StoneMor Partners L.P. Reports Operating and Financial Results for the Fourth Quarter and Full Year 2015

  • Adjusted EBITDA, a non-GAAP measure, was $26.5 million(1) for the 4th quarter 2015,  an increase of over 15% compared with the prior year 4th quarter.  Calendar year 2015 Adjusted EBITDA was $98.2 million, an increase of almost 8% compared with the prior year
  • Generated Distributable Available Cash, a non-GAAP measure, of $30.5 million(1) for the 4th quarter 2015 and $83.0 million for calendar year 2015
  • Declared a quarterly cash distribution of $0.66 per limited partner unit for the 4th quarter 2015, a 5% increase over the prior year 4th quarter.  Calendar year 2015 cash distributions were $2.61 per limited partner unit, a 6% increase compared with $2.46 for the prior year
  • Number of cemetery contracts written during the full year 2015 were 113,696 compared with 103,859 in the prior year, a 10% increase
  • Fourth quarter and full year 2015 operational and financial results will be discussed on a conference call at 11a.m. ET on Monday, February 29th

LEVITTOWN, Pa., Feb. 29, 2016 (GLOBE NEWSWIRE) -- StoneMor Partners L.P. (NYSE:STON) (“StoneMor” or the “Partnership”) has reported operating and financial results for the fourth quarter and full year 2015. 

Larry Miller, StoneMor’s President and CEO, commented, “StoneMor completed another successful year in 2015. We generated record revenues, both production-based ($398.0 million) and GAAP-based ($305.6 million) while increasing adjusted EBITDA nearly 8% on a year over year basis, 15% compared to the prior year 4th quarter and 13% from the 2015 3rd quarter.  We declared our 45th consecutive quarterly distribution and our backlog remains a solid indication of future business.  On the acquisition front, we acquired one cemetery and two funeral homes during the 4th quarter, bringing our property count to 307 cemeteries and 105 funeral homes.  The acquisition market continues to be robust, with opportunities we are currently evaluating exceeding our recent annual pace.  As previously announced, Cambridge Associates was retained to provide advisory services with respect to our trust funds.  We believe Cambridge, a leading advisor to pensions, foundations and endowments, private wealth, and corporate and government entities, will enhance our already strong efforts to maximize the value of our trust funds.  Finally, while land sales have always represented a part of revenue generation, we are exploring the possibility of increasing our land efficiency, either through accelerated land sales or partnerships with entities that will maximize the value of our excess acreage positions. To that end we have retained Cushman & Wakefield, a leading global real estate services firm to assist us in a strategic evaluation of our real estate portfolio.”

(1) Non-GAAP financial measures used by the Partnership should not be considered as alternatives to GAAP financial measures, and you should not consider such non-GAAP measures in isolation or as a substitute for the Partnership’s results as reported under GAAP.  A reconciliation of the non-GAAP financial measures of Adjusted EBITDA, Distributable Cash Flow and Distributable Available Cash to net loss attributable to the Partnership, the most directly comparable GAAP financial measure, is provided in the financial tables of this release.  Please see footnote 1 to the Financial Information table of this release.

Financial Highlights

 Three Months Ended Years Ended
 December 31, December 31,
  2015   2014   2015   2014 
        
Adjusted EBITDA(1)$   26,477  $   22,943  $   98,231  $   91,401 
        
Distributable Available Cash(1)$   30,453  $   42,339  $  82,981  $   80,138 
        
Net loss$   (7,111) $   (7,796) $  (24,244) $  (10,773)
        
Cash Distributions$   20,823  $   17,539  $  77,512  $   62,836 
per unit$   0.66  $   0.63  $   2.61  $ 2.46 
        
