
thousands)
|
|
|
|
For the Nine
Months Ended
September
30,
|
|
2014
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
10,461
|
|
|
$
|
15,419
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Gain on sale of
businesses and purchase of other assets
|
(2,724)
|
|
|
(49)
|
|
Impairment of
goodwill
|
1,180
|
|
|
—
|
|
Loss on early
extinguishment of debt
|
1,042
|
|
|
—
|
|
Depreciation and
amortization
|
8,801
|
|
|
10,124
|
|
Amortization of
deferred financing costs
|
681
|
|
|
688
|
|
Accretion of discount
on convertible subordinated notes
|
1,647
|
|
|
2,554
|
|
Provision for losses
on accounts receivable
|
2,113
|
|
|
1,332
|
|
Stock-based
compensation expense
|
3,702
|
|
|
3,448
|
|
Deferred income tax
(benefit) expense
|
(140)
|
|
|
2,065
|
|
Loss on redemption of
convertible junior subordinated debentures
|
2,932
|
|
|
—
|
|
Changes in operating
assets and liabilities that provided (required) cash:
|
|
|
|
Accounts and preneed
receivables
|
(1,700)
|
|
|
(779)
|
|
Inventories and other
current assets
|
725
|
|
|
3,277
|
|
Deferred charges and
other
|
(196)
|
|
|
114
|
|
Preneed funeral and
cemetery trust investments
|
(3,228)
|
|
|
21,234
|
|
Accounts
payable
|
785
|
|
|
368
|
|
Accrued and other
liabilities
|
(1,362)
|
|
|
4,408
|
|
Deferred preneed
funeral and cemetery revenue
|
335
|
|
|
432
|
|
Deferred preneed
funeral and cemetery receipts held in trust
|
2,595
|
|
|
(21,647)
|
|
Net cash provided by
operating activities
|
27,649
|
|
|
42,988
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Acquisitions and land
for new construction
|
(56,850)
|
|
|
(4,250)
|
|
Purchase of land and
buildings previously leased
|
(7,600)
|
|
|
(6,080)
|
|
Net proceeds from the
sale of businesses and other assets
|
1,927
|
|
|
65
|
|
Capital
expenditures
|
(10,558)
|
|
|
(22,823)
|
|
Net cash used in
investing activities
|
(73,081)
|
|
|
(33,088)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Net borrowings on the
revolving credit facility
|
5,400
|
|
|
22,500
|
|
Net borrowings
(payments) on the term loan
|
5,656
|
|
|
(7,032)
|
|
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
|
(662)
|
|
|
(679)
|
|
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
|
1,035
|
|
|
575
|
|
Dividends on common
stock
|
(1,379)
|
|
|
(1,385)
|
|
Payment of loan
origination costs related to the credit facility
|
(825)
|
|
|
(13)
|
|
Purchases of treasury
stock
|
—
|
|
|
(23,940)
|
|
Excess tax benefit of
equity compensation
|
4,594
|
|
|
57
|
|
Net cash provided by
(used in) financing activities
|
47,021
|
|
|
(9,917)
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
1,589
|
|
|
(17)
|
|
Cash and cash
equivalents at beginning of period
|
1,377
|
|
|
413
|
|
Cash and cash
equivalents at end of period
|
$
|
2,966
|
|
|
$
|
396
|
|
NON-GAAP FINANCIAL MEASURES
This press release uses Non-GAAP financial measures to present
the financial performance of the Company. Non-GAAP financial
measures should be viewed in addition to, and not as an alternative
for, the Company's reported operating results or cash flow from
operations or any other measure of performance as determined in
accordance with GAAP. We believe the Non-GAAP results are
useful to investors because such results help investors compare our
results to previous periods and provide insights into underlying
trends in our business. The Company's GAAP financial statements
accompany this release. Reconciliations of the Non-GAAP
financial measures to GAAP measures are provided in this press
release.
The Non-GAAP financial measures include "Adjusted Net
Income", "Adjusted Basic Earnings Per Share", "Adjusted Diluted
Earnings Per Share", "Consolidated EBITDA", "Adjusted Consolidated
EBITDA", "Adjusted Free Cash Flow", "Funeral, Cemetery and
Financial EBITDA", "Total Field EBITDA" and "Special Items"
in this press release. These financial measurements are
defined as similar GAAP items adjusted for Special Items and are
reconciled to GAAP in this press release. In addition, the
Company's presentation of these measures may not be comparable to
similarly titled measures in other companies' reports. The
definitions used by the Company for our internal management
purposes and in this press release are as follows:
- 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 and 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, 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 nine months ended September 30, 2014 and 2015, except for the
accretion of the discount on our convertible subordinated 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.
