Company Increases Rolling Four Quarter Outlook HOUSTON, Feb. 17
/PRNewswire-FirstCall/ -- Carriage Services, Inc. (NYSE: CSV) today
announced results for the fourth quarter and year ended December
31, 2009. YEAR 2009 FINANCIAL RESULTS Melvin C. Payne, Chairman and
Chief Executive Officer, stated, "I am proud beyond words of the
amazing job our operating leaders and employees performed in 2009
during the worst economic and financial crisis since the Great
Depression. We finished the year with a strong fourth quarter,
including record Total Revenue of $45.1 million, record
Consolidated EBITDA of $10.4 million and record tying EPS of $0.10
versus a GAAP EPS loss of $0.09 in 2008. But even though the fourth
quarter was great, it was the full year 2009 performance that
signaled completion of our transformation over the last six years
into an outstanding deathcare operating company." Highlights of the
2009 year compared to 2008 performance (before special charges)
were as follows: -- Record Total Revenues, up $700,000 or 0.4% from
2008 to $177.6 million; -- Record Cemetery Preneed Property
Revenue, up $4.2 million or 25.5% from 2008 to $20.8 million; --
Record Field EBITDA, up $2.3 million or 3.9% from 2008 to $61.6
million; -- Record Consolidated EBITDA, up $2.3 million or 5.9%
from 2008 to $41.5 million; -- Consolidated EBITDA Margin of 23.3%,
up 120 basis points from 22.1% in 2008; -- Record EPS of $0.40
under current accounting rules, up 33% from Adjusted EPS of $0.30
in 2008; -- Record Total Trust Fund Market Value, up $60 million or
43.0% to $198.1 million at year end 2009 compared to year end 2008;
-- Completion of our $10 million Stock Repurchase Program during
which we repurchased 3.1 million shares equal to 15% of fully
diluted shares outstanding. "We had so many performance heroes in
our company during 2009 that it would be impossible to list or
mention them all, but suffice it to say that they know who they are
and realize that each of them made an important contribution to our
total company performance," continued Mr. Payne. "More than
anything else, our record performance in 2009 was not only
differentiating within the universe of most public companies, it
was confirmation that our Standards Operating Model in combination
with our 4E Leadership Model has achieved broad traction and
effectiveness and has become the defining framework for Carriage's
high performance culture. "We made two small but strategic
acquisitions in the fourth quarter of 2009 and are actively
evaluating candidates using our Strategic Acquisition Model. As
consolidation of our industry continues, we are confident that we
can selectively grow by acquisition which will be a smart use of
our capital and add substantial value to our shareholders over the
next five years." FOUR QUARTER OUTLOOK 2010 "After the record
performance of 2009, we are confident that our 2010 performance
will be even better, so we are raising all of our key performance
metrics for the four quarters ending December 31, 2010, including
earnings to be in the range of $0.42 - $0.45 per diluted share,"
concluded Payne. TREND REPORTING Management monitors consolidated
same store and acquisition field operating and financial results
both on a five year and most recent rolling four quarters basis
("Trend Reports") to reflect long term and short term trends and
seasonality. "Acquisition" is defined as businesses acquired since
January 2005 (date of refinancing the Senior Notes). This
classification of acquisitions has been important to management and
investors in monitoring the results of these businesses and to
gauge the leveraging performance contribution that a selective
acquisition program can have on the total company performance.
