HOUSTON, Aug. 7 /PRNewswire-FirstCall/ -- Carriage Services, Inc.
(NYSE: CSV) today announced second quarter results and revised its Rolling
Four Quarter Outlook. Please go to the Investor homepage of Carriage's web
site at http://www.carriageservices.com for a link to the Press Release that
includes properly formatted Annual and Quarterly Trend Reports as well as the
data tables, which are downloadable in Excel(R) format. Results from
continuing operations for the second quarter of 2008 compared to the second
quarter of 2007 were as follows:
-- Revenues of $42.7 million compared to $41.3 million
-- Consolidated EBITDA of $7.1 million compared to $9.5 million.
-- Consolidated EBITDA Margin of 16.7% compared to 23.1%.
-- Diluted earnings per share of $0.00 compared to $0.10.
Melvin C. Payne, Chairman and Chief Executive Officer, stated, "Our second
quarter performance was disappointing. We like to say that there are no
excuses for underperformance, only reasons that should be viewed as
opportunities. Needless to say, we have plenty of opportunities on which to
focus during the remainder of 2008 in order to reverse this recent decline in
our performance so that we enter 2009 with strong positive momentum. Our near
term priorities are rebuilding key cemetery sales leadership and holding costs
in line with revenue across our entire portfolio consistent with our Standards
Operating Model. We view the second quarter as a wake-up call for our
leadership at all levels in a weak revenue environment and are confident that
our performance will improve quickly notwithstanding a slowing economy and
selective cost inflation.
"Our Field EBITDA Margin was lower in all areas compared to last year.
After an exceptionally strong first quarter for our same store funeral
operations, the second quarter was very weak, especially in our Western and
Central regions where many of our businesses were revenue challenged due to
weaker death rates and lower averages primarily because of a spike in
cremation rates. Lower revenue in these two regions combined with broadly
higher operating costs across all regions caused our same store Funeral Field
EBITDA Margin to decline to 33.2%, which was 420 basis points lower than last
year. Our same store cemetery performance remained weak for the second
straight quarter as we continue the process of rebuilding the sales leadership
and teams in our larger cemetery and combination businesses. While our same
store cemetery revenue was higher than the first quarter, the Cemetery Field
EBITDA Margin remained low at 25%, which was 900 basis points lower than last
year. And our acquisition portfolio showed operating weakness as well, as our
Acquisition Field EBITDA Margin was only 28.4%, which was 710 basis points
lower than the first quarter.
"Our Total Field EBITDA Margin was 30.8%, a decline of 510 basis points
compared to last year, leading to a decrease of $1.7 million in Total Field
EBITDA. When combined with an increase of $0.6 million in non-recurring
variable overhead, our weak operating performance resulted in a decline of
$2.4 million in Consolidated EBITDA to $7.1 million and a decline of 640 basis
points in Consolidated EBITDA Margin to 16.7%.
"Our Free Cash Flow was strong in the Second Quarter generating
$6.4 million, equal to $0.32 per diluted share. For the Second Quarter, our
Cemetery and Funeral trust performance was flat compared to a decline of 2.7%
for the S&P 500. For the first half through June 30, 2008, our Cemetery and
Funeral trust performance was down 1.6% which is an outstanding performance
compared to the 11.9% decline in S&P 500.
"Given the weakness in the second quarter, we are lowering our Rolling
Four Quarter Outlook through June 30, 2009 for diluted earnings per share from
$0.48 - $0.52 to $0.38 - $0.42, while maintaining our Long Term Outlook
through 2012. It is important to note that starting with the fourth quarter
of 2006 we experienced six straight quarters of excellent year over year
performance. We prefer to view our performance on a longer term basis through
our annual trend reports, but will be focused on improving results during the
balance of 2008 and positioning the Company for 2009 performance in the range
of what we believe is our sustainable earning power of $0.48 - $0.52 per
diluted share with our existing portfolio of operating assets."
Trend Reporting
"We report consolidated same store field operating and financial results
both on a multi-year and most recent rolling four quarters basis to reflect
long term trends, and by quarter for the most recent five quarters to reflect
short term trends and seasonality. Just as we report internally for each of
our businesses under the Standards Operating Model, these field level results
highlight trends in volumes, revenues, Field EBITDA (controllable profit) and
Field EBITDA Margin (controllable profit margin). Trend reporting allows us
to focus on the key operational and financial drivers relevant to the longer
term performance and valuation of our portfolio of deathcare businesses,"
added Payne.