Certain state regulations allow the withdrawal of financial
income from preneed cemetery merchandise and services trust funds
when realized in the trust. Under current generally accepted
accounting principles, trust income is only recognized in the
Company's financial statements at a later time when the related
merchandise and services sold on the preneed contract is delivered
at the time of death. Carriage has provided financial income
from the trusts, termed "Withdrawable Trust Income" and reported on
a Non-GAAP proforma basis within Special Items in the accompanying
Operating and Financial Trend Report (a Non-GAAP Unaudited Income
Statement), to reflect the current cash results. Management
believes that the Withdrawable Trust Income provides useful
information to investors because it presents income and cash flow
when earned by the trusts.
Reconciliation of Non-GAAP Financial Measures:
This press release includes the use of certain financial
measures that are not GAAP measures. The Non-GAAP financial
measures are presented for additional information and are
reconciled to their most comparable GAAP measures below.
Reconciliation
of Net Income from continuing operations to Adjusted Net Income for
the three and nine months ended September 30, 2014 and 2015
(in thousands):
|
|
|
Three Months
Ended September
30,
|
|
Nine Months
Ended September
30,
|
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Net Income from
continuing operations
|
$
|
4,565
|
|
|
$
|
4,444
|
|
|
$
|
10,080
|
|
|
$
|
15,419
|
|
Special items, net of
tax except for **
|
|
|
|
|
|
|
|
Withdrawable Trust
Income
|
$
|
468
|
|
|
$
|
136
|
|
|
$
|
983
|
|
|
$
|
366
|
|
Acquisition and
Divestiture Expenses
|
56
|
|
|
27
|
|
|
715
|
|
|
381
|
|
Severance
Costs
|
119
|
|
|
126
|
|
|
596
|
|
|
533
|
|
Consulting
Fees
|
71
|
|
|
377
|
|
|
236
|
|
|
898
|
|
Other Incentive
Compensation
|
—
|
|
|
—
|
|
|
660
|
|
|
—
|
|
Accretion of Discount
on Convertible Subordinated Notes **
|
782
|
|
|
876
|
|
|
1,647
|
|
|
2,554
|
|
Costs Related to the
Credit Facility
|
—
|
|
|
—
|
|
|
688
|
|
|
—
|
|
Loss on Redemption of
Convertible Junior Subordinated Debentures
|
—
|
|
|
—
|
|
|
2,493
|
|
|
—
|
|
Gain on Asset
Purchase
|
—
|
|
|
—
|
|
|
(746)
|
|
|
—
|
|
Other Special
Items
|
—
|
|
|
132
|
|
|
503
|
|
|
230
|
|
Tax Adjustment from
Prior Period **
|
—
|
|
|
—
|
|
|
—
|
|
|
141
|
|
Total
Special items affecting net income
|
$
|
1,496
|
|
|
$
|
1,674
|
|
|
$
|
7,775
|
|
|
$
|
5,103
|
|
Adjusted Net
Income
|
$
|
6,061
|
|
|
$
|
6,118
|
|
|
$
|
17,855
|
|
|
$
|
20,522
|
|
Reconciliation
of Net Income from continuing operations to Consolidated EBITDA and
Adjusted Consolidated EBITDA for the three and nine months ended
September 30, 2014 and 2015 (in thousands):
|
|
|
Three Months
Ended September
30,
|
|
Nine Months
Ended September
30,
|
|
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Net income from
continuing operations
|
$
|
4,565
|
|
|
$
|
4,444
|
|
|
$
|
10,080
|
|
|
$
|
15,419
|
|
Net provision for
income taxes
|
650
|
|
|
2,807
|
|
|
4,175
|
|
|
10,515
|
|
Pre-tax earnings from
continuing operations
|
$
|
5,215
|
|
|
$
|
7,251
|
|
|
$
|
14,255
|
|
|
$
|
25,934
|
|
Depreciation &
amortization
|
2,995
|
|
|
3,437
|
|
|
8,781
|
|
|
10,124
|
|
Non-cash stock
compensation
|
920
|
|
|
1,072
|
|
|
2,912
|
|
|
3,448
|
|
Interest
expense
|
2,180
|
|
|
2,629
|
|
|
7,715
|
|
|
7,671
|
|
Accretion of discount
on convertible subordinated notes
|
782
|
|
|
876
|
|
|
1,647
|
|
|
2,554
|
|
Loss on early
extinguishment of debt
|
—
|
|
|
—
|
|
|
1,042
|
|
|
—
|
|
Loss on redemption of
convertible junior subordinated debentures
