HOUSTON, May 5, 2015 /PRNewswire/ -- Carriage
Services, Inc. (NYSE: CSV) today announced results for the quarter
ending March 31, 2015.
Melvin C. Payne, Chief Executive
Officer, stated, "Our 2015 First Quarter Performance set numerous
earning power milestone records with Adjusted Net Income of
$8.0 million equal to Adjusted
Diluted EPS of $0.42 and Adjusted Net
Income Margin of 12.6% on record Revenue of $63.3 million. The four simultaneous
leveraging dynamics (operating, overhead, capital structure and
consolidation platform) of Carriage's consolidation and operating
platform for funeral homes and cemeteries contributed to the
leveraging of a 13.7% Total Revenue increase into much larger
increases of 20.7% in Total Field EBITDA, 30.2% in Adjusted
Consolidated EBITDA, 35.5% in Adjusted Diluted EPS, and 368.9% in
Adjusted Free Cash Flow.
The cash earning power of Carriage, as defined by Adjusted
Consolidated EBITDA Margin, reached a record 31.1% of Total Revenue
in the first quarter, an increase of 390 basis points from 27.2% in
the first quarter of 2014. This cash earning power milestone
was primarily driven by the $4.7
million increase in Total Field EBITDA, an increase of 20.7%
of which about 50% was contributed by our same store funeral and
cemetery portfolio (owned prior to January
1, 2011) and 50% from our acquisition funeral and cemetery
portfolio (owned since January 1,
2011). Moreover, we were able to produce a record Total Field
EBITDA Margin of 43.5% of Total Revenue while substantially
reducing Total Overhead by $1.6
million (15.8%), which combined with lower interest and
financial transaction fees from previous capital structure
improvements, resulted in record Free Cash Flow of $10.8 million.
Shown below are the highlights of our first quarter performance
(in millions):
Three Months ended March 31,
2015
- Total Revenue of $63.3 million,
an increase of 13.7%;
- Adjusted Consolidated EBITDA of $19.7
million, an increase of 30.2%;
- Adjusted Consolidated EBITDA Margin up 390 basis points to
31.1%;
- Adjusted Diluted Earnings Per Share of $0.42, an increase of 35.5%;
- Adjusted Net Profit Margin up 230 basis points to 12.6%;
and
- Adjusted Free Cash Flow of $10.8
million, an increase of 368.9%.
We recently published and made available to all shareholders
through our website a Carriage Investor Reference Book which
included a personal introduction that offered my executive summary
editorial comments about the enclosed materials because I believed
that each had substantive investment merit that a longer term
shareholder would appreciate learning about. From time to
time I will use our public press releases to supplement the
contents of our Carriage Investor Reference Book, including today
on the subject of Capital Allocation.
As CEO of Carriage over the last twenty-four years, I have
learned that our rapidly increasing Free Cash Flow represents
precious internally generated equity capital that should be
allocated among various options (dividends, share repurchases, debt
reduction, acquisitions and internal growth projects) to create
maximum shareholder value "per share" over long periods of
time. To achieve this goal, we must be judicious in the
management of our dilutive shares outstanding, which at the end of
2014 were 1.2 million less (6.4%) than at the end of 2007 while
Total Revenue has increased by 50%, primarily through acquisitions
funded mostly from Free Cash Flow. Moreover, over the last
seven years we have substantially improved the credit profile of
our company and currently enjoy the lowest cost of capital in our
history.
While we will continue to grow selectively by acquisition, we
are also capitalizing on a record number of wonderful internal
growth opportunities by allocating our capital to build high
quality cemetery product at a handful of our largest cemeteries, to
construct new "first in class" funeral homes where our brand is
dominant and the market is growing, and to acquire currently leased
property that is immediately accretive and provides the flexibility
to invest in expanding our facilities to increase market
share. Our revised acquisition methodology was specifically
designed to identify the best remaining businesses in the best
strategic markets, creating future internal opportunities to deploy
additional capital for growth at high rates of long-term returns on
invested capital.
While we have had a strong start to 2015 due to broad based
High Performance by our Managing Partners and their employee
teams, coupled with a higher relative death rate compared to 2014,
we remain committed to getting better over time in all areas
of our Company. Our two major areas of focus for 2015 are
cremation revenue averages and cemetery preneed property sales,
both of which have improved materially thus far. This year marks
the fourth year in our Five Year Good To Great Journey with
the annual theme of:
"Carriage Services 2015: High Performance through
Passion and Partnership!"
Our high performance in the first quarter was consistent with
our 2015 theme, but we remain focused on sustaining a high
performance for the remainder of the year and thereafter,"
concluded Mr. Payne.