"We maintain separate reporting of same store continuing operations
(adjusted for dispositions as they occur) and acquisition portfolio operations
to show how the execution of both our Standards Operating Model and our
Strategic Portfolio Optimization Model will change the sustainable revenue and
earning power profile of Carriage Services over time." The following trend
reports reflect results through the second quarter of 2008:
UNAUDITED INCOME STATEMENT FROM CONTINUING OPERATIONS
Annual Trend
For the Five Years Ended June 30, 2008
($000's)
Pro forma(1) Actual Actual
Year Year Year
2004 2005 2006
CONTINUING OPERATIONS
Same Store Contracts
Atneed Contracts 17,212 79.7% 17,163 79.6% 16,712 78.6%
Preneed Contracts 4,376 20.3% 4,405 20.4% 4,560 21.4%
Total Same Store
Funeral
Contracts 21,588 100.0% 21,568 100.0% 21,272 100.0%
Acquisition Contracts
Atneed Contracts - 53 64.6% 194 67.1%
Preneed Contracts - 29 35.4% 95 32.9%
Total Acquisition
Funeral Contracts - 82 100.0% 289 100.0%
New Store Openings - - -
Total Funeral
Contracts 21,588 21,650 21,561
Same Store Interments
Atneed Interments 2,324 26.3% 2,006 24.4% 2,100 25.0%
Preneed Interments 6,529 73.7% 6,213 75.6% 6,285 75.0%
Total Same Store
Cemetery
Interments 8,853 100.0% 8,219 100.0% 8,385 100.0%
Acquisition Interments
Atneed Interments - - -
Preneed Interments - - -
Total Acquisition
Cemetery Interments - - -
Total Cemetery
Interments 8,853 8,219 8,385
Same Store Revenue
Funeral Operations
Revenue $105,221 73.8% $107,139 72.7% $109,592 73.4%
Preneed Commission
and Other Revenue 1,319 0.9% 2,295 1.6% 2,267 1.5%
Total Funeral
Same Store
Revenue 106,540 74.7% 109,434 74.3% 111,859 74.9%
Cemetery Operations
Revenue 33,203 23.3% 33,940 23.0% 32,107 21.5%
Cemetery Financial
Revenue 2,912 2.0% 3,615 2.5% 4,052 2.7%
Total Same Store
Cemetery
Revenue 36,115 25.3% 37,555 25.5% 36,159 24.2%
Total Same Store
Revenue 142,655 100.0% 146,989 99.8% 148,018 99.1%
Acquisition Revenue
Funeral Operations
Revenue - 0.0% 303 0.2% 1,339 0.9%
Cemetery Operations
Revenue - - -
Cemetery Financial
Revenue - - -
Total Acquisition
Revenue - 0.0% 303 0.2% 1,339 0.9%
Total Revenue from
Continuing
Operations $142,655 100.0% $147,292 100.0% $149,357 100.0%
Field EBITDA from
Continuing
Operations
Same Store Funeral
Field EBITDA $37,061 76.4% $38,973 75.5% $41,127 79.0%
Same Store Funeral
Field EBITDA
Margin 34.8% 35.6% 36.8%
Same Store Cemetery
Field EBITDA 11,458 23.6% 12,545 24.3% 10,645 20.4%
Same Store Cemetery
Field EBITDA
Margin 31.7% 33.4% 29.4%
Total Same Store
Field EBITDA 48,519 100.0% 51,518 99.8% 51,772 99.4%
Total Same Store
Field EBITDA
Margin 34.0% 35.0% 35.0%
Acquisition Funeral
Field EBITDA - 0.0% 92 0.2% 313 0.6%
Acquisition Funeral
Field EBITDA Margin - 30.4% 23.4%
Acquisition Cemetery
Field EBITDA - - -
Acquisition Cemetery
Field EBITDA Margin - - -
Total Acquisition
Field EBITDA - 0.0% 92 0.2% 313 0.6%
Total Acquisition
Field EBITDA
Margin - 30.4% 23.4%
Total Field EBITDA from
Continuing
Operations 48,519 100.0% 51,610 100.0% 52,085 100.0%
Total Field EBITDA
Margin from Continuing
Operations 34.0% 35.0% 34.9%
Overhead
Total Variable
Overhead 1,910 11.5% 2,245 12.5% 3,402 17.4%
Total Regional
Fixed Overhead 2,892 17.4% 3,247 18.0% 2,977 15.2%
Total Corporate
Fixed Overhead 11,825 71.1% 12,501 69.5% 13,170 67.4%
Total Overhead 16,627 100.0% 17,993 100.0% 19,549 100.0%
11.7% 12.2% 13.1%
Consolidated EBITDA
from Continuing
Operations $31,892(2) $33,617(2) $32,536
Consolidated EBITDA
Margin from Continuing
Operations 22.4% 22.8% 21.8%
Total Depreciation &
Amortization 9,208 8,838 8,627
Interest, Net 16,908 18,591 17,106
Refinancing Costs - 6,933 -
Special Charges/Other
(Gains) Losses (940) 1,268
Team Partners
