OREANDA-NEWS. StoneMor Partners L.P. (NYSE:STON) (“StoneMor” or the “Partnership”) has reported operating and financial results for the second quarter 2016.

Second Quarter Summary

  • On a GAAP basis, the Partnership generated a net loss of $9.1 million for the second quarter 2016 compared with a net loss of $4.8 million for the prior year second quarter, an unfavorable change of $4.3 million.  The change in earnings is primarily attributable to reduced trust-related investment income of $4.3 million and a $0.8 million decrease in cemetery margin, partially offset by improvements of $0.7 million in both corporate overhead and funeral home margin.
  • Adjusted EBITDA(1), a non-GAAP measure, was $23.0 million for the second quarter 2016, a decrease of $3.6 million compared to $26.6 million for the prior year second quarter. The change in Adjusted EBITDA was primarily attributable to a $6.4 million decrease in non-GAAP trust-related investment income(1)  primarily due to an almost $8.0 million decline in realized gains and a $0.4 million decrease in non-GAAP cemetery margin(1) due principally to a decrease in at-need sales.  Partially offsetting these declines was a $2.0 million decrease in non-GAAP corporate overhead expenses resulting from lower labor costs and professional fees and a $1.0 million increase in non-GAAP funeral home margin(1) arising from contributions from recent acquisitions and lower same store expenses.
  • Distributable cash flow(1), a non-GAAP measure, was $16.8 million for the second quarter 2016 compared with $19.6 million for the prior year second quarter, a decrease of $2.8 million.  The change in distributable cash flow was primarily attributable to a $3.6 million decrease in Adjusted EBITDA partially offset by a $0.8 million decrease in maintenance capital expenditures.
  • On August 4, 2016, the Partnership entered into a new, $210 million revolving credit facility, replacing its previously existing $180 million facility.  The new facility, which has a current maturity date of December 1, 2020, includes significant improvements to the previous facility, including an accordion feature which allows the facility to be increased up to $310 million and a reduction of interest rates on borrowings between 0.75% and 1.00% annually, among other items.

(1)  These non-GAAP financial measures are used internally by the Partnership to measure Partnership operating performance, and management believes that they are relevant and helpful to investors in understanding that performance.  A reconciliation of non-GAAP financial measures with the most directly comparable financial measures presented in accordance with GAAP is provided in the Financial and Operating Highlights table of this release (please see footnotes 1 and 3 to such table).  Non-GAAP financial measures used by the Partnership should not be considered as alternatives to GAAP financial measures, and you should not consider such non-GAAP financial measures in isolation or as a substitute for the Partnership’s results as reported under GAAP.

  • As previously announced, the Partnership declared a $0.66 distribution for the second quarter, our 47th consecutive quarterly distribution.  Management of the Partnership believes that demographic trends and improved operational execution will continue to support the maintenance of the current distribution.

Larry Miller, StoneMor’s President and CEO, commented, “While pre-need sales in our cemetery division rebounded strongly from the prior two quarters, they are not yet at levels we anticipated and were a significant driver of our shortfall to previously announced guidance for the period.

“We decided last year to focus our efforts on ensuring we have the highest quality salesforce possible and reducing salesforce turnover to better drive sales.  In order to achieve these goals and be well positioned for future growth, we made structural changes which resulted in the elimination of our underperforming sales professionals.  Because of our increased selectivity in filling these vacancies, headcount was slow to ramp, resulting in fewer salespeople engaging customers and pre-need sales falling below acceptable levels.  The corrective action we are taking to improve overall sales performance is taking longer than we expected to implement and yield results.  We expect to announce additional measures in the coming weeks and once our salesforce returns to its optimal size and strength, we expect pre-need sales to return to targeted growth levels.

“In addition, we initiated a program early this year designed to take advantage of the scale we have achieved through our growth acquisition program. Through both enhanced efficiency and leveraging of our position as an industry leader, we have reduced annual operating and overhead costs by $2.5 million year-to-date, with an additional $5.0 million of savings to be announced in the next few weeks.  These actions will help assure our ability to achieve our revised full year guidance of $100 million to $110 million of Adjusted EBITDA(1) for 2016.”