FIELD OPERATIONS
Three Months Ended March 31, 2015
compared to Three Months Ended March 31,
2014
- Total Field Revenue increased 13.7% to $63.3 million;
- Total Field EBITDA increased 20.7% to $27.5 million;
- Total Field EBITDA Margin increased 250 basis points to
43.5%;
- Total Funeral Operating Revenue increased 14.7% to $47.6 million;
- Same Store Funeral Revenue increased 6.4% with same store
volume increasing 4.6%;
- Acquisition Funeral Revenue increased 50.2% with acquisition
volume increasing 49.8%;
- Total Funeral Field EBITDA increased 22.7% to $19.5 million;
- Total Funeral Field EBITDA Margin increased 270 basis points to
40.9%;
- Total Cemetery Operating Revenue increased 13.5% to
$11.1 million;
- Cemetery pre-need property sale contracts increased 30.2% to
2,140;
- Preneed property revenue recognized increased 27.7% and At-need
revenue increased 6.5%;
- Total Cemetery Field EBITDA increased 36.0% to $3.9 million;
- Total Cemetery Field EBITDA Margin increased 570 basis points
to 34.7%;
- Total Financial Revenue increased 4.0% to $4.6 million;
- Funeral Financial Revenue increased 2.9% to $2.6 million;
- Cemetery Financial Revenue increased 5.5% to $2.0 million;
- Total Financial EBITDA increased 2.7% to $4.2 million;
- Total Financial EBITDA Margin decreased 120 basis points to
92.5%.
FREE CASH FLOW
We produced Adjusted Free Cash Flow from operations for the
three months ended March 31, 2015 of
$10.8 million compared to Free Cash
Flow from operations of $2.3 million
for the corresponding period in 2014. The sources and uses of cash
for the three months ended March 31,
2014 and 2015 consisted of the following (in millions):
|
Three Months Ended
March 31,
|
|
2014
|
|
2015
|
Cash flow provided by
(used in) operating activities
|
$
|
(1.6)
|
|
|
$
|
12.6
|
|
Adjustment for tax
benefit of Good to Great stock awards
|
4.8
|
|
|
—
|
|
Cash used for
maintenance capital expenditures
|
(0.9)
|
|
|
(1.8)
|
|
Adjusted Free Cash
Flow
|
$
|
2.3
|
|
|
$
|
10.8
|
|
Cash at beginning of
period
|
1.4
|
|
|
0.4
|
|
Acquisitions
|
—
|
|
|
(4.3)
|
|
Proceeds from the
sale of businesses and other assets
|
0.2
|
|
|
—
|
|
Net payments on our
revolving credit facility, term loan and long-term debt
obligations
|
(40.1)
|
|
|
(2.2)
|
|
Proceeds from
issuance of convertible subordinated notes
|
143.7
|
|
|
—
|
|
Payment of issuance
costs related to the convertible subordinated notes
|
(4.4)
|
|
|
—
|
|
Redemption of
convertible junior subordinated debentures
|
(61.9)
|
|
|
—
|
|
Payments for
performance awards
|
(16.2)
|
|
|
—
|
|
Excess tax benefit of
equity compensation
|
0.8
|
|
|
0.4
|
|
Growth capital
expenditures
|
(4.1)
|
|
|
(4.6)
|
|
Dividends on common
stock
|
(0.4)
|
|
|
(0.5)
|
|
Other investing and
financing activities, net
|
0.6
|
|
|
0.3
|
|
Cash at March
31st
|
$
|
21.9
|
|
|
$
|
0.3
|
|
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, plus
likely acquisitions for the Rolling Four Quarter Outlook period
ending March 31, 2016. 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 March 31, 2016
|
|
|
|
Range (in
millions, except per share amounts)
|
Revenues
|
|
$244 -
$248
|
Adjusted Consolidated
EBITDA
|
|
$70 - $72
|
Adjusted Net
Income
|
|
$28 - $30
|
Adjusted Diluted
Earnings Per Share(1)
|
|
$1.55 -
$1.59
|
Factors affecting our analysis include, among others, number,
size and timing of closing of acquisitions, 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, Strategic
Acquisition 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 March 31, 2016 are expected to
improve relative to the trailing four quarter period ending
March 31, 2015 for the following
reasons:
- Increases in Acquired Funeral Revenue and Acquired Funeral
Field EBITDA;
- Increases in Acquired Cemetery Revenue and Acquired Cemetery
Field EBITDA;
- Modest increases in Same Store Funeral Revenue and Same Store
Funeral Field EBITDA;
- Increases in Same Store Cemetery Revenue and Same Store
Cemetery Field EBITDA; and
- Increases in Financial Revenue and Financial EBITDA from trust
funds.
(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 a share price increase and EPS dilution
calculations related to our convertible notes.
|
TRUST FUND PERFORMANCE
For the three months ended March 31,
2015, Carriage's discretionary trust funds gained 2.7%
compared to our 70/30 index benchmark of 2.1%. The current
yield on Carriage's discretionary fixed income portfolio, which
comprises 73% of discretionary trust assets, is 7.0% and the
estimated annual income for the discretionary portfolio is
approximately $10.7 million.