Incentive Expense 110 276
Pretax Income 6,606 (2,289) 6,803
Benefit for Income
Taxes due to a
Valuation Adjustment (810) - -
Income Tax 2,549 (736) 2,237
Net income from
Continuing
Operations $4,867 $(1,553) $4,566
3.4% -1.1% 3.1%
Diluted EPS-from
continuing operations $0.27 $(0.07) $0.19
Actual Actual
Year Trailing 4 Qtrs
2007 2008
CONTINUING OPERATIONS
Same Store Contracts
Atneed Contracts 16,330 78.8% 16,778 80.2%
Preneed Contracts 4,400 21.2% 4,146 19.8%
Total Same Store Funeral
Contracts 20,730 100.0% 20,924 100.0%
Acquisition Contracts
Atneed Contracts 1,476 69.8% 2,567 74.0%
Preneed Contracts 638 30.2% 901 26.0%
Total Acquisition Funeral
Contracts 2,114 100.0% 3,468 100.0%
New Store Openings 522 718
Total Funeral Contracts 23,366 25,110
Same Store Interments
Atneed Interments 2,055 27.2% 1,878 25.0%
Preneed Interments 5,506 72.8% 5,627 75.0%
Total Same Store Cemetery
Interments 7,561 100.0% 7,505 100.0%
Acquisition Interments
Atneed Interments 273 23.6% 298 20.5%
Preneed Interments 886 76.4% 1,157 79.5%
Total Acquisition Cemetery
Interments 1,159 100.0% 1,455 100.0%
Total Cemetery Interments 8,720 8,960
Same Store Revenue
Funeral Operations Revenue 110,932 66.5% 111,490 64.4%
Preneed Commission and Other
Revenue 2,197 1.3% 2,372 1.4%
Total Funeral Same Store
Revenue 113,129 67.8% 113,862 65.8%
Cemetery Operations Revenue 34,300 20.6% 31,543 18.2%
Cemetery Financial Revenue 4,526 2.7% 4,872 2.8%
Total Same Store Cemetery
Revenue 38,826 23.3% 36,415 21.0%
Total Same Store Revenue 151,955 91.1% 150,277 86.9%
Acquisition Revenue
Funeral Operations Revenue 10,710 6.4% 16,998 9.8%
Cemetery Operations Revenue 3,874 2.3% 5,390 3.1%
Cemetery Financial Revenue 317 0.2% 331 0.2%
Total Acquisition Revenue 14,901 8.9% 22,719 13.1%
Total Revenue from Continuing
Operations $166,856 100.0% $172,996 100.0%
Field EBITDA from Continuing
Operations
Same Store Funeral Field
EBITDA 43,080 70.3% 42,890 70.3%
Same Store Funeral Field
EBITDA Margin 38.1% 37.7%
Same Store Cemetery Field
EBITDA 13,466 22.0% 10,608 17.4%
Same Store Cemetery Field
EBITDA Margin 34.7% 29.1%
Total Same Store Field
EBITDA 56,546 92.2% 53,498 87.7%
Total Same Store Field
EBITDA Margin 37.2% 35.6%
Acquisition Funeral Field
EBITDA 3,724 6.1% 5,814 9.5%
Acquisition Funeral Field
EBITDA Margin 34.8% 34.2%
Acquisition Cemetery Field
EBITDA 1,053 1.7% 1,655 2.7%
Acquisition Cemetery Field
EBITDA Margin 25.1% 28.9%
Total Acquisition Field
EBITDA 4,777 7.8% 7,469 12.3%
Total Acquisition Field
EBITDA Margin 32.1% 32.9%
Total Field EBITDA from Continuing
Operations 61,322 100.0% 60,967 100.0%
Total Field EBITDA Margin from
Continuing Operations 36.8% 35.2%
Overhead
Total Variable Overhead 5,107 22.9% 6,289 26.9%
Total Regional Fixed Overhead 3,217 14.4% 3,283 14.1%
Total Corporate Fixed Overhead 13,997 62.7% 13,771 59.0%
Total Overhead 22,321 100.0% 23,343 100.0%
13.4% 13.5%
Consolidated EBITDA from Continuing
Operations $39,001 $37,624
Consolidated EBITDA Margin from
Continuing Operations 23.4% 21.7%
Total Depreciation & Amortization 9,488 9,809
Interest, Net 17,195 17,896
Refinancing Costs - -
Special Charges/Other (Gains) Losses -
Team Partners Incentive Expense -
Pretax Income 12,319 9,919
Benefit for Income Taxes due to a
Valuation Adjustment - -
Income Tax 4,960 4,089
Net income from Continuing Operations $7,359 $5,830
4.4% 3.4%
Diluted EPS-from continuing operations $0.38 $0.30
(1) Effective January 1, 2005, the company changed its accounting method
to expense preneed selling costs incurred for the origination of
prearranged funeral and cemetery sales contracts. Results of
operations for the year ended December 31, 2004 is presented on a
proforma basis applying the new accounting method.
