Carriage Services, Inc. (NYSE: CSV) today provided preliminary
unaudited results for the full year ended December 31, 2018
compared to December 31, 2017:
As these 2018 numbers are preliminary and
unaudited, we are presenting an estimate of the December 31, 2018
results. These 2018 financial results presented are subject to
change upon completion of the Company’s Form 10-K and the audit of
the Company’s financial statements for the year ended December 31,
2018, including the effects of any subsequent events.
- Total Revenue is estimated to be $268.0 million, a 3.8%
increase from $258.1 million;
- Total Field EBITDA is estimated to be $104.5 million, remaining
flat from $104.5 million;
- Total Field EBITDA Margin is estimated to be 39.0%, a 1.5%
decrease from 40.5%;
- Adjusted Consolidated EBITDA is estimated to be $70.5 million,
a 2.6% increase from $68.7 million;
- Adjusted Consolidated EBITDA Margin is estimated to be 26.3%, a
0.3% decrease from 26.6%; and
- Adjusted Diluted Earnings Per Share is estimated to be $1.19, a
14.4% decrease from $1.39.
Other Financial Highlights During the
Fourth Quarter of 2018:
- $4.5 million non-cash charge due to the cancellation of 210,470
performance awards granted in 2016 - 2018;
- $1.0 million non-cash charge related to goodwill and
other impairments on two businesses;
- $1.4 million termination expenses incurred due to
our restoration program;
- $1.0 million accrual related to legal reserves, including $0.6
million for a potential settlement;
- $0.4 million charges for natural disaster costs related to
Hurricane Michael in Panama City, Florida;
- Repurchased in privately negotiated transactions another $22.4
million in aggregate principal amount of our 2.75% convertible
notes due May 2021 funded by our revolving credit facility
($6.3 million in aggregate principal amount remain outstanding);
and
- Over 1.1 million shares, approximately $17.7 million of total
cost, repurchased in the open market pursuant to our share
repurchase program.
Rolling Four Quarter Outlook - Period Ending December
31, 2019
|
|
Range(in millions,
except per share amounts) |
|
Revenues |
|
$270 -
$274 |
|
Consolidated
EBITDA |
|
$77 -
$79 |
|
Adjusted Net
Income |
|
$24 -
$26 |
|
Adjusted Diluted
Earnings Per Share |
|
$1.34
- $1.44 |
|
Free Cash Flow |
|
$37 -
$40 |
|
Mel Payne, Chief Executive Officer, stated,
“Over the course of the past four months Carriage has embarked on a
rapid and transformative High Performance and Value Creation Trends
Restoration Program. Our goal was to first identify the root causes
of the declining performance trends over the last two years in too
many of our portfolio businesses and then to quickly make the
necessary changes to restore positive performance trends beginning
in the first quarter of 2019 and continuing thereafter for a five
year timeframe ending in 2023.
It will be very difficult for me and the
leadership team to explain in conventional financial language and
terms all that has happened underneath the “public covers” of
Carriage over the last four months. So to stimulate the learning
process and a better understanding by investors, many of which
might be new to the Carriage story, I have included below a few
relevant sections of my 2019 Theme Letter which went out yesterday
to all of our Field and Houston Support Center leadership, as
follows:” concluded Mr. Payne.
Congratulations - we survived 2018 and have
begun the second five year timeframe of Carriage’s Good To
Great Journey that never ends with the annual theme for
2019:
Carriage Services 2019: Back To The
Future - A NEW BEGINNING - PART II
For the many of you who were not a leader of or
in an individual business, field operations or support center group
on January 1, 2012 when we first launched Carriage’s
Good To Great Journey with the annual theme,
A NEW BEGINNING, the good news is that you
are now in a leadership position that can determine whether
Carriage quickly returns to a high and sustainable financial
performance. In other words, you are once again the real owners of
Carriage through your performance and therefore control the future
destiny of our company.
