Exhibit (c)(2)
StoneMor Inc. Preliminary Valuation Discussion Materials Prepared for the Conflicts Committee of the Board of Directors of StoneMor Inc. January 10, 2022 The information contained herein is of a confidential nature and is intended for the use of the persons or firm to whom it is furnished by us. Reproduction, publication, or dissemination of portions hereof may not be made without prior written approval of Kroll, LLC and its affiliates. Confidential – DRAFT
Table of Contents 2 CONFIDENTIAL DRAFT Section 1. Introduction & Background 2. Valuation Considerations and Methodology 3. Valuation Analysis Appendix I. Selected Public Companies / M&A Transactions Reviewed II. Selected Take-Private Transactions Reviewed
Introduction & Background 1.
Introduction & Background 4 CONFIDENTIAL DRAFT Overview The Board of Directors of StoneMor Inc. (“StoneMor”) received a letter (the “Letter”), dated September 22, 2021, from its current majority shareholder, Axar Capital Management, LP (“Axar”), in which Axar expressed an interest in pursuing discussions concerning strategic alternatives that may be beneficial to StoneMor and its various stakeholders On September 26, 2021, the Board of Directors authorized its Conflicts Committee (“Conflicts Committee”) to engage in the discussions contemplated by the Letter The Conflicts Committee has asked Duff & Phelps to: Establish an independent view on the value of StoneMor common stock Provide advice that will assist the Conflicts Committee in its discussions concerning, and consideration of, strategic alternatives pursuant to the Letter These materials represent Duff & Phelps’ preliminary valuation report and discussion materials for the Conflicts Committee
Introduction & Background Stock Analysis and Recent Events Stock Price Summary A December 23, 2020: StoneMor received notification from the NYSE that the company has regained compliance with the listing criteria Trading Commentary B March 24, 2021: StoneMor announced the acquisition of 4 cemeteries to expand east coast business C April 20, 2021: StoneMor announced a $400 million debt raise of senior secured notes June 25, 2021: StoneMor joins the Russell 3000 and Russell Microcap Indexes September 27, 2021: StoneMor announced Axar has expressed interest in pursuing discussions concerning strategic alternatives D Stock Price and Volume Analysis Beneficial Ownership Summary (1) A B C D E E (1) Excludes outstanding options, unvested RSUs, and director and select executive phantom units Source: S&P Capital IQ, Bloomberg, company filings, and StoneMor management Data as of January 7, 2022 % of Current 52-Week High 52-Week Low 60-Day VWAP Shareholder Shares Outstanding Trading Statistics Average Closing Price One Week One Month One Year Three Years Closing Trading Price $2.40 $3.60 $1.66 $2.52 Axar Capital Management LP Joseph M. Redling 88,633,045 1,354,459 74.93% 1.15% Intraday Trading Price $5.37 $1.51 David Miller 941,432 0.80% Austin K. So 133,100 0.11% $2.41 $2.39 $2.49 $1.89 Jeffrey DiGiovanni Lindsay Granson Stephen J. Negrotti Tom Connolly 59,182 57,195 48,634 14,247 0.05% 0.05% 0.04% 0.01% Average Daily Volume (in thousands) 194 158 464 279 Spencer E. Goldenberg 10,000 0.01% Avg. Daily Volume as a % of Shares Outstanding 0.2% 0.1% 0.4% 0.2% Robert Page 8,190 0.01% Patricia D. Wellenbach 6,064 0.01% Amount of Beneficial Ownership 91,265,548 77.15% All Remaining Shareholders 27,025,052 22.85% Total Outstanding 118,290,600 100.00% 4 CONFIDENTIAL DRAFT
Introduction & Background 4 CONFIDENTIAL DRAFT Business Plan We have been provided with a forecast for StoneMor for a four-year period through 2025 including a GAAP and non-GAAP P&L, a free cash flow forecast on a GAAP basis which incorporates changes in operating assets (including the merchandise trust asset) and liabilities (including deferred revenue liabilities), and forecasted capital expenditure needs It is our understanding that the projections include the following assumptions and considerations of historical and recent performance: COVID-19 impact in 2020 and 2021 has driven at-need sales to record levels, and while such impact persists, it is expected to lessen in 2022 Investment returns are assumed to be 6.5% in the forecast for both merchandise and perpetual trusts. Investment income on the merchandise and perpetual care trusts peaked in 2021, with returns of approximately 7.5% Purchasing and procurement efforts have driven down average COGS over last 2+ years of transformation. Potential supply chain disruptions may increase average pricing into 2022 with cost increases expected to be passed to consumers Increased payroll and payroll related costs are expected, and management sees opportunities to continue driving general and administrative cost savings and operational efficiency $12 million of annual capital expenditures are assumed for maintenance and inventory needs
Valuation Considerations and Methodology 2.
