2014

Carriage Services Announces 2012 Second Quarter Results Raises Rolling Four Quarter Outlook

HOUSTON, Aug. 2, 2012 /PRNewswire/ -- Carriage Services, Inc. (NYSE: CSV) today announced results for the quarter ending June 30, 2012.

Mel Payne, Chief Executive Officer, stated, "We are halfway through what we believe will be another record year for our Company.  Our operating leadership and performance plans are targeted and focused to position us for a strong finish to 2012.  While death rates continued to be weak in the second quarter, we were able to increase earnings per share as a result of substantially higher revenues and Field EBITDA and Field EBITDA Margins from recent high quality acquisitions and higher trust fund financial revenue and earnings."

HIGHLIGHTS OF THE 2012 SECOND QUARTER:

  • Record second quarter Total Revenue of $50.1 million, an increase of 5.1%;
  • Record second quarter Total Acquisition Funeral Field EBITDA of $1.8 million, an increase of 154%;
  • Total Acquisition Funeral Field EBITDA Margin of 30.1%, an increase of 790 basis points;
  • Record second quarter Total Funeral Field EBITDA of $12.2 million, an increase of 8.0%;
  • Total Field EBITDA of $18.7 million, an increase of 5.1%;
  • Record second quarter Total GAAP EPS of $0.15, an increase of 7.1%; and
  • Total Adjusted EPS of $0.16, a decrease of 27.3%.

"After the major management reorganization last November, we were able to quickly update and implement a new Funeral Standards Operating Model and Strategic Acquisition Model, the successful execution of which contributed to our strong first half results.  During the second quarter we focused on three major areas with the most upside potential in the fourth quarter and thereafter, i.e. rebuilding a new cemetery leadership organization and operating framework (less decentralized); structural changes and major modifications to management and compensation arrangements for our trust funds; and development of a capital structure refinancing strategy that could exploit the current historically low rate environment.  All three of these programs were finalized during the second quarter, are being implemented in the third quarter and should be completed by the fourth quarter which in combination will substantially increase the sustainable earning power of Carriage starting with the full year 2013."

"After establishing a theme of Carriage Services 2012 – A NEW BEGINNING, Bill and I empowered our new teams of leaders and employees to come up with ideas to increase sustainable earnings across all departments and field operations, including leadership competencies and organizational structure and reporting.  We have been overwhelmed by the collaboration, teamwork and results, which has enabled us to find meaningful buckets of earnings potential that were already existing but previously not obvious or defined with a plan of achievement.  We are now moving boldly and rapidly to realize all of our earnings potential, both as an operating company and consolidation platform.  As a result, we are raising our Four Quarter Outlook ending June 30, 2013."

CARRIAGE SERVICES, INC.

NON- GAAP UNAUDITED INCOME STATEMENT

($000's)