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)
|
|
|
|
|
|
|
|
|
3 months ended
3/31/15
|
|
2.7%
|
2.5%
|
|
1.0%
|
2.5%
|
2.1%
|
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 March 31, 2015 (in
thousands)
|
|
|
|
Discretionary Trust Funds
|
|
Total Trust
Funds
|
Asset
Class
|
|
|
MV
|
|
%
|
|
MV
|
|
%
|
Cash
|
|
|
$
|
2,501
|
1
|
%
|
|
$
|
17,778
|
7
|
%
|
Equities
|
|
|
46,598
|
25
|
%
|
|
64,611
|
27
|
%
|
Fixed
Income
|
|
|
135,845
|
72
|
%
|
|
151,356
|
64
|
%
|
Other/Insurance
|
|
|
3,365
|
2
|
%
|
|
3,599
|
2
|
%
|
Total
Portfolios
|
|
|
$
|
188,309
|
100
|
%
|
|
$
|
237,344
|
100
|
%
|
CONFERENCE CALL AND INVESTOR RELATIONS CONTACT
Carriage Services has scheduled a conference call for tomorrow,
May 6, 2015 at 9:30 a.m. central time. To participate in the
call, please dial 866-516-3867 (ID-33629228) and ask for the
Carriage Services conference call. A replay of the conference
call will be available through May 10, 2015 and may be
accessed by dialing 855-859-2056 (ID-33629228). The conference call
will also be available at www.carriageservices.com. For any
investor relations questions, please contact Bill Heiligbrodt at 713-332-8553.
CARRIAGE SERVICES,
INC.
|
OPERATING AND
FINANCIAL TREND REPORT
|
FROM CONTINUING
OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2014
|
2015
|
%
Change
|
|
|
|
|
Same Store
Contracts
|
|
|
|
Atneed
Contracts
|
5,336
|
|
5,544
|
|
3.9
|
%
|
Preneed
Contracts
|
1,313
|
|
1,413
|
|
7.6
|
%
|
Total Same Store
Funeral Contracts
|
6,649
|
|
6,957
|
|
4.6
|
%
|
Acquisition
Contracts
|
|
|
|
Atneed
Contracts
|
1,118
|
|
1,643
|
|
47.0
|
%
|
Preneed
Contracts
|
208
|
|
343
|
|
64.9
|
%
|
Total Acquisition
Funeral Contracts
|
1,326
|
|
1,986
|
|
49.8
|
%
|
Total Funeral
Contracts
|
7,975
|
|
8,943
|
|
12.1
|
%
|
|
|
|
|
Funeral Operating
Revenue
|
|
|
|
Same Store
Revenue
|
$
|
33,664
|
|
$
|
35,835
|
|
6.4
|
%
|
Acquisition
Revenue
|
7,820
|
|
11,749
|
|
50.2
|
%
|
Total Funeral
Operating Revenue
|
$
|
41,484
|
|
$
|
47,584
|
|
14.7
|
%
|
|
|
|
|
Cemetery Operating
Revenue
|
|
|
|
Same Store
Revenue
|
$
|
9,712
|
|
$
|
10,268
|
|
5.7
|
%
|
Acquisition
Revenue
|
55
|
|
822
|
|
1,394.5
|
%
|
Total Cemetery
Operating Revenue
|
$
|
9,767
|
|
$
|
11,090
|
|
13.5
|
%
|
|
|
|
|
Financial
Revenue
|
|
|
|
Preneed Funeral
Commission Income
|
$
|
564
|
|
$
|
355
|
|
-37.1
|
%
|
Preneed Funeral Trust
Earnings
|
1,916
|
|
2,198
|
|
14.7
|
%
|
Cemetery Trust
Earnings
|
1,584
|
|
1,641
|
|
3.6
|
%
|
Preneed Cemetery
Finance Charges
|
337
|
|
385
|
|
14.2
|
%
|
Total Financial
Revenue
|
$
|
4,401
|
|
$
|
4,579
|
|
4.0
|
%
|
Total
Revenue
|
$
|
55,652
|
|
$
|
63,253
|
|
13.7
|
%
|
|
|
|
|
Field
EBITDA
|
|
|
|
Same Store Funeral
Field EBITDA
|
$
|
12,900
|
|
$
|
14,556
|
|
12.8
|
%
|
Same Store Funeral
Field EBITDA Margin
|
38.3
|
%
|
40.6
|
%
|
230 bp
|
|
Acquisition Funeral
Field EBITDA
|
2,955
|
|
4,895
|
|
65.7
|
%
|
Acquisition Funeral
Field EBITDA Margin
|
37.8
|
%
|
41.7
|
%
|
390 bp
|
|
Total Funeral
Field EBITDA
|
$
|
15,855
|
|
$
|
19,451
|
|
22.7
|
%
|
Total Funeral
Field EBITDA Margin
|
38.2
|
%
|
40.9
|
%
|
270
bp
|
|
|
|
|
|
Same Store Cemetery
Field EBITDA
|
$
|
2,838
|
|
$
|
3,550
|
|
25.1
|
%
|
Same Store Cemetery
Field EBITDA Margin
|
29.2
|
%
|
34.6
|
%
|
540 bp
|
|
Acquisition Cemetery
Field EBITDA
|
(8)
|
|
300
|
|
3,850.0
|
%
|
Acquisition Cemetery
Field EBITDA Margin
|
-14.5
|
%
|
36.5
|
%
|
5,100 bp
|
Total Cemetery
Field EBITDA
|
$
|
2,830
|
|
$
|
3,850
|
|
36.0
|
%
|
Total Cemetery