Valuation Considerations and Methodology GAAP and Non-GAAP Financial Statements Material differences exist between GAAP and non-GAAP financials in both the historical and projected periods, driven in large part by revenue recognition on a GAAP basis of pre-need cemetery revenue Historical & Projected Financial Performance - GAAP ($ in thousands) Management Projections 2018A 2019A 2020A 2021E 2022P 2023P 2024P 2025P Total Revenue $314,493 $289,571 $295,982 $321,671 $324,183 $341,909 $359,273 $372,894 Growth (7.9%) 2.2% 8.7% 0.8% 5.5% 5.1% 3.8% Adjusted EBITDA (1) (2,072) (12,373) 25,007 41,796 41,288 49,033 57,976 63,269 Margin (0.7%) (4.3%) 8.4% 13.0% 12.7% 14.3% 16.1% 17.0% Growth NM NM 67.1% (1.2%) 18.8% 18.2% 9.1% (1) Includes stock-based compensation Historical & Projected Financial Performance - Non-GAAP ($ in thousands) Management Projections 2018A 2019A 2020A 2021E 2022P 2023P 2024P 2025P Total Revenue $292,259 $279,634 $320,553 $396,711 $395,809 $414,816 $432,320 $450,692 Growth (4.3%) 14.6% 23.8% (0.2%) 4.8% 4.2% 4.2% Adjusted EBITDA (1) 11,008 4,264 61,504 114,629 101,129 109,836 118,863 128,408 Margin 3.8% 1.5% 19.2% 28.9% 25.5% 26.5% 27.5% 28.5% Growth (61.3%) 1,342.3% 86.4% (11.8%) 8.6% 8.2% 8.0% (1) Includes stock-based compensation 10 CONFIDENTIAL DRAFT
Valuation Considerations and Methodology 10 CONFIDENTIAL DRAFT Selected Public Companies / Precedent Transactions Methodology The death care industry has a very limited number of publicly traded companies which operate funeral homes and cemeteries, as well as limited availability of precedent transactions with publicly reported financial information Only three major participants have operations in the United States: Carriage Services, Inc., Park Lawn Corporation, and Service Corporation International StoneMor operations are skewed much more heavily towards cemetery operations (~85% of revenues), while the other publicly traded death care companies derive a majority of their revenues from funeral home services Contracts for funeral home services are typically sold on an at-need basis, in which case GAAP revenues are recognized within a short period of time after the sale of the funeral home contract The difference in the timing of the recognition of GAAP revenues between StoneMor and the other publicly traded companies results in less comparability, making the application of a market multiple approach less meaningful as an indication of enterprise value
Valuation Considerations and Methodology 10 CONFIDENTIAL DRAFT Discounted Cash Flow Methodology As StoneMor is a Delaware Corporation, we believe that using a discounted cash flow approach is critical in valuing the company given the emphasis placed on this approach by Delaware courts In conducting a discounted cash flow analysis we believe that free cash flow derived from GAAP financial statements is the best indication of actual cash flow and in turn would form the basis for a discounted cash flow model We do not believe that a discounted cash flow analysis utilizing a forecast for the four-year period through 2025, and using an exit multiple on 2025 non-GAAP EBITDA to estimate the terminal value, constitutes a materially different analysis than that of a market multiple approach given that the majority of the overall value is captured in the terminal value – This could be a concern in the event that a DCF analysis using an abbreviated forecast is challenged in the future The lack of longer-term projections creates challenges in establishing accurate terminal or “steady-state” assumptions to be used in a Gordon Growth terminal value estimation
Valuation Considerations and Methodology 10 CONFIDENTIAL DRAFT Extended Long-Term Forecast for DCF Valuation A valuation of StoneMor utilizing a discounted cash flow analysis would need to capture the value of the backlog as well as the continuing value of the business from sales to future customers Therefore, Duff & Phelps has requested, and management has provided, an extended financial forecast (the “Management Projections”) which includes a run-off of the existing deferred revenue balance (which would capture the conversion of historical non-GAAP revenue to a GAAP cash flow basis) We believe the risks associated with executing on the forecasted sales to future customers, strategic initiatives, and projected cost savings presented in the business plan would necessitate the application of a higher discount rate than the cash flow associated with the run-off of the backlog
Valuation Analysis 3.
