STON - Earnings call transcript Q3 2021

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Operator

Thank you for standing by. Welcome to the StoneMor Third Quarter earnings release.

During the presentation, all participants will be in a listen-only mode. Afterwards, we'll conduct a question-and-answer session. At that time, [Operator Instructions]. recorded XXth, being is conference Thursday, XXXX. November This to conference Financial over now, and I Keith the like would President And to turn Trost, Analysis. Planning Vice Please, go ahead.

Keith Trost

us thank Good discuss to third again everyone, you. results. XXXX StoneMor and financial Thank for conference afternoon, our joining on quarter call the Inc. you

the of at all does copy, a not copy release full on issued website the find our release should stonemor.com. You a earlier we www. have you press have today. anyone can If

also President can and us Jeffrey presentation found Executive the on this With of copy Vice Chief a and website. be on afternoon our Additionally, President Officer, Officer. Senior DiGiovanni, are and call Financial the Joe Redling, Chief

developments on performance, include to are statements. address Private based operating would occur statements faith, meaning usual, begin, Before the certain to Securities events, we These statements will future in I like anticipate of that Act we within forward-looking Litigation the management's All everyone and beliefs, of are or XXXX. expect that assumptions. Reform the or remind as forward-looking statements good this call forward-looking conference that

management forward-looking that are reasonable. believes Our statements these

by information, today's undertake events, such or However, place forward-looking We because reliance as future except forward-looking any statements, statements law. any required revise any result not date. of new speak or a on you statements do of obligation to only update such undue not should publicly as as whether otherwise,

to the or which in statements risks described results, reports experience materially uncertainties we forward-looking historical projections. are certain from and actual differ expectations not the file but events, our are and addition, In to cause to These present with limited include, and that developments SEC. those risks uncertainties subject and could our

the will that, now accordance to over adjusted will turn and we to take press Joe GAAP free and presentation. unlevered of provided will directly EBITDA, the flow. Redling, EBITDA, I the the is release measures, comparable During field these reference measures here. calculated A in who certain call with in measurements reconciliation most as With cash financial EBITDA, from such non-GAAP it call,

Joe Redling

Keith. pleased quarter Thank us XXXX very on that joining thank this our to I'm third you trends afternoon have our year-and-a-half. report earnings the quarter for continued to call. of third you, past for performance results positive the build year, And everyone

tight strong strong basis. ahead at-need business trend our to cash projections. continuing markets in results. production driving EBITDA internal delivering sales continue exceeds drive of well. our rates far and as Unlevered expectations also new outperform our continues our are We're we on to sales reach to results, death guidance very flow continues to premium asset free and growth of the expenses and Our trust And value continues grows, performance that team management heights on our as focused stay a to

top the So quarter now our let's [Indiscernible] X% key XXXX increased of a versus of XXXX. on XX% we quarter This third in third in the reported to is in compared year the dive XXXX third of the for of the quarter basis. last some perspective of third growth drivers results. growth location production year-over-year into for the comparable of XXXX quarter sales third the a X% that the on of specifics quarter From

a productive been that highly ongoing half face is -need has record truly the testament continue we our to sales of We team, culture the regimen we've established, production as This our from training to implemented. pre XXXX. grow even and second comps that sales the the

team look opportunities with our be to and for continues strive team Our ahead. sales foundation we as high and upon supplemented new very we're historical excited to this build to inventory even

continue to three For -need our sales sales versus first as the growth pre year. production on the quarters pre the seen build XX% we we've impressive last XXXX, first three gains of quarters -need of established XXXX

first seen production XX% of have in we the three when comparing of sales an XXXX. fact, XXXX overall quarters quarters to three of In increase the first

continue mortality we experience operate. in production, while of rates to to excess growth states Looking community this been of improving where improving our properties. the share the at as our in We has in on [Indiscernible] performance market focus reinvesting we current continue we indicative believe outreach

XX% Our And XX% up XXXX quarter again, at-need XXXX. production that was of for for the is third of versus top XXXX. quarter the the of first the third quarter growth versus reported on XXXX of

below of to in COVID impact highs experienced year. the rates first continue While death we the well quarter quarter, this the volume we're third the during

data rates impact of death the are Importantly, a COVID. obtained base even against benchmarked to the according to when exceeding from XXXX the XXXX CDC,

