HOUSTON, Feb. 16, 2016 /PRNewswire/ -- Carriage Services,
Inc. (NYSE: CSV) today announced record results for the year ending
December 31, 2015, as highlighted
below:
Year Ended December 31, 2015
- Total Revenue of $242.5 million,
an increase of 7.2%;
- Adjusted Consolidated EBITDA of $71.1
million, an increase of 15.4%;
- Adjusted Consolidated EBITDA Margin up 200 basis points to
29.3%;
- Adjusted Diluted Earnings Per Share of $1.48, an increase of 10.4%;
- Adjusted Net Profit Margin up 30 basis points to 11.3%;
and
- Adjusted Free Cash Flow of $43.7
million, an increase of 13.0%.
Three Months Ended December 31,
2015
- Total Revenue of $61.6 million,
an increase of 3.7%;
- Adjusted Consolidated EBITDA of $17.8
million, an increase of 4.6%;
- Adjusted Consolidated EBITDA Margin up 30 basis points to
29.0%;
- Adjusted Diluted Earnings Per Share of $0.39, an increase of 2.6%;
- Adjusted Net Profit Margin down 60 basis points to 11.1%;
and
- Adjusted Free Cash Flow of $4.9
million, a decrease of 33.4%.
Mel Payne, Chief Executive
Officer, stated, "We finished amazingly strong in the fourth
quarter against a tough comparison last year, which made full year
2015 a Company and industry high performance for the record books
consistent with our annual Good To Great theme of
"Carriage Services 2015: High Performance through Passion and
Partnership!" We achieved Total Revenue growth of 7.2% to
$242.5 million, Adjusted Consolidated
EBITDA growth of 15.4% to $71.1
million, Adjusted Diluted Earnings Per Share growth of 10.4%
to $1.48 and Adjusted Free Cash Flow
growth of 13.0% to $43.7 million.
Excluding a one-time $1.7 million tax
benefit in the third quarter of 2014, equal to $0.10 per share, our Adjusted Diluted Earnings
Per Share grew 19.4% in 2015.
Our cash earning power per dollar of revenue, which we define as
Adjusted Consolidated EBITDA Margin, increased dramatically by 200
basis points to 29.3%, primarily due to a record Field EBITDA
performance which increased 12.4% or $11.2
million and Field EBITDA Margin which increased 190 basis
points to 41.9%. Total Overhead for the full year was essentially
flat but declined 80 basis points to 14.3% of Total Revenue.
We believe that the achievement of an Adjusted Consolidated
EBITDA Margin of 29.3% in 2015 is a level that has never been
reached in the over fifty year history of deathcare consolidation
by any mature, public company using current accounting methodology,
confirming our conviction that Carriage has evolved over the
last twelve years into a superior consolidation, operating and
value creation platform for the funeral and cemetery industry.
Our record 2015 performance reflected outstanding execution of
our three models, particularly our Standards Operating Model for
funeral homes and cemeteries, made possible by high performance 4E
Leaders and employees in our portfolio of businesses and home
office support teams. The outstanding execution of our operating
models produced record financial performance which was fueled by
substantial contributions from both the Funeral and Cemetery Same
Store and Acquisition segments with growth rates in Field EBITDA
greater than respective growth rates in revenue because of broadly
increasing Field EBITDA Margins across the portfolio. As reflected
in our highly transparent Trend Reports for the full year 2015,
Same Store Funeral Revenue rose 3.3% (Same Store Funeral EBITDA
8.3%), Same Store Cemetery Revenue rose 5.0% (Same Store Cemetery
Field EBITDA 18.6%), Acquisition (acquisitions since 2010) Funeral
Revenue rose 21.4% (Acquisition Funeral Field EBITDA 28.9%), and
Acquisition Cemetery Revenue rose 107.7% (Acquisition Cemetery
Field EBITDA 210.0%). Our Recognized Financial Revenue from funeral
and cemetery operations, primarily investment income from preneed
trusts which we report separately from funeral and cemetery pure
operating revenue for purposes of transparency, increased 2.4%
(Recognized Financial EBITDA 2.3%), but was still a substantial
contributor to our growing earning power over time.
Our Adjusted Free Cash Flow of $43.7 million for 2015 rose
13.0% over 2014 and was equivalent to $2.38 per GAAP diluted share, producing a Free
Cash Flow Equity Yield of about 11.6% at our current price of
$20.60. During May and September 2015, our Board of Directors approved
the repurchase of up to an aggregate of $45
million of the Company's common stock. The repurchases
through year end 2015 totaled 1.9 million shares at an aggregate
cost of $45 million and average cost
per share of $23.34, which
represented about 10.4% of our previous shares outstanding. On a
pro forma basis to December 31, 2015,
our Free Cash Flow per share with the lower share count would have
been $2.63 for 2015, offering current
shareholders a Free Cash Flow Equity Yield of 12.8%.
Based on the acceleration of our earnings and Adjusted Free Cash
Flow growth in 2015 and a materially lower share count for 2016, we
are raising our Rolling Four Quarter Outlook of Adjusted Diluted
Earnings Per Share by $0.04 to a
range of $1.69 - $1.73 for the period
ending December 31, 2016 (does not
include any acquisitions). We expect to make several high quality
acquisitions this year and will include them in our Rolling Four
Quarter Outlook when we have a signed LOI and have an expected
closing within 90 days. Our modestly raised Rolling Four Quarter
Outlook takes into consideration the likely negative impact on our
reported trust earnings from the currently volatile and declining
equity and fixed income markets. However, we do not believe these
market conditions and any realized losses while we execute a
relative value repositioning strategy will materially impair
the normalized, increasing and sustainable earning power of our
Company in the future, as has been the case in the past including
2008, 2009 and 2011.
Because of the historically high Field EBITDA performance in the
fourth quarter (up $2.6 million equal
to 10.6% on a revenue increase of 3.7%) and full year (up
$11.2 million equal to 12.4% on a
revenue increase of 7.2%), we were honored to "Pay for Full Year
High Performance" by increasing our fourth quarter incentive
compensation component of Variable Overhead by $1.5 million (about 5
cents per share) compared to the prior year. Two-thirds of
the increase will be paid to a large group of High Performance Hero
Managing Partners and their employees in High Standards Achievement
local businesses in our portfolio.
The key driver under our unique decentralized high performance
culture framework and Being The Best / Good To Great
Managing Partner incentive programs is full year Being The
Best Standards Achievement, determined in January 2016 for full year 2015, which produced a
record bonus payout for our Managing Partners and their employees.
Moreover, the incentive accrual increase in the fourth quarter also
took into consideration that the first five year Good To
Great long term value creation incentives (program began
January 1, 2012) will be paid after
2016 to those Managing Partners that achieve a high percentage of
Being the Best Standards over five full years while also
growing revenue at a compound rate in excess of 2% annually. We
believe that recognition of High Performance Heroes is the highest
form of motivation for top talent and that generous financial
reward after high performance is produced and sustained creates a
high performance culture Company and reputation that attracts not
only more top talent but top quality businesses as well. Simply
put, we believe "best in class" talent and businesses have a
naturally strong need to affiliate with other "best in class"
talent and businesses.