Valuation Analysis Projected Financial Performance Projected Financial Performance - GAAP ($ in thousands) Management Projections 2022P 2023P 2024P 2025P 2026P 2027P 2028P 2029P 2030P 2031P 2032P 2033P 2034P 2035P 2036P Total Revenue $324,183 $341,909 $359,273 $372,894 $387,087 $401,739 $416,904 $432,601 $448,851 $465,677 $483,101 $501,148 $519,845 $539,220 $559,302 Growth 0.8% 5.5% 5.1% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% Adjusted EBITDA (1) 41,288 49,033 57,976 63,269 70,033 75,860 81,809 87,875 94,052 100,335 106,714 113,182 119,727 126,337 132,999 Margin 12.7% 14.3% 16.1% 17.0% 18.1% 18.9% 19.6% 20.3% 21.0% 21.5% 22.1% 22.6% 23.0% 23.4% 23.8% Growth (1.2%) 18.8% 18.2% 9.1% 10.7% 8.3% 7.8% 7.4% 7.0% 6.7% 6.4% 6.1% 5.8% 5.5% 5.3% Capital Expenditures 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 as % of Total Revenue 3.7% 3.5% 3.3% 3.2% 3.1% 3.0% 2.9% 2.8% 2.7% 2.6% 2.5% 2.4% 2.3% 2.2% 2.1% Net Operating Assets and Liabilities (242,653) (246,370) (248,553) (250,043) (237,376) (223,650) (208,884) (193,106) (176,351) (158,664) (140,099) (120,718) (100,592) (79,800) (58,432) as % of Total Revenue (74.9%) (72.1%) (69.2%) (67.1%) (61.3%) (55.7%) (50.1%) (44.6%) (39.3%) (34.1%) (29.0%) (24.1%) (19.4%) (14.8%) (10.4%) (1) Includes stock-based compensation 13 CONFIDENTIAL DRAFT
Valuation Analysis 13 CONFIDENTIAL DRAFT Discounted Cash Flow Analysis - Key Assumptions Duff & Phelps used the Management Projections for the fiscal years (“FY”) ending December 31, 2022 through December 31, 2036 as the basis for the discounted cash flow analysis. Under the Management Projections: Total Revenue increases at a compound annual growth rate (“CAGR”) of 3.8% for the fifteen-year period from FY2021 through FY2036. Adjusted EBITDA increases at a CAGR of 8.0% for the fifteen-year period from FY2021 through FY2036, with an average Adjusted EBITDA margin of 19.6% over the FY2022 to FY2036 projection period. Capital expenditures are assumed to be $12 million per year, or an average of 2.8% of Total Revenue over the FY2022 to FY2036 projection period. Net operating assets and liabilities average negative 44.4% of Total Revenue over the FY2022 to FY2036 projection period. Beyond the projection period, Duff & Phelps estimated the “terminal value” using a terminal growth rate of 3.0%. Discount Rates: The resulting cash flows attributable to projected future sales and an estimated terminal value were discounted at a weighted average cost of capital (“WACC”) range of 8.50% to 9.50%. The resulting cash flows attributable to the deferred revenue backlog, including the trust income earned on the backlog, were discounted at a weighted discount rate of 3.50%. The implied weighted discount rate range, based on discounting the performance attributable to backlog at a lower rate than expected future sales, is 8.40% to 9.40%.