We forward. stages expectancy, the of boomer on life are early generation a the reaching now volume moving to baby can reasonably we positive which expect in at-need their have impact

XXXX. a by three impacted positively which For growth financial coupled during our expense first comparable the We of Again, the [Indiscernible] in strong production [Indiscernible] has been quarters grown our the results. in growth The our to the controls focus second has of analysis several on period has on production XX% with measurable really COVID, focus led our started this versus metrics. key drive quarter. metrics to XXXX impact strong

amortization. interest Income which captures taxes, less depreciation, our EBITDA, is and First expense, Net

certain based In one-time exclude metric. of this lots cost losses business benchmark to normalized gains non-cash upon compensation, order operations. for our and also and We stock sold, performance

of million which XXXX, $X.X For represented of growth the EBITDA of a recorded quarter third $X.X of we XX% million, versus quarter XXXX. or third the

activities, of with Note $XX.X XXXX. one not million was business our For negatively period conjunction results, that $XX.X quarters recorded in of in three the that with the million but the was which the the first for of our recorded of operations. XXXX loss adjustments income of refinancing accurately impacted compared we XXXX, EBITDA current period comparable net our one-time $XX.X million reflect does

operational that's of calculated of properties. our stripping by overhead to EBITDA locations EBITDA at out look our isolate to field the metric also understand of We as a corporate performance the efficiency calculation

the in of quarter third of field quarter to XXXX, XXXX, XX.X% we of which revenues. generated was $XX.X third revenues. total $XX.X compared million the EBITDA This of for total of During XX.X% million

first and three the we significant sell. utilize adjusts field million where the quarters against comparable field $XX.X adjusted a EBITDA. in The further the improvement in Xrd metric is changes $XX.X For we XXXX, the generated EBITDA. and generated EBITDA. metric XXXX we of for million deferred represents This utilizes deferred period of that key revenues calculation That EBITDA of

While measures of with our the business utilizes current current metric business upon locations. management that expenses our expense matching performance efficiency expect revenue, allows business to production is levels, our and that against fixed operations support. all This us frequently based to GAAP manage and analyze EBITDA levels adjustment this additional they our most calculation the sales

of we Note initiatives During compared for the metrics. first At has XXXX. generated the key compared quarter the growth million the beginning metrics across million trust third XXXX, gains with all we sales the $XX.X EBITDA, adjusted of issued three And of of line that is these included million of $XX.X we year, reconciliation for quarter of the non-GAAP to guidance $XX.X items. X of performance which $XX.X the for million million within represents each remarkable of savings That and quarters third adjusted this considered XX% expense growth culmination EBITDA or XXXX. $XX.X in comparable generated XXXX, with our are on have savings of metrics that press a coupled release. been and generated production our both our period

Cash operating provided was unlevered from cash derive back by metric activities is for cash paid is flow. unlevered to free million from expense cash $XX subtracting flow. operations. capital then unlevered expenditures flow free interest of first calculated by The added cash

bringing want payment of notes. unlevered also the cash free another XXXX I to interest drove first cash During paid note peak our which flow quarters is to included unlevered to with million, on well $XX old cash to target. pace the refinancing XXXX, third full-year our on adjustments free satisfy $X.X of quarter our derive three we million, full-year the million that the $XX.X flow of the exceed free flow to for

$XX.X cash very was to operating performance flow might in and treated you purposes included paid XXXX For accounting $X.X not and interest free X million favorable the activities periods, largely among that Driven EBITDA and respectively. by we and levels as our previously levered expect. compares discussed. as comparable cash performance X the million with adjusted financing EBITDA cash flow for month when in achieved This in increase

$XX $XX.X million was million target, we growth. trust metric of second second worth The were reported the Even that through exceeding quarter, having of full-year growth.

the trust. strong continue to driven of has management, million growth, coupled quarter growth by drove add This sales the to$XX.X We during that with third growth been asset another with the into million. bringing contributions $XX.X new production year-to-date trust to strong that

that We transactions the strength growth true period, i.e. metrics our three premiums collectively origination through generated insight feel million free unlevered also cash particularly and into helped growth Sheet. in our of terms during as plus benefited this the the they value flow two value-creation, of provided of quarters that from $XXX.X the created Collectively, we've Balance including first these of and during We one-time trust highlighted XXXX. provide XXXX. investments, drive we guidance on refinancing for fees