As soon as we show that our future performance
will be back on an upward trend and that we have quickly reversed
the negative trends of 2017 and especially 2018, then our share
price will head north much like during the five year timeframe of
2012 - 2016. A little history will help provide a “big picture”
perspective. We launched the first five year timeframe of
Carriage’s Good To Great Journey after a previous
significant management team restructuring and update of our Funeral
Standards at the end of 2011, after which we achieved the following
financial and Carriage (NYSE Symbol: CSV) share price results:
- Total Revenue increased at a compounded rate of 6.4% (Same
Store and Acquisition) over the five years 2012 - 2016;
- Adjusted Consolidated EBITDA increased at a compounded rate of
10.8% over the five year timeframe;
- Adjusted Consolidated EBITDA Margin increased 5.5 percentage
points over the five year timeframe to 29.7% in 2016 from 24.2% in
2011, a company and industry milestone never before reached by a
consolidation company; and
- Carriage’s share price soared from $5.60 per share at December
31, 2011 to $28.64 on December 31, 2016, a compounded annual
increase over five years of 38.6%.
After all the positive and exciting feedback
that we have recently received from so many of you, I am 100%
certain that A NEW BEGINNING - PART II will
produce the same spectacular financial results and compounded share
price increases over five years, except this time we begin with a
base year share price of $15.50 on December 31, 2018. So right now
would be a great time for any of you not enrolled in our stock
purchase program to do so, as I would much prefer to be celebrating
with you five years from now rather than hearing, “Coulda, Woulda,
Shoulda!”
First Who, Then What
We will continue our focus on First Who,
Then What which means getting the Wrong People off the
Carriage Bus and the Right People in the Right Seats on the
Carriage Bus so that we never again experience the demoralizing
impact and portfolio performance declines of the last two years. At
this point it’s time for our leadership at all levels to execute
the recently rebooted and updated Right Funeral and Cemetery High
Performance Standards, enabling us to once again drive the Carriage
Good To Great Journey Bus toward
GREATNESS!
Transformation: Mid-September through
December 2018
I have been involved in many up and down cycles
at Carriage since its founding on June 1, 1991. Most of the down
cycles lasted years and seemed like they would never end. So what
we have accomplished together over the last three months of 2018
has been nothing short of AMAZING, as summarized below:
- October 1st Memorandum: Analytical Analysis and Profile of
Portfolio Performance Declines since 2011.
- October 31st Memorandum: Wrong People Off The Carriage Bus and
diagnosis of outdated Funeral and Cemetery Performance
Standards.
- December 3rd Memorandum: Standards Council Approval of Rebooted
/ Updated Funeral Performance Standards.
- December 21st Standards Council Telephonic Meeting: Approved
Rebooted / Updated Cemetery Performance Standards.
- December 3rd - January 8th: Collaboration by Carriage High
Performance Team (Kyle Incardona, Kristi AhYou, Nathan Stiffler,
Kyle Miller and many others) to create and roll out a Partnership
Portal for the “Game Changing” new Funeral Service and Guest
Experience Performance Standard.
I would like to thank all of the Managing
Partners, Standards Council Members, Directors of Support, Regional
Partners and Operations and Planning Group Analysts who let me know
with brutal honesty how you had been demoralized during 2017 and
2018 and your thoughts about the rapid fire changes in leadership
and Funeral and Cemetery Performance Standards over the last four
months outlined above. Your feedback to me both directly through
emails and indirectly through others has been the most energizing
and inspiring experience of my long career.
So much so that I’m feeling twenty years younger
and passionately excited about how our 4E Leadership Managing
Partners and their Being The Best Employee Teams
can increase our portfolio performance immediately ahead and
thereafter over the second five year Good To Great
Journey timeframe ending December 2023.