(2) Reclassified special charges (gains) and Team Partner Incentive
expense to improve comparability of periods presented.
UNAUDITED INCOME STATEMENT FROM CONTINUING OPERATIONS
Quarter Trend
For the Five Quarters Ended June 30, 2008
($000's)
Actual Actual Actual
Qtr 2 Qtr 3 Qtr 4
2007 2007 2007
CONTINUING OPERATIONS
Same Store Contracts
Atneed Contracts 3,933 77.1% 3,870 80.0% 4,165 79.9%
Preneed Contracts 1,165 22.9% 966 20.0% 1,047 20.1%
Total Same Store
Funeral Contracts 5,098 100.0% 4,836 100.0% 5,212 100.0%
Acquisition Contracts
Atneed Contracts 248 67.4% 437 69.1% 607 71.9%
Preneed Contracts 120 32.6% 195 30.9% 237 28.1%
Total Acquisition
Funeral Contracts 368 100.0% 632 100.0% 844 100.0%
New Store Openings 126 132 144
Total Funeral
Contracts 5,592 5,600 6,200
Same Store Interments
Atneed Interments 537 27.9% 492 27.9% 443 24.8%
Preneed Interments 1,391 72.1% 1,271 72.1% 1,342 75.2%
Total Same Store
Cemetery
Interments 1,928 100.0% 1,763 100.0% 1,785 100.0%
Acquisition Interments
Atneed Interments 81 30.1% 76 21.7% 77 20.3%
Preneed Interments 188 69.9% 275 78.3% 303 79.7%
Total Acquisition
Cemetery Interments 269 100.0% 351 100.0% 380 100.0%
Total Cemetery
Interments 2,197 2,114 2,165
Same Store Revenue
Funeral Operations
Revenue $27,506 66.6% $25,686 63.6% $27,776 64.6%
Preneed Commission
and Other Revenue 625 1.5% 502 1.2% 443 1.0%
Total Funeral Same
Store Revenue 28,131 68.1% 26,188 64.8% 28,219 65.7%
Cemetery Operations
Revenue 9,408 22.8% 8,360 20.7% 7,764 18.1%
Cemetery Financial
Revenue 733 1.8% 1,321 3.3% 1,543 3.6%
Total Cemetery Same
Store Revenue 10,141 24.5% 9,681 24.0% 9,307 21.7%
Total Same Store
Revenue 38,272 92.6% 35,869 88.8% 37,526 87.3%
Acquisition Revenue
Funeral Operations
Revenue 1,943 4.7% 3,290 8.1% 3,995 9.3%
Cemetery Operations
Revenue 1,014 2.5% 1,193 3.0% 1,296 3.0%
Cemetery Financial
Revenue 87 0.2% 50 0.1% 161 0.4%
Total Acquisition
Revenue 3,044 7.4% 4,533 11.2% 5,452 12.7%
Total Revenue from
Continuing Operations $41,316 100.0% $40,402 100.0% $42,978 100.0%
Field EBITDA from
Continuing Operations
Same Store Funeral
Field EBITDA $10,509 70.9% $8,978 65.8% $11,133 69.0%
Same Store Funeral
Field EBITDA Margin 37.4% 34.3% 39.5%
Same Store Cemetery
Field EBITDA 3,451 23.3% 3,159 23.1% 3,133 19.4%
Same Store Cemetery
Field EBITDA Margin 34.0% 32.6% 33.7%
Total Same Store
Field EBITDA 13,960 94.1% 12,137 88.9% 14,266 88.4%
Total Same Store
Field EBITDA
Margin 36.5% 33.8% 38.0%
Acquisition Funeral
Field EBITDA 545 3.7% 1,298 9.5% 1,423 8.8%
Acquisition Funeral
Field EBITDA Margin 28.0% 39.5% 35.6%
Acquisition Cemetery
Field EBITDA 325 2.2% 212 1.6% 452 2.8%
Acquisition Cemetery
Field EBITDA Margin 32.1% 17.9% 35.0%
Total Acquisition
Field EBITDA 870 5.9% 1,510 11.1% 1,875 11.6%
Total Acquisition
Field EBITDA
Margin 28.6% 33.3% 34.4%
Total Field EBITDA
from Continuing
Operations 14,830 100.0% 13,647 100.0% 16,141 100.0%
Total Field EBITDA
Margin from
Continuing Operations 35.9% 33.8% 37.6%
Overhead
Total Variable
Overhead 1,059 20.0% 1,135 20.4% 1,852 30.1%
Total Regional Fixed
Overhead 813 15.4% 886 15.9% 731 11.9%
Total Corporate Fixed
Overhead 3,421 64.6% 3,553 63.7% 3,567 58.0%
Total Overhead 5,293 100.0% 5,574 100.0% 6,150 100.0%
12.8% 13.8% 14.3%
Consolidated EBITDA
from Continuing
Operations $9,537 $8,073 $9,991
Consolidated EBITDA
Margin from
Continuing Operations 23.1% 20.0% 23.2%