Financial Highlights  
   
  Three Months Ended  
  June 30,  
  2016   2015  
         
  (in thousands, except per unit data)  
Revenues  $ 75,549     $ 80,825    
         
Net loss  $ (9,079 )   $ (4,848 )  
         
Adjusted EBITDA(2)  $ 22,957     $ 26,627    
         
Distributable Available Cash(2)  $ 30,288     $ 26,013    
         
Cash Distributions   $ 23,316     $ 18,349    
per unit $ 0.66     $ 0.65    
         
  At June 30,  
   2016    2015  
Backlog(3)  $ 640,833     $ 591,547    
         
  • Net loss for the second quarter 2016 of $9.1 million compared to $4.8 million for the prior year second quarter.  Losses in both periods were driven principally by deferral of revenues, cost of goods sold and selling expenses associated with the Partnership’s pre-need sales, while other period operating costs, such as cemetery and general and administrative expenses, were expensed as incurred.  In addition, investment income (GAAP) from trusts declined by $4.3 million in the second quarter 2016 compared with the prior year period.
  • Adjusted EBITDA(2) a non-GAAP financial measure, of $23.0 million for the second quarter 2016 compared with $21.9 million in the first quarter of 2016 and $26.6 million for the prior year second quarter.

(1)  With respect to the 2016 guidance, the Partnership is not able to provide a reconciliation of this forward-looking non-GAAP financial measure to the most directly comparable GAAP financial measure because not all of the information necessary for such quantitative reconciliation is available to the Partnership without unreasonable efforts due to variability and difficulty in making accurate forecasts and projections and/or certain information not being ascertainable or accessible.
(2)  These non-GAAP financial measures are used internally by the Partnership to measure Partnership operating performance, and management believes that they are relevant and helpful to investors in understanding that performance.  A reconciliation of non-GAAP financial measures with the most directly comparable financial measures presented in accordance with GAAP is provided in the Financial and Operating Highlights table of this release (please see footnotes 1 and 3 to such table).  Non-GAAP financial measures used by the Partnership should not be considered as alternatives to GAAP financial measures, and you should not consider such non-GAAP financial measures in isolation or as a substitute for the Partnership’s results as reported under GAAP.
(3)  Amounts as of period end.  Backlog is defined as deferred revenues and investment income less deferred selling and obtaining costs.  It does not include deferred unrealized gains and losses and other-than-temporary impairment on merchandise trust assets.

  • Distributable Available Cash(1), a non-GAAP financial measure, of $30.3 million for the second quarter 2016 compared with $29.0 million in the first quarter of 2016 and $26.0 million for the prior year second quarter, a 16.5% increase.
  • Backlog(2) increased by $49.3 million, or 8.3% compared with June 30, 2015.

Operating Highlights

Cemetery Operations

  • Cemetery contracts written for the second quarter 2016 were 28,365 compared to 26,031 in the first quarter 2016 and 30,227 in the prior year second quarter.
  • GAAP cemetery margin was $1.2 million for the second quarter 2016, a decrease of $0.8 million compared to the second quarter 2015.  GAAP cemetery margin percentage was approximately 2% for the second quarter 2016, compared with 4% in the prior year second quarter.  Non-GAAP cemetery margin(1) was $15.2 million for the second quarter 2016 compared with $15.6 million for the prior year second quarter, a decrease of $0.4 million due principally to lower at-need sales, partially offset by lower cemetery costs due to cost reduction initiatives.  Non-GAAP cemetery margin percentage was approximately 22% for the second quarter 2016, compared with 21% in the prior year second quarter.
  • GAAP cemetery margin (same store) was $1.0 million for the second quarter 2016, a decrease of $1.0 million compared with the second quarter 2015.  Non-GAAP cemetery margin(1) (same store) was $14.6 million, compared to $15.6 million for the second quarter 2015.