Beginning in the first quarter of 2010, Acquisition will be defined
as businesses owned for at least one full fiscal year. The Trend
Reports highlight trends in volumes, revenues, Field EBITDA
(controllable profit), Field EBITDA Margin (controllable profit
margin) and the components of overhead. Trend reporting allows
management to focus on the key operational and financial drivers
relevant to the longer term performance and valuation of the
Company's portfolio of deathcare businesses. Please review the
following table and visit the Investor Relations homepage of
Carriage Services' web site at http://www.carriageservices.com/ for
a link to the five year Annual and Quarterly (most recent five
quarters) Trend Reports. UNAUDITED INCOME STATEMENT FROM CONTINUING
OPERATIONS Period Ended December 31, 2009 ($000's) Three Months
Three Months Twelve Months Twelve Months Ended Ended Ended Ended
December 31, December 31, December 31, December 31, 2008 2009 2008
2009 ------------ ------------ ------------- -------------
CONTINUING OPERATIONS Same Store Contracts Atneed Contracts 4,144
4,083 16,881 15,971 Preneed Contracts 964 962 4,019 3,792 -------
------- -------- -------- Total Same Store Funeral Contracts 5,108
5,045 20,900 19,763 Acquisition Contracts Atneed Contracts 664 777
2,858 2,852 Preneed Contracts 247 245 903 932 ------- -------
-------- -------- Total Acquisition Funeral Contracts 911 1,022
3,761 3,784 New Store Openings 238 184 870 815 ------- -------
-------- -------- Total Funeral Contracts 6,257 6,251 25,531 24,362
======= ======= ======== ======== Funeral Revenue Same Store
Funeral Operations Revenue $28,349 $28,590 $113,034 $110,776
Preneed Commission and Other Revenue 617 451 2,670 2,024 -------
------- -------- -------- Total Funeral Same Store Revenue 28,966
29,041 115,704 112,800 Acquired Funeral Operations Revenue 4,516
4,794 18,542 18,251 ------- ------- -------- -------- Total Funeral
Revenue $33,482 $33,835 $134,246 $131,051 Cemetery Revenue Same
Store Cemetery Operations Revenue $8,134 $8,803 $32,615 $36,021
Same Store Cemetery Financial Revenue 695 904 3,723 3,724 -------
------- -------- -------- Total Cemetery Same Store Revenue 8,829
9,707 36,338 39,745 Acquired Cemetery Operations Revenue 1,451
1,475 6,082 6,276 Acquired Cemetery Financial Revenue 72 90 262 555
------- ------- -------- -------- Total Cemetery Acquisition
Revenue 1,523 1,565 6,344 6,831 ------- ------- -------- --------
Total Cemetery Revenue $10,352 $11,272 $42,682 $46,576 -------
------- -------- -------- Total Revenue from Continuing Operations
$43,834 $45,107 $176,928 $177,627 ======= ======= ======== ========
Field EBITDA from Continuing Operations Same Store Funeral Field
EBITDA $11,001 $11,232 $42,587 $42,202 Same Store Funeral Field
EBITDA Margin 38.0% 38.7% 36.8% 37.4% Acquired Funeral Field EBITDA
1,383 1,478 5,736 5,780 Acquired Funeral Field EBITDA Margin 30.6%
30.8% 30.9% 31.7% ------- ------- -------- -------- Total Funeral
Field EBITDA $12,384 $12,710 $48,323 $47,982 Total Funeral Field
EBITDA Margin 37.0% 37.6% 36.0% 36.6% Same Store Cemetery Field
EBITDA 1,782 2,764 8,855 11,596 Same Store Cemetery Field EBITDA
Margin 20.2% 28.5% 24.4% 29.2% Acquired Cemetery Field EBITDA 465
417 2,105 1,996 Acquired Cemetery Field EBITDA Margin 30.5% 26.6%
33.2% 29.2% ------- ------- -------- -------- Total Cemetery Field
EBITDA $2,247 $3,181 $10,960 $13,592 Total Cemetery Field EBITDA
Margin 21.7% 28.2% 25.7% 29.2% ------- ------- -------- --------
Total Field EBITDA from Continuing Operations $14,631 $15,891
$59,283 $61,574 Total Field EBITDA Margin from Continuing
Operations 33.4% 35.2% 33.5% 34.7% Overhead Total Variable Overhead
$1,449 $1,065 $3,403 $3,376 Total Regional Fixed Overhead 916 896
3,413 3,093 Total Corporate Fixed Overhead 3,413 3,503 13,311
13,646 ------- ------- -------- -------- Total Overhead $5,778
$5,464 $20,127 $20,115 13.2% 12.1% 11.4% 11.3% ------- -------
-------- -------- Adjusted Consolidated EBITDA from Continuing
Operations $8,853 $10,427 $39,156 $41,459 ------- ------- --------
-------- Adjusted Consolidated EBITDA Margin from Continuing
Operations 20.2% 23.1% 22.1% 23.3% Special Charges Litigation
Settlement $3,300 - $3,300 - Litigation Related Legal Costs 241 -
1,638 - Termination Expenses - - 969 - Other Special Charges - -
254 - ------- ------- -------- -------- Sum of Special Charges
$3,541 - $6,161 - ------- ------- -------- -------- Consolidated
EBITDA from Continuing Operations $5,312 $10,427 $32,995 $41,459
12.1% 23.1% 18.6% 23.3% Property Depreciation & Amortization
$2,624 $2,499 $10,368 $10,339 Restricted Stock Amortization 246 266