|
—
|
|
|
—
|
|
|
3,779
|
|
|
—
|
|
Other, net
|
(3)
|
|
|
(52)
|
|
|
(376)
|
|
|
54
|
|
Consolidated
EBITDA
|
$
|
12,089
|
|
|
$
|
15,213
|
|
|
$
|
39,755
|
|
|
$
|
49,785
|
|
Adjusted
For:
|
|
|
|
|
|
|
|
Withdrawable Trust
Income
|
$
|
709
|
|
|
$
|
207
|
|
|
$
|
1,488
|
|
|
$
|
555
|
|
Acquisition and
Divestiture Expenses
|
85
|
|
|
40
|
|
|
1,084
|
|
|
577
|
|
Severance
Costs
|
180
|
|
|
192
|
|
|
903
|
|
|
808
|
|
Consulting
Fees
|
107
|
|
|
570
|
|
|
357
|
|
|
1,358
|
|
Other Special
Items
|
—
|
|
|
200
|
|
|
—
|
|
|
200
|
|
Other Incentive
Compensation
|
—
|
|
|
—
|
|
|
1,000
|
|
|
—
|
|
Adjusted Consolidated
EBITDA
|
$
|
13,170
|
|
|
$
|
16,422
|
|
|
$
|
44,587
|
|
|
$
|
53,283
|
|
Revenue
|
$
|
54,549
|
|
|
$
|
58,378
|
|
|
$
|
166,705
|
|
|
$
|
180,892
|
|
|
|
|
|
|
|
|
|
Adjusted Consolidated
EBITDA Margin
|
24.1 %
|
|
|
28.1 %
|
|
|
26.7 %
|
|
|
29.5 %
|
|
Reconciliation
of funeral and cemetery income before income taxes to Field EBITDA
for the three and nine months ended September 30, 2014 and
2015 (in thousands):
|
|
Funeral Field
EBITDA
|
Three Months
Ended September
30,
|
|
Nine Months
Ended September
30,
|
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Gross Profit
(GAAP)
|
$
|
11,830
|
|
|
$
|
12,909
|
|
|
$
|
39,565
|
|
|
$
|
44,549
|
|
Depreciation &
amortization
|
1,762
|
|
|
1,911
|
|
|
5,059
|
|
|
5,576
|
|
Regional &
unallocated costs
|
2,248
|
|
|
2,471
|
|
|
5,396
|
|
|
6,126
|
|
Net financial
income
|
(2,002)
|
|
|
(1,982)
|
|
|
(6,307)
|
|
|
(6,178)
|
|
Funeral Field
EBITDA
|
$
|
13,838
|
|
|
$
|
15,309
|
|
|
$
|
43,713
|
|
|
$
|
50,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cemetery Field
EBITDA
|
Three Months
Ended September
30,
|
|
Nine Months
Ended September
30,
|
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Gross Profit
(GAAP)
|
$
|
3,247
|
|
|
$
|
4,451
|
|
|
$
|
11,516
|
|
|
$
|
13,268
|
|
Depreciation &
amortization
|
892
|
|
|
1,108
|
|
|
2,685
|
|
|
3,238
|
|
Regional &
unallocated costs
|
652
|
|
|
438
|
|
|
1,576
|
|
|
1,619
|
|
Net financial
income
|
(2,529)
|
|
|
(2,716)
|
|
|
(6,983)
|
|
|
(7,169)
|
|
Cemetery Field
EBITDA
|
$
|
2,262
|
|
|
$
|
3,281
|
|
|
$
|
8,794
|
|
|
$
|
10,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Field
EBITDA
|
Three Months
Ended September
30,
|
|
Nine Months
Ended September
30,
|
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Funeral Field
EBITDA
|
$
|
13,838
|
|
|
$
|
15,309
|
|
|
$
|
43,713
|
|
|
$
|
50,073
|
|
Cemetery Field
EBITDA
|
2,262
|
|
|
3,281
|
|
|
8,794
|
|
|
10,956
|
|
Funeral Financial
EBITDA
|
2,002
|
|
|
1,982
|
|
|
6,307
|
|
|
6,178
|
|
Cemetery Financial
EBITDA
|
2,529
|
|
|
2,716
|
|
|
6,983
|
|
|
7,169
|
|
Total Field
EBITDA
|
$
|
20,631
|
|
|
$
|
23,288
|
|
|
$
|
65,797
|
|
|
$
|
74,376
|
|
Reconciliation
of GAAP basic earnings per share to Adjusted basic earnings per
share for the three and nine months ended September 30, 2014
and 2015:
|
|
|
Three Months
Ended September
30,
|
|
Nine Months
Ended September
30,
|
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
GAAP basic earnings
per share from continuing operations
|
$
|
0.25
|
|
|
$
|
0.24
|
|
|
$
|
0.55
|
|
|
$
|
0.84
|
|
Special items
affecting net income
|
0.08
|
|
|
0.09
|
|
|
0.43
|
|
|
0.28
|
|
Adjusted basic
earnings per share
|
$
|
0.33
|
|
|
$
|
0.33
|
|
|
$
|
0.98
|
|
|
$
|
1.12
|
|
Reconciliation
of GAAP diluted earnings per share to Adjusted diluted earnings per
share for the three and nine months ended September 30, 2014
and 2015:
|
|
|
Three Months
Ended September
30,
|
|
Nine Months
Ended September
30,
|
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