Field EBITDA Margin
|
29.0
|
%
|
34.7
|
%
|
570
bp
|
|
|
|
|
|
Funeral Financial
EBITDA
|
$
|
2,226
|
|
$
|
2,271
|
|
2.0
|
%
|
Cemetery Financial
EBITDA
|
1,898
|
|
1,964
|
|
3.5
|
%
|
Total Financial
EBITDA
|
$
|
4,124
|
|
$
|
4,235
|
|
2.7
|
%
|
Total Financial
EBITDA Margin
|
93.7
|
%
|
92.5
|
%
|
-120
bp
|
|
|
|
|
|
Total Field
EBITDA
|
$
|
22,809
|
|
$
|
27,536
|
|
20.7
|
%
|
Total Field EBITDA
Margin
|
41.0
|
%
|
43.5
|
%
|
250
bp
|
|
|
|
|
|
OPERATING AND
FINANCIAL TREND REPORT
|
FROM CONTINUING
OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2014
|
2015
|
%
Change
|
|
|
|
|
Overhead
|
|
|
|
Total Variable
Overhead
|
$
|
3,863
|
|
$
|
2,430
|
|
-37.1
|
%
|
Total Regional Fixed
Overhead
|
786
|
|
823
|
|
4.7
|
%
|
Total Corporate Fixed
Overhead
|
5,574
|
|
5,353
|
|
-4.0
|
%
|
Total
Overhead
|
$
|
10,223
|
|
$
|
8,606
|
|
-15.8
|
%
|
Overhead as a
percent of sales
|
18.4
|
%
|
13.6
|
%
|
-480
bp
|
|
|
|
|
Consolidated
EBITDA
|
$
|
12,586
|
|
$
|
18,930
|
|
50.4
|
%
|
Consolidated
EBITDA Margin
|
22.6
|
%
|
29.9
|
%
|
730
bp
|
|
|
|
|
Other Expenses and
Interest
|
|
|
|
Property Depreciation
& Amortization
|
$
|
2,757
|
|
$
|
3,322
|
|
20.5
|
%
|
Non Cash Stock
Compensation
|
729
|
|
1,089
|
|
49.4
|
%
|
Interest
Expense
|
2,844
|
|
2,550
|
|
-10.3
|
%
|
Accretion of Discount
on Convertible Subordinated Notes
|
171
|
|
827
|
|
383.6
|
%
|
Loss on Redemption of
Convertible Junior Subordinated Debentures
|
3,779
|
|
—
|
|
-100.0
|
%
|
Other, Net
|
(368)
|
|
119
|
|
-132.3
|
%
|
Pretax
Income
|
$
|
2,674
|
|
$
|
11,023
|
|
312.2
|
%
|
Net Tax
Provision
|
1,043
|
|
4,605
|
|
341.5
|
%
|
GAAP Net
Income
|
$
|
1,631
|
|
$
|
6,418
|
|
293.5
|
%
|
|
|
|
|
Special Items, Net
of tax except for **
|
|
|
|
Withdrawable Trust
Income
|
$
|
149
|
|
$
|
—
|
|
|
Acquisition and
Divestiture Expenses
|
491
|
|
335
|
|
|
Severance
Costs
|
209
|
|
84
|
|
|
Consulting
Fees
|
159
|
|
76
|
|
|
Other Incentive
Compensation
|
660
|
|
—
|
|
|
Accretion of Discount
on Convertible Subordinated Notes **
|
171
|
|
827
|
|
|
Loss on Redemption of
Convertible Junior Subordinated Debentures
|
2,493
|
|
—
|
|
|
Gain on Asset
Purchase
|
(746)
|
|
—
|
|
|
Other Special
Items
|
503
|
|
98
|
|
|
Tax Adjustment from
Prior Period **
|
—
|
|
141
|
|
|
Sum of Special
Items, Net of tax
|
$
|
4,089
|
|
$
|
1,561
|
|
-61.8
|
%
|
|
|
|
|
Adjusted Net
Income
|
$
|
5,720
|
|
$
|
7,979
|
|
39.5
|
%
|
Adjusted Net
Profit Margin
|
10.3
|
%
|
12.6
|
%
|
230
bp
|
|
|
|
|
|
Adjusted Basic
Earnings Per Share
|
$
|
0.31
|
|
$
|
0.43
|
|
38.7
|
%
|
Adjusted Diluted
Earnings Per Share
|
$
|
0.31
|
|
$
|
0.42
|
|
35.5
|
%
|
|
|
|
|
GAAP Basic Earnings
Per Share
|
$
|
0.09
|
|
$
|
0.35
|
|
288.9
|
%
|
GAAP Diluted Earnings
Per Share
|
$
|
0.09
|
|
$
|
0.34
|
|
277.8
|
%
|
|
|
|
|
Effective Tax
Rate
|
39.0
|
%
|
41.8
|
%
|
|
Reconciliation to
Adjusted Consolidated EBITDA
|
|
|
|
Consolidated
EBITDA
|
$
|
12,586
|
|
$
|
18,930
|
|
50.4
|
%
|
Withdrawable Trust
Income
|
225
|
|
—
|
|
|
Acquisition and
Divestiture Expenses
|
744
|
|
508
|
|
|
Severance
Costs
|
317
|
|
127
|
|
|
Consulting
Fees
|
241
|
|
115
|
|
|
Other Incentive
Compensation
|
1,000
|
|
—
|
|
|
Adjusted
Consolidated EBITDA
|
$
|
15,113
|
|
$
|
19,680
|
|
30.2
|
%
|
Adjusted
Consolidated EBITDA Margin
|
27.2
|
%
|
31.1
|
%
|
390
bp
|
|
CARRIAGE SERVICES,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(in
thousands)
|
|
|
|
|
(unaudited)
|
|
December 31,
2014
|
|
March 31,
2015
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