Total Depreciation &
Amortization 2,285 2,398 2,336
Interest, Net 4,157 4,388 4,474
Pretax Income 3,095 1,287 3,181
Income tax 1,192 584 1,352
Net income from
Continuing Operations $1,903 $703 $1,829
4.6% 1.7% 4.3%
Diluted EPS-from
continuing operations $0.10 $0.04 $0.10
Actual Actual
Qtr 1 Qtr 2
2008 2008
CONTINUING OPERATIONS
Same Store Contracts
Atneed Contracts 4,640 80.1% 4,103 80.7%
Preneed Contracts 1,150 19.9% 983 19.3%
Total Same Store Funeral
Contracts 5,790 100.0% 5,086 100.0%
Acquisition Contracts
Atneed Contracts 800 76.9% 723 75.9%
Preneed Contracts 240 23.1% 229 24.1%
Total Acquisition Funeral
Contracts 1,040 100.0% 952 100.0%
New Store Openings 210 232
Total Funeral Contracts 7,040 6,270
Same Store Interments
Atneed Interments 493 23.6% 450 24.1%
Preneed Interments 1,598 76.4% 1,416 75.9%
Total Same Store Cemetery
Interments 2,091 100.0% 1,866 100.0%
Acquisition Interments
Atneed Interments 83 21.0% 62 18.9%
Preneed Interments 313 79.0% 266 81.1%
Total Acquisition Cemetery
Interments 396 100.0% 328 100.0%
Total Cemetery Interments 2,487 2,194
Same Store Revenue
Funeral Operations Revenue $31,304 66.7% $26,724 62.6%
Preneed Commission and Other
Revenue 752 1.6% 675 1.6%
Total Funeral Same Store Revenue 32,056 68.3% 27,399 64.2%
Cemetery Operations Revenue 7,281 15.5% 8,138 19.1%
Cemetery Financial Revenue 1,004 2.1% 1,004 2.4%
Total Cemetery Same Store Revenue 8,285 17.7% 9,142 21.4%
Total Same Store Revenue 40,341 86.0% 36,541 85.6%
Acquisition Revenue
Funeral Operations Revenue 4,961 10.6% 4,752 11.1%
Cemetery Operations Revenue 1,534 3.3% 1,367 3.2%
Cemetery Financial Revenue 81 0.2% 39 0.1%
Total Acquisition Revenue 6,576 14.0% 6,158 14.4%
Total Revenue from Continuing
Operations $46,917 100.0% $42,699 100.0%
Field EBITDA from Continuing
Operations
Same Store Funeral Field EBITDA $13,680 75.8% $9,099 69.3%
Same Store Funeral Field EBITDA
Margin 42.7% 33.2%
Same Store Cemetery Field EBITDA 2,033 11.3% 2,283 17.4%
Same Store Cemetery Field EBITDA
Margin 24.5% 25.0%
Total Same Store Field EBITDA 15,713 87.1% 11,382 86.7%
Total Same Store Field EBITDA
Margin 39.0% 31.1%
Acquisition Funeral Field EBITDA 1,746 9.7% 1,347 10.3%
Acquisition Funeral Field EBITDA
Margin 35.2% 28.3%
Acquisition Cemetery Field EBITDA 589 3.3% 402 3.1%
Acquisition Cemetery Field EBITDA
Margin 38.4% 29.4%
Total Acquisition Field EBITDA 2,335 12.9% 1,749 13.3%
Total Acquisition Field EBITDA
Margin 35.5% 28.4%
Total Field EBITDA from Continuing
Operations 18,048 100.0% 13,131 100.0%
Total Field EBITDA Margin from
Continuing Operations 38.5% 30.8%
Overhead
Total Variable Overhead 1,689 30.1% 1,613 26.8%
Total Regional Fixed Overhead 833 14.9% 833 13.9%
Total Corporate Fixed Overhead 3,087 55.0% 3,564 59.3%
Total Overhead 5,609 100.0% 6,010 100.0%
12.0% 14.1%
Consolidated EBITDA from Continuing
Operations $12,439 $7,121
Consolidated EBITDA Margin from
Continuing Operations 26.5% 16.7%
Total Depreciation & Amortization 2,530 2,545
Interest, Net 4,529 4,505
Pretax Income 5,380 71
Income tax 2,125 28
Net income from Continuing
Operations $3,255 $43
6.9% 0.1%
Diluted EPS-from continuing
operations $0.16 $-
Same Store Portfolio
"While same store funeral contracts were flat with last year's second
quarter, same store funeral revenue decreased 2.6% primarily because of a
280 basis point spike in our cremation rate to 36.2% from 33.4%. The spike in