 Three

 Months

 Ended

 Three

Months

Ended

Six

Months

Ended

Six

Months

Ended


June 30,

2011

June 30,

2012

June 30,

2011

June 30,

2012






Same Store Contracts





   Atneed Contracts

4,691

4,476

9,853

9,387

   Preneed Contracts

1,222

1,157

2,656

2,436

   Total Same Store Funeral Contracts

5,913

5,633

12,509

11,823

Acquisition Contracts





   Atneed Contracts

709

1,139

1,425

2,379

   Preneed Contracts

136

202

275

390

   Total Acquisition Funeral Contracts

845

1,341

1,700

2,769

Total Funeral Contracts

6,758

6,974

14,209

14,592






Funeral Operating Revenue





   Same Store Revenue

$ 30,122

$ 29,621

$ 64,208

$ 62,046

   Acquisition Revenue

3,173

5,948

6,249

12,352

Total Funeral Operating Revenue

$ 33,295

$ 35,569

$ 70,457

$ 74,398






Cemetery Operating Revenue





   Same Store Revenue

$ 10,538

$ 10,392

$ 20,094

$ 19,796

   Acquisition Revenue

-

-

-

-

Total Cemetery Operating Revenue

$ 10,538

$ 10,392

$ 20,094

$ 19,796






Financial Revenue





   Preneed Funeral Commission Income

$ 414

$ 450

$ 887

$ 901

   Preneed Funeral Trust Earnings

1,856

1,382

3,329

3,101

   Cemetery Trust Earnings

1,221

1,795

2,878

3,311

   Preneed Cemetery Finance Charges 

331

478

679

846

Total Financial Revenue

$ 3,822

$ 4,105

$ 7,773

$ 8,159

Total Revenue

$ 47,655

$ 50,066

$ 98,324

$ 102,353






Field EBITDA 





   Same Store Funeral Field EBITDA

$ 10,616

$ 10,437

$ 22,843

$ 23,457

   Same Store Funeral Field EBITDA Margin

35.2%

35.2%

35.6%

37.8%






   Acquisition Funeral Field EBITDA

704

1,791

1,516

4,282

   Acquisition Funeral Field EBITDA Margin

22.2%

30.1%

24.3%

34.7%






Total Funeral Field EBITDA

$ 11,320

$ 12,228

$ 24,359

$ 27,739

Total Funeral Field EBITDA Margin

34.0%

34.4%

34.6%

37.3%






Total Cemetery Field EBITDA

$ 3,063

$ 2,748

$ 5,690

$ 4,970

Total Cemetery Field EBITDA Margin

29.1%

26.4%

28.3%

25.1%






   Funeral Financial EBITDA

1,879

1,483

3,482

3,302

   Cemetery Financial EBITDA

1,552

2,273

3,557

4,157

Total Financial EBITDA

$ 3,431

$ 3,756

$ 7,039

$ 7,459

Total Financial EBITDA Margin

89.8%

91.5%

90.6%

91.4%






Total Field EBITDA

$ 17,814

$ 18,732

$ 37,088

$ 40,168

Total Field EBITDA Margin

37.4%

37.4%

37.7%

39.2%






Overhead





   Total Variable Overhead

$ 1,159

$ 1,236

$ 2,695

$ 3,426

   Total Regional Fixed Overhead

1,092

1,047

1,998

1,830

   Total Corporate Fixed Overhead

3,906

3,867

7,846

8,067

Total Overhead

$ 6,157

$ 6,150

$ 12,539

$ 13,323


12.9%

12.3%

12.8%

13.0%






Other Income

$ 357

-

$ 364

-

Consolidated EBITDA 

$ 12,014

$ 12,582

$ 24,913

$ 26,845

Consolidated EBITDA Margin 

25.2%

25.1%

25.3%

26.2%






GAAP Diluted EPS

$ 0.14

$ 0.15

$ 0.32

$ 0.38






Special Items





Withdrawable Trust Income

$ 2,249

$ 77

$ 3,581

$ 771

Gain on Repurchase of Convertible Junior Subordinated Debentures

(357)

-

(364)

-

Securities Transactions Expenses

323

-

461

-

Acquisition Expenses

157

238

245

615

Severance Costs

-

8

117

490

Non-recurring Legal Fees

-

-

-

135

Litigation Settlements

-

60

-

60

Total of Special Items

$ 2,372

$ 383

$ 4,040

$ 2,071






Adjusted Consolidated EBITDA

$ 14,386

$ 12,965

$ 28,953

$ 28,916

Adjusted Consolidated EBITDA Margin

30.2%

25.9%

29.4%

28.3%






Property Depreciation & Amortization

$ 2,522

$ 2,622

$ 4,919

$ 5,050

Non Cash Stock Compensation

648

781

1,095

1,183

Interest Expense

4,509

4,538

9,063

9,111

Interest Income

(1)

(17)

(22)

(34)

Pretax Income

$ 6,708

$ 5,042

$ 13,898

$ 13,606






Income tax

$ 2,717

$ 2,152

$ 5,628

$ 5,500

Adjusted Net Income

$ 3,991

$ 2,890

$ 8,270

$ 8,106


8.4%

5.8%

8.4%

7.9%






Adjusted Diluted EPS 

$ 0.22

$ 0.16

$ 0.45

$ 0.44






Diluted Shares Outstanding

18,407

18,153

18,340

18,237

ACQUISITIONS

Carriage acquired a business during the second quarter of 2012 consisting of two funeral homes and one cemetery; the Lawton Ritter Gray Funeral Home, Gray Funeral Home and Sunset Memorial Gardens in Lawton, Oklahoma.  On an annualized basis, these businesses are expected to serve approximately 400 families and generate revenue of approximately $2.0 million.  Carriage has acquired twelve funeral homes and one cemetery during the trailing twelve months.