996 1,005 Interest Expense 4,630 4,641 18,331 18,498 Interest
(Income) and Other (6) (4) (229) (228) ------- ------- --------
-------- Pretax Income ($2,182) $3,025 $3,529 $11,845 Income tax
(531) 1,225 1,725 4,797 ------- ------- -------- -------- Net
income from Continuing Operations ($1,651) $1,800 $1,804 $7,048
======= ======= ======== ======== -3.8% 4.0% 1.0% 4.0% Diluted EPS
from Continuing Operations ($0.09) $0.10 $0.09 $0.40 Diluted EPS
from Continuing Operations Excluding Special Charges $0.04 $0.10
$0.30 $0.40 Diluted Shares Outstanding 18,116,713 17,539,490
19,362,504 17,749,847 TRUST FUND PERFORMANCE Beginning in October
2008, Carriage management worked closely with its trust fund
investment advisor, Salient Partners, to first develop and then
execute a repositioning strategy to exploit the "credit and
leverage" nature of the market crisis and panic by acquiring
extraordinary values available in fixed income and equity
securities of mostly iconic U.S. companies. Our strategy was
concentrated in the common and preferred shares of large,
systemically critical banks, life insurance and other financial
service companies. The result of this 14 month repositioning
strategy was a market value gain for the 2009 year of over $52
million or 51.3% in our discretionary accounts and $59.6 million or
43.0% in our total trust funds. The gains were achieved while
simultaneously increasing our fixed income allocation (including
preferred stocks) from 35% of total trust assets at year end 2008
to 49% at year end 2009, which had the result of more than doubling
the market value of our fixed income portfolio to $99.3 million and
increasing by 41% the annual income from our total portfolio of
fixed income and equity securities. Our equity allocation declined
from 51% of total trust fund assets at year end 2008 to 43% at year
end 2009. We completed our repositioning strategy in mid December
2009. Management believes that our combined trust fund accounts now
contain excess funding beyond the historical revenue and profit
margins that we have achieved when contracts mature. Management
estimates such current excess funding equates to about $2 per share
of fully diluted shares outstanding which approximates the $35
million of currently unrealized gains. The currently embedded
excess funding and any future growth could be realized through
earnings over time assuming a more normal market environment
without major crises. However, given the uncertainty related to
predicting intermediate term market performance, we will only
forecast incremental EPS contribution primarily from our perpetual
care trust in our rolling four quarter outlook. Our 2010 EPS
outlook includes $0.02-$0.03 per share contribution above the
historical normal trust fund component of Carriage's EPS. Shown
below are consolidated performance metrics for the combined trust
fund portfolios (preneed funeral, cemetery merchandise and services
and cemetery perpetual care) at key dates. ($ in 000's)
Discretionary Accounts ---------------------- CSV Trust Funds
Market Value, Income and Yield Est. Yield Unrealized Date Market
Value Annual Income on Cost Gain / (Loss) -------- ------------
------------- ------- ------------- 12/31/08 $101,554 $5,431 5.27%
($25,753) 3/9/2009 $79,439 $6,611 7.16% ($40,408) 3/31/09 $89,249
$7,208 7.52% ($29,217) 6/30/09 $120,667 $7,352 7.82% $7,014 9/30/09
$145,776 $7,979 7.28% $28,323 12/31/09 $153,608 $7,656 7.65%
$33,519 ($ in 000's) Total Trust Funds ----------------- CSV Trust
Funds Cost, Market Value, Gain Unrealized Date Cost Basis Market
Value Gain / (Loss) -------- ---------- ------------ -------------
12/31/08 $167,242 $138,537 ($28,705) 03/09/09 $156,262 $112,114
($44,147) 3/31/09 $159,023 $126,324 ($32,699) 06/30/09 $153,999
$158,928 $4,929 09/30/09 $159,050 $186,646 $27,596 12/31/09
$163,079 $198,113 $35,042 CSV Trust Funds: Market Value Performance
(Gain) -------------------------------------------------
Discretionary Total Trust Accounts Funds -----------------
---------------- Timeframe Amount Percent Amount Percent
------------------------ ------ ------- ------ ------- 1 year
ending 12/31/09 $52,054 51.3% $59,576 43.0% 3/9/09 to 12/31/09
$74,169 93.4% $85,999 76.7% 3 months ending 12/31/09 $7,832 6.5%
$11,467 7.2% CSV Trust Funds: Market Value Performance (Gain)
------------------------------------------------- Index Performance
----------------------------------- 50/50 index Timeframe DJIA
S&P 500 NASDAQ Benchmark ------------------------ ---- -------
------ --------- 1 year ending 12/31/09 18.8% 23.5% 43.9% 16.20%