I'd for million there sitting financial Before over our over like other cash. currently cash of items on detailed are during I with quarter, with including turn $XXX We're a discuss. the Sheet, two the Jeff Balance more restricted -- third want to call of not -- performance review to our I

year see to look growth. XXXX, we we and a reinvestment As of ahead

those I've see our the the few including of We And projects our our to expect pursuit operational to footprint. in business a strategic utilize acquisitions a performance acquisition substantially within previously, portion times of engaging opportunities. assets growth, and through current opportunity tremendous through new on we're reinvesting that overall locations. key can We organic across this addition current grow funds actively upgrade a the aesthetics to improved locations discussed of in inventory of

that are greater drive current financial through last and our integrate over the new operational the and we in business our we've years, into synergies made good improvements a to property with even performance position operation. X+ With

acquisition monitor reduce ratio. debt interest leverage position will to our We and project cash our appropriate, making consider EBITDA capital our and partial of improve continue as debt to to a our expense And we and cash pipeline. repayment against the

opportunities. item the letter The received our strategic was second shareholder majority recent Axon, regarding from

those best are Directors evaluate and and committee of legal options three our the of of As pursue Board address delegated they of committee both strategic our independent engaged options. analysis shareholders. evaluation. of as this counsel conference the to has equipped might the advisors and who to a and letter, how financial quick upon board, they review strategic all board committee conflicts potential and the The members review impact responsibility update comprised to receipt Conflicts

Jeff to financial over as will provide updates I will required. turn call further further review that, to the We With the performance.

Jeffrey Digiovanni

you, all Thank (ph). today. you joining And for us thank Joe

Before we the we I they That is, divested a talk results, continuing performance that about properties. our on financial are presenting GAAP basis. exclude the of numbers you to remind want operations these

we point. completing this be we while acquisitions done so that have near not Additionally, of we future, anticipate in as will the

results the these do such so have And not of benefit acquisitions.

of on basis. our same-store all a truly results So are

in revenue benefit quarter which as being operations XXXX, experienced of cemetery XXXX. During $X.X of I which segment, million to increase $X.X driven the the have total XX.X% by And $XX.X in quarter or without represented third top-line or continues in any for of standpoint, XXXX. quarter from in from compared XX% quarter XX.X% growth the XX.X increase is the revenues largely generated acquisitions. million million of million drove revenue the compared represented to our the recognized That a we increase mentioned, was the third and revenues this third

the home represented quarter for funeral XXXX. to X.X% Joe our investment also our million revenue, driven the quarter, to XX% that third of or remaining growth was of growth addition the growth and also revenues in other The which performance. $XXX Specifically, the the thousand on compared grew about, the in grew already strength revenues, sales this during talked trust by by segment, X quarter which third

both by work to that continue opportunity completed our transforming to segment segment the through in tremendous grow we acquisitions. to and We on strategic and similar funeral our evaluating focusing already current the assets cemetery a see home

reported we third half that XXXX. of the The quarter strong first continued to results during

in million XX.X% the months a September ended ended For revenues, versus months X million increase we XXth, X XXXX. $XXX.X XX, recognized $XX.X XXXX, or the September total

is XXXX As the quarter for XXXX. period third the results, largely of million first grew growth which the or versus the with XX.X% $XX.X quarters the cemetery by driven comparable three segment, in

reflect of to million an production pre and quarter been on vendor And and increases sold through And starting which production As sales the sales supply we reflected with and cost September ended for part our to standpoint, in current turning in Cemetery our at that basis, increased cemetery does our cemetery a expense, was expense -need to revenue ended of the the and XXXX. capitalization add. Increase XX, successful revenues. months the the sales XX.X% for XX.X% terms quality an of in as quarter cost by period on a I'd our landscaping, rising other talk the We're million repairs goods in are pre recognition you for to -need production. increasing that earlier current real metrics The the of XX.X% issues not increase directly million overall $X.X measure servicing instead September targeted merchandise of increase percentage selling to on XX, XX, driven driven versus improve chain to application From not XXXX, of the ended that revenues expense standards was goods increased by our strong We've associated discussed both revenues, GAAP heavily September maintenance, like see $X.X the non-cash volume. are includes partially the full impact about XXXX, XXXX. quarter not pre ability GAAP effectively or or standards ended and by to costs. effectively efforts Joe our September increased of margins the strategic maintaining merchandise. of cost GAAP locations. relies XX.X% the XX, our timing again for Cemetery results. third revenue On estate or did of XX.X% of cost flat, sales repairs maintenance revenue remind -need for our the taxes, of $X.X impact management. in meet deliver and attributable quarter X price costs