Valuation Analysis Discounted Cash Flow Analysis – WACC Analysis Weighted Average Cost of Capital Analysis Hamada Harris-Pringle Levered Beta Discount Rate Range Discount Rate Range Sources and Considerations Unlevered Beta 0.65 0.80 0.70 0.85 Selected Public Companies Debt % of Capital 20% 30% 20% 30% Selected Public Companies Equity % of Capital 80% 70% 80% 70% Selected Public Companies Tax Rate 25.8% 25.8% Not Used Not Used Blended Federal & State Corporate Income Tax Rate; Management Discussion Debt Beta Not Used Not Used 0.36 0.37 Duff & Phelps Levered Beta 0.77 1.05 0.79 1.06 Levered Cost of Equity Risk-free Rate 2.5% 2.5% 2.5% 2.5% Average Historical Yield on Treasury Levered Beta 0.77 1.05 0.79 1.06 See Above Market Risk Premium 5.5% 5.5% 5.5% 5.5% Duff & Phelps Study Size Premium 1.5% 5.0% 1.5% 5.0% 2021 CRSP Deciles Size Premia Study; Duff & Phelps Cost of Capital Study Levered Cost of Equity 8.2% 13.3% 8.3% 13.3% Cost of Debt Cost of Long-term Debt 4.9% 6.2% 4.9% 6.2% BB and B Bond Rate Tax Rate 25.8% 25.8% 25.8% 25.8% Blended Federal & State Corporate Income Tax Rate; Management Discussion After-tax Cost of Debt 3.6% 4.6% 3.6% 4.6% Weighted Average Cost of Capital (WACC) Debt % of Capital 20% 30% 20% 30% Equity % of Capital 80% 70% 80% 70% Calculated WACC 7.29% 10.67% 7.35% 10.67% Calculated WACC Average 8.98% 9.01% Selected WACC 9.00% 13 CONFIDENTIAL DRAFT
Valuation Analysis Discounted Cash Flow Analysis Discounted Cash Flow Analysis ($ in thousands) Management Projections Normalized '21 - '36 '22 - '36 Terminal Growth Rate 3.00% 3.00% 3.00% WACC Applied to Projected Future Sales 9.50% 9.00% 8.50% Discount Rate Applied to Backlog 3.50% 3.50% 3.50% Weighted Discount Rate (1) 9.40% 8.90% 8.40% Concluded Enterprise Value Range (Rounded) $644,800 $700,900 $767,500 Implied Enterprise Value Multiples 2021E Adj. EBITDA $41,796 15.4x 16.8x 18.4x 2022P Adj. EBITDA 41,288 15.6x 17.0x 18.6x 2023P Adj. EBITDA 49,033 13.2x 14.3x 15.7x 2021E Total Revenue 321,671 2.00x 2.18x 2.39x 2021E Non-GAAP Adj. EBITDA $114,629 5.6x 6.1x 6.7x 2022P Non-GAAP Adj. EBITDA 101,129 6.4x 6.9x 7.6x 2023P Non-GAAP Adj. EBITDA 109,836 5.9x 6.4x 7.0x 2021E Non-GAAP Total Revenue 396,711 1.63x 1.77x 1.93x (1) Weighted discount rate based on an approach that discounts the performance attributable to backlog at a lower rate than expected future sales 2021E 2022P 2023P 2024P 2025P 2026P 2027P 2028P 2029P 2030P … 2036P Terminal CAGR Average Total Revenue $321,671 $324,183 $341,909 $359,273 $372,894 $387,087 $401,739 $416,904 $432,601 $448,851 … $559,302 $559,302 3.8% Growth 8.7% 0.8% 5.5% 5.1% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.7% Adjusted EBITDA 41,796 41,288 49,033 57,976 63,269 70,033 75,860 81,809 87,875 94,052 … 132,999 132,999 8.0% EBITDA Margin 13.0% 12.7% 14.3% 16.1% 17.0% 18.1% 18.9% 19.6% 20.3% 21.0% 23.8% 23.8% 19.6% Earnings Before Interest and Taxes $22,887 $31,433 $41,074 $46,966 $54,238 $60,484 $65,614 $70,868 $76,236 … $110,051 $121,599 Pro Forma Taxes @ 25.8% (5,901) (8,105) (10,591) (12,110) (13,985) (15,596) (16,918) (18,273) (19,657) … (28,376) (31,354) Net Operating Profit After Tax 16,986 23,328 30,483 34,856 40,253 44,889 48,696 52,595 56,579 … 81,674 90,245 Tax Depreciation 9,997 8,842 7,774 6,785 5,871 5,026 5,399 5,743 6,062 … 7,722 5,700 Amortization of Cemetery Property 8,404 8,758 9,129 9,517 9,924 10,350 10,796 11,264 11,754 … 15,227 5,700 Capital Expenditures (12,000) (12,000) (12,000) (12,000) (12,000) (12,000) (12,000) (12,000) (12,000) … (12,000) (12,000) (Increase) Decrease in Net Op. Assets and Liabilities 5,835 3,717 2,183 1,490 (12,667) (13,726) (14,766) (15,779) (16,755) … (21,368) (21,368) Free Cash Flow $29,221 $32,646 $37,568 $40,648 $31,381 $34,538 $38,124 $41,823 $45,640 … $71,255 $68,277 Enterprise Value Low Mid High 13 CONFIDENTIAL DRAFT