413
|
|
|
$
|
317
|
|
Accounts receivable,
net
|
19,264
|
|
|
18,637
|
|
Inventories
|
5,294
|
|
|
5,432
|
|
Prepaid
expenses
|
4,590
|
|
|
4,556
|
|
Other current
assets
|
7,144
|
|
|
2,369
|
|
Total current
assets
|
36,705
|
|
|
31,311
|
|
Preneed cemetery
trust investments
|
71,972
|
|
|
72,534
|
|
Preneed funeral trust
investments
|
97,607
|
|
|
97,240
|
|
Preneed receivables,
net
|
26,284
|
|
|
26,431
|
|
Receivables from
preneed trusts
|
12,809
|
|
|
12,795
|
|
Property, plant and
equipment, net
|
186,211
|
|
|
193,984
|
|
Cemetery
property
|
75,564
|
|
|
75,264
|
|
Goodwill
|
257,442
|
|
|
261,291
|
|
Deferred charges and
other non-current assets
|
14,264
|
|
|
15,136
|
|
Cemetery perpetual
care trust investments
|
48,670
|
|
|
49,249
|
|
Total
assets
|
$
|
827,528
|
|
|
$
|
835,235
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term debt and capital lease obligations
|
$
|
9,838
|
|
|
$
|
10,624
|
|
Accounts
payable
|
6,472
|
|
|
6,463
|
|
Other
liabilities
|
1,437
|
|
|
788
|
|
Accrued
liabilities
|
15,203
|
|
|
12,211
|
|
Total current
liabilities
|
32,950
|
|
|
30,086
|
|
Long-term debt, net
of current portion
|
111,887
|
|
|
112,972
|
|
Revolving credit
facility
|
40,500
|
|
|
41,000
|
|
Convertible
subordinated notes due 2021
|
114,542
|
|
|
115,369
|
|
Obligations under
capital leases, net of current portion
|
3,098
|
|
|
3,044
|
|
Deferred preneed
cemetery revenue
|
56,875
|
|
|
56,871
|
|
Deferred preneed
funeral revenue
|
31,265
|
|
|
31,187
|
|
Deferred tax
liability
|
36,414
|
|
|
36,487
|
|
Other long-term
liabilities
|
2,401
|
|
|
3,086
|
|
Deferred preneed
cemetery receipts held in trust
|
71,972
|
|
|
72,534
|
|
Deferred preneed
funeral receipts held in trust
|
97,607
|
|
|
97,240
|
|
Care trusts'
corpus
|
48,142
|
|
|
49,184
|
|
Total
liabilities
|
647,653
|
|
|
649,060
|
|
Commitments and
contingencies:
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common stock, $.01
par value; 80,000,000 shares authorized; 22,434,000 shares issued
at December 31, 2014 and March 31, 2015
|
224
|
|
|
224
|
|
Additional paid-in
capital
|
212,386
|
|
|
212,268
|
|
Accumulated
deficit
|
(17,468)
|
|
|
(11,050)
|
|
Treasury stock, at
cost; 3,922,000 shares at December 31, 2014 and March 31,
2015
|
(15,267)
|
|
|
(15,267)
|
|
Total stockholders'
equity
|
179,875
|
|
|
186,175
|
|
Total liabilities and
stockholders' equity
|
$
|
827,528
|
|
|
$
|
835,235
|
|
CARRIAGE SERVICES,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands,
except share and per share data)
|
|
|
(unaudited)
|
|
For the Three
Months Ended March 31,
|
|
2014
|
|
2015
|
|
|
|
|
Revenues
|
$
|
55,652
|
|
|
$
|
63,253
|
|
Field costs and
expenses
|
37,637
|
|
|
41,044
|
|
Gross
profit
|
18,015
|
|
|
22,209
|
|
General and
administrative expenses
|
9,677
|
|
|
7,690
|
|
Operating
income
|
8,338
|
|
|
14,519
|
|
Interest expense,
net
|
(3,015)
|
|
|
(3,377)
|
|
Loss on redemption of
convertible junior subordinated notes
|
(3,779)
|
|
|
—
|
|
Other
|
1,130
|
|
|
(119)
|
|
Income from
continuing operations before income taxes
|
2,674
|
|
|
11,023
|
|
Provision for income
taxes
|
(1,043)
|
|
|
(4,605)
|
|
Net income from
continuing operations
|
1,631
|
|
|
6,418
|
|
Net income from
discontinued operations, net of tax
|
587
|
|
|
—
|
|
Net income available
to common stockholders
|
$
|
2,218
|
|
|
$
|
6,418
|
|
|
|
|
|
Basic earnings per
common share:
|
|
|
|
Continuing
operations
|
$
|
0.09
|
|
|
$
|
0.35
|
|
Discontinued
operations
|
0.03
|
|
|
—
|
|