GAAP diluted earnings
per share from continuing operations
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.54
|
|
|
$
|
0.82
|
|
Special items
affecting net income
|
0.08
|
|
|
0.09
|
|
|
0.43
|
|
|
0.27
|
|
Adjusted diluted
earnings per share
|
$
|
0.32
|
|
|
$
|
0.33
|
|
|
$
|
0.97
|
|
|
$
|
1.09
|
|
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Certain statements made herein or elsewhere by, or on behalf of,
the Company that are not historical facts are intended to be
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In addition to
historical information, this Press Release contains certain
statements and information that may constitute forward-looking
statements within the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements include
statements regarding the consummation of the SCI acquisition, any
projections of earnings, revenues, asset sales, cash flow, debt
levels or other financial items; any statements of the plans,
strategies and objectives of management for future operations; any
statements regarding future economic conditions or performance; any
statements of belief; and any statements of assumptions underlying
any of the foregoing and are based on our current expectations and
beliefs concerning future developments and their potential effect
on us. The words "may", "will", "estimate", "intend", "believe",
"expect", "project", "forecast", "foresee", "should", "would",
"could", "plan", "anticipate" and other similar words or
expressions are intended to identify forward-looking statements,
which are generally not historical in nature. While management
believes that these forward-looking statements are reasonable as
and when made, there can be no assurance that future developments
affecting us will be those that we anticipate. All comments
concerning our expectations for future revenues and operating
results are based on our forecasts for our existing operations and
do not include the potential impact of any future acquisitions. Our
forward-looking statements involve significant risks and
uncertainties (some of which are beyond our control) and
assumptions that could cause actual results to differ materially
from our historical experience and our present expectations or
projections. Important factors that could cause actual results to
differ materially from those in the forward-looking statements
include, but are not limited to, those summarized below:
- 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;
- 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.
For additional information regarding known material factors that
could cause our actual results to differ from our projected
results, please see "Risk Factors" in our most recent Annual Report
on Form 10-K. Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date hereof.
We undertake no obligation to publicly update or revise any
forward-looking statements after the date they are made, whether as
a result of new information, future events or otherwise. A copy of
the Company's Form 10-K, other Carriage Services information and
news releases are available at www.carriageservices.com.
This press release includes the use of certain financial
measures that are not GAAP measures. The Non-GAAP financial
measures are presented for additional information and are
reconciled to their most comparable GAAP measures in the tables
presented above.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/carriage-services-announces-record-results-for-third-quarter-and-nine-months-2015-and-raises-rolling-four-quarter-outlook-300171652.html
SOURCE Carriage Services, Inc.