Standards Council Meeting / Service and
Guest Experience Standard / Partnership Portal
Our Standards Council eliminated three Funeral
Standards with a total weighting of 35% (ARPC weighted 15% and two
People Standards weighted 10% each) and approved new Funeral and
Cemetery Compounded Revenue Growth Standards plus the “Game
Changer” Funeral Service and Guest Experience Standard weighted
15%. There has been a natural response from our Funeral Managing
Partners that the new Service and Guest Experience Standard is to a
large degree subjective and could be “abused” much like those that
were eliminated at our Standards Council Meeting on November 30,
2018.
Anytime an innovation minded company like
Carriage moves radically, boldly and swiftly to eliminate what
doesn’t work and to get out in front of the changing preferences of
our client families (the ONLY THING we can be certain about is
CHANGE!), then undoubtedly some people may find rapid change
unsettling. The new Service and Guest Experience Standard as well
as the Partnership Portal is a “work in progress” that will be
continuously evolving and growing more relevant and effective for
Managing Partners and your teams of employees as you provide both
positive and negative feedback over time.
Carriage Good To Great Journey Becoming
A Built To Last Company
I have long been a “student learner” dedicated
to the study of successful companies (Good To
Great and Built To Last books by Jim
Collins that profiled a handful of such companies) that were able
to differentiate their long term financial and share price
performance because of their enterprise mission, purpose,
principles and high performance culture over long periods of time
(20 to 50 years). I see no reason Carriage cannot rejoin the
Good To Great Journey ranks and then become a
Built To Last Company over the next ten years as
each of you leads your performance higher and the “Flywheel
Effect” literally sweeps across our portfolio and infects
each of you with a “never-say-die, can do” attitude!
Setbacks Lead to Comebacks
I recently read a wonderful article in the
Investors’ Business Daily by Steve Watkins on Leaders and
Success titled “Problem Solving: Overcome Setbacks
With A Comeback Attitude,” and after our recent setbacks
would like to share a few of the main points with you as we embark
on A NEW BEGINNING - PART II:
- Setbacks are a fact of life. It’s how you respond to and
overcome setbacks that sets you apart from the crowd;
- People need an overarching reason to keep pushing when they hit
a roadblock. That reason can’t be monetary because it won’t last.
You have to attach a purpose that is emotional. Leaders must be
connected to the purpose.
- Look for the lesson and learn from the setback. Turn your
setbacks into comebacks.
- Realize that everyone, even those at the top, encounter
setbacks. Life is 10% what happens to you and 90% how you
respond.
- The power of a positive attitude can have an enormous impact on
turning a setback into a comeback. Comebacks happen when you
restore confidence and build momentum.
- Release your regrets while taking responsibility for your role
in the setback. Regret only imprisons a person in self-pity.
- If you have people who aren’t on board with the company’s
purpose and won’t battle adversity, then get rid of them.
My unshakable belief is that the recent setbacks
and our remarkable comeback over the last four months has
positioned our company and each of you for unparalleled success
over the next five years. Now let’s show all the nay-sayers and
doubters in our industry and world what a “Carriage High
Performance Culture Snapback Comeback” really looks
like!
Our annual theme is therefore timely and
profoundly appropriate:
Carriage Services 2019: Back To The Future
- A NEW BEGINNING - Part II
As always, I leave you with this quote from the
book Good To Great by Jim
Collins:
“Greatness is not a matter of circumstance.
Greatness, it turns out, is a matter of conscious
choice!”
Like each of you I choose
Greatness because that’s just WHO WE
ARE!
INFORMATION REGARDING PRELIMINARY
UNAUDITED RESULTS
The financial results presented in this release
are preliminary and unaudited, and these results are subject to
change upon the completion of the Company’s Form 10-K for the
period ended December 31, 2018, including the effects of any
subsequent events and the audit by the Company’s independent
registered public accounting firm of the 2018 consolidated
financial statements. The Company has provided estimates for
certain financial results, primarily because the Company’s
financial closing procedures as of December 31, 2018 are not fully
complete. As a result, the Company’s actual results may vary from
the estimated preliminary results included herein. In addition, the
preliminary unaudited financial data should not be viewed as a
substitute for the full financial information prepared in
accordance with accounting principles generally accepted in the
United States (“GAAP”), which will be filed with the Securities and
Exchange Commission at a later date. Please see the “CAUTIONARY
STATEMENT ON FORWARD-LOOKING STATEMENTS” section of this press
release for further information.