Basic earnings per
common share
|
$
|
0.12
|
|
|
$
|
0.35
|
|
|
|
|
|
Diluted earnings per
common share:
|
|
|
|
Continuing
operations
|
$
|
0.09
|
|
|
$
|
0.34
|
|
Discontinued
operations
|
0.03
|
|
|
—
|
|
Diluted earnings per
common share
|
$
|
0.12
|
|
|
$
|
0.34
|
|
|
|
|
|
Dividends declared
per common share
|
$
|
0.025
|
|
|
$
|
0.025
|
|
|
|
|
|
Weighted average
number of common and common equivalent shares
outstanding:
|
|
|
|
Basic
|
17,984
|
|
|
18,208
|
|
Diluted
|
18,143
|
|
|
18,804
|
|
CARRIAGE SERVICES,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited and in
thousands)
|
|
|
For the Three
Months Ended March 31,
|
|
2014
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
2,218
|
|
|
$
|
6,418
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Gain on sale of
businesses and purchase of other assets
|
(2,039)
|
|
|
—
|
|
Depreciation and
amortization
|
2,764
|
|
|
3,322
|
|
Amortization of
deferred financing costs
|
232
|
|
|
226
|
|
Accretion of discount
on convertible subordinated notes
|
171
|
|
|
827
|
|
Provision for losses
on accounts receivable
|
700
|
|
|
424
|
|
Stock-based
compensation expense
|
1,491
|
|
|
1,089
|
|
Deferred income tax
(benefit) expense
|
(4,780)
|
|
|
1,559
|
|
Loss on redemption of
convertible junior subordinated debentures
|
2,932
|
|
|
—
|
|
Other
|
(3)
|
|
|
—
|
|
Changes in operating
assets and liabilities that provided (required) cash:
|
|
|
|
Accounts and preneed
receivables
|
(245)
|
|
|
56
|
|
Inventories and other
current assets
|
299
|
|
|
3,224
|
|
Deferred charges and
other
|
(318)
|
|
|
111
|
|
Preneed funeral and
cemetery trust investments
|
(5,258)
|
|
|
(760)
|
|
Accounts
payable
|
(2,566)
|
|
|
(9)
|
|
Accrued and other
liabilities
|
(2,387)
|
|
|
(5,020)
|
|
Deferred preneed
funeral and cemetery revenue
|
(37)
|
|
|
(82)
|
|
Deferred preneed
funeral and cemetery receipts held in trust
|
5,208
|
|
|
1,237
|
|
Net cash provided by
(used in) operating activities
|
(1,618)
|
|
|
12,622
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Acquisitions
|
—
|
|
|
(4,250)
|
|
Net proceeds from the
sale of businesses and other assets
|
200
|
|
|
—
|
|
Capital
expenditures
|
(5,048)
|
|
|
(6,398)
|
|
Net cash used in
investing activities
|
(4,848)
|
|
|
(10,648)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Net (payments)
borrowings on the revolving credit facility
|
(36,900)
|
|
|
500
|
|
Net payments on the
term loan
|
(3,000)
|
|
|
(2,344)
|
|
Payments on other
long-term debt and obligations under capital leases
|
(185)
|
|
|
(370)
|
|
Proceeds from the
exercise of stock options and employee stock purchase plan
contributions
|
652
|
|
|
212
|
|
Dividends on common
stock
|
(456)
|
|
|
(463)
|
|
Payment of loan
origination costs related to the credit facility
|
—
|
|
|
(13)
|
|
Excess tax benefit of
equity compensation
|
5,596
|
|
|
408
|
|
Proceeds from the
issuance of convertible subordinated notes
|
143,750
|
|
|
—
|
|
Payment of debt
issuance costs related to the convertible subordinated
notes
|
(4,355)
|
|
|
—
|
|
Redemption of
convertible junior subordinated debentures
|
(61,905)
|
|
|
—
|
|
Payments for
performance-based stock awards
|
(16,150)
|
|
|
—
|
|
Net cash provided by
(used in) financing activities
|
27,047
|
|
|
(2,070)
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
20,581
|
|
|
(96)
|
|
Cash and cash
equivalents at beginning of period
|
1,377
|
|
|
413
|
|
Cash and cash
equivalents at end of period
|
$
|
21,958
|
|
|
$
|
317
|
|
CARRIAGE SERVICES,
INC.