TRUST FUND PERFORMANCE

During the second quarter of 2012, Carriage's discretionary trust fund performance was flat compared to a decline of (2.7%) for the S&P 500 Index and a gain of 1.8% for the Barclay's High Yield Bond Index.  Through the first half of 2012, Carriage's discretionary portfolio gained 9.5% compared to 9.5% for the S&P 500 and 7.3% for the High Yield Index.  The foundation for this excellent performance was the major asset reallocation from equities to fixed income during the second half of 2011 which continued through the first half of 2012.  Carriage was able to match the performance of the S&P 500 in the first half even though we had an 83% allocation to fixed income securities and only a 13% allocation to equities in the discretionary portfolio as of June 30, 2012.  

Carriage has continued into the third quarter to reduce the allocation to large cap cyclical equities and increase the allocation to fixed income and cash equivalents.  The current yield as of July 31, 2012 on the fixed income discretionary portfolio (85% fixed income versus 11% equity) is 8.9%, and this large current annual income of about $12.7 million (up from $7.9 million on August 8, 2011) will be used to continue to grow the fixed income portfolio and selectively increase a group of seven core large cap growth equities.

Carriage's investment strategy to emphasize current income in the discretionary trust fund portfolio will continue to benefit preneed funeral and cemetery contracts that will mature in the future, but more importantly, a large share of the growing income can be recognized and reported on a monthly basis as GAAP financial revenue and earnings from our cemetery perpetual care trusts.  The major shift in allocation toward fixed income away from equities has resulted in a lower volatility portfolio with less risk of significant losses, but also less potential for large Non-GAAP withdrawable amounts as a result of large, realized equity gains as in 2010 and the first half of 2011.  Carriage has already realized substantial capital appreciation from many of the core fixed income positions in high yield corporate bonds and "Too Big To Fail" preferred stocks that were purchased during the second half of 2011 and 2012, with realized gains of $6.5 million in the first six months of 2012 and unrealized gains of another $7.3 million currently available at the end of July.

Shown below are consolidated performance metrics for the combined trust fund portfolios (preneed funeral, cemetery merchandise and services, and cemetery perpetual care) at key dates.

Investment Performance








Investment Performance(1)


Index Performance

Timeframe


Discretionary

Total Trust


DJIA

S&P 500

50/50 index

Benchmark

5 years ended 12/31/11


40.5%

40.4%


12.4%

(1.2)%

0.9%

3 years ended 12/31/11


82.3%

70.5%


51.7%

48.6%

32.0%

1 year ended 12/31/11


(2.9)%

(1.9)%


8.3%

2.1%

5.0%

6 months ended 6/30/12


9.5%

8.1%


6.8%

9.5%

5.9%



(1)

Investment performance includes realized income and unrealized appreciation (depreciation).





Asset Allocation as of June 30, 2012








Discretionary Trust Funds


Total Trust Funds

Asset Class


MV


%


MV


%

Equities


$            21,241


13%


$      36,644


16.5%

Fixed Income


140,952


83%


163,511


73.5%

Cash


7,389


4%


22,448


10%

Total Portfolios


$         169,582


100%


$    222,603


100%













FREE CASH FLOW

Carriage generated Free Cash Flow from continuing operations in the second quarter of 2012 of $8.5 million compared to Free Cash Flow from continuing operations of $10.1 million for the corresponding period in 2011.  The sources and uses of cash for the first six months of 2011 and 2012 consisted of the following (in millions):


2011


2012

Cash flow provided by continuing operations

$        15.6


$        13.4

Cash used for maintenance capital expenditures

(3.4)


(2.3)

Free Cash Flow

$        12.2


$        11.1

Cash at beginning of year

1.3


1.1

Acquisitions

(5.1)