3/9/09 to 12/31/09 59.3% 64.8% 78.9% n/a 3 months ending 12/31/09
7.4% 5.5% 6.4% 3.12% CSV Trust Funds: Portfolio Profile
----------------------------------- 12/31/2008 12/31/2009
---------- ---------- Total Trust Total Trust Funds Funds
-------------- -------------- Asset Class MV % MV % -----------
------- --- ------- --- Equities $70,213 51% $83,155 43% Fixed
Income $49,033 35% $99,286 49% Cash $19,290 14% $15,672 8% ----
------- --- ------- --- Total Portfolios $138,537 100% $198,113
100% ----------- ------- --- ------- --- CONSOLIDATED OPERATING
RESULTS Total revenue for the fourth quarter of 2009 grew $1.3
million or 2.9% to $45.1 million from $43.8 million reported in
last year's fourth quarter as the Company experienced growth in
both the funeral and cemetery segments as discussed in the
following sections. Carriage earned $0.10 per diluted share for the
fourth quarter of 2009 compared to a loss of $(0.09) per share in
the same period last year. Fourth quarter of 2008 results included
special charges associated with a litigation settlement,
termination charges, and other costs that were non-recurring in
nature. Excluding those charges, adjusted diluted earnings per
share were $0.04 in last year's period. Excellent cost and expense
management produced dollar for dollar profit gains from the
incremental revenue which, when combined with a reduction of
overhead in the amount of $0.3 million, produced an increase in
Consolidated EBITDA in the fourth quarter of $1.6 million or 17.6%
to $10.4 million versus adjusted Consolidated EBITDA of $8.9
million in last year's fourth quarter. Consolidated EBITDA Margin
increased in the fourth quarter of this year by 290 basis points to
23.1% compared to adjusted Consolidated EBITDA Margin of 20.2% in
the fourth quarter last year. For the year ended December 31, 2009,
Total Revenue increased $0.7 million to $177.6 million compared to
$176.9 million for 2008. Consolidated EBITDA for 2009 was $41.5
million and Consolidated EBITDA Margin was 23.3% compared to 2008
adjusted Consolidated EBITDA of $39.2 million and adjusted
Consolidated EBITDA Margin of 22.1%. Diluted earnings per share
from continuing operations was $0.40 in 2009 compared to diluted
earnings per share of $0.09 in 2008. Excluding the special charges
in 2008, adjusted diluted earnings per share from continuing
operations was $0.30. FUNERAL OPERATIONS Fourth quarter funeral
revenue increased $0.4 million to $33.8 million compared to the
prior year quarter. Contract volume was essentially flat compared
to the prior year quarter while the average revenue per contract
increased 1.7%. Year over year the cremation rate for the fourth
quarter increased from 39.2% to 42.5%. An initiative implemented in
the fourth quarter of 2008 to increase the average revenue per
cremation contract, largely by converting direct cremations to
cremations with services, continues to gain traction and helped not
only the cremation average but also customer satisfaction levels
with cremation families. Cremations with services have grown
significantly from 37.7% of total cremation contracts in the fourth
quarter of 2008 to 45.2% for the fourth quarter of 2009. As a
result of this continuing initiative, which includes new training
and new merchandise options for client families, the average
revenue per cremation contract in the current quarter increased
5.3% to $2,922 from the fourth quarter of 2008. Funeral Field
EBITDA increased 2.6% to $12.7 million compared to the fourth
quarter of 2008, while the related Field EBITDA Margin increased 60
basis points from 37.0% to 37.6%. The year over year improvement in
Funeral Field EBITDA and Funeral Field EBITDA Margin was
substantially due to the ability of our Managing Partners to
maintain their operating costs and expenses at essentially the same
level as in the prior year quarter, allowing the incremental
revenue to drop to Funeral Field EBITDA. For the year ended
December 31, 2009, total funeral revenue was $131.1 million
compared to $134.2 million reported in 2008, a decline of 2.4
percent. The number of contracts decreased by 1,169, or 4.6%
compared to 2008, while the average revenue per contract increased
2.8%. The overall cremation rate increased from 39.8% in 2008 to
42.1% in 2009. Funeral Field EBITDA declined by only $0.3 million
to $48.0 million and total Funeral Field EBITDA Margin increased 60
basis points to 36.6% because of excellent cost management.
CEMETERY OPERATIONS Cemetery Revenue totaled $11.3 million in the
fourth quarter of 2009, an increase of $0.9 million, or 8.9% as
both atneed and preneed revenues rose compared to the prior year.