Funeral Home Operations

  • Funeral home calls for the second quarter 2016 were 4,219 compared with 3,778 in the prior year period.
  • GAAP funeral home margin was $2.0 million for the second quarter 2016, an increase of $0.7 million compared to the second quarter 2015.  GAAP funeral home margin percentage was approximately 14% for the second quarter 2016, compared with 10% in the prior year second quarter.  Non-GAAP funeral home margin(1) was $4.1 million for the second quarter 2016 compared with $3.1 million for the prior year second quarter, an increase of $1.0 million due principally to contributions from recent acquisitions.  Non-GAAP funeral home margin percentage was approximately 23% for the second quarter 2016, compared with 19% in the prior year second quarter.
  • GAAP funeral home margin (same store) was $1.8 million for the second quarter 2016, an increase of $0.4 million compared with the second quarter 2015.  Non-GAAP funeral home margin(1) (same store) was $3.5 million, compared to $3.2 million for the second quarter 2015.

Trust Investment Income

  • GAAP trust investment income was $4.8 million for the second quarter 2016, a decrease of $4.3 million compared to the second quarter 2015.  Non-GAAP trust investment income(1) was $9.2 million for the second quarter 2016 compared with $15.6 million for the prior year second quarter.  The decline in non-GAAP investment trust income was largely the result of an almost $8.0 million decrease in realized gains between periods, partially offset by higher returns on invested funds.
  • Trust investment returns, including realized gains and losses and dividends (excluding realized gains on perpetual care trusts), net of fees, were 1.3% (5.1% annualized) for the second quarter 2016, compared with 1.9% (7.5% annualized) for the prior year second quarter.

(1)  These non-GAAP financial measures are used internally by the Partnership to measure Partnership operating performance, and management believes that they are relevant and helpful to investors in understanding that performance.  We define non-GAAP Cemetery margin as cemetery revenues less cost of goods sold, cemetery, selling and general and administrative expenses, including certain revenues and expenses which are deferred under GAAP, as well as excluding certain GAAP revenues and expenses.  We define non-GAAP Funeral Home margin as Funeral Home revenues less associated expenses, including certain revenues and expenses which are deferred under GAAP, as well as excluding certain GAAP revenues and expenses. We define non-GAAP Trust Investment Income as investment income from trusts, including certain income which is deferred under GAAP, as well as excluding certain GAAP income.  A reconciliation of non-GAAP financial measures with the most directly comparable financial measures presented in accordance with GAAP is provided in the Financial and Operating Highlights table of this release.  Please see footnotes 1 and 3 to such table. Non-GAAP financial measures used by the Partnership should not be considered as alternatives to GAAP financial measures, and you should not consider such non-GAAP financial measures in isolation or as a substitute for the Partnership’s results as reported under GAAP.
(2)  Amounts as of period end.  Backlog is defined as deferred revenues and investment income less deferred selling and obtaining costs.  It does not include deferred unrealized gains and losses and other-than-temporary impairment on merchandise trust assets.

Corporate Expenses, Liquidity and Capital Structure

  • Corporate overhead expenses for the second quarter 2016 were $9.7 million compared with $10.4 million for the prior year second quarter.  Corporate overhead expenses, excluding acquisition and related costs and non-cash stock compensation, for the second quarter 2016 were $7.8 million, a decrease of $2.0 million, or 20% from the $9.8 million for the prior year second quarter due to lower labor costs and professional fees due to cost reduction initiatives.
  • Interest expense was $5.7 million for the second quarter 2016 compared with $5.8 million for the prior year second quarter.  Cash interest expense, which excludes non-cash amortization of deferred finance costs and accretion of discounts, was $4.9 million for the second quarter 2016 compared with $5.0 million in the prior year second quarter.
  • As of June 30, 2016, the Partnership had $283.2 million of total debt, including $112.5 million outstanding under its revolving credit facility.  The Partnership had approximately $61.0 million available on its $180.0 million revolving credit facility existing at June 30, 2016, and $9.4 million of cash and cash equivalents as of the same date.  On August 4, 2016, the Partnership entered into a new, $210 million revolving credit facility, replacing its previously existing facility.
  • During the three months ended June 30, 2016, the Partnership issued 176,208 common units under the ATM Equity Program for net proceeds of $4.2 million.