We ended 2015 with nine members on our Operations and Strategic
Growth Leadership Team (OSGLT) compared to fifteen as recently as
May 2015. This senior leadership team
has had twenty three members since the launch of our Good To
Great Journey at the beginning of 2012, but the cultural fit
related to the 4E Leadership High Performance characteristics
necessary to effectively execute our three models individually and
as collaborative teams simply was not there for most of those
who are no longer on the OSGLT. The really good news is that the
remaining team of seven younger senior leaders plus Dave and me are
completely aligned around the idea of One Team, One Vision,
so the significant turnover on this team is over and will result in
much less "add-back noise" in our Non-GAAP performance
reporting so that over 2016 and thereafter our Non-GAAP and
GAAP results will begin to converge. The other good news is
that our Total Overhead should decline over time as a percent of
Total Revenue because our two fixed components are now more stable
and relatively fixed yet efficient and effective, allowing us to
operate at a high level of performance while leveraging growth by
acquisition over the Carriage consolidation platform. Our variable
overhead component should increase over time based on earned
performance bonuses from our "Pay for High Performance" Being
The Best / Good To Great incentive plans.
In November, we announced the acquisition of Bright Funeral Home
& Cremation Center in North
Carolina, which serves over 320 families per year and
expands Carriage's presence in an attractive strategic
market. We made two high quality funeral home acquisitions
during 2015 consistent with our Ten Year Vision and focus on
acquiring "best in class" funeral homes and cemetery businesses as
a core strategy to grow revenues and earnings over time
through the disciplined execution of our Strategic
Acquisition Model. Based on the attractive industry landscape and
our corporate development communications and relationship building
program targeted at the top remaining independents in the best
strategic markets, we are highly confident about our ability to
grow consistent with our Ten Year Vision by affiliating with
really good franchises that will get even better within the
Carriage High Performance Culture Framework.
A week ago we finalized our 7th amendment to our bank Credit
Facility which resulted in reducing our LIBOR based variable
interest rate 37.5 basis points, extending maturity another 5 years
to 2021 which coincides with the maturity of our Convertible Notes,
resetting the term loan to $150
million and reducing the size of the revolver to
$150 million while upsizing the
accordion to $75 million. We ended
2015 with record debt service performance metrics supporting a
total leverage ratio of 5.0x, the upper limit of how we intend to
manage our balance sheet while maintaining a significant capacity
for financial flexibility over the next five years. Our highly
selective growth strategy by acquisition can be mostly
self-financed from Free Cash Flow over the next five years while
producing a total leverage ratio that will trend down from 5.0x
currently to about 4.0 times by 2020 if not sooner.
As we entered 2012, we established extraordinarily challenging
goals over the five year period ending with 2016, consistent with
the five year theme of taking Carriage from a Good company
in 2012 to one considered Great by 2016 based on total
equity market value growth and total shareholder returns over time,
which including dividends has been 342% over the last four years
ending December 31, 2015. As
summarized below, since we launched the Carriage Good To Great
Journey at the end of 2011, our performance has been
extraordinary and produced market beating shareholder returns:
|
|
Carriage Good To
Great Journey
|
|
|
Years Ending
December 31
|
|
|
|
|
(in Millions
Except Per Share and Percentage Amounts)
|
|
CAGR
|
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue
|
|
$
|
182.3
|
|
|
$
|
198.2
|
|
|
$
|
213.1
|
|
|
$
|
226.1
|
|
|
$
|
242.5
|
|
|
7.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Consolidated
EBITDA
|
|
$
|
48.6
|
|
|
$
|
52.6
|
|
|
$
|
56.0
|
|
|
$
|
61.7
|
|
|
$
|
71.1
|
|
|
10.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Consolidated
EBITDA Margin
|
|
26.6
|
%
|
|
26.5
|
%
|
|
26.3
|
%
|
|
27.3
|
%
|
|
29.3
|
%
|
|
2.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Diluted
Earnings Per Share
|
|
$
|
0.64
|
|
|
$
|
0.80
|
|
|
$
|
0.98
|
|
|
$
1.24(1)
|
|
|
$
|
1.48
|
|
|
23.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash
Flow
|
|
$
|
29.1
|
|
|
$
|
22.9
|
|
|
$
|
36.2
|
|
|
$
|
38.6
|
|
|
$
|
43.7
|
|
|
10.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Price at
December 31
|
|
$
|
5.60
|
|
|
$
|
11.87
|
|
|
$
|
19.53
|
|
|
$
|
20.95
|
|
|
$
|
24.10
|
|
|
44.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Adjusted for one
time tax benefit of 10 cents per share
|
Our yearly theme for 2016, "Carriage Services 2016: We Choose
To Be Great!", speaks to the confidence we have in our
Field Operations and Support leaders and employees to
effectively execute our models individually and as teams so as to
bring "Being The Best" distinction upon themselves and our
company. As we enter the fifth year of the first five year
timeframe of the Carriage Good To Great Journey that never
ends, we are committed more than ever to achieve the second element
of our Ten Year Vision, which was only recently added to our
Mission of Being The Best and is highlighted below,"
concluded Mr. Payne.
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.
FIELD OPERATIONS
For the Year Ended December 31,
2015 compared to Year Ended December
31, 2014
- Total Field Revenue increased 7.2% to $242.5 million;
- Total Field EBITDA increased 12.4% to $101.5 million;
- Total Field EBITDA Margin increased 190 basis points to
41.9%;
- Total Funeral Operating Revenue increased 7.4% to $176.4 million;
- Same Store Funeral Revenue increased 3.3% with same store
volume increasing 0.9%;
- Acquisition Funeral Revenue increased 21.4% with acquisition
volume increasing 15.6%;
- Total Funeral Field EBITDA increased 13.0% to $68.3 million;
- Total Funeral Field EBITDA Margin increased 190 basis points to
38.7%;
- Total Cemetery Operating Revenue increased 8.9% to $46.7 million;
- Cemetery preneed property sale contracts increased 9.6% to
8,121;
- Preneed property revenue recognized increased 13.3% and At-need
revenue increased 4.2%;
- Total Cemetery Field EBITDA increased 24.1% to $15.1 million;
- Total Cemetery Field EBITDA Margin increased 390 basis points
to 32.4%;
- Total Financial Revenue increased 2.4% to $19.5 million;
- Funeral Financial Revenue remained flat at $9.5 million;
- Cemetery Financial Revenue increased 5.2% to $10.0 million;
- Total Financial EBITDA increased 2.3% to $18.1 million;
- Total Financial EBITDA Margin decreased 10 basis points to
92.9%.
Three Months Ended December 31,
2015 compared to Three Months Ended December 31, 2014
- Total Field Revenue increased 3.7% to $61.6 million;
- Total Field EBITDA increased 10.6% to $27.2 million;
- Total Field EBITDA Margin increased 280 basis points to
44.1%;
- Total Funeral Operating Revenue increased 2.8% to $44.7 million;
- Same Store Funeral Revenue increased 2.0% with same store
volume decreasing 0.4%;
- Acquisition Funeral Revenue increased 5.1% with acquisition
volume decreasing 1.7%;
- Total Funeral Field EBITDA increased 8.8% to $18.2 million;
- Total Funeral Field EBITDA Margin increased 220 basis points to
40.8%;
- Total Cemetery Operating Revenue increased 6.1% to $11.9 million;
- Cemetery pre-need property sale contracts increased 1.7% to
1,930;
- Preneed property revenue recognized increased 8.3% and At-need
revenue increased 3.2%;
- Total Cemetery Field EBITDA increased 22.8% to $4.2 million;
- Total Cemetery Field EBITDA Margin increased 480 basis points
to 35.2%;
- Total Financial Revenue increased 6.2% to $5.0 million;
- Funeral Financial Revenue increased 3.0% to $2.4 million;
- Cemetery Financial Revenue increased 9.4% to $2.6 million;
- Total Financial EBITDA increased 7.9% to $4.7 million;
- Total Financial EBITDA Margin increased 140 basis points to
93.6%.