Valuation Analysis Valuation Summary 13 CONFIDENTIAL DRAFT Current Share Price (7) $2.40 Valuation Summary ($ in thousands) Low Mid High WACC Applied to Projected Future Sales 9.50% 9.00% 8.50% Discount Rate Applied to Backlog 3.50% 3.50% 3.50% Weighted Discount Rate (1) 9.40% 8.90% 8.40% Enterprise Value Discounted Cash Flow Analysis $644,800 $700,900 $767,500 Present Value of Tax Attributes (2) 10,480 10,623 10,776 Present Value of Tax Amortization Benefit 10,628 10,785 10,947 Enterprise Value (Rounded) $665,900 $722,300 $789,200 Plus: Cash and Equivalents (3) 87,891 87,891 87,891 Less: Debt (3) (4) (405,775) (405,775) (405,775) Aggregate Equity Value $348,016 $404,416 $471,316 Less: Fair Value of Options, After-Tax (5) (8,505) (10,432) (12,757) Aggregate Common Equity Value $339,510 $393,984 $458,559 Fully Diluted Shares Outstanding (000s) (6) 119,024 119,024 119,024 Resulting Per Share Price $2.85 $3.31 $3.85 Implied Premium to Current Share Price 18.9% 37.9% 60.5% Implied Enterprise Value Multiples 2021E Non-GAAP Adj. EBITDA $114,629 5.8x 6.3x 6.9x 2022P Non-GAAP Adj. EBITDA 101,129 6.6x 7.1x 7.8x 2023P Non-GAAP Adj. EBITDA 109,836 6.1x 6.6x 7.2x 2021E Non-GAAP Total Revenue 396,711 1.68x 1.82x 1.99x Implied Enterprise Value Multiples Excluding Tax Attributes and Tax Amortization Benefit 2021E Non-GAAP Adj. EBITDA $114,629 5.6x 6.1x 6.7x 2022P Non-GAAP Adj. EBITDA 101,129 6.4x 6.9x 7.6x 2023P Non-GAAP Adj. EBITDA 109,836 5.9x 6.4x 7.0x 2021E Non-GAAP Total Revenue 396,711 1.63x 1.77x 1.93x Weighted discount rate based on an approach that discounts the performance attributable to backlog at a lower rate than expected future sales Present value of NOL tax shield Estimated balance as of December 31, 2021 Includes accrued interest of $5.4 million Reflects 6.1 million options outstanding. Fair value of options is based on a Black-Scholes option pricing model Per StoneMor management. Reflects 118.3 million shares outstanding plus 533.3 thousand unvested RSUs plus 199.6 thousand director and select executive phantom units As of January 7, 2022 per S&P Capital IQ
Selected Public Companies / M&A Transactions Reviewed Appendix I.
Selected Public Companies / M&A Transactions Reviewed 19 CONFIDENTIAL DRAFT Overview Duff & Phelps selected six (6) publicly traded companies that it deemed relevant to its analysis. Duff & Phelps analyzed the historical and projected financial performance of each of the selected public companies. Duff & Phelps then reviewed the selected public companies’ trading multiples of enterprise value to Revenue and EBITDA. Duff & Phelps also researched M&A transactions involving target companies with businesses that were deemed relevant to its analysis. The Selected Public Companies analysis was not chosen as a primary methodology for StoneMor due to lack of comparability resulting from differences in business mix, as StoneMor operations are skewed much more heavily towards cemetery operations, which has revenue recognition implications, as discussed previously. None of the selected public companies or the target companies in the M&A transactions analysis is, of course, identical to StoneMor and Duff & Phelps does not have access to non-public information regarding those companies. Accordingly, a complete financial analysis cannot be limited to a quantitative review of the selected public companies or the companies that were acquired in the M&A transactions analysis and involves complex considerations and judgments concerning differences in financial and operating characteristics of such companies and targets, as well as other factors that could affect their value relative to StoneMor.