Working Capital Requirements

  • In addition to cash paid for acquisitions, the Partnership’s principal working capital need is to fund contributions to its Merchandise trust and expansion capital expenditures.  These amounts are funded temporarily through borrowings under the Partnership’s revolving credit facility until they can be financed long-term through issuance of additional limited partner units or senior unsecured notes.  In particular, contributions to the Partnership’s Merchandise trust result from individual state requirements that cause it to contribute approximately 70% of the merchandise and service portion of its pre-need sales into the trust, which must remain in the trust until the time of delivery of the merchandise or service.  The table below reflects the amount of net cash received from the issuance of limited partner units compared to the net cash paid for acquisitions and net contributions to the Partnership’s Merchandise trust for the six months ended June 30, 2016 and the three years ended December 31, 2015 (in thousands):
  Six Months Ended   Years Ended December 31,
  June 30, 2016   2015   2014   2013
               
Net cash received from issuance of limited partner units $   74,537     $   75,156     $   173,497     $   38,377  
               
Net cash paid for acquisitions and management agreements $    1,500     $   18,800     $   109,381     $   14,100  
               
Net contributions to Merchandise trust     10,517         52,332          28,828         36,919  
               
Expansion capital expenditures     3,211         7,402          6,176         5,766  
               
Total $   15,228     $   78,534     $   144,385     $   56,785  
 
  • The Partnership’s cash flows are unfavorably impacted by negative working capital movements associated with the net contributions to its Merchandise trusts and the growth in accounts receivable.  So while cash flow may appear diminished, it is because the Partnership’s balance sheet continues to grow in strength.  The Partnership has significant net assets, including its Merchandise Trust and Accounts Receivable, less the associated Merchandise Liabilities, which is net cash to its account when the merchandise or services are delivered to the customer.  The table below presents this data as of June 30, 2016 (in thousands):
  June 30, 2016
   
Accounts receivable, current and long term, net $    169,352  
Merchandise trusts, restricted, at fair value     494,596  
Total Accounts receivable and merchandise trust     663,948  
Less: Merchandise liability     (169,974 )
Total $      493,974  

 

 

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this press release, including, but not limited to, information regarding the status and progress of StoneMor’s operating activities, the plans and objectives of StoneMor’s management, assumptions regarding StoneMor’s future performance and plans, and any financial guidance provided or guidance related to StoneMor’s future distributions, as well as certain information in StoneMor’s other filings with the SEC and elsewhere, are forward-looking statements. Generally, the words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend (including, but not limited to StoneMor’s intent to maintain or increase its distributions),” “project,” “expect,” “predict” and similar expressions identify these forward-looking statements.

These forward-looking statements are made subject to certain risks and uncertainties that could cause actual results to differ materially from those stated or implied.  StoneMor’s major risk is related to uncertainties associated with the cash flow from pre-need and at-need sales, trusts and financings, which may impact StoneMor’s ability to meet its financial projections, its ability to service its debt and pay distributions, and its ability to increase its distributions.

StoneMor’s additional risks and uncertainties include, but are not limited to, the following: uncertainties associated with future revenue and revenue growth; uncertainties associated with the integration or anticipated benefits of recent acquisitions or any future acquisitions; StoneMor’s ability to complete and fund additional acquisitions; the effect of economic downturns; the impact of StoneMor’s significant leverage on its operating plans; the decline in the fair value of certain equity and debt securities held in StoneMor’s trusts; StoneMor’s ability to attract, train and retain an adequate number of sales people; uncertainties associated with the volume and timing of pre-need sales of cemetery services and products; increased use of cremation; changes in the death rate; changes in the political or regulatory environments, including potential changes in tax accounting and trusting policies; StoneMor’s ability to successfully implement a strategic plan relating to achieving operating improvements, strong cash flows and further deleveraging; StoneMor’s ability to successfully compete in the cemetery and funeral home industry; litigation or legal proceedings that could expose StoneMor to significant liabilities and damage StoneMor’s reputation; the effects of cyber security attacks due to StoneMor’s significant reliance on information technology; uncertainties relating to the financial condition of third-party insurance companies that fund StoneMor’s pre-need funeral contracts; and various other uncertainties associated with the death care industry and StoneMor’s operations in particular.

When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth in StoneMor’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2016 and the other reports that StoneMor files with the Securities and Exchange Commission, from time to time. Except as required under applicable law, StoneMor assumes no obligation to update or revise any forward-looking statements made herein or any other forward-looking statements made by it, whether as a result of new information, future events or otherwise.