(16.4)

Net (payments) borrowings under credit facility

(0.6)


14.2

Cash used for growth capital expenditures

(1.3)


(3.7)

Cash dividends paid

(0.5)


(0.9)

Cash used for the repurchase of convertible junior

     subordinated debenture        

(1.0)


Repurchase of common stock

(4.5)

Other investing and financing activities


0.1

Cash provided by discontinued operations

0.2


Cash at June 30th

$          5.2


$          1.0

Credit Facility borrowings at June 30th

$             –


$        17.3

FOUR QUARTER OUTLOOK RAISED

The Four Quarter Outlook reflects management's current opinion on the performance of the portfolio of businesses for the rolling four quarter period ending June 30, 2013, and the performance of the trusts as well as our view of the financial markets.  Factors affecting our analysis include, among others, funeral contract volumes, average revenue per funeral service, cemetery interment volumes, preneed cemetery sales, capital expenditures, execution of our funeral Standards Operating Model, acquisitions and Withdrawable Trust Income.  The Four Quarter Outlook includes the Lawton Ritter Gray acquisition that closed in June.

ROLLING FOUR QUARTER OUTLOOK – Period Ending June 30, 2013
(amounts in millions, except per share amounts)


Range

Revenues

$206 – $208



Consolidated EBITDA

$51.5 – $52.5



Net Income

$12.5 – $13.5

GAAP Diluted EPS

$0.70 – $0.73

Non-GAAP EPS

$0.83 – $0.85

Cash Flow from Operations

$26 – $28

Free Cash Flow

$22 – $24

Revenues, Consolidated EBITDA and Net Income for the four quarter period ending June 30, 2013 are expected to improve relative to the same period ended June 30, 2012, for the following reasons:

  • Increases in Acquired Funeral Revenue and Acquired Funeral Field EBITDA from the 2011 and 2012 acquisitions;
  • Modest increases in Same Store Funeral Revenue averages;
  • Increases in Same Store Funeral Field EBITDA Margins;
  • Improvement in Cemetery Revenue and Cemetery Field EBITDA Margins; and
  • Increases in Financial Revenue from the trust funds.

The Outlook also includes the Company's new policy of withdrawing realized gains and income in excess of regulatory mandated amounts on a monthly basis from certain cemetery merchandise and services trust funds, which are estimated to be approximately $1.2 million for the rolling four quarter period.

CONFERENCE CALL

Carriage Services has scheduled a conference call for tomorrow, August 3, 2012 at 10:30 a.m. eastern time.  To participate in the call, please dial 800-860-2442 at least ten minutes before the conference call begins and ask for the Carriage Services conference call.  A telephonic replay of the conference call will be available through August 17, 2012 and may be accessed by dialing 877-344-7529 and using pass code 10016846.  An audio archive will also be available on the company's website at www.carriageservices.com shortly after the call and will be accessible for approximately 90 days.  For more information, please contact Bill Heiligbrodt at bill.heiligbrodt@carriageservices.com or 713-332-8553.

Carriage Services is a leading provider of death care services and products.  Carriage operates 164 funeral homes in 26 states and 33 cemeteries in 11 states.

NON-GAAP FINANCIAL MEASURES

This press release uses Non-GAAP financial measures to present the financial performance of the Company.  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's GAAP financial statements accompany this release.  Reconciliations of the Non-GAAP financial measures to GAAP measures are provided at the end of the press release.

Certain state regulations allow the withdrawal of financial income from preneed cemetery merchandise and services trust funds when realized in the trust.  Under current generally accepted accounting principles, trust income is only recognized in the Company's financial statements at a later time when the related merchandise and services sold on the preneed contract is delivered at the time of death.  Carriage has provided financial income from the trusts, termed Withdrawable Trust Income (loss) and reported on a Non-GAAP proforma basis within Special Items in the accompanying Non-GAAP Unaudited Income Statement, to reflect the current cash results.  Management believes that the Withdrawable Trust Income provides useful information to investors because it presents income and cash flow when earned by the trusts. 

