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StoneMor Partners L.P. Announces 2010 Year-End Results

Stocks in this article: STON

LEVITTOWN, Pa., March 29, 2011 (GLOBE NEWSWIRE) -- StoneMor Partners L.P. (Nasdaq:STON) announced its results of operations and various critical financial measures (non-GAAP) today for both the three months and year ended December 31, 2010. Measures released include both GAAP measures as provided for in our quarterly and annual financial statements and other financial measures that we believe help to understand our results of operations, financial position and decision making process:

Critical financial measures (non-GAAP):

  Three months ended Year ended
  December 31, December 31,
  2010 2009 2010 2009
    (As Restated)   (As Restated)
  (In thousands) (In thousands)
Adjusted operating profit (a)  $ 11,481  $ 5,863  $ 37,884  $ 35,873
Total value of cemetery contracts written,        
 funeral home revenues and investment and        
 other income (a)  70,596  52,237  247,400  217,261
Adjusted operating cash generated (a)  16,071  6,290  40,104  36,141
Distributable free cash flow (a)  $ 13,569  $ 5,580  $ 37,595  $ 35,123
(a) This is a non-GAAP financial measure as defined by the Securities and Exchange Commission. Please see the reconciliation to GAAP measures within this press release.

Financial measures (GAAP):

  Three months ended Year ended
  December 31, December 31,
  2010 2009 2010 2009
    (As Restated)   (As Restated)
  (In thousands) (In thousands)
Total revenues  $ 55,755  $ 44,215  $ 197,292  $ 181,203
Operating profit (loss)  (795)  441  3,267  12,566
Operating cash flows (deficits)  (6,651)  (1,225)  3,106  14,729
Net loss  $ (3,981)  $ (7,774)  $ (1,446)  $ (4,388)

2010 Overview

2010 was an eventful year for our company. As with many other companies, the prolonged economic slowdown provided us with many obstacles. Despite this, we were able to accomplish each of the following critical goals:

  • We became the exclusive operator of 3 cemeteries and acquired 19 cemeteries and 6 funeral homes during the year and have fully integrated them into our operations.
  • We increased our production, as evidenced by the increase in the total value of cemetery contracts written, funeral home revenues and investment and other income (see "Production Based Revenue").
  • We held our profit margins relatively consistent for the year, despite the economic downturn. This is evidenced by the ratio of adjusted operating profit to production based revenue, which was 15.3% and 16.5% in 2010 and 2009, respectively. Further, we were able to accomplish this in a year where we integrated 22 cemeteries and 6 funeral homes into our operations. Typically, it takes some time to initiate and develop our pre-need sales programs at acquired cemeteries, while many costs are incurred from inceptions. As a result, acquisitions tend to lower our profit margins in the short-term, as they did in 2010.
  • At December 31, 2010, our net accounts receivable of $105.5 million and merchandise trust assets of $318.3 million exceeded our merchandise trust liability of $113.4 million by $310.4 million. As a result, we feel we are adequately funded to meet our future liability to deliver the goods and services that we have sold on a pre-need basis. 
  • We completed several transactions that strengthened our capital base. In September of 2010, we completed a public offering of 1,725,000 common units. Further, in February of 2011, we completed another public offering of 3,756,155 common units. At the same time, we also amended our credit agreement, and paid off all outstanding amounts on our credit lines and $35.0 million of secured notes. As a result, we currently have availability of $65.0 million on our acquisition credit facility and $55.0 million on our revolving credit facility. 
  • We increased the ratio of total liquid net assets at December 31, 2010 to our cash distribution as discussed under "Increased Distribution"
  • We believe we are now well positioned to acquire, grow, and as a potential result, increase future distributions.

Increased Distribution

In January of 2011, we were pleased to announce that we were increasing our distribution to $0.575 in the fourth quarter. This is an increase from our third quarter distribution of $0.565 and second quarter distribution of $0.555. We made this decision after evaluating recent operating results, the impact of our capital restructuring, and the impact on our financial position due to our recent acquisitions. These occurrences led to a substantial buildup in our liquid net asset position as compared to prior periods. Such buildup is shown in the table below:

  As of As of
  12/31/2010 12/31/2009
    (As Restated)
  (In thousands)
Liquid assets:    
Cash and cash equivalents  $ 7,535  $ 13,479
Accounts receivable, net of allowance  45,149  37,273
Long-term accounts receivable - net of allowance  60,314  47,794
Merchandise trusts, restricted, at fair value  318,318  203,829
Total liquid assets  431,316  302,375
Liquid liabilities    
Accounts payable and accrued liabilities  23,444  26,574
Accrued interest  2,034  1,829
Current portion, long-term debt  1,386  378
Other long-term liabilities  3,577  2,912
Long-term debt  219,008  182,821
Deferred tax liabilities  18,029  4,676
Merchandise liability  113,356  65,894
Total liquid liabilities  380,834  285,084
Total liquid net assets  $ 50,482  $ 17,291
Distribution coverage quarters (a) 5.43 2.26
(a) This is a measure of the ratio of liquid net assets to a quarterly distribution commitment. The quarterly distribution commitment is calculated by taking the end of the period outstanding common units (15,577,571 for the year ended December 31, 2010 and 13,357,585 for the year ended December 31, 2009 respectively) and multiplying these units by the declared distribution. This total is then added to the distribution due to the General Partner based upon the same variables.

We believe that this information shows a material improvement in our liquid net asset position and supports our decision to increase our distribution in the fourth quarter of 2010.

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