CONFERENCE CALL AND INVESTOR RELATIONS
CONTACT
Carriage Services has scheduled a conference
call for tomorrow, January 17, 2019 at 9:30 a.m. central time. To
participate in the call, please dial 866-516-3867 (ID-3988388) and
ask for the Carriage Services conference call. A replay of the
conference call will be available through February 25, 2019 and may
be accessed by dialing 855-859-2056 (ID-3988388). 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.
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, 2019 unless we have a
signed Letter of Intent with a 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 precise
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.
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 our cemetery
Standards Operating Model. Revenues, Consolidated EBITDA, Adjusted
Net Income, Adjusted Diluted Earnings Per Share and Free Cash Flow
for the four quarter period ending December 31, 2019 are expected
to improve relative to the trailing four quarter period ended
December 31, 2018 due to improved operating performance in our
existing Funeral Home and Cemetery portfolio, full year results
from funeral homes acquired in 2018 and a decrease in Overhead
expenses, offset by the loss of a cemetery management agreement
that occurred at the end of the third quarter 2018. Net Income and
Adjusted Diluted Earnings Per Share have been adjusted for
accretion on our convertible notes.
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 notes and outstanding and
exercisable stock options.
NON-GAAP FINANCIAL MEASURES
This press release uses Non-GAAP financial
measures to present the financial performance of the Company. Our
non-GAAP reporting provides a transparent framework of our
operating and financial performance that reflects the earning power
of the Company as an operating and consolidation platform.
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 to compare our results
to previous periods, to provide insight into the underlying
long-term performance trends in our business and to provide the
opportunity to differentiate ourselves as the best consolidation
platform in the industry against the performance of other funeral
and cemetery companies.
Reconciliations of the Non-GAAP financial
measures to GAAP measures are provided in this press release.
The Non-GAAP financial measures we typically
report include “Special Items”, “Adjusted Net Income”,
“Consolidated EBITDA”, “Adjusted Consolidated EBITDA”, “Adjusted
Consolidated EBITDA Margin”, “Free Cash Flow”, “Funeral, Cemetery
and Financial EBITDA”, “Total Field EBITDA”, “Total Field EBITDA
Margin”, “Divested Revenue”, “Divested EBITDA”, “Divested EBITDA
Margin”, “Adjusted Basic Earnings Per Share” and “Adjusted Diluted
Earnings Per Share”; however, not all of these measures are present
herein. The Non-GAAP financial measurements presented herein 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 of Non-GAAP financial measures used by the Company are
as follows:
- Special Items are defined as charges or credits included in our
GAAP financial statements that can vary from period to period and
are not reflective of costs incurred in the ordinary course of our
operations. Special Items are typically taxed at the federal
statutory rate, except for the accretion of the discount on our
Convertible Notes, as this is a non-tax deductible item.
- Adjusted Net Income is defined as net income plus adjustments
for Special Items and other expenses or gains that we believe do
not directly reflect our core operations and may not be indicative
of our normal business operations.
- Consolidated EBITDA is defined as net income 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 other expenses or gains that
we believe do not directly reflect our core operations and may not
be indicative of our normal business operations.
- Adjusted Consolidated EBITDA Margin is defined as Adjusted
Consolidated EBITDA as a percentage of revenue.
- Free Cash Flow is defined as net cash provided by operations,
less cash for maintenance capital expenditures.
- Funeral Field EBITDA is defined as Funeral Gross Profit,
excluding depreciation and amortization, funeral overhead expenses
and Financial EBITDA related to the Funeral Home segment.