 At December 31,    
  2015   2014     
Backlog(2)$  609,048  $  543,329     
        
Quarterly distribution asset coverage(3)5.23x      


  • Adjusted EBITDA, a non-GAAP measure, was $26.5 million(1) for the fourth quarter 2015 compared with $22.9 million for the prior year fourth quarter, an increase of over 15%.  The increase from the prior year period was primarily the result of higher income from investment trusts and lower corporate overhead costs, partially offset by lower cemetery margin.
  • Distributable Available Cash, a non-GAAP measure, was $30.5 million(1) for the fourth quarter 2015 compared with $42.3 million for the prior year fourth quarter, a 28% decrease. The decrease was primarily due to different levels of cash on hand at the beginning of the reporting periods.
  • Backlog(2) increased by $65.7 million, or 12% to $609.0 million at December 31, 2015 compared with December 31, 2014. 
  • The Partnership declared a cash distribution for the 4th quarter 2015 of $0.66 per common limited partner unit, a 5% increase compared with the prior year 4th quarter.  The Partnership’s 4th quarter 2015 cash distribution was paid on February 12, 2016 to holders of record as of February 5, 2016. 
  • On a GAAP basis, net loss for the 4th quarter 2015 was $7.1 million compared with a net loss of $7.8 million for the prior year 4th quarter.  The GAAP losses in both periods were driven principally by the deferral of revenues, cost of goods sold and selling expenses associated with the Partnership’s pre-need sales, while other period operating costs, such as cemetery and general and administrative expenses, were expensed as incurred.

Recent Events

  • During the fourth quarter 2015, the Partnership acquired 1 cemetery and 2 funeral homes in Florida for an aggregate purchase price of $5.7 million. The funeral homes have performed approximately 594 funeral services in the aggregate annually, and the cemetery has performed approximately 164 interments in the aggregate annually.  Currently, inclusive of these acquisitions, the Partnership operates 307 cemeteries and 105 funeral homes in 28 states and Puerto Rico.
  • On November 19, 2015, the Partnership entered into an at-the-market equity distribution agreement (“ATM Equity Program”) with a group of banks whereby it may sell, from time to time, common units representing limited partner interests having an aggregate offering price of up to $100,000,000.  During the year ended December 31, 2015, we issued 277,667 common units under the ATM program for net proceeds of $7.5 million.

(1) A reconciliation of the non-GAAP financial measures of Adjusted EBITDA, Distributable Cash Flow and Distributable Available Cash is provided in the financial tables of this release.  Please see footnote 1 to the Financial Information table of this release.
(2) Amounts as of period end.  Backlog is defined as deferred cemetery revenues and investment income less deferred selling and obtaining costs.  It does not include deferred unrealized gains and losses on merchandise trust assets.
(3) Ratio of selected net assets to quarterly cash distributions paid during the most recent quarterly period as of the date noted.  Please see the Distribution Asset Coverage table of this release.

Operating Highlights

Cemetery Operations

  • Cemetery contracts written for the 4th quarter 2015 of 27,180 were relatively consistent with the prior year 4th quarter. For calendar year 2015, 113,696 cemetery contracts were written, a 10% increase from the prior year. 
  • Cemetery margin(1) was $12.9 million for the 4th quarter 2015, compared with $18.2 million for the prior year 4th quarter and $15.0 million for the 3rd quarter 2015.  Cemetery margin percentage was approximately 20% for the 4th quarter 2015, compared to 27% for the prior year 4th quarter and 22% for the 3rd quarter 2015.  The decrease in margin and margin percentage was due principally to a decrease in pre-need sales resulting from the restructuring of its sales force.  The Partnership high-graded its sales force and restructured its sales compensation program at the beginning of the 4th quarter to maximize productivity and efficiency of its sales infrastructure in future periods.   This transition process impacted pre-need sales during the early part of the 4th quarter, but normalized by period end.  For calendar year 2015, cemetery margin was $54.6 million, an increase of 5% from the prior year.

Funeral Home Operations

  • Funeral home calls for the 4th quarter 2015 were 4,034 compared with 3,780 for the prior year 4th quarter, an increase of 7%.  Calendar year 2015 funeral home calls of 15,826 represented an increase of 12% compared with the prior year. 
  • Funeral Home margin(1) was $4.6 million for the 4th quarter 2015, compared with $4.1 million for the prior year 4th quarter, an increase of 12%.  Funeral Home margin percentage was approximately 27% for the 4th quarter 2015, consistent with the prior year 4th quarter.  Calendar year 2015 funeral home margin was $17.9 million, a 19% increase from the prior year.

Trust Investment and Interest Income

  • Combined trust investment and interest income(1) was $16.7 million for the 4th quarter 2015 compared with $10.5 million for the prior year 4th quarter, an increase of $6.2 million or almost 60%.  The increase was largely the result of the timing of realized trust gains.  For calendar year 2015, combined trust investment and interest income was $59.6 million, an increase of 7% from the prior year.
  • Trust fund investment returns, including realized gains and losses and dividends (excluding realized gains on perpetual care trusts), net of fees, were 2.1% (8.5% annualized) for the 4th quarter 2015, compared with 1.1% (4.5% annualized) for the prior year 4th quarter and 1.1% (4.2% annualized) for the 3rd quarter 2015. The increase in the rate of return in the current period compared to the comparable prior year period and 3rd quarter 2015 was a result of the timing of realized merchandise trust gains.