Cemetery Field EBITDA also increased $0.9 million to $3.2 million
while Cemetery Field EBITDA Margin increased 650 basis points from
21.7% to 28.2%. Cemetery Revenue includes earnings from trust funds
and finance charges, which increased by approximately $0.2 million
compared to the fourth quarter in 2008. Income from perpetual care
trust funds, where current earnings are recognized, increased by
$0.4 million or 177% compared to fourth quarter 2008. Income from
merchandise and services trust funds, where cumulative realized
earnings are recognized at the point when the merchandise and
services are provided, was $0.1 million lower than the prior year.
For the year ended December 31, 2009, total cemetery revenue
increased $3.9 million or 9.1% to $46.6 million compared to the
prior year period, driven by a $4.2 million or 25.5% increase in
revenue from preneed property sales. The percentage of preneed
property sales that were recognized as revenue increased from 82.8%
to 87.7% and the number of interment rights sold increased 23.7%.
Total Cemetery Field EBITDA increased by $2.6 million or 24.0% to
$13.6 million and as a result Total Cemetery Field EBITDA Margin
increased 350 basis points to 29.2% from 25.7%. The improvement in
cemetery sales revenue and profitability was primarily due to
recruiting new and stronger sales managers to most of our larger
parks during the last half of 2008 and subsequently adding
significantly to the number and quality of sales counselors in
early 2009. OVERHEAD Total Overhead declined by $0.3 million or
5.2% in the 2009 fourth quarter to $5.5 million and was 12.1% of
revenues as compared $5.8 million and 13.2% of revenues in the
fourth quarter of 2008. For the year ended December 31, 2009, total
overhead was comparable to the prior year. SHARE REPURCHASE PROGRAM
During 2008 the Board of Directors approved plans for common stock
repurchases totaling $10 million. In 2008, the Company repurchased
1,730,969 shares at an aggregate cost of $5,740,000 and an average
cost per share of $3.29. In 2009, the Company repurchased 1,377,882
shares at an aggregate cost of $4,260,000 and an average cost per
share of $3.09. At the completion of the program in the fourth
quarter of 2009, the Company had repurchased a total of 3,108,851
shares for $10 million at an average cost per share of $3.19. CASH
FLOW Carriage produced Free Cash Flow (defined as cash flow from
operations less maintenance capital expenditures) of $6.2 million
during the fourth quarter of 2009 compared to $5.6 million for the
corresponding 2008 period. Free Cash Flow for the full year 2009
was $14.2 million equal to $0.80 per share compared to $13.5
million equal to $0.70 per share in 2008. The sources and uses of
cash for 2009 consisted of the following (in millions): Adjusted
cash flow provided by operations(1) $19.4 Cash used for maintenance
capital expenditures (5.2) ---- Adjusted Free Cash Flow $14.2 Cash
at beginning of year 5.0 Acquisitions (3.1) Cash used for growth
capital expenditures - funeral homes (0.8) Cash used for growth
capital expenditures - cemeteries (3.3) Cash used for litigation
settlement (3.3) Share repurchase program (4.3) Other investing and
financing activities, net (0.8) ---- Cash at December 31, 2009 $3.6
==== (1) Cash provided by operations excludes the $3.3 million
litigation settlement reported in the fourth quarter of 2008 and
paid in the first quarter of 2009. BANK CREDIT FACILITY The Company
amended and extended its bank credit facility with its lenders,
Bank of America and Wells Fargo, during the fourth quarter of 2009.
The amended credit facility is in the amount of $40 million with an
accordion provision for an additional $20 million and matures in
November 2012. The primary purpose of the credit facility is to
provide acquisition financing. As of this date, the facility is
undrawn. OUTLOOK The Four Quarter Outlook ranges for the rolling
four quarter period ending December 31, 2010 are intended to
approximate what the Company believes will be the sustainable
earning power of its portfolio of deathcare assets over the next
four quarters as its three models are effectively executed.