As quarter to revenues, basis decreased XXXX. percentage comparable in XX, for third XX.X% XXXX cemetery of from XXXX XXXX, a selling historically, to cemeteries the expense September ended versus the period points

XX.X% XX.X%. Our expense cemetery between run and

largely organization. To was our advertising with pandemic, improvement. to the decrease changes despite within tell this in the a decrease has represented truly we $X.X tremendous spend, sales marketing quarter talked by year sales efficient create the So platform team. the due tied could production, last partially This a COVID-XX a and million September profitable expense leadership which surrounding increase million compensation was attributable that and is that general sales insurance Joe uncertainty sales an XX, or and driven in administrative card back Cemetery about. fees $X.X in more premiums increased X.X% ended increased processing increase and for XXXX, increases to the align credit

in clearly opportunities operating and our division that for Lastly, results specifically the EBITDA bonus we managers have our and both increased general evident of production drive plan leaders, the which teams, sales field our to growth management results.

in offset because fees cost the or $XX the pandemic. or decreases operations. total, with were acquiring during quarter by of related for $XX.X XXXX. to XXXX an onset Additionally, operating XX.X% the third increase segment In million the cemetery PPE in the These of compared cost we ongoing produced increases third profit COVID-XX with of quarter of supplies million saw associated legal XX.X%

with that and XX, the or evident the or nine the operational segment We and the our has We months period. million during profits our in XX.X XXth a ended of testament we looking funeral period XXXX. XX, quarter the quarter XXXX. more funeral third at improving pushed overhead, XX.X% comparable in the tremendous X.X% our increase X.X% at Compared September XXXX. for versus while this together driving In when the Joe September versus operating million look nine-month XX.X% truly $XXX,XXX teams. we work the segment, to have this is XXXX a the operating in production X ended for XXXX, XXXX performance by with $XX.X increase or cemetery on XX.X% period ended quarter the in strides made even of mentioned, comparable saw September September of growth as is expenses the sales more put third XXXX, compared sales hard It revenue And (ph) for months quarter efficient grew a for generated home XX, XXXX, ended organization. home versus corporate

Joe XXXX, to when As organic third to the free unlevered have an a years, XX.X% particularly XX.X% was the corporate compared trust cash revenue, of compared guidance, both percentage third flow XXXX of full-year XXXX XX.X% of great quarter of total corporate revenues. full-year total over strides the overhead for talked made overhead quarter we was for growth. about the

those over to XXXX. or but We confident we the continued of do plan new that we the remain ahead perform We will targets. guidance, issuing not exceed updated on of guidance course annual

cash $XXX,XXX mentioned, target unlevered Joe million $XX annual wanted XXXX. $XX for ahead for the months includes million XX, is provide September capital spent cash XXXX. $X.X is X September some September own refinancing. cash on target growth the and the million to and expansion, is the As increase versus leverage million reinvestment on increase ended X maintenance consistent $XX.X XX.X and our expenditures, flow spend XX, months exceed XX, in our To $X.X the XXXX. increase million on This expenditures. $XXX,XXX payment CapEx, XXXX the ended ended XX, capital of the the I interest performance. million months expansion increase payments paid for expansion $XXX,XXX September during calculation $XX.X nine ended The calculation of Those in cash million conjunction in flow for details free is with interest was [Indiscernible]. our notes million maintenance of paid included paid-in-kind expenditures, capital additional of to The included also of The million in this included The expenditures. that capital months free $X.X $X.X X in specifically interest increase cash an payments. capital a with on of

months trust sales the our value in by during The of This our merchandise being driver and growth largest $XX.X million on by realized grew growth increased returns which X have which contributions million million -need by of unrealized $XX growth by million investment distributions that efforts We was assets, in and flow. of on offset million, in the new The pre asset. quarter. sales million $XX driven is $XX.X cash the trust trust for driven was $XX.X enhancing included $XX.X the our of by production growth XXXX. September net ended gains and XXth, of were in operating included fees