ADJUSTED FREE CASH FLOW
We produced Adjusted Free Cash Flow from operations for the
three months and years ended December 31,
2015 of $4.9 million and
$43.7 million, respectively, compared
to Adjusted Free Cash Flow from operations of $7.3 million and $38.6
million for the corresponding periods in 2014. A
reconciliation of Cash Flow Provided by Operations to Adjusted Free
Cash Flow for the three months and years ended December 31, 2014 and 2015 is as follows (in
thousands):
|
Three Months
Ended
|
|
Years
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Cash flow provided by
operations
|
$
|
8,915
|
|
|
$
|
6,916
|
|
|
$
|
36,565
|
|
|
$
|
49,904
|
|
Cash used for
maintenance capital expenditures
|
(1,904)
|
|
|
(2,795)
|
|
|
(7,212)
|
|
|
(9,735)
|
|
Free Cash
Flow
|
$
|
7,011
|
|
|
$
|
4,121
|
|
|
$
|
29,353
|
|
|
$
|
40,169
|
|
|
|
|
|
|
|
|
|
Plus: Incremental
Special Items:
|
|
|
|
|
|
|
|
Adjustment for tax
benefit from Good To Great stock awards
|
—
|
|
|
—
|
|
|
4,815
|
|
|
—
|
|
Acquisition and
divestiture expenses
|
74
|
|
|
37
|
|
|
1,158
|
|
|
614
|
|
Severance
costs
|
153
|
|
|
151
|
|
|
1,056
|
|
|
959
|
|
Consulting
fees
|
62
|
|
|
555
|
|
|
419
|
|
|
1,913
|
|
Other incentive
compensation
|
—
|
|
|
—
|
|
|
1,000
|
|
|
—
|
|
Premium paid for the
redemption of convertible junior subordinated debentures
|
—
|
|
|
—
|
|
|
847
|
|
|
—
|
|
Adjusted Free Cash
Flow
|
$
|
7,300
|
|
|
$
|
4,864
|
|
|
$
|
38,648
|
|
|
$
|
43,655
|
|
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 December 31, 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 December 31, 2016
|
|
Range
(in millions, except
per share amounts)
|
Revenues
|
|
$249 -
$253
|
Adjusted Consolidated
EBITDA
|
|
$73 - $77
|
Adjusted Net
Income
|
|
$29 - $31
|
Adjusted Diluted
Earnings Per Share(1)
|
|
$1.69 -
$1.73
|
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, market volatility 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 December 31, 2016 are expected to
improve relative to the trailing four quarter period ending
December 31, 2015 due to increases in
our existing Funeral Home and Cemetery portfolio 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 year ended December 31, 2015, Carriage's
discretionary trust funds returned (3.1%) versus (2.9%) for the
70/30 index benchmark. The overall performance year-to-date was
affected by weakness in the equity and fixed income markets, and as
a result negatively impacted Carriage's discretionary equity and
fixed income portfolio, especially our high yield and 10 year
warrant portfolio of five "Too Big To Fail" banks and insurance
companies.
This underperformance led to approximately $23 million of unrealized losses in our
discretionary trust portfolios through year end 2015, which has
subsequently increased during the first quarter. We have
developed and are implementing an investment portfolio relative
value repositioning strategy biased toward fixed income sectors
that we believe have been oversold and mispriced relative to risk
and offer attractive recurring income at currently discounted
prices, similar to our executed strategies in 2008/2009 and
2011. This repositioning will lead to realized losses within
the investment portfolio over the first half of the year as we
redeploy capital to higher relative value opportunities, and under
our current assumptions will also lead to declines in our reported
Preneed Trust Earnings and Withdrawable Trust Income in 2016 versus
2015. The year over year decline in our trust fund
earnings estimates are included in our rolling four quarter
outlook, which reflects a midpoint Adjusted Diluted EPS of
$1.71 in 2016 versus $1.48 in 2015 (15.5% increase) and does not
reflect a material decline in Carriage's earning power as a result
of the volatile market environment or realization of losses during
the execution of our repositioning strategy.
The long term average life of our preneed funeral and cemetery
trust contracts, 11 and 15 years respectively, along with our
repositioning strategy will mitigate the negative impact to our
financial revenue in future years. Based on our analysis,
even after this repositioning strategy, our trust funds will remain
in an overfunded position and the average revenue per preneed trust
contract will still be higher than our current averages. This
is due to approximately $110 million
in capital gains and interest income (net of fees and taxes) we
have earned in our discretionary trusts since 2009.
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)
|
|
|
|
|
|
|
|
|
1 year ended
12/31/15
|
|
(3.1)%
|
(2.7)%
|
|
1.4%
|
(4.7)%
|
(2.9)%
|
2 years ended
12/31/15
|
|
5.0%
|
5.0%
|
|
15.2%
|
(2.3)%
|
3.0%
|
3 years ended
12/31/15
|
|
20.0%
|
19.4%
|
|
52.5%
|
5.0%
|
19.3%
|
4 years ended
12/31/15
|
|
44.4%
|
39.9%
|
|
76.9%
|
21.4%
|
38.0%
|
5 years ended
12/31/15
|
|
40.2%
|
37.2%
|
|
80.6%
|
26.7%
|
42.8%
|
|
|
(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 December 31, 2015 (in thousands)
|
|
|
|
Discretionary Trust Funds
|
|
Total
Trust Funds
|
Asset
Class
|
|
|
MV
|
%
|
|
MV
|
%
|
Cash
|
|
|
$
|
22,352
|
|
12
|
%
|
|
$
|
38,431
|
|
18
|
%
|
Equities
|
|
|
47,235
|
|
26
|
%
|
|
49,820
|
|
24
|
%
|
Fixed
Income(1)
|
|
|
108,135
|
|
60
|
%
|
|
119,157
|
|
56
|
%
|
Other/Insurance
|
|
|
3,420
|
|
2
|
%
|
|
3,612
|
|
2
|
%
|
Total
Portfolios
|
|
|
$
|
181,142
|
|
100
|
%
|
|
$
|
211,020
|
|
100
|
%
|
|
|
(1)
|
Discretionary Trust -
Fixed Income Portfolio Profile
|
Industry/Sector
|
|
%
|
Communications
|
|
9.5%
|
Consumer
|
|
11.1%
|
Energy
|
|
7.1%
|
Financial
|
|
48.3%
|
Government
|
|
1.0%
|
Industrial
|
|
0.8%
|
Media
|
|
10.5%
|
Technology
|
|
3.2%
|
Utilities
|
|
8.5%
|
Total
|
|
100%
|
CONFERENCE CALL AND INVESTOR RELATIONS CONTACT
Carriage Services has scheduled a conference call for tomorrow,
February 17, 2016 at 9:30 a.m. central time. To participate in the
call, please dial 866-516-3867 (ID-28690356) and ask for the
Carriage Services conference call. A replay of the conference
call will be available through February 21,
2016 and may be accessed by dialing 855-859-2056
(ID-28690356). The conference call will also be available at
www.carriageservices.com. For any investor relations questions,
please contact Viki Blinderman at
713-332-8568 or Ben Brink at
713-332-8441 or email InvestorRelations@carriageservices.com.