             
Corporate Expenses, Liquidity and Capital Structure

  • Corporate overhead expenses for the 4th quarter 2015 were $7.7 million, a decrease of $2.1 million or 22% from $9.8 million for the prior year 4th quarter, and a decrease of $0.2 million or 3% from the 3rd quarter 2015.  The decrease from the prior year 4th quarter was due to lower legal professional fees and other miscellaneous costs.
  • Cash interest expense was $4.9 million for the 4th quarter 2015 compared with $4.8 million for the prior year 4th quarter and $4.9 million for the 3rd quarter 2015.   
  • As of December 31, 2015, the Partnership had $318.8 million of total debt, including $149.5 million outstanding under its revolving credit facility.  The Partnership had approximately $30.5 million available on its revolving credit facility and $15.2 million of cash and cash equivalents as of December 31, 2015.

(1) See the Supplemental Adjusted EBITDA, Distributable Cash Flow and Distributable Available Cash Summary in the Financial and Operating Highlights table and related footnotes in this release for information regarding the calculation of Cemetery margin, which is defined as non-deferred cemetery revenues less cost of goods sold, cemetery, selling and general and administrative expenses, and Funeral Home margin, which is defined as non-deferred Funeral Home revenues less associated expenses, and Trust Investment and Interest Income, which is defined as non-deferred Investment income from trusts and interest income.

Investor Conference Call and Webcast
The Partnership will conduct a conference call to discuss 2015 fourth quarter and full year financial results today, Monday, February 29, 2016 at 11:00 a.m. ET.  The conference call can be accessed by calling (800) 256-8282.  An audio replay of the conference call will be available by calling (800) 633-8284 through 12:00 p.m. ET on March 14, 2016.  The reservation number for the audio replay is 21804014.  A live webcast of the conference call will also be available to investors who may access the call through the investors section of www.stonemor.com. An audio replay of the conference call will also be archived on the Partnership’s website at www.stonemor.com.

About StoneMor Partners L.P.

StoneMor Partners L.P., headquartered in Levittown, Pennsylvania, is an owner and operator of cemeteries and funeral homes in the United States, with 307 cemeteries and 105 funeral homes in 28 states and Puerto Rico. 

StoneMor is the only publicly traded death care company structured as a partnership.  StoneMor’s cemetery products and services, which are sold on both a pre-need (before death) and at-need (at death) basis, include:  burial lots, lawn and mausoleum crypts, burial vaults, caskets, memorials, and all services which provide for the installation of this merchandise. For additional information about StoneMor Partners L.P., please visit StoneMor’s website, and the investors section, at http://www.stonemor.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements that involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements.  The Partnership cautions readers that any forward-looking information is not a guarantee of future performance.  Such forward-looking statements include, but are not limited to, statements about future financial and operating results, the Partnership’s plans, objectives, expectations and intentions and other statements that are not historical facts. Risks, assumptions and uncertainties that could cause actual results to materially differ from the  forward-looking statements include, but are not limited to, those associated with the cash flow from our pre-need and at-need sales, our trusts, and financings, which may impact our ability to meet our financial projections, our ability to service our debt and pay distributions, and our ability to increase our distributions; future revenue and revenue growth; the integration or anticipated benefits of our recent acquisitions or any future acquisitions; our ability to complete and fund additional acquisitions; the effect of economic downturns; the impact of our leverage on our operating plans; the decline in the fair value of certain equity and debt securities held in our trusts; our ability to attract, train and retain an adequate number of sales people; the volume and timing of pre-need sales of cemetery services and products; increased use of cremation; changes in the death rate; changes in the political or regulatory environments, including potential changes in tax accounting and trusting policies; litigation or legal proceedings that could expose us to significant liabilities and damage our reputation; the effects of cyber security attacks due to our significant reliance on information technology; the financial condition of third-party insurance companies that fund our pre-need funeral contracts; and other risks, assumptions and uncertainties detailed from time to time in the Partnership’s reports filed with the U.S. Securities and Exchange Commission, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K. Forward-looking statements speak only as of the date hereof, and the Partnership assumes no obligation to update such statements, except as may be required by applicable law.