|
CALCULATION OF
EARNINGS PER SHARE
|
(in thousands,
except share and per share data)
|
|
|
(unaudited)
|
|
For the Three
Months Ended March 31,
|
|
2014
|
|
2015
|
Numerator for
basic and diluted earnings per share:
|
|
|
|
Numerator from
continuing operations
|
|
|
|
Income from
continuing operations
|
$
|
1,631
|
|
|
$
|
6,418
|
|
Less: Earnings
allocated to unvested restricted stock
|
(37)
|
|
|
(100)
|
|
Income
attributable to continuing operations
|
$
|
1,594
|
|
|
$
|
6,318
|
|
|
|
|
|
Numerator from
discontinued operations
|
|
|
|
Income from
discontinued operations
|
$
|
587
|
|
|
$
|
—
|
|
Less: Earnings
allocated to unvested restricted stock
|
(13)
|
|
|
—
|
|
Income
attributable to discontinued operations
|
$
|
574
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
Denominator for basic
earnings per common share - weighted average shares
outstanding
|
17,984
|
|
|
18,208
|
|
Effect of dilutive
securities:
|
|
|
|
Stock
options
|
159
|
|
|
248
|
|
Convertible
subordinated notes
|
—
|
|
|
348
|
|
Denominator for
diluted earnings per common share - weighted average shares
outstanding
|
18,143
|
|
|
18,804
|
|
|
|
|
|
Basic earnings per
common share:
|
|
|
|
Continuing
operations
|
$
|
0.09
|
|
|
$
|
0.35
|
|
Discontinued
operations
|
0.03
|
|
|
—
|
|
Basic earnings per
common share
|
$
|
0.12
|
|
|
$
|
0.35
|
|
|
|
|
|
Diluted earnings per
common share:
|
|
|
|
Continuing
operations
|
$
|
0.09
|
|
|
$
|
0.34
|
|
Discontinued
operations
|
0.03
|
|
|
—
|
|
Diluted earnings per
common share
|
$
|
0.12
|
|
|
$
|
0.34
|
|
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 months ended March
31, 2014 and 2015, except for the accretion of the discount
on Convertible 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 months ended March 31, 2014 and 2015 (in
thousands):
|
|
|
Three Months
Ended March
31,
|
|
|
2014
|
|
2015
|
Net Income from
continuing operations
|
$
|
1,631
|
|
|
$
|
6,418
|
|
Special items, net of
tax except for **
|
|
|
|
Withdrawable Trust
Income
|
$
|
149
|
|
|
$
|
—
|
|
Acquisition and
Divestiture Expenses
|
491
|
|
|
335
|
|
Severance
Costs
|
209
|
|
|
84
|
|
Consulting
Fees
|
159
|
|
|
76
|
|
Other Incentive
Compensation
|
660
|
|
|
—
|
|
Accretion of Discount
on Convertible Subordinated Notes **
|
171
|
|
|
827
|
|
Loss on Redemption of
Convertible Junior Subordinated Debentures
|
2,493
|
|
|
—
|
|
Gain on Asset
Purchase
|
(746)
|
|
|
—
|
|
Other Special
Items
|
503
|
|
|
98
|
|
Tax Adjustment from
Prior Period **
|
—
|
|
|
141
|
|
Total Special items affecting net
income
|
$
|
4,089
|
|
|
$
|
1,561
|
|
Adjusted Net
Income
|
$
|
5,720
|
|
|
$
|
7,979
|
|
Reconciliation
of Net Income from continuing operations to Consolidated EBITDA and
Adjusted Consolidated EBITDA for the three months ended March 31,
2014 and 2015 (in thousands):
|
|
|
Three Months
Ended March
31,
|
|
|
2014
|
|
2015
|
Net income from
continuing operations
|
$
|
1,631
|
|
|
$
|
6,418
|
|
Net provision for
income taxes
|
1,043
|
|
|
4,605
|
|
Pre-tax earnings from
continuing operations
|
$
|
2,674
|
|
|
$
|
11,023
|
|
Interest
expense
|
2,844
|
|
|
2,550
|
|
Accretion of discount
on convertible subordinated notes
|
171
|
|
|
827
|
|
Loss on redemption of
convertible junior subordinated debentures