STONEMOR PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands)
 
    June 30,   December 31,
ASSETS   2016   2015
Current assets:        
Cash and cash equivalents   $     9,436     $     15,153  
Accounts receivable, net of allowance       74,231         68,415  
Prepaid expenses       7,037         5,367  
Other current assets       19,126         18,863  
Total current assets       109,830         107,798  
         
Long-term accounts receivable, net of allowance         95,121         95,167  
Cemetery property       341,825         342,639  
Property and equipment, net of accumulated depreciation       103,083         104,330  
Merchandise trusts, restricted, at fair value       494,596         464,676  
Perpetual care trusts, restricted, at fair value       321,700         307,804  
Deferred selling and obtaining costs       118,410         111,542  
Deferred tax assets       40         40  
Goodwill       70,572         69,851  
Intangible assets       66,098         67,209  
Other assets       17,243         15,069  
Total assets   $      1,738,518     $     1,686,125  
         
LIABILITIES AND PARTNERS’ CAPITAL        
         
Current liabilities:        
Accounts payable and accrued liabilities   $     35,546     $     31,875  
Accrued interest       1,473         1,503  
Current portion of long-term debt       5,373         2,440  
Total current liabilities       42,392         35,818  
         
Long-term debt, net of deferred financing costs       277,854         316,399  
Deferred revenues, net       695,092         637,536  
Deferred tax liabilities       17,914         17,833  
Merchandise liability       169,974         173,097  
Perpetual care trust corpus       321,700         307,804  
Other long-term liabilities        16,168         13,960  
Total liabilities         1,541,094         1,502,447  
         
Partners’ capital        
General partner’s interest       (13,054 )       (10,038 )
Common limited partners’ interests         210,478         193,716  
Total partners’ capital         197,424         183,678  
Total liabilities and partners’ capital   $   1,738,518     $   1,686,125  

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements in the Quarterly Report to be filed on Form 10-Q for the quarter ended June 30, 2016.

STONEMOR PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per unit data)
 
  Three Months Ended
 June 30,		   Six Months Ended
 June 30,
   2016    2015   2016   2015
Revenues:              
Cemetery:              
Merchandise $     36,105     $    36,042     $      67,080     $      62,979  
Services     12,984         14,591         25,816         28,501  
Investment and other     11,721         16,698         26,173         28,008  
Funeral home:              
Merchandise     6,569         6,250         14,025         13,325  
Services     8,170         7,244         17,037         15,429  
Total revenues     75,549         80,825         150,131         148,242  
               
Costs and expenses:              
Cost of goods sold (exclusive of depreciation)     9,737         9,807         18,294         16,890  
Cemetery expense     17,485         19,279         33,341         35,544  
Selling expense      16,391         15,769         30,967         29,679  
General and administrative expense     8,993         9,192         18,197         18,521  
Corporate overhead     9,737          10,429         20,048         19,512  
Depreciation and amortization     3,155         2,944         6,220         5,896  
Funeral home expense:              
Merchandise     1,835         2,066         3,984         4,442  
Services     6,151         5,703         12,602         11,296  
Other     4,746         4,380         9,886         8,561  
Total costs and expenses     78,230         79,569         153,539         150,341  
               
Operating income (loss)     (2,681 )       1,256           (3,408 )          (2,099 )
               
Other gains (losses), net     (191 )       -          (1,073 )        -  
Interest expense     (5,707 )         (5,770 )        (11,497 )        (11,233 )
               
Loss before income taxes      (8,579 )          (4,514 )        (15,978 )        (13,332 )
               
Income tax expense      (500 )          (334 )        (760 )        (399 )
Net loss $   (9,079 )   $        (4,848 )   $    (16,738 )   $      (13,731 )
               
Allocation of net loss attributable to limited partners and the general partner:                        
General partner’s interest $      (103 )   $    (65 )   $    (196 )   $    (185 )
Limited partners’ interest        (8,976 )        (4,783 )        (16,542 )        (13,546 )
               
Net loss attributable to common limited partners per unit                        
(basic and diluted) $   (0.26 )   $    (0.16 )   $  (0.49 )   $    (0.46 )
               
Weighted average limited partner units outstanding:                        
Basic and diluted     34,837          29,286          33,688          29,258  

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements in the Quarterly Report to be filed on Form 10-Q for the quarter ended June 30, 2016.