STONEMOR PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands)
     
  December 31, December 31,
ASSETS  2015   2014 
Current assets:    
Cash and cash equivalents $    15,153  $    10,401 
Accounts receivable, net of allowance    68,415     62,503 
Prepaid expenses    5,367     4,708 
Other current assets    18,863     24,266 
Total current assets      107,798       101,878 
     
Long-term accounts receivable, net of allowance     95,167     89,536 
Cemetery Property    342,639     339,848 
Property and equipment, net of accumulated depreciation    104,330     100,391 
Merchandise trusts, restricted, at fair value    464,676     484,820 
Perpetual care trusts, restricted, at fair value    307,804     345,105 
Deferred selling and obtaining costs    111,542     97,795 
Deferred tax assets    40     40 
Goodwill and intangible assets    137,060     127,826 
Other assets    15,069       3,136 
Total assets $     1,686,125  $    1,690,375 
     
LIABILITIES AND PARTNERS’ CAPITAL    
Current liabilities:    
Accounts payable and accrued liabilities $    31,875  $    35,382 
Accrued interest    1,503     1,219 
Long-term debt, current portion    2,440     2,251 
Total current liabilities    35,818     38,852 
     
Long-term debt, net of deferred financing costs    316,399     276,289 
Deferred cemetery revenues, net    637,536     643,408 
Deferred tax liabilities    17,833     17,708 
Merchandise liability    173,097     150,192 
Perpetual care trust corpus    307,804     345,105 
Other long-term liabilities    13,960     10,059 
Total liabilities    1,502,447     1,481,613 
     
Partners’ capital:    
General partner interest      (10,038)    (5,113)
Common limited partners’ interests      193,716     213,875 
Total partners’ capital      183,678     208,762 
Total liabilities and partners’ capital $  1,686,125  $  1,690,375 
     


                   

STONEMOR PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per unit data)
    
 Three Months Ended Years Ended
 December 31, December 31,
  2015   2014   2015   2014 
Revenues:       
Cemetery:       
Merchandise$  34,174  $  33,903  $  131,862  $  132,355 
Services   13,547     14,067     56,243     51,827 
Investment and other   16,703     12,799     59,765     55,217 
Funeral home:       
Merchandise   6,809     6,290     26,722     21,060 
Services   7,965     6,932     31,048     27,626 
Total revenues   79,198     73,991     305,640     288,085 
        
Costs and expenses:       
Cost of goods sold   13,306     8,436     38,924     33,652 
Cemetery expense   17,507     17,126     71,296     64,672 
Selling expense   14,558     12,733     58,884     55,277 
General and administrative expense   9,031     8,777     36,371     35,110 
Corporate overhead   9,982     10,289     38,609     34,723 
Depreciation and amortization   3,596     3,088     12,803     11,081 
Funeral home expense:       
Merchandise   1,484     1,968     6,928     6,659 
Services   6,231     5,447     22,959     20,470 
Other   4,191     3,214     17,526     12,581 
Total costs and expenses   79,886     71,078     304,300     274,225 
        
Operating income (loss)   (688)    2,913      1,340     13,860 
        
Gain on acquisitions and divestitures   -      -     1,540     656 
Gain on settlement agreement, net   -     -     -     888 
Legal settlement    (135)    -     (3,135)    - 
Loss on early extinguishment of debt   -     (214)    -     (214)
Loss on impairment of long-lived assets   (296)    (440)    (296)    (440)
Interest expense     (5,683)      (5,620)      (22,585)    (21,610)
        
Net loss before income taxes     (6,802)      (3,361)    (23,136)    (6,860)
        
Income tax benefit (expense)     (309)      (4,435)    (1,108)    (3,913)
Net loss$  (7,111) $      (7,796) $  (24,244) $    (10,773)
        
Allocation of net loss attributable to limited partners and the general partner:    
General partner’s interest$(88) $(106) $  (315) $   (155)
Limited partners’ interest (7,023)  (7,690)    (23,929)    (10,618)
Net loss$(7,111) $(7,796) $  (24,244) $ (10,773)
        
Net loss attributable to common limited partners per unit    
(basic and diluted)$(0.22) $(0.26) $  (0.79) $    (0.40)
        