trust perpetual the September transformation months assets remarkable. X truly ended care XXXX. last XX, been financial over the million the years Additionally, for grew has three The $XX.X

sitting total nearly were just million another cash had Looking to over cash. restricted million cash. we $XX a with of XX, we today Well, December million with back XXX where XXXX, non-restricted in $XX in

and million is driven the Our adjusted ended healthy XXXX. Balance X months XXX Sheet for in we've EBITDA nearly

cash plans. has the the management senior million team the debt on an as Sheet, strategic super step to excited add and whole Balance This StoneMor I'm growth addition and In plan. next team ability we have in we strategic take growth our the $XX our also delivered in additional to to the

the their members quarter open aspire With continued each the thank during in to to will us help strong floor to future. team Company questions. want we our to I for the and that, we transform be StoneMor the Finally, of commitment success

Operator

your [Operator prompt You a [Operator will Instructions]. request. you. Instructions] [Operator three-tone Instructions]. Thank acknowledge to hear

open. Jed a line's brooklyn question Kellyn with Please from have your ahead, Group. We go

Jack Kelly

at, if on doing. of Yes. when or but what was apologize. had you is I is comment some any etc. wondering guys. Joe? off of on more that was Good considering can't the understanding what made, was that offer (ph) Joe opening looking of committee commented I know I the merging, you outside my special whether earlier your selling It back what committee just announcement special it's details, party parameters going a wasn't the was afternoon, committee the I are special strategic lot comments. pieces to missed from the an

Joe Redling

Yeah, Jack.

covered you've think I well. it

I predisposed or no think is there of another. focus one direction

a strategic consider. advisors is goal work with alternatives their their of So evaluate that to number we could to

after. So there's defined matter not go to really a

and So look and going the think strategically results at how how things really look they it's do this for we are can business can leverage how can we we to at better can about where the of business shareholders. structure

really it's the up on work to that to So their some committee bringing the board. to back advisors of with

Jack Kelly

Is when a of maybe when bit than months. month any two back And timeframe -- do, things limited potential a on the board? I might are there think better can bring the a it's I number you guess would been there to that to they

Joe Redling

we they as have so you I from market. I with engaged I and don't advisor will they And financial soon we them, comments, with have mean, something prepared today. share share a advisor. a as that said, legal hear Yes. the the -- have time to as you obviously

Jack Kelly

potential acquisitions, look you're probably I assume of getting geographic though within you ones, for acquisition be Does tires Just haven't areas? any and feel the do existing what's a kicking the would anything market there. out completed major And you attractive? in terms even

Joe Redling

footprint. think general now. a structure, We operational the manager right Jack. have want within very our market attractive stay to could We synergies. We our quite we correct, definitely is with that's bit think Yeah, of we think

looks we're pipeline very very strong Our so that in review. active

there'll be to feel come more just we about but so this, we're mentioned, on good this, activity got on the you we started seeing. As really

Jack Kelly

just last the in question terms of capex. Okay. And

were some or For million we should that a quarter, times rate case, the but number? or I the that the know looking forward, the why is made just for you're months, so, it comments on was catch-up a year doubled million is third -- X but was your annualize and last something there X.X up $X

Joe Redling

million $X The for rate quarter? the

Jack Kelly

Yes. In capex. Too many [Indiscernible]

Joe Redling

Yes.

our properties. probably opportunities we'd we that have financial think reinvest think I higher portfolio. within we I were that. think these to -- huge our With position I than in we're think looking look now, Honestly,

share additional opportunities So leverage capex to but start can we're More -- talking XXXX. generate we'll to as properties going we us that. and upgrade our about that do we that, more on if for to inventory come

Jack Kelly

Thank you.

Joe Redling

You bet.

Operator

And will call Keith I further time. Trost. questions back turn no are at to there the this

Keith Trost

to Thank with fourth for not you have or update. forward this if again today's please your at look discussed (XXX) you again the quarter the Investor any talking for our time out on Relations were In afternoon. XXX-XXXX. answered that We meantime, call, team you reach to questions

Operator

That please participation call the concludes for and today. We ask thank your you for lines. your you, disconnect

StoneMor (STON) 12 Nov 212021 Q3 Earnings call transcript