The Non-GAAP financial measures include "Free Cash Flow", "Funeral and Cemetery Field EBITDA", "Total Field EBITDA", "Consolidated EBITDA", and "Adjusted Consolidated EBITDA" are reflected in this press release.  Both Free Cash Flow and Adjusted Consolidated 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 Non-GAAP Consolidated EBITDA in this press release because it is widely used by investors to compare the Company's financial performance with the performance of other death care companies.  Adjusted Consolidated 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 Adjusted Consolidated EBITDA may not be comparable to similarly titled measures in other companies' reports.

FORWARD-LOOKING STATEMENTS

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" in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, 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 www.carriageservices.com.

– Financial Statements and Tables to Follow –

 

CARRIAGE SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)








December 31,


June 30,



2011


2012

ASSETS




(unaudited)

Current assets:





   Cash and cash equivalents


$          1,137


$          1,012

   Accounts receivable, net of allowance for bad debts


16,497


16,199

   Assets held for sale


1,229


   Inventories and other current assets


13,439


12,342

         Total current assets


32,302


29,553






Preneed cemetery and funeral trust investments


141,494


150,481

Preneed receivables, net of allowance for bad debts


22,614


23,250

Receivables from preneed funeral trusts


22,487


22,366

Property, plant and equipment, net of accumulated depreciation


136,467


143,597

Cemetery property


71,515


75,139

Goodwill


193,962


200,852

Deferred charges and other non-current assets


10,451


8,471

Cemetery perpetual care trust investments


41,485


44,486

         Total assets


$      672,777


$      698,195






LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:





   Current portion of long-term debt and obligations under capital leases


$             628


$             668

   Accounts payable and accrued liabilities


31,735


29,524

   Liabilities associated with assets held for sale


1,868


         Total current liabilities


34,231


30,192






Senior long-term debt, net of current portion


131,900


131,858

Line of credit


3,100


17,300

Convertible junior subordinated debenture due in 2029 to an affiliated trust


89,770


89,770

Obligations under capital leases, net of current portion


4,155


4,083

Deferred preneed cemetery and funeral revenue


99,770


100,189

Deferred preneed cemetery and funeral receipts held in trust


141,494


150,481

Care trusts' corpus


41,379


44,281

         Total liabilities


545,799


568,154






Commitments and contingencies





Redeemable preferred stock


200


200






Stockholders' equity:





   Common stock


217


220

   Additional paid-in capital


201,284


201,760

   Accumulated deficit


(63,987)


(56,872)

   Treasury stock


(10,736)


(15,267)

Total stockholders' equity


126,778


129,841

         Total liabilities and stockholders' equity


$      672,777


$      698,195

 

CARRIAGE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except share and per share data)








For the three months ended

June 30,


For the six months ended

June 30,



2011


2012


2011


2012










Revenues


$     47,655


$   50,066


$   98,324


$   102,353

Field costs and expenses


34,143


35,782


69,762


71,141

Gross profit


13,512


14,284


28,562


31,212

General and administrative expenses


5,023


5,105


10,026


10,600

Operating income


8,489


9,179


18,536


20,612

Interest expense


(4,510)


(4,538)


(9,064)


(9,111)

Other income


358


17


387


34

Income from continuing operations before income taxes


4,337


4,658


9,859


11,535

Provision for income taxes


(1,756)


(1,995)


(3,994)


(4,663)

Net income from continuing operations


2,581


2,663


5,865


6,872

Net income from discontinued operations, net of tax


20



21


250

Net income


2,601


2,663


5,886


7,122

Preferred stock dividend


(3)


(3)


(7)


(7)

Net income available to common stockholders


$       2,598


$     2,660


$     5,879


$       7,115










Basic earnings per common share:









Continuing operations


$         0.14


$       0.15


$       0.32


$        0.38

Discontinued operations





0.01

Basic earnings per common share


$         0.14


$       0.15


$       0.32


$        0.39

Diluted earnings per common share:









Continuing operations


$         0.14


$       0.15


$       0.32


$        0.38

Discontinued operations





0.01

Diluted earnings per common share


$         0.14


$       0.15


$       0.32


$        0.39










Dividends declared per common share


$       0.025


$       0.025


$      0.025


$        0.05










Weighted average number of common and common equivalent shares outstanding:









Basic


18,367


18,077


18,301


18,171

Diluted


18,407


18,153


18,340


18,237










 

CARRIAGE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)






For the six months ended

June 30,



2011


2012






Cash flows from operating activities:





   Net income


$     5,886


$     7,122

   Adjustments to reconcile net income to net cash  provided by operating

   activities:





      Income from discontinued operations


(21)


(250)

      Depreciation and amortization


4,920


5,050

Amortization of deferred financing costs


362


348

Gain on repurchase of convertible junior subordinated debentures


(366)


      Provision for losses on accounts receivable


2,024


1,102

      Stock-based compensation expense


1,095


1,183

      Deferred income taxes


(2,257)


2,096

      Other


(26)


(10)

Changes in operating assets and liabilities that provided (required) cash:





      Accounts and preneed receivables


(60)


(1,413)

      Inventories and other current assets


54


740

      Deferred charges and other


(35)


(38)

      Preneed funeral and cemetery trust investments


3,397


(146)

      Accounts payable and accrued liabilities


3,891


(2,402)

      Deferred preneed funeral and cemetery revenue


(44)


(176)

      Deferred preneed funeral and cemetery receipts held in trust


(3,237)


168

Net cash provided by continuing operating activities


15,583


13,374

         Net cash provided by discontinued operating activities


178


         Net cash provided by operating activities


15,761


13,374






Cash flows from investing activities:





      Acquisitions


(5,100)


(16,399)

      Capital expenditures


(4,608)


(5,981)

         Net cash used in investing activities


(9,708)


(22,380)






Cash flows from financing activities:





      Net borrowings from (payments against) the bank credit facility


(600)


14,200

      Payments on senior long-term debt and obligations under capital leases


(315)


(342)

      Proceeds from the exercise of stock options and employee stock

      purchase plan


199


440

      Stock option benefit


7


24

      Dividends paid on common stock


(460)


(903)

      Dividends on redeemable preferred stock


(7)


(7)

      Repurchase of convertible junior subordinated debentures


(972)


      Purchase of treasury stock



(4,531)

         Net cash provided by (used in) financing activities


(2,148)


8,881






Net increase (decrease) in cash and cash equivalents


3,905


(125)

Cash and cash equivalents at beginning of period


1,279


1,137

Cash and cash equivalents at end of period


$     5,184


$     1,012




CARRIAGE SERVICES, INC.

Selected Financial Data



December 31,


June 30,



2011


2012

Selected Balance Sheet Data:




(unaudited)

Cash and short-term investments


$        1,137


$      1,012

Total Senior Debt (a)


139,783


153,909

Days sales in funeral accounts receivable


19.1


18.1

Senior Debt to total capitalization


39.2


40.9

Senior Debt to EBITDA (rolling twelve months)


3.3


3.5

Senior Debt to Adjusted Consolidated EBITDA (rolling 12 mos.)


2.8


3.0


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 Non-GAAP Net Income from continuing operations for the three and six months ended June 30, 2011 and 2012:


Three months ended

June 30,


Six months ended

June 30,


2011


2012


2011


2012

Net Income from continuing operations

$    2,581


$    2,663


$  5,865


$    6,872

Special items, net of tax

1,410


227


2,405


1,234

Non-GAAP Net Income from continuing

     operations

$    3,991


$    2,890


$  8,270


$    8,106

Reconciliation of Diluted EPS from continuing operations to Non-GAAP Diluted EPS from continuing operations for the three and six months ended June 30, 2011 and 2012:


Three months ended

June 30,


Six months ended

June 30,


2011


2012


2011


2012

Diluted EPS from continuing operations

$          0.14


$       0.15


$         0.32


$         0.38

Effect of special items

0.08


0.01


0.13


0.06

Non-GAAP Diluted EPS from continuing

     operations

$          0.22


$       0.16


$         0.45


$         0.44

Reconciliation of Non-GAAP Financial Measures (unaudited), Continued:

Reconciliation of Net Income from continuing operations to Adjusted Consolidated EBITDA from continuing operations and Adjusted Consolidated EBITDA from continuing operations for the three and six months ended June 30, 2011 and 2012 and the estimated rolling four quarters ended June 30, 2013 (in 000's):