STONEMOR PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
 
  Six months Ended
 June 30,		  
  2016   2015  
         
Cash Flows From Operating Activities:        
Net loss $   (16,738 )   $   (13,731 )  
Adjustments to reconcile net loss to net cash provided by operating activities:        
Cost of lots sold   4,443       4,917    
Depreciation and amortization   6,220       5,896    
Non-cash compensation expense   820       547    
Non-cash interest expense   1,534       1,467    
Other gains (losses), net   1,073       -    
Changes in assets and liabilities:        
Accounts receivable, net of allowance   (5,867 )     (9,469 )  
Merchandise trust fund   (10,517 )     (23,478 )  
Other assets   (4,295 )     (9,162 )  
Deferred selling and obtaining costs   (6,868 )     (7,483 )  
Deferred revenue   37,755       45,307    
Deferred taxes (net)   81       (44 )  
Payables and other liabilities   818       9,208    
Net cash provided by operating activities   8,459       3,975    
         
Cash Flows From Investing Activities:        
Cash paid for capital expenditures   (7,504 )     (7,250 )  
Cash paid for acquisitions   (1,500 )     -    
Proceeds from asset sales   1,848       -    
Net cash used in investing activities   (7,156 )     (7,250 )  
         
Cash Flows From Financing Activities:        
Cash distributions   (44,703 )     (36,297 )  
Proceeds from borrowings   38,744       56,823    
Repayments of debt   (75,247 )     (14,215 )  
Proceeds from issuance of common units   74,537       -    
Cost of financing activities   (351 )     (34 )  
Net cash provided by (used in) financing activities   (7,020 )     6,277    
Net increase (decrease) in cash and cash equivalents   (5,717 )     3,002    
Cash and cash equivalents - Beginning of period   15,153       10,401    
Cash and cash equivalents - End of period $   9,436      $   13,403     
Supplemental disclosure of cash flow information:        
Cash paid during the period for interest $   9,994      $   9,551     
Cash paid during the period for income taxes $    2,325      $    3,516     
         
Non-cash investing and financing activities:        
Acquisition of assets by financing $   137      $    242     

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements in the Quarterly Report to be filed on Form 10-Q for the quarter ended June 30, 2016.

STONEMOR PARTNERS L.P.
FINANCIAL AND OPERATING DATA
(unaudited)
 
  Three Months Ended   Six Months Ended
  June 30,   June 30,
  2016   2015   2016   2015
               
Financial Data:              
Net loss (in thousands) $   (9,079 )   $   (4,848 )   $   (16,738 )   $   (13,731 )
               
Net loss per limited partners per unit – basic and diluted $    (0.26 )   $    (0.16 )   $    (0.49 )   $   (0.46 )
               
Adjusted EBITDA(1) (in thousands) $    22,957     $    26,627     $   44,848     $   48,297  
               
Distributable Available Cash(1) (in thousands) $    30,288     $    26,013     $   45,826     $   45,509  
               
Cash distributions paid per unit(2) $    0.66     $    0.65     $   1.32     $   1.29  
               
Operating Data:              
Interments Performed      13,401          14,024          27,034       28,636  
               
Interment rights sold (3):              
Lots      8,635          8,844          15,241         15,894  
Mausoleum crypts (including pre-construction)     582         715          1,052       1,333  
Niches      403          475          755       844  
Net interment rights sold(3)      9,620          10,034          17,048           18,071  
               
Number of cemetery contracts written      28,365          30,227          54,396          57,626  
Aggregate contract revenue amount(1) (in thousands, excluding interest) $   68,107     $   71,447     $   127,656     $   133,316  
Average revenue amount per contract (excluding interest) $   2,401     $   2,364     $   2,347     $   2,313  
               
Pre-need cemetery contracts written      12,784         13,965          24,160         26,048  
Aggregate pre-need contract revenue amount(1) (in thousands, excluding interest) $   42,202     $ 44,012     $    76,018     $ 79,905  
 Average revenue amount per pre-need contract (excluding interest) $   3,301     $ 3,152     $   3,146     $ 3,068  
               