Weighted average limited partner units outstanding:    
Basic and diluted 31,840   29,165     30,472     26,582 



STONEMOR PARTNERS L.P.
FINANCIAL AND OPERATING HIGHLIGHTS
(unaudited)
    
 Three Months Ended Years Ended
 December 31, December 31
  2015   2014   2015   2014 
        
Financial Data:       
Net loss per limited partners per unit – basic and diluted$   (0.22) $   (0.26) $  (0.79) $  (0.40)
        
Adjusted EBITDA (in thousands)(1)$   26,477  $   22,943  $   98,231  $  91,401 
        
Distributable Available Cash (in thousands)(1)$   30,453  $   42,339  $  82,981  $  80,138 
per limited partner unit(1)$   0.96  $   1.45  $  2.72  $  3.01 
        
Cash distributions paid per unit(2)$   0.66  $   0.63  $  2.61  $  2.46 
        
Operating Data:       
Interments Performed    13,323      13,986      54,837     50,566 
        
Interment rights sold (3):       
Lots    9,282      7,414      33,262     31,774 
Mausoleum crypts (including pre-construction)    426     489      2,205   2,186 
Niches    334      322      1,619   1,466 
Net interment rights sold(3)    10,042      8,225      37,086       35,426 
        
Number of cemetery contracts written    27,180      27,504     113,696     103,859 
Aggregate contract amount (in thousands, excluding interest)$  61,424  $  66,072  $  262,383  $  238,331 
Average amount per contract (excluding interest)$  2,260  $  2,402  $  2,308  $  2,295 
        
Pre-need cemetery contracts written    12,381     12,374      52,228     48,585 
Aggregate pre-need contract amount (in thousands, excluding interest)$36,409  $41,052  $158,806  $145,607 
Average amount per pre-need contract (excluding interest)$  2,941  $  3,318  $  3,041  $  2,997 
        
At-need cemetery contracts written    14,799      15,130      61,468     55,274 
Aggregate at-need contract amount (in thousands excluding interest)$25,015  $25,020  $103,577  $ 92,724 
Average amount per at-need contract (excluding interest)$  1,690  $  1,654  $  1,685  $  1,678 
        
Funeral home calls    4,034      3,780      15,826     14,072 

_____________________

  (1)A reconciliation of GAAP net loss to Adjusted EBITDA, Distributable Cash Flow and Distributable Available Cash is provided in the financial tables of this release.  Please see footnote 1 to the Financial Information table of this release.
  (2)Represents the cash distributions declared for the respective period and paid by the Partnership within 45 days after the end of each quarter, utilizing the distributable cash flow generated during the respective period.
  (3)Net of cancellations.  Sales of double-depth burial lots are counted as two sales.  



STONEMOR PARTNERS L.P.
FINANCIAL AND OPERATING HIGHLIGHTS
(unaudited; in thousands, except per unit amounts)
    
 Three Months Ended Years Ended
 December 31, December 31,
Reconciliation of net loss to non-GAAP measures(1): 2015   2014   2015   2014 
Net loss$(7,111) $(7,796) $(24,244) $(10,773)
Acquisition and related costs 1,575   229   3,223   2,269 
Depreciation and amortization 3,596   3,088   12,803   11,081 
Cost of cemetery lots sold 5,597   3,110   13,103   10,291 
Non-cash interest expense 742   812   2,949   2,939 
Non-cash stock compensation expense 692   266   1,516   1,068 
Maintenance capital expenditures(2) (2,926)  (1,968)  (7,937)  (8,398)
Non-cash income tax expense 360   8,432   1,265   6,656 
Gain on acquisition/dispositions -   -   (1,540)  (656)
Loss on early extinguishment of debt -   214   -   214 
Net operating profit deferral from non-delivered merchandise and services(3) 16,001   13,337   66,542   52,832 
Distributable Cash Flow (1)$18,526  $20,164  $67,680  $67,963 
Supplemental Adjusted EBITDA, Distributable Cash Flow and Distributable Available Cash Summary(3):
Revenues       
Pre-need cemetery revenues$36,409  $41,052  $158,806  $145,607 
At-need cemetery revenues 25,015   25,020   103,577   92,724 
Investment income from trusts 14,620   8,687   50,937   47,912 
Interest income 2,055   1,780   8,672   7,628 
Funeral home revenues 17,148   14,974   67,374   55,751 
Other cemetery revenues 4,426   1,206   8,624   7,369 
Total revenues 99,673   92,719   397,990   356,991 
Costs and expenses         
Cost of goods sold(4) 9,353   7,425   35,445   29,551 
Cemetery expense 17,506   17,126   71,295   64,672 
Selling expense 17,056   15,771   73,332   64,175 
General and administrative expense 9,031   8,777   36,371   35,110 
Cash corporate overhead(5) 7,679   9,794   33,834   31,386 
Funeral home expense 12,571   10,883   49,482   40,696 
Total costs and expenses 73,196   69,776   299,759   265,590 
Adjusted EBITDA(1)  26,477   22,943   98,231   91,401 
Cash interest expense(6) (4,941)  (4,808)  (19,636)  (18,671)
Cash income taxes 51   3,997   157   2,743 
Cash gain (loss) on settlement and acquisition/disposition(7) (135)  -   (3,135)  888 
Maintenance capital expenditures(2) (2,926)  (1,968)  (7,937)  (8,398)
Distributable Cash Flow(1) 18,526   20,164   67,680   67,963 
        