- Cemetery Field EBITDA is defined as Cemetery Gross Profit,
excluding depreciation and amortization, cemetery overhead
expenses and Cemetery Financial EBITDA related to the Cemetery
segment.
- Funeral Financial EBITDA is defined as Funeral Financial
Revenue less Funeral Financial Expenses.
- Cemetery Financial EBITDA is defined as Cemetery Financial
Revenue less Cemetery Financial Expenses.
- Total Field EBITDA is defined as Gross Profit, excluding
depreciation and amortization and funeral and cemetery overhead
expenses.
- Total Field EBITDA Margin is defined as Total Field EBITDA as a
percentage of revenue.
- Divested Revenue is defined as revenues from one funeral home
business sold during 2017 and three cemetery businesses that we
ceased to operate on September 30, 2018, as a result of an expired
management agreement.
- Divested EBITDA is defined as Divested Revenue, less field
level and financial expenses related to the funeral home business
sold and the three cemetery businesses related to the expired
management agreement noted above.
- Divested EBITDA Margin is defined as Divested EBITDA as a
percentage of Divested Revenue.
- 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.
Funeral Field EBITDA and Cemetery Field
EBITDA
Our operations are reported in two business
segments: Funeral Home Operations and Cemetery Operations. Our
Field level results highlight trends in volumes, Revenues, Field
EBITDA (the individual business’ cash earning power / locally
controllable business profit) and Field EBITDA Margin (the
individual business’ controllable profit margin).
Funeral Field EBITDA and Cemetery Field EBITDA
are defined above. Gross Profit is defined as Revenue less “Field
costs and expenses” - a line item encompassing four areas of costs:
i) Funeral field costs, ii) Cemetery field costs, iii) depreciation
and amortization and iv) funeral and cemetery overhead expenses.
Funeral and Cemetery field costs include funeral merchandise costs,
cemetery merchandise costs, operating expenses, labor and other
related expenses incurred at the business level.
Funeral and cemetery overhead expenses presented
in our GAAP statement consist primarily of salaries and benefits of
our Regional leadership, incentive compensation opportunity to our
Field employees and other related costs for field infrastructure.
These costs, while necessary to operate our businesses as currently
operated within our unique, decentralized platform, are not
controllable operating expenses at the Field level as the
composition, structure and function of these costs are determined
by Executive leadership in the Houston Support Center. These costs
are components of our overall overhead platform presented within
Consolidated EBITDA and Adjusted Consolidated EBITDA. We do not
openly or indirectly “push down” any of these expenses to the
individual business’ field level margins.
We believe that our “funeral and cemetery
overhead expenses” are necessary to support our decentralized, high
performance culture operating framework, and as such, are included
in Consolidated EBITDA and Adjusted Consolidated EBITDA, which more
accurately reflects the cash earning power of the Company as an
operating and consolidation platform.
Consolidated EBITDA and Adjusted
Consolidated EBITDA
Consolidated EBITDA and Adjusted Consolidated
EBITDA are defined above. Our Adjusted Consolidated EBITDA include
adjustments for Special Items and other expenses or gains that we
believe do not directly reflect our core operations and may not be
indicative of our normal business operations.
How These Measures Are
Useful
When used in conjunction with GAAP financial measures, our Field
EBITDA, Consolidated EBITDA and Adjusted Consolidated EBITDA are
supplemental measures of operating performance that we believe are
useful measures to facilitate comparisons to our historical
consolidated and business level performance and operating
results.
We believe our presentation of Adjusted
Consolidated EBITDA, a key metric used internally by our
management, provides investors with a supplemental view of our
operating performance that facilitates analysis and comparisons of
our ongoing business operations because they exclude items that may
not be indicative of our ongoing operating performance.
Limitations of the Usefulness of These
Measures
Our Field EBITDA, Consolidated EBITDA and
Adjusted Consolidated EBITDA are not necessarily comparable to
similarly titled measures used by other companies due to different
methods of calculation. Our presentation is not intended to be
considered in isolation or as a substitute for, or superior to, the
financial information prepared and presented in accordance with
GAAP. Funeral Field EBITDA and Cemetery Field EBITDA are not
consolidated measures of profitability.