|
3,779
|
|
|
—
|
|
Non-cash stock
compensation
|
729
|
|
|
1,089
|
|
Depreciation &
amortization
|
2,757
|
|
|
3,322
|
|
Other, net
|
(368)
|
|
|
119
|
|
Consolidated
EBITDA
|
$
|
12,586
|
|
|
$
|
18,930
|
|
Adjusted
For:
|
|
|
|
Withdrawable Trust
Income
|
$
|
225
|
|
|
$
|
—
|
|
Acquisition and
Divestiture Expenses
|
744
|
|
|
508
|
|
Severance
Costs
|
317
|
|
|
127
|
|
Consulting
Fees
|
241
|
|
|
115
|
|
Other Incentive
Compensation
|
1,000
|
|
|
—
|
|
Adjusted Consolidated
EBITDA
|
$
|
15,113
|
|
|
$
|
19,680
|
|
Revenue
|
$
|
55,652
|
|
|
$
|
63,253
|
|
|
|
|
|
Adjusted Consolidated
EBITDA Margin
|
27.2
|
%
|
|
31.1
|
%
|
Reconciliation
of funeral and cemetery income before income taxes to Field EBITDA
for the three months ended March 31, 2014 and 2015 (in
thousands):
|
|
Funeral Field
EBITDA
|
Three Months
Ended March
31,
|
|
|
2014
|
|
2015
|
Gross Profit
(GAAP)
|
$
|
14,521
|
|
|
$
|
17,996
|
|
Depreciation &
amortization
|
1,614
|
|
|
1,789
|
|
Regional &
unallocated costs
|
1,946
|
|
|
1,937
|
|
Net financial
income
|
(2,226)
|
|
|
(2,271)
|
|
Funeral Field
EBITDA
|
$
|
15,855
|
|
|
$
|
19,451
|
|
|
|
Cemetery Field
EBITDA
|
Three Months
Ended March
31,
|
|
|
2014
|
|
2015
|
Gross Profit
(GAAP)
|
$
|
3,494
|
|
|
$
|
4,213
|
|
Depreciation &
amortization
|
801
|
|
|
1,013
|
|
Regional &
unallocated costs
|
433
|
|
|
588
|
|
Net financial
income
|
(1,898)
|
|
|
(1,964)
|
|
Cemetery Field
EBITDA
|
$
|
2,830
|
|
|
$
|
3,850
|
|
|
|
Total Field
EBITDA
|
Three Months
Ended March
31,
|
|
|
2014
|
|
2015
|
Funeral Field
EBITDA
|
$
|
15,855
|
|
|
$
|
19,451
|
|
Cemetery Field
EBITDA
|
2,830
|
|
|
3,850
|
|
Funeral Financial
EBITDA
|
2,226
|
|
|
2,271
|
|
Cemetery Financial
EBITDA
|
1,898
|
|
|
1,964
|
|
Total Field
EBITDA
|
$
|
22,809
|
|
|
$
|
27,536
|
|
Reconciliation
of cash provided by operating activities to Adjusted Free Cash Flow
from operations for the three months ended March 31, 2014 and 2015
(in thousands):
|
|
|
Three Months
Ended March
31,
|
|
|
2014
|
|
2015
|
Cash flow provided by
operations
|
$
|
(1,618)
|
|
|
$
|
12,622
|
|
Adjustment for tax
benefit from Good to Great stock awards
|
4,800
|
|
|
—
|
|
Cash used for
maintenance capital expenditures
|
(884)
|
|
|
(1,846)
|
|
Adjusted Free Cash
Flow
|
$
|
2,298
|
|
|
$
|
10,776
|
|
|
Reconciliation
of GAAP basic earnings per share to Adjusted basic earnings per
share for the three months ended March 31, 2014 and
2015:
|
|
|
Three Months
Ended March
31,
|
|
|
2014
|
|
2015
|
GAAP basic earnings
per share from continuing operations
|
$
|
0.09
|
|
|
$
|
0.35
|
|
Special items
affecting net income
|
0.22
|
|
|
0.08
|
|
Adjusted basic
earnings per share
|
$
|
0.31
|
|
|
$
|
0.43
|
|
|
Reconciliation
of GAAP diluted earnings per share to Adjusted diluted earnings per
share for the three months ended March 31, 2014 and
2015:
|
|
|
Three Months
Ended March
31,
|
|
|
2014
|
|
2015
|
GAAP diluted earnings
per share from continuing operations
|
$
|
0.09
|
|
|
$
|
0.34
|
|
Special items
affecting net income
|
0.22
|
|
|
0.08
|
|
Adjusted diluted
earnings per share
|
$
|
0.31
|
|
|
$
|
0.42
|
|
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-first-quarter-2015-300077828.html
SOURCE Carriage Services, Inc.