Selected Public Companies / M&A Transactions Reviewed Selected Public Company Overview StoneMor Inc. Comparable Public Companies Name Country Description Cemeteries Funeral Homes Other Business Mix StoneMor Inc. Owns and operates cemeteries and funeral homes in the United United States States. 301 70 NA Cemetery Operations segment accounted for approximately 86% of total revenue in Q4 2021 Carriage Services, Inc. United States Provides funeral and cemetery services, and merchandise in the United States. 32 171 NA Funeral Home Operations segment makes up approximately 70% of total revenue Dignity plc United Kingdom Provides funeral services in the United Kingdom. NA 789 46 Crematoria Funeral Services makes up approximately 64% of total revenue with Pre-Arranged Funeral Plan sales making up less than 10% of total revenue InvoCare Limited Australia Provides funeral, cemetery, crematoria, and related services in Australia, New Zealand, and Singapore. 17 278 NA Funeral Services makes up approximately 73% of total revenue with Memorial Parks accounting for approximately 25% of total revenue Park Lawn Corporation Canada Provides funeral, cremation, and cemetery services in Canada and the United States. 133 135 43 Crematoria Company does not provide a breakdown of revenue by operating segment Propel Funeral Partners Limited Australia Provides death care services in Australia and New Zealand. 9 136 32 Crematoria Company does not provide a breakdown of revenue by operating segment Service Corporation International Provides deathcare products and services in the United States and United States Canada. 485 1,453 NA Funeral Revenue accounts for approximately 56% of total revenue with Cemetery Revenue making up the remaining balance Source: S&P Capital IQ, Company filings, Company websites 19 CONFIDENTIAL DRAFT
Selected Public Companies / M&A Transactions Reviewed Selected Comparable Financial Performance Selected Public Companies Analysis As of December 31, 2021 COMPANY INFORMATION REVENUE GROWTH EBITDA GROWTH EBITDA MARGIN Company Name 2-YR CAGR 2021 2022 2023 2-YR CAGR 2021 2022 2023 3-YR AVG 2021 2022 2023 Carriage Services, Inc. 10.9% 13.1% 3.0% 3.6% 25.9% 20.0% 4.2% 3.2% 27.2% 32.5% 32.9% 32.7% Dignity plc 0.5 -12.8 -1.7 1.8 -5.1 -15.6 -9.3 1.2 25.8 24.2 22.3 22.2 InvoCare Limited -0.3 8.2 8.8 4.1 -7.2 20.9 21.8 6.6 25.0 24.0 26.8 27.5 Park Lawn Corporation 45.9 10.2 14.5 5.2 35.0 51.2 16.7 7.0 19.5 26.0 26.5 26.9 Propel Funeral Partners Limited 12.5 15.6 10.9 9.9 23.5 0.1 5.4 10.5 28.1 28.2 26.9 27.0 Service Corporation International 4.9 15.8 -11.8 5.9 12.4 28.0 -24.6 11.0 28.5 34.4 29.4 30.8 Mean 12.4% 8.4% 3.9% 5.1% 14.1% 17.4% 2.4% 6.6% 25.7% 28.2% 27.5% 27.8% Median 7.9% 11.7% 5.9% 4.7% 18.0% 20.4% 4.8% 6.8% 26.5% 27.1% 26.9% 27.2% StoneMor (1) 4.7% 23.8% -0.2% 4.8% 136.4% 86.4% -11.8% 8.6% 16.5% 28.9% 25.5% 26.5% CAGR = Compounded Annual Growth Rate EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization (1) Based on non-GAAP performance metrics Source: S&P Capital IQ, SEC Filings, Annual and Interim Reports. 19 CONFIDENTIAL DRAFT