Field EBITDA excludes certain costs presented in
our GAAP statement that we do not allocate to the individual
business’ field level margins, as noted above. A reconciliation of
Field EBITDA to Gross Profit, the most directly comparable GAAP
measure, is set forth below.
Consolidated EBITDA excludes certain items that
we believe do not directly reflect our core operations and may not
be indicative of our normal business operations. A reconciliation
of Consolidated EBITDA to Net Income, the most directly comparable
GAAP measure, is set forth below.
Therefore, these measures may not provide a
complete understanding of our performance and should be reviewed in
conjunction with our GAAP financial measures.
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 to Consolidated EBITDA and Adjusted
Consolidated EBITDA for the years ended December 31, 2017 and
estimated December 31, 2018 (in thousands): |
|
|
|
For the Years Ended December 31, |
|
2017 |
|
2018E |
Net Income |
$ |
37,193 |
|
|
$ |
11,900 |
|
Net Tax
(Benefit)/Provision |
(4,411 |
) |
|
6,600 |
|
Pre-Tax Income |
32,782 |
|
|
18,500 |
|
Interest Expense |
12,948 |
|
|
21,000 |
|
Accretion of Discount
on Convertible Notes |
4,329 |
|
|
2,100 |
|
Net Loss on Early
Extinguishment of Debt |
— |
|
|
600 |
|
Non-Cash Stock
Compensation |
3,162 |
|
|
6,600 |
|
Depreciation &
Amortization |
15,979 |
|
|
17,400 |
|
Other, Net |
(1,118 |
) |
|
1,500 |
|
Consolidated
EBITDA |
$ |
68,082 |
|
|
$ |
67,700 |
|
Adjusted For: |
|
|
|
Severance
and Retirement Costs |
— |
|
|
1,400 |
|
Litigation Reserve |
— |
|
|
1,000 |
|
Natural
Disaster Costs |
620 |
|
|
400 |
|
Adjusted
Consolidated EBITDA |
$ |
68,702 |
|
|
$ |
70,500 |
|
|
|
|
|
Revenue |
$ |
258,139 |
|
|
$ |
268,000 |
|
|
|
|
|
Adjusted Consolidated
EBITDA Margin |
26.6 |
% |
|
26.3 |
% |
Reconciliation of Funeral and
Cemetery Gross Profit to Field EBITDA for the years ended December
31, 2017 and estimated December 31, 2018 (in
thousands): |
|
|
|
For the Years Ended December 31, |
|
2017 |
|
2018E |
Funeral Gross Profit
(GAAP) |
$ |
61,369 |
|
|
$ |
61,100 |
|
Depreciation &
Amortization |
9,785 |
|
|
10,700 |
|
Overhead Expenses |
10,827 |
|
|
10,400 |
|
Funeral Financial
EBITDA |
(7,548 |
) |
|
(7,800 |
) |
Funeral Divested
EBITDA |
(302 |
) |
|
— |
|
Funeral Field
EBITDA |
$ |
74,131 |
|
|
$ |
74,400 |
|
|
For the Years Ended December 31, |
|
2017 |
|
2018E |
Cemetery Gross Profit
(GAAP) |
$ |
15,430 |
|
|
$ |
15,300 |
|
Depreciation &
Amortization |
4,589 |
|
|
4,800 |
|
Overhead Expenses |
2,512 |
|
|
2,200 |
|
Cemetery Financial
EBITDA |
(7,450 |
) |
|
(7,100 |
) |
Cemetery Divested
EBITDA |
(1,675 |
) |
|
(1,400 |
) |
Cemetery Field
EBITDA |
$ |
13,406 |
|
|
$ |
13,800 |
|
Components of Total Field EBITDA December 31, 2017 and
estimated December 31, 2018 (in thousands): |
|
|
|
For the Years Ended December 31, |
|
2017 |
|
2018E |
Funeral Field
EBITDA |
$ |
74,131 |
|
|
$ |
74,400 |
|
Cemetery Field
EBITDA |
13,406 |
|
|
13,800 |
|
Funeral Financial
EBITDA |
7,548 |
|
|
7,800 |
|
Cemetery Financial
EBITDA |
7,450 |
|
|
7,100 |
|
Funeral Divested
EBITDA |
302 |
|
|
— |
|
Cemetery Divested
EBITDA |
1,675 |
|
|
1,400 |
|
Total Field EBITDA |
$ |
104,512 |
|
|
$ |
104,500 |
|
|
|
|
|
Revenue |
$ |
258,139 |
|
|
$ |
268,000 |
|
|
|
|
|
Total Field EBITDA