cremation rate was comparable to the 290 basis point spike in the first
quarter and was broadly evident across all regions. Moreover, we had a slight
decline in our second quarter atneed burial and cremation averages for the
first time since we started tracking atneed and preneed contracts separately
in 2006. With our funeral businesses challenged for revenue during the second
quarter, the operating leverage dynamic worked against us and was compounded
by increased operating costs across our portfolio, resulting in a decline of
420 basis points to 33.2% in our same store Funeral Field EBITDA Margin.
However, our same store Funeral Field EBITDA Margin on a trailing four quarter
basis only declined by 40 basis points to 37.7% when compared to calendar year
2007, which remains a high level of Field EBITDA Margin when viewed
historically over a period of years. We estimate that the weaker revenue
accounted for about 2.4 cents per share and higher costs of 1.9 cents per
share compared to the second quarter of last year. We can and will do better
-- starting in the third quarter.
"Same store cemetery performance improved slightly over the first quarter,
but operating revenue was down 13.5% or $1.3 million from last year, while
financial revenue was up 37% or $0.3 million and Cemetery Field EBITDA Margin
declined 900 basis points to 25%, resulting in a 34% decrease in same store
Cemetery Field EBITDA to $2.3 million. We estimate that the weaker cemetery
performance accounted for about 3.6 cents per share compared to the second
quarter of last year. We are making good progress in rebuilding the sales
leadership and teams at our larger parks and expect this process to be
complete by year end. However, we do not expect a return to the 2007
performance level until sometime in 2009. We also now believe that general
economic weakness in some of our key markets is having a negative impact on
our preneed and atneed cemetery sales, which together with the cremation spike
and lower funeral revenue averages are the primary reasons for lowering the
Rolling Four Quarter Outlook."
Acquisition Portfolio
"This quarter was the second full quarter of ownership for all of the
seven acquisitions made during 2007, which accounted for an increase of
$3.1 million in Total Acquisition Revenue and a $0.9 million increase in
Acquisition Field EBITDA which added more than $0.02 per share to our
quarterly earnings per share. However, the large decline from the first
quarter of 710 basis points in the Total Acquisition Field EBITDA Margin to
28.4% was disappointing and reflects that the acquisition portfolio
experienced challenging conditions similar to our same store portfolio, but
also that we have not yet effectively integrated most of this group to be in
alignment with our Standards Operating Model. Our goal is to have this group
with the right leadership in place and aligned with our operating and
leadership models by year end so that we achieve Acquisition Field EBITDA
Margin performance for all of 2009 equal to or better than our same store
performance."
Dispositions
"Carriage will report a total loss of $0.07 per share for the second
quarter of 2008 as we completed two small, non strategic funeral home
dispositions during the quarter that resulted in non-cash losses of
$2.4 million equal to $0.07 per share and which produced $1.0 million of cash
proceeds."