CARRIAGE SERVICES,
INC.
|
OPERATING AND
FINANCIAL TREND REPORT
|
FROM CONTINUING
OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
2014
|
2015
|
%
Change
|
|
2014
|
2015
|
%
Change
|
|
|
|
|
|
|
|
|
Same Store
Contracts
|
|
|
|
|
|
|
|
Atneed
Contracts
|
5,056
|
|
5,082
|
|
0.5
|
%
|
|
20,046
|
|
20,223
|
|
0.9
|
%
|
Preneed
Contracts
|
1,287
|
|
1,238
|
|
-3.8
|
%
|
|
4,994
|
|
5,047
|
|
1.1
|
%
|
Total Same Store
Funeral Contracts
|
6,343
|
|
6,320
|
|
-0.4
|
%
|
|
25,040
|
|
25,270
|
|
0.9
|
%
|
Acquisition
Contracts
|
|
|
|
|
|
|
|
Atneed
Contracts
|
1,601
|
|
1,566
|
|
-2.2
|
%
|
|
5,347
|
|
6,076
|
|
13.6
|
%
|
Preneed
Contracts
|
293
|
|
296
|
|
1.0
|
%
|
|
1,015
|
|
1,281
|
|
26.2
|
%
|
Total Acquisition
Funeral Contracts
|
1,894
|
|
1,862
|
|
-1.7
|
%
|
|
6,362
|
|
7,357
|
|
15.6
|
%
|
Total Funeral
Contracts
|
8,237
|
|
8,182
|
|
-0.7
|
%
|
|
31,402
|
|
32,627
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
Funeral Operating
Revenue
|
|
|
|
|
|
|
|
Same Store
Revenue
|
$
|
32,623
|
|
$
|
33,278
|
|
2.0
|
%
|
|
$
|
127,487
|
|
$
|
131,740
|
|
3.3
|
%
|
Acquisition
Revenue
|
10,837
|
|
11,393
|
|
5.1
|
%
|
|
36,765
|
|
44,628
|
|
21.4
|
%
|
Total Funeral
Operating Revenue
|
$
|
43,460
|
|
$
|
44,671
|
|
2.8
|
%
|
|
$
|
164,252
|
|
$
|
176,368
|
|
7.4
|
%
|
|
|
|
|
|
|
|
|
Cemetery Operating
Revenue
|
|
|
|
|
|
|
|
Same Store
Revenue
|
$
|
10,624
|
|
$
|
11,076
|
|
4.3
|
%
|
|
$
|
41,257
|
|
$
|
43,336
|
|
5.0
|
%
|
Acquisition
Revenue
|
565
|
|
795
|
|
40.7
|
%
|
|
1,599
|
|
3,321
|
|
107.7
|
%
|
Total Cemetery
Operating Revenue
|
$
|
11,189
|
|
$
|
11,871
|
|
6.1
|
%
|
|
$
|
42,856
|
|
$
|
46,657
|
|
8.9
|
%
|
|
|
|
|
|
|
|
|
Financial
Revenue
|
|
|
|
|
|
|
|
Preneed Funeral
Commission Income
|
$
|
400
|
|
$
|
413
|
|
3.3
|
%
|
|
$
|
2,036
|
|
$
|
1,484
|
|
-27.1
|
%
|
Preneed Funeral Trust
Earnings
|
1,949
|
|
2,007
|
|
3.0
|
%
|
|
7,447
|
|
7,966
|
|
7.0
|
%
|
Cemetery Trust
Earnings
|
2,051
|
|
2,238
|
|
9.1
|
%
|
|
8,123
|
|
8,440
|
|
3.9
|
%
|
Preneed Cemetery
Finance Charges
|
370
|
|
410
|
|
10.8
|
%
|
|
1,410
|
|
1,587
|
|
12.6
|
%
|
Total Financial
Revenue
|
$
|
4,770
|
|
$
|
5,068
|
|
6.2
|
%
|
|
$
|
19,016
|
|
$
|
19,477
|
|
2.4
|
%
|
Total
Revenue
|
$
|
59,419
|
|
$
|
61,610
|
|
3.7
|
%
|
|
$
|
226,124
|
|
$
|
242,502
|
|
7.2
|
%
|
|
|
|
|
|
|
|
|
Field
EBITDA
|
|
|
|
|
|
|
|
Same Store Funeral
Field EBITDA
|
$
|
12,442
|
|
$
|
13,513
|
|
8.6
|
%
|
|
$
|
46,707
|
|
$
|
50,563
|
|
8.3
|
%
|
Same Store Funeral
Field EBITDA Margin
|
38.1
|
%
|
40.6
|
%
|
250 bp
|
|
|
36.6
|
%
|
38.4
|
%
|
180 bp
|
|
Acquisition Funeral
Field EBITDA
|
4,319
|
|
4,727
|
|
9.4
|
%
|
|
13,767
|
|
17,750
|
|
28.9
|
%
|
Acquisition Funeral
Field EBITDA Margin
|
39.9
|
%
|
41.5
|
%
|
160 bp
|
|
|
37.4
|
%
|
39.8
|
%
|
240 bp
|
|
Total Funeral
Field EBITDA
|
$
|
16,761
|
|
$
|
18,240
|
|
8.8
|
%
|
|
$
|
60,474
|
|
$
|
68,313
|
|
13.0
|
%
|
Total Funeral
Field EBITDA Margin
|
38.6
|
%
|
40.8
|
%
|
220
bp
|
|
|
36.8
|
%
|
38.7
|
%
|
190
bp
|
|
|
|
|
|
|
|
|
|
Same Store Cemetery
Field EBITDA
|
$
|
3,290
|
|
$
|
3,892
|
|
18.3
|
%
|
|
$
|
11,845
|
|
$
|
14,045
|
|
18.6
|
%
|
Same Store Cemetery
Field EBITDA Margin
|
31.0
|
%
|
35.1
|
%
|
410 bp
|
|
|
28.7
|
%
|
32.4
|
%
|
370 bp
|
|
Acquisition Cemetery
Field EBITDA
|
112
|
|
285
|
|
154.5
|
%
|
|
351
|
|
1,088
|
|
210.0
|
%
|
Acquisition Cemetery
Field EBITDA Margin
|
19.8
|
%
|
35.8
|
%
|
1,600 bp
|
|
|
22.0
|
%
|
32.8
|
%
|
1,080 bp
|
|
Total Cemetery
Field EBITDA
|
$
|
3,402
|
|
$
|
4,177
|
|
22.8
|
%
|
|
$
|
12,196
|
|
$
|
15,133
|
|
24.1
|
%
|
Total Cemetery
Field EBITDA Margin
|
30.4
|
%
|
35.2
|
%
|
480
bp
|
|
|
28.5
|
%
|
32.4
|
%
|
390
bp
|
|
|
|
|
|
|
|
|
|
Funeral Financial
EBITDA
|
$
|
2,041
|
|
$
|
2,161
|
|
5.9
|
%
|
|
$
|
8,348
|
|
$
|
8,339
|
|
-0.1%
|
|
Cemetery Financial
EBITDA
|
2,358
|
|
2,585
|
|
9.6
|
%
|
|
9,341
|
|
9,754
|
|
4.4
|
%
|
Total Financial
EBITDA
|
$
|
4,399
|
|
$
|
4,746
|
|
7.9
|
%
|
|
$
|
17,689
|
|
$
|
18,093
|
|
2.3
|
%
|
Total Financial
EBITDA Margin
|
92.2
|
%
|
93.6
|
%
|
140
bp
|
|
|
93.0
|
%
|
92.9
|
%
|
-10
bp
|
|
|
|
|
|
|
|
|
|
Total Field
EBITDA
|
$
|
24,562
|
|
$
|
27,163
|
|
10.6
|
%
|
|
$
|
90,359
|
|
$
|
101,539
|
|
12.4
|
%
|
Total Field EBITDA
Margin
|
41.3
|
%
|
44.1
|
%
|
280
bp
|
|
|
40.0
|
%
|
41.9
|
%
|
190
bp
|
|
|
|
|
|
|
|
|
|
OPERATING AND
FINANCIAL TREND REPORT
|
FROM CONTINUING
OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