Discretionary adjustments considered by the Board of Directors of the General Partner
in the determination of quarterly cash distributions:
Non-recurring legal settlement(7) 135   -   3,135   - 
Non-recurring impact from early repayment marketing program(8) -   -   1,765   - 
Distributable Cash Flow with discretionary adjustments by the Board of Directors of the General Partner 18,661   20,164   72,580   67,963 
Cash on hand – beginning of period 11,792   22,175   10,401   12,175 
Distributable Available Cash(1)(9)$30,453  $42,339  $82,981  $80,138 
        
Cash distributions paid(10)$20,823  $17,539  $77,512  $62,836 
per limited partner unit$0.66  $0.63  $2.61  $2.46 
        
Excess of Distributable Available Cash after cash distributions paid(11)$9,630  $24,800  $5,469  $17,302 
        


(1) 
Although not prescribed under generally accepted accounting principles (“GAAP”), the Partnership’s management believes the presentation of Adjusted EBITDA, Distributable Cash Flow (“DCF”) and Distributable Available Cash is relevant and useful because it helps the Partnership’s investors understand its operating performance, allows for easier comparison of its results with other master limited partnerships (“MLP”), and is a critical component in the determination of quarterly cash distributions. As a MLP, the Partnership is required to distribute 100% of available cash, subject to cash reserves established by its general partner and as defined in its limited partnership agreement (“Available Cash”), to investors on a quarterly basis, in compliance with applicable Delaware law. The Partnership refers to Available Cash prior to the establishment of cash reserves as Distributable Available Cash.  Adjusted EBITDA, DCF and Distributable Available Cash should not be considered in isolation of, or as a substitute for, net income as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. While the Partnership’s management believes that its methodology of calculating Adjusted EBITDA, DCF and Distributable Available Cash is generally consistent with the common practice of other MLPs, such metrics may not be consistent and, as such, may not be comparable to measures reported by other MLPs, who may use other adjustments related to their specific businesses. Adjusted EBITDA, DCF and Distributable Available Cash are supplemental financial measures used by the Partnership’s management and by external users of the Partnership’s financial statements such as investors, lenders under the Partnership’s credit facility, research analysts, rating agencies and others to assess its:

  • Operating performance as compared to other publicly traded partnerships, without regard to financing methods, historical cost basis or capital structure;
  • Ability to generate sufficient cash flows to support its distributions to unitholders;
  • Ability to incur and service debt and fund acquisitions and growth opportunities; and 
  • Ability to comply with financial covenants in its Credit Facility, which is calculated based upon Adjusted EBITDA with certain adjustments.

DCF is determined by calculating EBITDA, which is defined as net income (loss) plus interest expense, income tax, and depreciation and amortization, then adjusting it for non-cash, non-recurring and other items to achieve Adjusted EBITDA, and then deducting cash interest expense, net cash income tax, maintenance capital expenditures and other items. Distributable Available Cash is then determined by adjusting DCF for discretionary adjustments considered by the Board of Directors of the General Partner in determination of the quarterly cash distribution, and then adding cash on hand at the beginning of the period.  The Partnership defines Adjusted EBITDA as net income (loss) plus the following adjustments:

  • Interest expense;
  • Income tax expense; 
  • Depreciation and amortization.
  • Asset impairments;
  • Acquisition and related costs;
  • Non-cash stock compensation;
  • (Gains) losses on asset disposal; and
  • Other items.