Overhead
"Total overhead increased $0.7 million to $6 million with almost all of
the increase in this year's quarter related to severance for Joe Saporito, who
resigned as CFO effective April 30, 2008. When the severance expense of over
$0.02 per share is excluded, Total Overhead was up only 1.8% from last year
and declined 20 basis points as a percent of revenue to 12.6%. The second
quarter also included $260,000 of variable litigation expense equal to almost
$0.01 per share that will wind down as the specific litigation is concluded,
which we now expect to be sometime in 2009."
Free Cash Flow
"Carriage generated $6.4 million of Free Cash Flow (defined as cash flow
from continuing operations less maintenance capital expenditures) during the
second quarter of 2008. The elements of Cash Flow for the first half of 2008
consisted of the following (in millions):
Cash flow from continuing operations $11.9
Cash used for maintenance capital expenditures (3.4)
Free Cash Flow for first half of 2008 8.5
Cash and liquid investments at beginning of year 3.4
Cash flow from discontinued operations 0.2
Proceeds from sales of businesses 1.0
Cash used for growth capital expenditures - funeral homes (2.5)
Cash used for growth capital expenditures - cemeteries (1.4)
Financing activities (0.4)
Cash at June 30, 2008 $8.8
Rolling Four Quarter Outlook
The Rolling Four Quarter Outlook ranges for the period ending June 30,
2009 are intended to approximate what the Company believes will be the
sustainable earning power of its portfolio of deathcare assets over the next
four quarters as the three models are effectively executed. Payne added, "We
have learned that it is better to be 'roughly right' most of the time rather
than 'precisely wrong' all of the time when forecasting our future results due
to the uncertainties in estimating key drivers of near term performance.
These drivers include funeral contract volumes, cremation mix, preneed sales,
preneed maturities and deliveries, average revenue per service and sale, Field
EBITDA Margins, acquisition size, timing and performance, and variable
overhead items, just to name a few. Because we are dealing with several
recent negative trends with some of these performance drivers, we have less
visibility of our near term results and do not want to be 'roughly wrong'
about our guidance. Therefore we are lowering our Rolling Four Quarter
Outlook until there is more near term certainty in the drivers of our
performance and better execution of our models that leads to sustainable
performance.
"We believe that Rolling Four Quarter Outlook performance ranges updated
for acquisitions and dispositions will result in a more accurate near term
assessment of the company's prospects that is not constrained by a fixed and
arbitrary 'finish line' at the end of each quarter or calendar year. In our
Four Quarter Outlook ending June 30, 2009, we have assumed no additional
acquisitions. Although we are in the market evaluating candidates, we do not
plan to close an acquisition in 2008 and will follow our policy of updating
our Outlook when the closing of a transaction is certain."
ROLLING FOUR QUARTER OUTLOOK - Period Ending June 30, 2009
(Amounts in Millions, Except per Share Amounts)
Range
Revenues $175.0 - $181.0
Field EBITDA $63.0 - $65.0
Field EBITDA Margin 34.8% - 37.1%
Total Overhead $22.5 - $23.5
Consolidated EBITDA $39.5 - $42.5
Consolidated EBITDA Margin 21.8% - 24.3%
Interest $18.0
Depreciation & Amortization $10.0
Cash Taxes $1.0
Net Earnings from Cont. Operations $7.5 - $8.3
Diluted Earnings Per Share $0.38 - $0.42
Free Cash Flow $12.0 - $14.0
Long Term Outlook -- Through 2012 (Base Year 2006)
Revenue growth of 7-9% annually, including acquisitions
Consolidated EBITDA growth of 9-11% annually, including acquisitions
Consolidated EBITDA Margin range of 24-26%
Growth internally funded without new debt or equity
Second Quarter Conference Call Information
Carriage Services has scheduled a conference call for tomorrow, Friday,
August 8, 2008 at 10:30 a.m. Eastern Time. To participate in the call, dial
303-262-2142 at least ten minutes before the conference call begins and ask
for the Carriage Services conference call. A replay of the call will be
available approximately two hours after the live broadcast ends and will be
accessible until August 15, 2008. To access the replay, dial 303-590-3000 and
enter pass code 11118040#.
Investors, analysts and the general public will also have the opportunity
to listen to the conference call free over the Internet by visiting
http://www.carriageservices.com. To listen to the live call on the web,
please visit the website at least fifteen minutes early to register, download
and install any necessary audio software. For those who cannot listen to the
live webcast, an audio archive will be available shortly after the call and
will be accessible for approximately 90 days. For more information, please
contact Karen Roan at DRG&E at (713) 529-6600 or email kcroan@drg-e.com.
Carriage Services is a leading provider of death care services and
products. As of August 7, 2008, Carriage operates 136 funeral homes in
25 states and 32 cemeteries in 11 states.