Performance drivers include funeral contract volumes, cremation
mix, preneed sales, preneed maturities and deliveries, average
revenue per service and overhead items. Other variables include the
effective tax rate, which is currently estimated to be
approximately 40% and the estimated number of diluted shares
outstanding which is currently estimated to be approximately 17.8
million. Though we expect to acquire businesses during 2010, we
have not forecast any acquisitions in the Four Quarter Outlook
ending December 31, 2010 because of the uncertainty as to the
timing and size of acquisitions. ROLLING FOUR QUARTER OUTLOOK -
Period Ending December 31, 2010 (amounts in millions, except per
share amounts) Range ------------- Revenues $180 - $184 Field
EBITDA $63 - $65 Field EBITDA Margin 35% Total Overhead $20.5 -
$21.5 Consolidated EBITDA $42.5 - $43.5 Consolidated EBITDA Margin
23.6% Interest $18.0 Depreciation & Amortization $12.0 Income
Taxes $5.0 - $5.4 Net Income $7.5 - $8.1 Diluted Earnings Per Share
$0.42 - $0.45 Free Cash Flow $14.5 - $15.5 Earnings for this period
are expected to increase relative to the year ended December 31,
2009 for the following reasons: -- Increase in Funeral Revenue and
Funeral Field EBITDA from the acquisition of two businesses in Q4
2009 -- Increase in the average revenue per funeral service --
Higher cemetery financial revenue Long Term Outlook - Through 2014
(Base Year 2009) -------------------------------------------------
Revenue growth of 6-7% annually, including acquisitions
Consolidated EBITDA growth of 8-10% annually, including
acquisitions Consolidated EBITDA Margin range of 24-26% EPS growth
of 14-16% annually, including acquisitions CONFERENCE CALL Carriage
Services has scheduled a conference call for tomorrow, Thursday,
February 18, 2010 at 10:30 a.m. eastern time. To participate in the
call, please dial 480-629-9772 at least ten minutes before the
conference call begins and ask for the Carriage Services conference
call. A telephonic replay of the conference call will be available
through February 25, 2010 and may be accessed by dialing
303-590-3030 and using pass code 4206545#. An audio archive will
also be available on the company's website at
http://www.carriageservices.com/ shortly after the call and will be
accessible for approximately 90 days. For more information, please
contact Karen Roan at DRG&E at 713-529-6600 or email . Carriage
Services is a leading provider of death care services and products.
Carriage operates 138 funeral homes in 25 states and 32 cemeteries
in 11 states. USE OF NON-GAAP FINANCIAL MEASURES This press release
uses the following Non-GAAP financial measures "free cash flow" and
"EBITDA". Both free cash flow and EBITDA are used by investors to
value common stock. The Company considers free cash flow to be an
important indicator of its ability to generate cash for
acquisitions and other strategic investments. The Company has
included EBITDA in this press release because it is widely used by
investors to compare the Company's financial performance with the
performance of other deathcare companies. The Company also uses
Field EBITDA and Field EBITDA Margin to monitor and compare the
financial performance of the individual funeral and cemetery field
businesses. EBITDA does not give effect to the cash the Company
must use to service its debt or pay its income taxes and thus does
not reflect the funds actually available for capital expenditures.
In addition, the Company's presentation of EBITDA may not be
comparable to similarly titled measures other companies report.
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. Reconciliations of the Non-GAAP
financial measures to GAAP measures are provided at the back of the
press release. The Company categorizes its general and
administrative expenses into three categories of overhead: (1)
variable overhead, (2) regional fixed overhead and (3) corporate
fixed overhead. Variable overhead consists of cost and expense such
as incentive compensation which will vary with profitability and
legal expense unrelated to day to day operations. Regional fixed
overhead and corporate fixed overhead represent the cost and
expenses of regional operations leaders and the home office and
will not vary as a result of profitability. Special charges are
considered by management to be unusual in nature, unique and not
expected to occur in the normal course of business. 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. These statements are
based on assumptions that the Company believes are reasonable;
however, many important factors, as discussed under
"Forward-Looking Statements and Cautionary Statements" in the
Company's Annual Report and Form 10-K for the year ended December
31, 2008, could cause the Company's results in the future to differ
materially from the forward-looking statements made herein and in
any other documents or oral presentations made by, or on behalf of,
the Company. The Company assumes no obligation to update or
publicly release any revisions to forward-looking statements made