At-need cemetery contracts written      15,581          16,262          30,236         31,578  
Aggregate at-need contract revenue amount(1) (in thousands excluding interest) $   25,905     $ 27,435     $   51,638     $ 53,411  
Average revenue amount per at-need contract (excluding interest) $   1,663     $ 1,687     $   1,708     $ 1,691  
               
Funeral home calls      4,219          3,778          8,763          7,978  

(1)  These non-GAAP financial measures are used internally by the Partnership to measure Partnership operating performance, and management believes that they are relevant and helpful to investors in understanding that performance.  A reconciliation of GAAP net loss to Adjusted EBITDA, Distributable Cash Flow and Distributable Available Cash is provided in the financial tables of this release.  Please see footnotes 1 and 3 to the Financial and Operating Highlights table of this release.
(2)  Represents the cash distributions declared for the respective period and paid by the Partnership within 45 days after the end of each quarter, based upon the distributable cash flow generated during the respective period.
(3)  Net of cancellations.  Sales of double-depth burial lots are counted as two sales.

STONEMOR PARTNERS L.P.
FINANCIAL AND OPERATING HIGHLIGHTS
(unaudited; in thousands, except per unit data)
 
  Three Months Ended   Six Months Ended
  June 30,   June 30,
Reconciliation of net loss to non-GAAP financial measures(1): 2016     2015   2016   2015
Net loss $   (9,079 )     $   (4,848 )   $   (16,738 )   $   (13,731 )
Acquisition and related costs   1,516           336         3,252         685  
Depreciation and amortization   3,155           2,944         6,220         5,896  
Non-cash amortization of cemetery property   2,437           2,869         4,443         4,917  
Non-cash interest expense   777           733         1,534         1,467  
Non-cash stock compensation expense   413           275         820         547  
Maintenance capital expenditures(2)     (1,289 )          (2,065 )         (4,293 )       (3,379 )
Non-cash income tax expense   564           425         842         355  
Other gains (losses), net     1,474           -          2,356         -  
Net operating profit deferral from non-delivered merchandise and services(3)   16,834         18,947         32,237       38,351  
Distributable Cash Flow (1) $    16,802       $     19,616     $   30,673     $   35,108  
Non-GAAP Supplemental Adjusted EBITDA, Distributable Cash Flow and Distributable Available Cash Summary(1,3):                                
Revenues            
Pre-need cemetery revenues $   42,202     $   44,012     $   76,018     $   79,905  
At-need cemetery revenues     25,905         27,435         51,638         53,411  
Other cemetery revenues(4)     2,518         1,983         5,874         3,044  
Total cemetery revenues     70,625         73,430         133,530         136,360  
             
Funeral home revenues     17,557         15,734         36,851         33,149  
Investment income from trusts     9,246         15,641         19,861         27,626  
Interest income     2,252         2,184         4,481         4,384  
Total revenues   99,680       106,989       194,723       201,519  
Costs and expenses             
Cost of goods sold(5)     9,415         9,660         17,286         17,349  
Cemetery expense     17,485         19,279         33,341         35,544  
Selling expense     19,542         19,738         37,187         38,242  
General and administrative expense     8,993         9,192         18,197         18,521  
Total cemetery expenses   55,435       57,869         106,011       109,656  
Funeral home expense     13,480         12,675         27,889         25,286  
Cash corporate overhead(6)     7,808         9,818         15,975         18,280  
Total costs and expenses   76,723       80,362         149,875       153,222  
Adjusted EBITDA(1)   22,957       26,627         44,848       48,297  
Cash interest expense(7)     (4,930 )       (5,037 )       (9,963 )       (9,766 )
Cash income taxes      64          91         81          (44 )
Maintenance capital expenditures(2)     (1,289 )       (2,065 )       (4,293 )        (3,379 )
Distributable Cash Flow(1)       16,802             19,616         30,673         35,108  
Cash on hand – beginning of period     13,486            6,397           15,153         10,401  
Distributable Available Cash(1) $   30,288       $   26,013     $   45,826     $   45,509  
             
Cash distributions paid(8) $   23,316       $ 18,349     $   44,703     $   36,297  
per limited partner unit $   0.66       $   0.65     $   1.32     $   1.29  
                 
Excess of Distributable Available Cash after cash distributions paid(9) $ 6,972       $ 7,664     $ 1,123     $ 9,212