Use of Non-GAAP Financial Measures
This press release uses the following Non-GAAP financial measures "free
cash flow and EBITDA". Both free cash flow and EBITDA are used by investors
to value common stock. The Company considers free cash flow to be an
important indicator of its ability to generate cash for acquisitions and other
strategic investments. The Company has included EBITDA in this press release
because it is widely used by investors to compare the Company's financial
performance with the performance of other deathcare companies. The Company
also uses Field EBITDA and Field EBITDA Margin to monitor and compare the
financial performance of the individual funeral and cemetery field businesses.
EBITDA does not give effect to the cash the Company must use to service its
debt or pay its income taxes and thus does not reflect the funds actually
available for capital expenditures. In addition, the Company's presentation
of EBITDA may not be comparable to similarly titled measures other companies
report. 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.
The Company categorizes its general and administrative expenses into three
categories of overhead: (1) variable overhead, (2) regional fixed overhead and
(3) corporate fixed overhead. Variable overhead consists of cost and expense
such as incentive compensation which will vary with profitability or legal
expense unrelated to our day to day operations. Regional fixed overhead and
corporate fixed overhead represent the cost and expenses of our regional
operations leaders and the home office and will not vary as a result of
profitability.
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.
These statements are based on assumptions that the Company believes are
reasonable; however, many important factors, as discussed under
"Forward-Looking Statements and Cautionary Statements" in the Company's Annual
Report and Form 10-K for the year ended December 31, 2007, could cause the
Company's results in the future to differ materially from the forward-looking
statements made herein and in any other documents or oral presentations made
by, or on behalf of, the Company. The Company assumes no obligation to
update or publicly release any revisions to forward-looking statements made
herein or any other forward-looking statements made by, or on behalf of, the
Company. A copy of the Company's Form 10-K, and other Carriage Services
information and news releases, are available at
http://www.carriageservices.com.
CARRIAGE SERVICES, INC.
Selected Financial Data
June 30, 2008
(unaudited)
Selected Balance Sheet Data: 12/31/07 06/30/08
Cash and short-term investments $3,446 $8,764
Total Senior Debt (a) 138,913 138,179
Days sales in funeral accounts receivable 22.9 22.1
Senior Debt to total capitalization 40.9 40.4
Senior Debt to EBITDA from continuing
operations (rolling twelve months) 3.53 3.67
(a) - Senior debt does not include the convertible junior subordinated
debentures.
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 from continuing operations to EBITDA from
continuing operations for the following periods (in 000s). Rolling twelve
months ended 6/30/2009 is presented at the midpoint of the range identified in
the release:
Three Three Twelve
months months months
ended ended Ended
6/30/2007 6/30/2008 6/30/2009 E
Net income from continuing operations $1,903 $43 $8,100
Provision for income taxes 1,192 28 4,900
Pre-tax earnings from continuing
operations 3,095 71 13,000
Net interest expense, including
loan cost amortization 4,157 4,505 18,000
Depreciation & amortization 2,285 2,545 10,000
EBITDA from continuing operations $9,537 $7,121 $41,000
Revenue from continuing operations $41,316 $42,699 $178,000
EBITDA margin from continuing
operations 23.1% 16.7% 22.6%
Reconciliation of Non-GAAP Financial Measures Continued:
Reconciliation of cash provided by operating activities from continuing
operations to free cash flow (in 000's):
Three months Three months
ended ended
6/30/2007 6/30/2008
Cash provided by operating activities from
continuing operations $8,356 $8,507
Less maintenance capital expenditures from
continuing operations (1,772) (2,071)
Free cash flow from continuing operations $6,584 $6,436
Six months Six months
ended ended
6/30/2007 6/30/2008
Cash provided by operating activities from
continuing operations $10,132 $11,854
Less capital expenditures from continuing
operations (3,390) (3,385)
Free cash flow from continuing operations $6,742 $8,469
Reconciliation of estimated net income to free cash flow for the twelve
months ending June 30, 2009(in 000's):
Net income $8,100
Tax expense 4,900
Interest expense, net 18,000
Depreciation and amortization 10,000
EBITDA $41,000
Interest paid 18,000
Cash taxes 1,000
Maintenance capital expenditures 9,000
Free cash flow $13,000
Contacts: Mel Payne, Chairman & CEO
Billy Dixon, Sr. Vice President & CFO
Carriage Services, Inc.
713-332-8400
Ken Dennard / ksdennard@drg-e.com
Kip Rupp / krupp@drg-e.com
DRG&E / 713-529-6600
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