(2) Maintenance capital expenditures include those capitalized costs which the Partnership incurs to maintain its properties and equipment as well as corporate expenditures.

(3) Includes adjustments to add back certain revenues and related expenses deferred in accordance with GAAP. The Partnership’s management has provided this data so as to present its results in a manner consistent with its internal managerial accounting practices, which recognizes certain revenue and related expenses when contracts are signed by the customer and accepted by the Partnership.  Under GAAP, the Partnership recognizes pre-need cemetery sales for sales of burial lots and mausoleum crypts when the product is constructed and at least 10% of the sales price is collected, while other products are recognized when the criteria for delivery under GAAP are met, which include purchase of the product, delivery and installation, and transfer of title, among other items. The Partnership’s management believes that this data is relevant and useful to its investors so as to better understand its operating performance and allow for easier comparison to other MLPs.

(4) Excludes non-cash amortization of cemetery property.

(5) Excludes non-cash stock compensation expense.

(6) Excludes non-cash amortization of deferred finance costs and other non-cash items.

(7) Consists of the estimated non-recurring settlement cost and associated legal fees of a litigation matter.  The Board of Directors and management of the General Partner deemed this item as non-recurring and excluded the impact in its determination of DCF and Distributable Available Cash for the period after consideration of the item’s characteristics, including, but not limited to, the type of litigation and the amount of the settlement.

(8)  Consists of the non-recurring reduction of pre-need cemetery revenues resulting from the Partnership’s early payment marketing program, which offers certain discounts for installment pre-need sales if paid in full within specific dates.  The Board of Directors and management of the General Partner considered this item as non-recurring and excluded the impact in its determination of DCF and Distributable Available Cash for the period as they do not expect to offer such programs in future periods.

(9) Including the discretionary adjustments by the Board of Directors of the General Partner in the determination of quarterly cash distributions, Adjusted EBITDA would have been $26.6 million and $103.1 million for the three months and year ended December 31, 2015.

(10) Represents cash distributions declared for the respective period and paid by the Partnership within 45 days after the end of each quarter, utilizing the DCF and Distributable Available Cash generated during the respective period.

(11) The Partnership seeks to at least maintain its current cash distribution in future quarterly periods, and expects to only increase such cash distributions when future DCF and Distributable Available Cash amounts allow for it and are expected to be sustained. The Partnership’s determination of quarterly cash distributions and its resulting determination of the amount of excess (shortfall) those cash distributions generate in comparison to DCF and Distributable Available Cash are based upon its assessment of numerous factors, including but not limited to the variability of cash flow from the Partnership’s pre-need and at-need sales and its trust investments performance, interest rate movements, and financial leverage.  The Partnership also considers its historical trailing four quarters of excess or shortfalls and future forecasted excess or shortfalls that its cash distributions generate in comparison to DCF and Distributable Available Cash due to the variability of its DCF and Distributable Available Cash generated each quarter, which could have more or less excess (shortfalls) generated quarter to quarter.
    

STONEMOR PARTNERS L.P.
DISTRIBUTION ASSET COVERAGE
(unaudited; in thousands, except ratios)
 
  December 31, December 31,
   2015   2014 
Selected assets:    
Cash and cash equivalents $15,153  $10,401 
Accounts receivable, net of allowance  68,415   62,503 
Long-term accounts receivable, net of allowance  95,167   89,536 
Merchandise trusts, restricted, at fair value  464,676   484,820 
Total selected assets  643,411   647,260 
     
     
Selected liabilities:    
Accounts payable and accrued liabilities  31,875   35,382 
Accrued interest  1,503   1,219 
Long-term debt, current portion  2,440   2,251 
Long-term debt  316,399   276,289 
Merchandise liability  173,097   150,192 
Total selected liabilities  525,314   465,333 
Total selected net assets $117,897  $181,927 
Distribution asset coverage(1) 5.23x 9.58x
_______________________________________    

(1) Ratio of selected net assets to quarterly cash distributions paid during the most recent quarterly period as of the date noted.

CONTACT: John McNamara
Director - Investor Relations
StoneMor Partners L.P.
(215) 826-2945

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