2014
|
2015
|
%
Change
|
|
2014
|
2015
|
%
Change
|
|
|
|
|
|
|
|
|
Overhead
|
|
|
|
|
|
|
|
Total Variable
Overhead
|
$
|
2,425
|
|
$
|
4,109
|
|
69.4
|
%
|
|
$
|
10,764
|
|
$
|
10,878
|
|
1.1
|
%
|
Total Regional Fixed
Overhead
|
758
|
|
886
|
|
16.9
|
%
|
|
3,136
|
|
3,435
|
|
9.5
|
%
|
Total Corporate Fixed
Overhead
|
4,902
|
|
5,081
|
|
3.7
|
%
|
|
20,227
|
|
20,354
|
|
0.6
|
%
|
Total
Overhead
|
$
|
8,085
|
|
$
|
10,076
|
|
24.6
|
%
|
|
$
|
34,127
|
|
$
|
34,667
|
|
1.6
|
%
|
Overhead as a
percent of sales
|
13.6
|
%
|
16.4
|
%
|
280
bp
|
|
|
15.1
|
%
|
14.3
|
%
|
-80
bp
|
|
|
|
|
|
|
|
|
|
Consolidated
EBITDA
|
$
|
16,477
|
|
$
|
17,087
|
|
3.7
|
%
|
|
$
|
56,232
|
|
$
|
66,872
|
|
18.9
|
%
|
Consolidated
EBITDA Margin
|
27.7
|
%
|
27.7
|
%
|
0
bp
|
|
|
24.9
|
%
|
27.6
|
%
|
270
bp
|
|
|
|
|
|
|
|
|
|
Other Expenses and
Interest
|
|
|
|
|
|
|
|
Depreciation &
Amortization
|
$
|
3,142
|
|
$
|
3,656
|
|
16.4
|
%
|
|
$
|
11,923
|
|
$
|
13,780
|
|
15.6
|
%
|
Non-Cash Stock
Compensation
|
920
|
|
996
|
|
8.3
|
%
|
|
3,832
|
|
4,444
|
|
16.0
|
%
|
Interest
Expense
|
2,593
|
|
2,888
|
|
11.4
|
%
|
|
10,308
|
|
10,559
|
|
2.4
|
%
|
Accretion of Discount
on Convertible Subordinated Notes
|
805
|
|
900
|
|
|
|
2,452
|
|
3,454
|
|
|
Loss on Early
Extinguishment of Debt
|
—
|
|
—
|
|
|
|
1,042
|
|
—
|
|
|
Loss on Redemption of
Convertible Junior Subordinated Debentures
|
—
|
|
—
|
|
|
|
3,779
|
|
—
|
|
|
Other, Net
|
571
|
|
(9)
|
|
|
|
195
|
|
45
|
|
|
Pretax
Income
|
$
|
8,446
|
|
$
|
8,656
|
|
2.5
|
%
|
|
$
|
22,701
|
|
$
|
34,590
|
|
52.4
|
%
|
Net Tax
Provision
|
3,079
|
|
3,222
|
|
|
|
7,255
|
|
13,737
|
|
|
GAAP Net
Income
|
$
|
5,367
|
|
$
|
5,434
|
|
1.2
|
%
|
|
$
|
15,446
|
|
$
|
20,853
|
|
35.0
|
%
|
|
|
|
|
|
|
|
|
Special Items, Net
of tax except for**
|
|
|
|
|
|
|
|
Withdrawable Trust
Income
|
$
|
198
|
|
$
|
—
|
|
|
|
$
|
1,181
|
|
$
|
366
|
|
|
Acquisition and
Divestiture Expenses
|
49
|
|
24
|
|
|
|
764
|
|
405
|
|
|
Severance
Costs
|
101
|
|
100
|
|
|
|
697
|
|
633
|
|
|
Consulting
Fees
|
41
|
|
367
|
|
|
|
277
|
|
1,265
|
|
|
Other Incentive
Compensation
|
—
|
|
—
|
|
|
|
660
|
|
—
|
|
|
Accretion on
Convertible Subordinated Notes**
|
805
|
|
900
|
|
|
|
2,452
|
|
3,454
|
|
|
Costs Related to
Credit Facility
|
—
|
|
—
|
|
|
|
688
|
|
—
|
|
|
Loss on Redemption of
Convertible Junior Subordinated Debentures
|
—
|
|
—
|
|
|
|
2,493
|
|
—
|
|
|
Loss (Gain) on Asset
Purchase/Sale
|
379
|
|
—
|
|
|
|
(367)
|
|
—
|
|
|
Other Special
Items
|
—
|
|
14
|
|
|
|
503
|
|
244
|
|
|
Tax Adjustment from
Prior Period**
|
—
|
|
—
|
|
|
|
—
|
|
141
|
|
|
Sum of Special
Items, Net of tax
|
$
|
1,573
|
|
$
|
1,405
|
|
-10.7
|
%
|
|
$
|
9,348
|
|
$
|
6,508
|
|
-30.4
|
%
|
|
|
|
|
|
|
|
|
Adjusted Net
Income
|
$
|
6,940
|
|
$
|
6,839
|
|
-1.5
|
%
|
|
$
|
24,794
|
|
$
|
27,361
|
|
10.4
|
%
|
Adjusted Net
Profit Margin
|
11.7
|
%
|
11.1
|
%
|
-60
bp
|
|
|
11.0
|
%
|
11.3
|
%
|
30
bp
|
|
|
|
|
|
|
|
|
|
Adjusted Basic
Earnings Per Share
|
$
|
0.38
|
|
$
|
0.40
|
|
5.3
|
%
|
|
$
|
1.35
|
|
$
|
1.52
|
|
12.6
|
%
|
Adjusted Diluted
Earnings Per Share
|
$
|
0.38
|
|
$
|
0.39
|
|
2.6
|
%
|
|
$
|
1.34
|
|
$
|
1.48
|
|
10.4
|
%
|
|
|
|
|
|
|
|
|
GAAP Basic Earnings
Per Share
|
$
|
0.29
|
|
$
|
0.32
|
|
10.3
|
%
|
|
$
|
0.84
|
|
$
|
1.16
|
|
38.1
|
%
|
GAAP Diluted Earnings
Per Share
|
$
|
0.29
|
|
$
|
0.31
|
|
6.9
|
%
|
|
$
|
0.83
|
|
$
|
1.12
|
|
34.9
|
%
|
|
|
|
|
|
|
|
|
Weighted Average
Basic Shares Outstanding
|
18,170
|
|
16,828
|
|
|
|
18,108
|
|
17,791
|
|
|
Weighted Average
Diluted Shares Outstanding
|
18,358
|
|
17,499
|
|
|
|
18,257
|
|
18,313
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to
Adjusted Consolidated EBITDA
|
|
|
|
|
|
|
|
Consolidated
EBITDA
|
$
|
16,477
|
|
$
|
17,087
|
|
3.7
|
%
|
|
$
|
56,232
|
|
$
|
66,872
|
|
18.9
|
%
|
Withdrawable Trust
Income
|
300
|
|
—
|
|
|
|
1,788
|
|
555
|
|
|
Acquisition and
Divestiture Expenses
|
74
|
|
37
|
|
|
|
1,158
|
|
614
|
|
|
Severance
Costs
|
153
|
|
151
|
|
|
|
1,056
|
|
959
|
|
|
Consulting
Fees
|
62
|
|
555
|
|
|
|
419
|
|
1,913
|
|
|
Other Incentive
Compensation
|
—
|
|
—
|
|
|
|
1,000
|
|
—
|
|
|
Other Special
Items
|
—
|
|
20
|
|
|
|
—
|
|
220
|
|
|
Adjusted
Consolidated EBITDA
|
$
|
17,066
|
|
$
|
17,850
|
|
4.6
|
%
|
|
$
|
61,653
|
|
$
|
71,133
|
|
15.4
|
%
|
Adjusted
Consolidated EBITDA Margin
|
28.7
|
%
|
29.0
|
%
|
30
bp
|
|
|
27.3
|
%
|
29.3
|
%
|
200
bp
|
|