Selected Public Companies / M&A Transactions Reviewed Selected Comparable Market Multiples 19 CONFIDENTIAL DRAFT
Selected Public Companies / M&A Transactions Reviewed Selected M&A Transactions Selected M&A Transactions Analysis ($ in millions) 2021 Virginia / North Carolina (1) 4 cemeteries - currently under APA StoneMor $5.5 $2.3 $1.0 43.5% 2.39x 5.5x 2021 Florida (1) 1 Funeral Home - currently under LOI StoneMor $1.7 $0.6 $0.2 33.3% 2.83x 8.5x 2021 Tennessee / Georgia / Alabama / Mississippi (1) 15 cemeteries and 2 funeral homes - currently under LOI StoneMor $10.5 $5.0 $2.2 44.0% 2.10x 4.8x 2021 Mississippi (1) 2 funeral homes - currently under LOI StoneMor $3.2 $1.4 $0.7 50.0% 2.29x 4.6x 2021 West Virginia (1) 2 cemeteries and 2 funeral homes - currently under LOI StoneMor $10.9 $3.8 $1.9 50.0% 2.87x 5.7x 2020 California - Yeatman (StoneMor)(1)(2) Owned by StoneMor NA $7.1 $9.5 $1.4 14.4% 0.75x 5.2x 2020 Oregon / Washington (StoneMor)(1)(2) Owned by StoneMor NA $8.5 $7.7 $1.1 14.2% 1.10x 7.8x 2020 Kansas (StoneMor)(1)(2) Owned by StoneMor NA $3.9 $3.6 $0.5 14.4% 1.09x 7.6x 2020 Illinois / Missouri (StoneMor)(1)(2) Owned by StoneMor NA $5.5 $4.5 $0.9 20.4% 1.23x 6.0x 2019 Oakmont (StoneMor)(1)(2) Owned by StoneMor NA $33.0 $8.2 $3.3 40.1% 4.02x 10.0x 2019 Evergreen (StoneMor)(1)(2) Owned by StoneMor NA $0.9 $0.6 $0.1 23.6% 1.47x 6.2x 2019 Olivet (StoneMor)(1)(2) Owned by StoneMor NA $25.0 $7.6 $2.4 32.3% 3.30x 10.2x Announced Target Name Target Business Description Acquirer Name Enterprise Value LTM Revenue LTM EBITDA EBITDA Margin EV / Revenue EV / EBITDA people in Colorado. and crematoria in Texas, Kansas, Missouri, New Mexico, and Mississippi. Spain and Portugal. Board May-19 Horan & McConaty Funeral Home Horan & McConaty Funeral Home provides burial, cremation, and funeral services to Park Lawn Corporation $58.0 $18.0 NA NA 3.23x NA Apr-18 The Signature Memorial Group LLC The Signature Memorial Group LLC owns and operates cemeteries, funeral homes, Park Lawn Corporation $123.0 $23.3 NA NA 5.27x NA Jul-17 MEMORA Servicios Funerarios S.L. (3) MEMORA SERVICIOS FUNERARIOS SLU provides funeral services for families in Ontario Teachers' Pension Plan $458.6 $162.0 $30.4 18.8% 2.83x 15.1x Jun-17 Saber Management, L.L.C. Saber Management, L.L.C. acquires, owns, and operates cemeteries and funeral Park Lawn Corporation $58.5 NA $6.9 NA NA 8.5x homes in Kentucky, Illinois, and Texas. (1) Transaction metrics provided by StoneMor management (2) Metrics represent 2019 non-GAAP performance including Trusts Mean $50.9 $17.2 $3.8 30.7% 2.45x 7.5x (3) Operating metrics represent FY 2016 Median $9.5 $5.0 $1.2 32.3% 2.39x 6.9x Source: StoneMor management, S&P Capital IQ, Merger Market, and company filings 19 CONFIDENTIAL DRAFT
Selected Take-Private Transactions Reviewed Appendix I.