herein or any other forward-looking statements made by, or on
behalf of, the Company. A copy of the Company's Form 10-K, and
other Carriage Services information and news releases, are
available at http://www.carriageservices.com/. Contacts: Terry
Sanford, EVP & CFO Carriage Services, Inc. 713-332-8400 Ken
Dennard / Kip Rupp / DRG&E / 713-529-6600 - Financial
Statements and Tables to Follow - CARRIAGE SERVICES, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share
data) December 31, --------------------- ASSETS 2008 2009 --------
-------- Current assets: Cash and cash equivalents $5,007 $3,616
Accounts receivable, net of allowance for bad debts 14,637 15,177
Inventories and other current assets 15,144 14,683 --------
-------- Total current assets 34,788 33,476 -------- --------
Preneed cemetery and funeral trust investments 125,843 183,484
Preneed receivables, net of allowance for bad debts 13,783 16,782
Receivables from preneed funeral trusts 12,694 14,629 Property,
plant and equipment, net of accumulated depreciation 126,164
124,800 Cemetery property 70,213 71,661 Goodwill 164,515 166,930
Deferred charges and other non-current assets 12,293 7,536 --------
-------- Total assets $560,293 $619,298 ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current
portion of long-term debt and obligations under capital leases $815
$558 Accounts payable and accrued liabilities 25,860 20,914
-------- -------- Total current liabilities 26,675 21,472 Senior
long-term debt, net of current portion 132,345 131,898 Convertible
junior subordinated debenture due in 2029 to an affiliated trust
93,750 93,750 Obligations under capital leases, net of current
portion 4,572 4,418 Deferred preneed cemetery and funeral revenue
73,638 75,834 Deferred preneed cemetery and funeral receipts held
in trust 99,525 143,101 Care trusts' corpus 26,078 40,403 --------
-------- Total liabilities 456,583 510,876 -------- --------
Commitments and contingencies Redeemable Preferred Stock 200 200
Stockholders' equity: Common Stock, $.01 par value; 80,000,000
shares authorized; 19,562,000 and 20,411,000 issued in 2008 and
2009, respectively 196 205 Additional paid-in capital 195,104
197,033 Accumulated deficit (86,050) (79,016) Treasury stock, at
cost; 1,731,000 and 3,109,000 shares at 12/31/08 and 12/31/09,
respectively (5,740) (10,000) -------- -------- Total stockholders'
equity 103,510 108,222 -------- -------- Total liabilities and
stockholders' equity $560,293 $619,298 ======== ======== CARRIAGE
SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) (in thousands, except per share data) For the years
ended December 31, --------------------- 2008 2009 --------
-------- Revenues $176,928 $177,627 Field costs and expenses
133,885 131,509 -------- -------- Gross profit 43,043 46,118
Corporate costs and expenses 18,112 16,003 -------- --------
Operating income 24,931 30,115 Interest expense, net of interest
income and other (18,102) (18,270) Litigation settlement (3,300) -
-------- -------- Income from continuing operations before income
taxes 3,529 11,845 Provision for income taxes (1,725) (4,797)
-------- -------- Net income from continuing operations 1,804 7,048
Income (loss) from discontinued operations, net of tax (1,546) -
-------- -------- Net Income 258 7,048 Preferred stock dividend 10
14 -------- -------- Net income available to common stockholders
$248 $7,034 ======== ======== Basic earnings (loss) per common
share: Continuing operations $0.09 $0.40 Discontinued operations
(0.08) - -------- -------- Net income $0.01 $0.40 ======== ========
Diluted earnings (loss) per common share: Continuing operations
$0.09 $0.40 Discontinued operations (0.08) - -------- -------- Net
income $0.01 $0.40 ======== ======== Weighted average number of
common and common equivalent shares outstanding: Basic 19,054
17,573 ======== ======== Diluted 19,362 17,749 ======== ========
CARRIAGE SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED) (in thousands) For the years ended December 31,
------------------- 2008 2009 ------ ------ Cash flows from
operating activities: Net income $258 $7,048 Adjustments to
reconcile net income (loss) to net cash provided by operating
activities: (Income) loss from discontinued operations, net of tax
1,546 - Depreciation and amortization 10,372 10,339 Amortization of
deferred financing costs 725 767 Provision for losses on accounts
receivable 4,034 3,937 Stock-based compensation expense 1,548 1,588
Deferred income taxes 1,648 4,797 Other (90) (37) Changes in
operating assets and liabilities that provided (required) cash, net
of effects from acquisitions Accounts and preneed receivables 2,319
(7,241) Inventories and other current assets 857 220 Deferred
charges and other 60 (108) Preneed funeral and cemetery trust
investments (4,260) (3,737) Accounts payable and accrued
liabilities 4,481 (5,372) Deferred preneed funeral and cemetery
revenue (11,239) (784) Deferred preneed funeral and cemetery
receipts held in trust 7,238 4,678 Net cash provided by operating