CARRIAGE SERVICES,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(in thousands,
except share data)
|
|
|
December 31,
|
|
2014
|
|
2015
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
413
|
|
|
$
|
535
|
|
Accounts receivable,
net
|
19,264
|
|
|
18,181
|
|
Inventories
|
5,294
|
|
|
5,654
|
|
Prepaid
expenses
|
4,590
|
|
|
4,684
|
|
Other current
assets
|
7,144
|
|
|
4,707
|
|
Total current
assets
|
36,705
|
|
|
33,761
|
|
Preneed cemetery
trust investments
|
71,972
|
|
|
63,291
|
|
Preneed funeral trust
investments
|
97,607
|
|
|
85,553
|
|
Preneed receivables,
net
|
26,284
|
|
|
27,998
|
|
Receivables from
preneed trusts
|
12,809
|
|
|
13,544
|
|
Property, plant and
equipment, net
|
186,211
|
|
|
214,874
|
|
Cemetery
property
|
75,564
|
|
|
75,597
|
|
Goodwill
|
257,442
|
|
|
264,416
|
|
Deferred charges and
other non-current assets
|
14,264
|
|
|
15,192
|
|
Cemetery perpetual
care trust investments
|
48,670
|
|
|
43,127
|
|
Total
assets
|
$
|
827,528
|
|
|
$
|
837,353
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term debt and capital lease obligations
|
$
|
9,838
|
|
|
$
|
12,236
|
|
Accounts
payable
|
6,472
|
|
|
7,917
|
|
Other
liabilities
|
1,437
|
|
|
524
|
|
Accrued
liabilities
|
15,203
|
|
|
16,541
|
|
Total current
liabilities
|
32,950
|
|
|
37,218
|
|
Long-term debt, net
of current portion
|
111,887
|
|
|
103,854
|
|
Revolving credit
facility
|
40,500
|
|
|
92,600
|
|
Convertible
subordinated notes due 2021
|
114,542
|
|
|
117,996
|
|
Obligations under
capital leases, net of current portion
|
3,098
|
|
|
2,875
|
|
Deferred preneed
cemetery revenue
|
56,875
|
|
|
56,721
|
|
Deferred preneed
funeral revenue
|
31,265
|
|
|
31,748
|
|
Deferred tax
liability
|
36,414
|
|
|
39,956
|
|
Other long-term
liabilities
|
2,401
|
|
|
5,531
|
|
Deferred preneed
cemetery receipts held in trust
|
71,972
|
|
|
63,291
|
|
Deferred preneed
funeral receipts held in trust
|
97,607
|
|
|
85,553
|
|
Care trusts'
corpus
|
48,142
|
|
|
42,416
|
|
Total
liabilities
|
647,653
|
|
|
679,759
|
|
Commitments and
contingencies:
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common stock, $.01
par value; 80,000,000 shares authorized; 22,434,609 and 22,497,873
issued as of December 31, 2014 and 2015,
respectively
|
224
|
|
|
225
|
|
Additional paid-in
capital
|
212,386
|
|
|
214,250
|
|
Retained earnings
(deficit)
|
(17,468)
|
|
|
3,385
|
|
Treasury stock, at
cost; 3,921,651 shares at December 31, 2014 and 5,849,316
shares at December 31, 2015
|
(15,267)
|
|
|
(60,266)
|
|
Total stockholders'
equity
|
179,875
|
|
|
157,594
|
|
Total liabilities and
stockholders' equity
|
$
|
827,528
|
|
|
$
|
837,353
|
|
CARRIAGE SERVICES,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(in thousands,
except per share data)
|
|
|
(unaudited)
|
|
|
|
|
|
For the Three
Months
Ended December 31,
|
|
For the
Years Ended December
31,
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
Funeral
|
$
|
45,809
|
|
|
$
|
47,091
|
|
|
$
|
173,735
|
|
|
$
|
185,818
|
|
Cemetery
|
13,610
|
|
|
|
14,519
|
|
|
52,389
|
|
|
56,684
|
|
|
59,419
|
|
|
61,610
|
|
|
226,124
|
|
|
242,502
|
|
Field costs and
expenses:
|
|
|
|
|
|
|
|
Funeral
|
27,007
|
|
|
26,690
|
|
|
104,913
|
|
|
109,166
|
|
Cemetery
|
7,850
|
|
|
7,757
|
|
|
30,852
|
|
|
31,797
|
|
Depreciation and
amortization
|
2,801
|
|
|
3,220
|
|
|
10,545
|
|
|
12,034
|
|
Regional and
unallocated funeral and cemetery costs
|
2,834
|
|
|
4,252
|
|
|
9,806
|
|
|
11,997
|
|
Gross
profit
|
18,927
|
|
|
19,691
|
|
|
70,008
|
|
|
77,508
|
|
|
|
|
|
|
|
|
|
Corporate costs and
expenses:
|
|
|
|
|
|
|
|
General and
administrative costs and expenses
|
6,171
|
|
|
6,820
|
|
|
28,915
|
|
|
27,114
|
|
Home office
depreciation and amortization
|
341
|
|
|
436
|
|
|
1,378
|
|
|
1,746
|
|
|
6,512
|
|
|
7,256
|
|
|
30,293
|
|
|
28,860
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
12,415
|
|
|
$
|
12,435
|
|
|
$
|
39,715
|
|
|
$
|
48,648
|
|
Interest expense,
net
|
(2,593)
|
|
|
(2,888)
|
|
|
(10,308)
|
|
|
(10,559)
|
|
Accretion of discount
on convertible subordinated notes
|
(805)
|
|
|
(900)
|
|
|
(2,452)
|
|
|
(3,454)
|
|
Loss on early
extinguishment of debt and other costs
|
—
|
|
|
—
|
|
|
(1,042)
|
|
|
—
|
|
Loss on redemption of
convertible junior subordinated debentures
|
—
|
|
|
—
|
|
|
(3,779)
|
|
|
—
|
|
Other, net
|
(571)
|
|
|
9
|
|
|
567
|
|
|
(45)
|
|
Income from
continuing operations before income taxes
|
$
|
8,446
|
|
|
$
|
8,656
|
|
|