Selected Take-Private Transactions Reviewed Take Private Transactions of Public Companies with less than $1 Billion Market Capitalization Transactions announced, closed, or effective Take Private Offering Price Premium To: Date Announced Company Name Implied Equity Value Offering Price Per Share Stock Price 1 Trading Day Prior to Announcement Stock Price 5 Trading Days Prior to Announcement Stock Price 10 Trading Days Prior to Announcement Length of Go- Shop Period (Days) 11/15/2021 Casper Sleep Inc. $308.62 $6.90 94.4% 74.2% 76.5% NA 7/27/2020 Optiva Inc. $244.80 $44.82 91.5% 100.6% 117.9% NA 7/23/2021 The New Home Company Inc. $171.11 $9.00 85.2% 85.6% 53.8% NA 4/19/2021 Marlin Business Services Corp. $299.06 $23.50 65.0% 72.0% 71.3% NA 7/29/2020 IPL Plastics Inc. $411.72 $7.48 49.1% 63.4% 76.9% 30 1/14/2021 Atlantic Power Corporation $403.29 $3.03 43.6% 43.6% 45.0% NA 6/7/2019 Barnes & Noble, Inc. $490.43 $6.50 41.6% 50.8% 33.2% NA 7/13/2020 Benefytt Technologies, Inc. $420.60 $31.00 38.6% 56.8% 57.7% NA 12/14/2020 People Corporation $862.01 $11.90 36.2% 38.6% 39.2% NA 8/9/2021 Select Interior Concepts, Inc. $411.33 $14.50 31.7% 27.4% 41.6% NA 11/15/2020 Foundation Building Materials, Inc. $846.47 $19.25 27.0% 34.7% 21.1% 30 7/26/2019 Monotype Imaging Holdings Inc. $824.41 $19.85 22.8% 18.6% 14.8% 30 3/1/2021 Boingo Wireless, Inc. $653.31 $14.00 22.8% 10.0% 11.5% 25 (business days) 10/2/2020 Telenav, Inc. $237.12 $4.80 20.9% 20.0% 19.1% 30 4/16/2019 Smart & Final Stores, Inc. $514.33 $6.50 20.6% 22.2% 28.7% NA 6/24/2019 Del Frisco's Restaurant Group, Inc. $280.21 $8.00 18.9% 21.2% 22.9% NA 7/12/2021 Verso Corporation $610.59 $20.00 15.9% 15.3% 16.1% NA 12/7/2020 SEACOR Holdings Inc. $860.22 $41.50 14.4% 24.9% 17.4% NA Highest Premium 94.4% 100.6% 117.9% Mean Premium 41.1% 43.3% 42.5% Median Premium 34.0% 36.6% 36.2% Lowest Premium 14.4% 10.0% 11.5% Source: S&P Capital IQ, Bloomberg, company filings 25 CONFIDENTIAL DRAFT
Selected Take-Private Transactions Reviewed Date Announced Company Name Length of Go-Shop Period (Days) 12/7/2021 Mimecast Limited 30 7/26/2021 Medallia, Inc. 40 7/9/2021 Stamps.com Inc. 40 6/1/2021 Cloudera, Inc. 30 5/6/2021 At Home Group Inc. 40 4/26/2021 Proofpoint, Inc. 45 4/8/2021 ORBCOMM Inc. 30 3/10/2021 Talend S.A. 30 3/3/2021 The Michaels Companies, Inc. 25 3/1/2021 Boingo Wireless, Inc. 25 (business days) 12/21/2020 RealPage, Inc. 45 10/2/2020 Telenav, Inc. 30 7/29/2020 IPL Plastics Inc. 30 2/6/2020 Forescout Technologies, Inc. 30 12/17/2019 LogMeIn, Inc. 45 12/4/2019 Instructure Holdings, Inc. 35 11/15/2020 Foundation Building Materials, Inc. 30 11/13/2019 Tiger Parent (AP) Corporation 28 11/4/2019 Pattern Energy Group Inc. 35 8/14/2019 Presidio, Inc. 40 8/7/2019 Cambrex Corporation 45 7/26/2019 Monotype Imaging Holdings Inc. 30 4/15/2019 Electronics for Imaging, Inc. 45 2/12/2019 ICE Mortgage Technology, Inc. 35 Mean Go-Shop Period (Days) 35 Median Go-Shop Period (Days) 35 Take Private Transactions of Public Companies with Go-Shop Provisions Transactions announced, closed, or effective Source: S&P Capital IQ, company filings 25 CONFIDENTIAL DRAFT