activities of discontinued operations 155 - ------ ------ Net cash
provided by operating activities 19,652 16,095 Cash flows from
investing activities: Acquisitions - (3,102) Sales proceeds
withdrawn from restricted accounts and other - 67 Capital
expenditures (12,876) (9,370) Net cash provided by investing
activities of discontinued operations 1,029 - ------ ------ Net
cash used in investing activities (11,847) (12,405) Cash flows from
financing activities: Payments on senior long-term debt and
obligations under capital leases (1,182) (778) Proceeds from the
exercise of stock options and employee stock purchase plan and tax
688 476 Purchase of treasury stock (5,740) (4,260) Dividend on
redeemable preferred stock (10) (14) Other financing expenses -
(505) ------ ------ Net cash used in financing activities (6,244)
(5,081) ------ ------ Net increase (decrease) in cash and cash
equivalents 1,561 (1,391) Cash and cash equivalents at beginning of
year 3,446 5,007 ------ ------ Cash and cash equivalents at end of
year $5,007 $3,616 ====== ====== CARRIAGE SERVICES, INC. Selected
Financial Data December 31, 2009 (unaudited) Selected Balance Sheet
Data: 12/31/2008 12/31/2009 ---------- ---------- Cash and cash
equivalents $5,007 $3,616 Total Senior Debt (a) 137,732 136,874
Days sales in funeral accounts receivable 21.3 20.0 Senior Debt to
total capitalization 41.1 40.4 Senior Debt to EBITDA from
continuing operations (rolling twelve months) 4.3 3.3 (a) Senior
debt does not include the convertible junior subordinated
debentures. 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 EBITDA from continuing
operations for the three months ended and year ended December 31,
2008 and 2009 and the estimated rolling four quarters ended
December 31, 2010 (presented at the midpoint of the range
identified in the release)(in 000's): Three months Three months
ended ended 12/31/2008 12/31/2009 ---------- ---------- Net income
(loss) from continuing operations $(1,651) $1,800 Provision
(benefit) for income taxes (531) 1,225 ---------- ----------
Pre-tax earnings (loss) from continuing operations (2,182) 3,025
Net interest expense, including loan cost amortization 4,624 4,637
Depreciation & amortization 2,870 2,751 Special Charges 3,541 -
---------- ---------- Adjusted EBITDA from continuing operations
$8,853 $10,413 ========== ========== Revenue from continuing
operations $43,834 $45,107 Adjusted EBITDA margin from continuing
operations 20.2% 23.1% Reconciliation of Non-GAAP Financial
Measures, Continued: Rolling Twelve months Twelve months Four
Quarter ended ended Outlook 12/31/2008 12/31/2009 12/31/2010 E
---------- ---------- ------------ Net income from continuing
operations $1,804 $7,048 $7,700 Provision for income taxes 1,725
4,797 5,300 ------- ------- ------- Pre-tax earnings from
continuing operations 3,529 11,845 13,000 Net interest expense,
including loan cost amortization 18,102 18,270 18,000 Depreciation
& amortization 11,364 11,344 12,000 Special Charges 6,161 - -
------- ------- ------- Adjusted EBITDA from continuing operations
$39,156 $41,459 $43,000 ======= ======= ======= Revenue from
continuing operations $176,928 $177,627 $182,000 Adjusted EBITDA
margin from continuing operations 22.1% 23.3% 23.6% Reconciliation
of cash provided by operating activities from continuing operations
to free cash flow (in 000's): Three months Three months ended ended
12/31/2008 12/31/2009 ---------- ---------- Cash provided by
operating activities from continuing operations $7,441 $8,177 Less
maintenance capital expenditures from continuing operations (1,794)
(1,930) ------ ------ Free cash flow from continuing operations
$5,647 $6,247 ====== ====== Twelve months Twelve months ended ended
12/31/2008 12/31/2009 ---------- ---------- Cash provided by
operating activities from continuing operations $19,497 $16,095
Cash used for litigation settlement - 3,300 ------- -------
Adjusted free cash flow from continuing operations $19,497 $19,395
Less maintenance capital expenditures from continuing operations
(5,984) (5,250) ------- ------- Adjusted free cash flow from
continuing operations $13,513 $14,145 ======= ======= Diluted
shares outstanding 19,362 17,749 Adjusted free cash flow per share
$0.70 $0.80 ======= ======= Reconciliation of diluted earnings per
share to adjusted diluted earnings per share for the fourth quarter
of 2008 (in 000's): As Litigation Tax Rate Reported Charges Change
Adjusted -------- ---------- -------- -------- Pre-tax income
(loss) from continuing operations $(2,182) $3,541 $- $1,359 Income
tax (expense) benefit 531 (1,728) 532 (665) ------- ------ -----
------ Net income (loss) $(1,651) $1,813 $532 $694 Diluted earnings
(loss) per share $(0.09) $0.10 $0.03 $0.04 DATASOURCE: Carriage
Services, Inc. CONTACT: Terry Sanford, EVP & CFO of Carriage
Services, Inc., +1-713-332-8400; or Ken Dennard, , or Kip Rupp, ,
both of DRG&E, +1-713-529-6600, for Carriage Services, Inc. Web
Site: http://www.carriageservices.com/
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