$
|
22,701
|
|
|
$
|
34,590
|
|
Provision for income
taxes
|
(3,079)
|
|
|
(3,222)
|
|
|
(8,995)
|
|
|
(13,737)
|
|
Income tax benefit
related to uncertain tax provisions
|
—
|
|
|
—
|
|
|
1,740
|
|
|
—
|
|
Net provision for
income taxes
|
(3,079)
|
|
|
(3,222)
|
|
|
(7,255)
|
|
|
(13,737)
|
|
Net income from
continuing operations
|
$
|
5,367
|
|
|
$
|
5,434
|
|
|
$
|
15,446
|
|
|
$
|
20,853
|
|
Net income from
discontinued operations, net of tax
|
11
|
|
|
—
|
|
|
392
|
|
|
—
|
|
Net income available
to common stockholders
|
$
|
5,378
|
|
|
$
|
5,434
|
|
|
$
|
15,838
|
|
|
$
|
20,853
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.29
|
|
|
$
|
0.32
|
|
|
$
|
0.84
|
|
|
$
|
1.16
|
|
Discontinued
operations
|
—
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
Basic earnings per
common share
|
$
|
0.29
|
|
|
$
|
0.32
|
|
|
$
|
0.86
|
|
|
$
|
1.16
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.29
|
|
|
$
|
0.31
|
|
|
$
|
0.83
|
|
|
$
|
1.12
|
|
Discontinued
operations
|
—
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
Diluted earnings per
common share
|
$
|
0.29
|
|
|
$
|
0.31
|
|
|
$
|
0.85
|
|
|
$
|
1.12
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
|
0.025
|
|
|
$
|
0.025
|
|
|
$
|
0.100
|
|
|
$
|
0.100
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
18,170
|
|
|
16,828
|
|
|
18,108
|
|
|
17,791
|
|
Diluted
|
18,358
|
|
|
17,499
|
|
|
18,257
|
|
|
18,313
|
|
CARRIAGE SERVICES,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(in
thousands)
|
|
|
|
For the Years
Ended December 31,
|
|
|
2014
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
|
$
|
15,838
|
|
|
$
|
20,853
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
11,945
|
|
|
13,780
|
|
Gain on sale of
businesses and purchase of assets
|
|
(2,150)
|
|
|
(49)
|
|
Impairment of
goodwill
|
|
1,180
|
|
|
—
|
|
Loss on early
extinguishment of debt and other costs
|
|
1,042
|
|
|
—
|
|
Amortization of
deferred financing costs
|
|
908
|
|
|
921
|
|
Accretion of discount
on convertible subordinated notes
|
|
2,452
|
|
|
3,454
|
|
Provision for losses
on accounts receivable
|
|
2,877
|
|
|
1,679
|
|
Stock-based
compensation expense
|
|
4,622
|
|
|
4,444
|
|
Deferred income tax
expense
|
|
5,295
|
|
|
3,035
|
|
Loss on redemption of
convertible junior subordinated debentures
|
|
2,932
|
|
|
—
|
|
Changes in operating
assets and liabilities that provided (required) cash:
|
|
|
|
|
Accounts and preneed
receivables
|
|
(4,146)
|
|
|
(2,310)
|
|
Inventories and other
current assets
|
|
(2,590)
|
|
|
2,582
|
|
Deferred charges and
other
|
|
(165)
|
|
|
150
|
|
Preneed funeral and
cemetery trust investments
|
|
(203)
|
|
|
25,543
|
|
Accounts
payable
|
|
(562)
|
|
|
1,445
|
|
Accrued and other
liabilities
|
|
(1,529)
|
|
|
509
|
|
Deferred preneed
funeral and cemetery revenue
|
|
303
|
|
|
329
|
|
Deferred preneed
funeral and cemetery receipts held in trust
|
|
(1,484)
|
|
|
(26,461)
|
|
Net cash provided by
operating activities
|
|
36,565
|
|
|
49,904
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Acquisitions and land
for new construction
|
|
(57,874)
|
|
|
(9,725)
|
|
Purchase of land and
buildings previously leased
|
|
(7,600)
|
|
|
(6,080)
|
|
Net proceeds from
sale of businesses and other assets
|
|
2,192
|
|
|
65
|
|
Capital
expenditures
|
|
(16,075)
|
|
|
(29,744)
|
|
Net cash used in
investing activities
|
|
(79,357)
|
|
|
(45,484)
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Net borrowings on the
revolving credit facility
|
|
3,600
|
|
|
52,100
|
|
Net borrowings
(payments) on the term loan
|
|
3,313
|
|
|
(9,375)
|
|
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 long-term
debt and obligations under capital leases
|
|
(840)
|
|
|
(1,014)
|
|
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
|
|
1,228
|
|
|
758
|
|
Dividends on common
stock
|
|
(1,840)
|
|
|
(1,819)
|
|
Payment of loan
origination costs
|
|
(825)
|
|
|
(13)
|
|
Excess tax benefit of
equity compensation
|
|
3,990
|
|
|
64
|
|
Purchase of treasury
stock
|
|
—
|
|
|
(44,999)
|
|
Net cash provided by
(used in) financing activities
|
|
41,828
|
|
|
(4,298)
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
(964)
|
|
|
122
|
|
Cash and cash
equivalents at beginning of year
|
|
1,377
|
|
|
413
|
|
Cash and cash
equivalents at end of year
|
|
$
|
413
|
|
|
$
|
535
|
|
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, regional and unallocated overhead expenses.