Margin |
40.5 |
% |
|
39.0 |
% |
Reconciliation of GAAP Diluted Earnings Per Share to
Adjusted Diluted Earnings Per Share of December 31, 2017 and
estimated December 31, 2018 (in thousands): |
|
|
|
For the Years Ended December 31, |
|
2017 |
|
2018E |
GAAP Diluted Earnings
Per Share |
$ |
2.09 |
|
|
$ |
0.64 |
Special Items |
(0.70 |
) |
|
0.55 |
Adjusted Diluted
Earnings Per Share |
$ |
1.39 |
|
|
$ |
1.19 |
Reconciliation of Rolling Four Quarter
Outlook:
Earlier in this press release, we present the
Rolling Four Quarter Outlook (“Outlook”) which 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, 2019 unless we have a
signed Letter of Intent with a 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 precise
estimates will be precisely wrong all the time. The following
four reconciliations are presented at the approximate midpoint of
the range in this Outlook.
Reconciliation
of Net Income to Consolidated EBITDA for the Rolling Four Quarters
ending December 31, 2019 (in thousands): |
|
|
|
|
December 31, 2019E |
Net Income |
$ |
24,800 |
Total Tax
Provision |
9,400 |
Pretax Income |
34,200 |
Net Interest Expense,
including Accretion of Discount on Convertible Notes |
24,400 |
Depreciation &
Amortization, including Non-cash Stock Compensation |
19,600 |
Consolidated
EBITDA |
$ |
78,200 |
Reconciliation
of Net Income to Adjusted Net Income for the Rolling Four Quarters
ending December 31, 2019 (in thousands): |
|
|
|
|
December 31, 2019E |
Net Income |
$ |
24,800 |
Special Items |
200 |
Adjusted Net
Income |
$ |
25,000 |
Reconciliation
of GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per
Share for the Rolling Four Quarters ending December 31,
2019: |
|
|
|
|
December 31, 2019E |
GAAP Diluted Earnings
Per Share |
$ |
1.38 |
Special Items |
0.01 |
Adjusted Diluted
Earnings Per Share |
$ |
1.39 |
Reconciliation
of Cash Flow Provided by Operations to Free Cash Flow for the
Rolling Four Quarters ending December 31, 2019 (in
thousands): |
|
|
|
|
December 31, 2019E |
Cash flow Provided by
Operations |
$ |
48,500 |
|
Cash used for
Maintenance Capital Expenditures |
(10,000 |
) |
Free Cash Flow |
$ |
38,500 |
|
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. All statements, other
than statements of historical information, should be deemed to be
forward-looking statements. 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 and market 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”,
“seek”, “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:
- our ability to find and retain skilled personnel;
- our ability to execute our growth strategy;
- the effects of competition;
- the execution of our Standards Operating, 4E Leadership and
Strategic 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;
- the timely and full payment of 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;
- our level of indebtedness and the cash required to service our
indebtedness;
- recent changes in federal income tax laws and regulations and
the implementation and interpretation of these laws and regulations
by the Internal Revenue Service;
- effects of the application of other 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.
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.
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