StoneMor Inc (STON) Reports Q1 Loss of $1.23, Revenues Miss

StoneMor Inc (NYSE: STON) reported Q1 EPS of ($1.23), versus ($0.54) reported last year. Revenue for the quarter came in at $66.4 million versus the consensus estimate of $85.58 million.

FOURTH QUARTER AND FULL YEAR FINANCIAL PERFORMANCE

• Revenues for the three months ended December 31, 2019 were $66.4 million compared to $83.4 million in the prior year period. Revenues for the twelve months ended December 31, 2019 were $289.5 million compared to $316.1 million in the prior year.
• Cemetery segment income for the three months ended December 31, 2019 was $0.6 million compared to $6.6 million in the prior year period, representing a decrease of $6.0 million. Cemetery segment income for the year ended December 31, 2019 was $12.4 million compared to $14.9 million in the prior year.
• Funeral home segment income for the three months ended December 31, 2019 and 2018 was $1.5 million. Funeral home segment income for the year ended December 31, 2019 was $5.9 million compared to $6.9 million in the prior year.
• Corporate overhead expense, excluding non-recurring expenses and non-cash stock compensation expense, increased to $10.6 million in the fourth quarter compared to $9.9 million in the prior year period. Corporate overhead expense, excluding non-recurring expenses and non-cash stock compensation expense, declined to $38.0 million for the full year period from $39.9 million in the prior year, as a result of corporate cost reduction initiatives.
• Fourth quarter net loss was $52.4 million compared to $20.5 million in the prior year period. Full year net loss was $151.9 million compared to $72.7 million in the prior year. The increased loss for the full year was driven primarily by the June 2019 recapitalization and the December 2019 C-Corp conversion, with increases in interest expense of $17.9 million related to the new debt financing, losses on the extinguishment of our old facility and increases in income tax expense of $30.0 million based on the change in tax status and a limitation on our ability to use our NOL carryovers following the recapitalization. Additionally, we recorded a $24.9 million impairment of goodwill during 2019.

Joe Redling, StoneMor’s President and Chief Executive Officer said, “We are starting to see the impact of our company-wide cost reduction initiatives take hold and we expect to benefit much more significantly from these actions in future quarters. Phase II of our cost reduction efforts are well underway, as evidenced by today’s announcement regarding our partnership with Moon Landscaping that will reduce costs and improve efficiencies across our entire cemetery portfolio. Additionally, we are in the process of launching a new procurement program that will improve internal controls and drive additional savings opportunities. We continue to identify and implement additional savings opportunities and we expect to incur one-time expenses of approximately $5 million to achieve these savings in the form of investments in technology platforms, software and other operational costs. That said, we expect that we will exceed our target of over $30 million in annualized cost savings.”

“COVID-19 is creating personal and economic disruption globally. During this challenging time, the health and safety of our team members, our families and our guests remain our top priority. We implemented safe work practices and work from home policies consistent with CDC guidance to reduce the risks of exposure to the virus while supporting the families that we serve. Services and gatherings are being limited in compliance with local, state and federal guidelines, but we are working with our locations to ensure that they have video streaming capabilities for the benefit of friends and family that cannot physically attend a service. We will also work with our families to ensure that additional services and memorials can be held after this pandemic has subsided.”

“Like every other business world-wide, we have been impacted by the COVID-19 pandemic. As recently as early March, we were on-pace to deliver double-digit sales growth for the first quarter 2020, as compared to the first quarter 2019. Over the last two weeks we have seen our Pre-Need sales activity decline as Americans practice social distancing. We have already taken steps to provide virtual meeting options using a variety of web-based tools to our entire salesforce and we are seeing encouraging early results. While we expect our Pre-Need sales business to be challenged during this period, we are doing everything possible to mitigate the disruption. Additionally, we expect this disruption will not have a material impact on our operating cash flow in 2020. Our cemeteries and funeral homes remain open and fully available to serve our families.”

For earnings history and earnings-related data on StoneMor Inc (STON) click here.

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