- Special Items are defined as charges or credits 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 and years ended December 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 and years ended December 31, 2014 and 2015
(in thousands):
|
|
|
Three Months
Ended
|
|
Years
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Net Income from
continuing operations
|
$
|
5,367
|
|
|
$
|
5,434
|
|
|
$
|
15,446
|
|
|
$
|
20,853
|
|
Special items, net of
tax except for **
|
|
|
|
|
|
|
|
Withdrawable Trust
Income
|
$
|
198
|
|
|
$
|
—
|
|
|
$
|
1,181
|
|
|
$
|
366
|
|
Acquisition and
Divestiture Expenses
|
49
|
|
|
24
|
|
|
764
|
|
|
405
|
|
Severance
Costs
|
101
|
|
|
100
|
|
|
697
|
|
|
633
|
|
Consulting
Fees
|
41
|
|
|
367
|
|
|
277
|
|
|
1,265
|
|
Other Incentive
Compensation
|
—
|
|
|
—
|
|
|
660
|
|
|
—
|
|
Accretion of Discount
on Convertible Subordinated Notes **
|
805
|
|
|
900
|
|
|
2,452
|
|
|
3,454
|
|
Costs Related to the
Credit Facility
|
—
|
|
|
—
|
|
|
688
|
|
|
—
|
|
Loss on Redemption of
Convertible Junior Subordinated Debentures
|
—
|
|
|
—
|
|
|
2,493
|
|
|
—
|
|
Loss (Gain) on Asset
Purchase/Sale
|
379
|
|
|
—
|
|
|
(367)
|
|
|
—
|
|
Other Special
Items
|
—
|
|
|
14
|
|
|
503
|
|
|
244
|
|
Tax Adjustment from
Prior Period **
|
—
|
|
|
—
|
|
|
—
|
|
|
141
|
|
Total Special items
affecting net income
|
$
|
1,573
|
|
|
$
|
1,405
|
|
|
$
|
9,348
|
|
|
$
|
6,508
|
|
Adjusted Net
Income
|
$
|
6,940
|
|
|
$
|
6,839
|
|
|
$
|
24,794
|
|
|
$
|
27,361
|
|
Reconciliation
of Net Income from continuing operations to Consolidated EBITDA and
Adjusted Consolidated EBITDA for the three months and years ended
December 31, 2014 and 2015 (in thousands):
|
|
|
Three Months
Ended
|
|
Years
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Net income from
continuing operations
|
$
|
5,367
|
|
|
$
|
5,434
|
|
|
$
|
15,446
|
|
|
$
|
20,853
|
|
Net provision for
income taxes
|
3,079
|
|
|
3,222
|
|
|
7,255
|
|
|
13,737
|
|
Pre-tax earnings from
continuing operations
|
$
|
8,446
|
|
|
$
|
8,656
|
|
|
$
|
22,701
|
|
|
$
|
34,590
|
|
Interest
expense
|
2,593
|
|
|
2,888
|
|
|
10,308
|
|
|
10,559
|
|
Accretion of discount
on convertible subordinated notes
|
805
|
|
|
900
|
|
|
2,452
|
|
|
3,454
|
|
Loss on early
extinguishment of debt and other costs
|
—
|
|
|
—
|
|
|
1,042
|
|
|
—
|
|
Loss on redemption of
convertible junior subordinated debentures
|
—
|
|
|
—
|
|
|
3,779
|
|
|
—
|
|
Non-cash stock
compensation
|
920
|
|
|
996
|
|
|
3,832
|
|
|
4,444
|
|
Depreciation &
amortization
|
3,142
|
|
|
3,656
|
|
|
11,923
|
|
|
13,780
|
|
Other, net
|
571
|
|
|
(9)
|
|
|
195
|
|
|
45
|
|
Consolidated
EBITDA
|
$
|
16,477
|
|
|
$
|
17,087
|
|
|
$
|
56,232
|
|
|
$
|
66,872
|
|
Adjusted
For:
|
|
|
|
|
|
|
|
Withdrawable Trust
Income
|
$
|
300
|
|
|
$
|
—
|
|
|
$
|
1,788
|
|
|
$
|
555
|
|
Acquisition and
Divestiture Expenses
|
74
|
|
|
37
|
|
|
1,158
|
|
|
614
|
|
Severance
Costs
|
153
|
|
|
151
|
|
|
1,056
|
|
|
959
|
|
Consulting
Fees
|
62
|
|
|
555
|
|
|
419
|
|
|
1,913
|
|
Other Incentive
Compensation
|
—
|
|
|
—
|
|
|
1,000
|
|
|
—
|
|
Other Special
Items
|
—
|
|
|
20
|
|
|
—
|
|
|
220
|
|
Adjusted Consolidated
EBITDA
|
$
|
17,066
|
|
|
$
|
17,850
|
|
|
$
|
61,653
|
|
|
$
|
71,133
|
|
Revenue
|
$
|
59,419
|
|
|
$ 61,610
|
|
|
$
|
226,124
|
|
|
$
|
242,502
|
|
|
|
|
|
|
|
|
|
Adjusted Consolidated
EBITDA Margin
|
28.7
|
%
|
|
29.0
|
%
|
|
27.3
|
%
|
|
29.3
|
%
|
Reconciliation
of funeral and cemetery income before income taxes to Field EBITDA
for the three months and years ended December 31, 2014 and
2015 (in thousands):
|
|
Funeral Field
EBITDA
|
Three Months
Ended
|
|
Years
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Gross Profit
(GAAP)
|
$
|
14,537
|
|
|
$
|
14,885
|
|
|
$
|
54,102
|
|
|
$
|
59,434
|
|
Depreciation &
amortization
|
1,782
|
|
|
2,038
|
|
|
6,841
|
|
|
7,614
|
|
Regional &
unallocated costs
|
2,483
|
|
|
3,478
|
|
|
7,879
|
|
|
9,604
|
|
Net financial
income
|
(2,041)
|
|
|
(2,161)
|
|
|
(8,348)
|
|
|
(8,339)
|
|
Funeral Field
EBITDA
|
$
|
16,761
|
|
|
$
|
18,240
|
|
|
$
|
60,474
|
|
|
$
|
68,313
|
|
|
|
|
|
Cemetery Field
EBITDA
|
Three Months
Ended
|
|
Years
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Gross Profit
(GAAP)
|
$
|
4,390
|
|
|
$
|
4,806
|
|
|
$
|
15,906
|
|
|
$
|
18,074
|
|
Depreciation &
amortization
|
1,019
|
|
|
1,182
|
|
|
3,704
|
|
|
4,420
|
|
Regional &
unallocated costs
|
351
|
|
|
774
|
|
|
1,927
|
|
|
2,393
|
|
Net financial
income
|
(2,358)
|
|
|
(2,585)
|
|
|
(9,341)
|
|
|
(9,754)
|
|
Cemetery Field
EBITDA
|
$
|
3,402
|
|
|
$
|
4,177
|
|
|
$
|
12,196
|
|
|
$
|
15,133
|
|
|
|
|
|
Total Field
EBITDA
|
Three Months
Ended
|
|
Years
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Funeral Field
EBITDA
|
$
|
16,761
|
|
|
$
|
18,240
|
|
|
$
|
60,474
|
|
|
$
|
68,313
|
|
Cemetery Field
EBITDA
|
3,402
|
|
|
4,177
|
|
|
12,196
|
|
|
15,133
|
|
Funeral Financial
EBITDA
|
2,041
|
|
|
2,161
|
|
|
8,348
|
|
|
8,339
|
|
Cemetery Financial
EBITDA
|
2,358
|
|
|
2,585
|
|
|
9,341
|
|
|
9,754
|
|
Total Field
EBITDA
|
$
|
24,562
|
|
|
$
|
27,163
|
|
|
$
|
90,359
|
|
|
$
|
101,539
|
|
Reconciliation
of GAAP basic earnings per share to Adjusted basic earnings per
share for the three months and years ended December 31, 2014
and 2015:
|
|
|
Three Months
Ended
|
|
Years
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
GAAP basic earnings
per share from continuing operations
|
$
|
0.29
|
|
|
$
|
0.32
|
|
|
$
|
0.84
|
|
|
$
|
1.16
|
|
Special items
affecting net income
|
0.09
|
|
|
0.08
|
|
|
0.51
|
|
|
0.36
|
|
Adjusted basic
earnings per share
|
$
|
0.38
|
|
|
$
|
0.40
|
|
|
$
|
1.35
|
|
|
$
|
1.52
|
|
Reconciliation
of GAAP diluted earnings per share to Adjusted diluted earnings per
share for the three months and years ended December 31, 2014
and 2015:
|
|
|
Three Months
Ended
|
|
Years
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
GAAP diluted earnings
per share from continuing operations
|
$
|
0.29
|
|
|
$
|
0.31
|
|
|
$
|
0.83
|
|
|
$
|
1.12
|
|
Special items
affecting net income
|
0.09
|
|
|
0.08
|
|
|
0.51
|
|
|
0.36
|
|
Adjusted diluted
earnings per share
|
$
|
0.38
|
|
|
$
|
0.39
|
|
|
$
|
1.34
|
|
|
$
|
1.48
|
|
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,
but are not limited to, statements regarding 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 ability to find and retain skilled personnel;
- the effects of competition;
- 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;
- our ability to generate preneed sales;
- 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;
- 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-2015-annual-results-record-field-operating-results-and-record-managing-partner-bonuses-raises-rolling-four-quarter-outlook-300220946.html
SOURCE Carriage Services, Inc.