Three months ended

June 30,


Six months ended

June 30,


2011


2012


2011


2012

Net income from continuing operations

$    2,581


$    2,663


$  5,865


$     6,872

Provision for income taxes

1,756


1,995


3,994


4,663

Pre-tax earnings from continuing operations

4,337


4,658


9,859


11,535

Interest expense, including loan cost

     amortization

4,509


4,538


9,063


9,111

Interest income

(2)


(17)


(23)


(34)

Noncash stock compensation

648


781


1,095


1,183

Depreciation & amortization

2,522


2,622


4,919


5,050

Special items

2,372


383


4,040


2,071

Adjusted Consolidated EBITDA from

     continuing operations

$  14,386


$  12,965


$ 28,953


$   28,916

Revenue from continuing operations

$  47,655


$  50,066


$ 98,324


$ 102,353

Adjusted EBITDA Margin

30.2%


25.9%


29.4%


28.2%









Rolling

Four Quarter

Outlook



June 30, 2013 E

Net income from continuing operations


$         13,200

Provision for income taxes


9,000

Pre-tax earnings from continuing operations


22,200

Net interest expense, including loan cost amortization


18,200

Depreciation & amortization, including stock compensation


11,700

Consolidated EBITDA from continuing operations


$         52,100

Reconciliation of Non-GAAP Financial Measures (unaudited), Continued:

Reconciliation of Field income from continuing operations before income taxes to field EBITDA from continuing operations for the three and six months ended June 30, 2011 and 2012:

Funeral Home


Three months ended

June 30,


Six months ended

June 30,


2011


2012


2011


2012

Income from continuing operations

before income taxes

$   10,407


$  10,696


$   22,236


$   24,799

Depreciation & amortization

1,457


1,491


2,857


2,945

Regional & unallocated costs

1,334


1,524


2,748


3,297

Net financial income

(1,878)


(1,483)


(3,482)


(3,302)

Funeral Home EBITDA

$   11,320


$  12,228


$   24,359


$   27,739

Funeral Home Revenue

$   33,295


$  35,569


$   70,457


$   74,398

Funeral Home EBITDA Margin

34.0%


34.4%


34.6%


37.3%













Cemetery


Three months ended

June 30,


Six months ended

June 30,


2011


2012


2011


2012

Income from continuing operations

before income taxes

$     3,105


$   3,588


$     6,326


$     6,414

Depreciation & amortization

823


877


1,567


1,597

Regional & unallocated costs

688


556


1,354


1,116

Net financial income

(1,553)


(2,273)


(3,557)


(4,157)

Cemetery EBITDA

$     3,063


$    2,748


$     5,690


$     4,970

Cemetery Revenue

$   10,538


$  10,392


$   20,094


$   19,796

Cemetery EBITDA Margin

29.1%


26.4%


28.3%


25.1%













Reconciliation of cash provided by continuing operating activities to Free Cash Flow from continuing operations (in 000's) for the three and six months ended June 30, 2011 and 2012:


Three months ended June 30,


2011


2012

Cash provided by continuing operating activities

$         12,163


$          9,851

Less maintenance capital expenditures

(2,028)


(1,312)

Free Cash Flow from continuing operations

$         10,135


$          8,539




Six months ended June 30,


2011


2012

Cash provided by continuing operating activities

$         15,583


$        13,374

Less maintenance capital expenditures

(3,363)


(2,250)

Free Cash Flow from continuing operations

$         12,220


$        11,124

Reconciliation of Non-GAAP Financial Measures (unaudited), Continued:

Reconciliation of Consolidated EBITDA from continuing operations to Free Cash Flow from continuing operations for the estimated rolling four quarters ending June 30, 2013 (in 000's):



Rolling

Four Quarter



Outlook



June 30, 2013 E

Consolidated EBITDA from continuing operations


$           52,100

Interest paid


(17,500)

Cash Income taxes


(7,400)

Maintenance capital expenditures


(4,500)

Withdrawable trust income


1,200

Free Cash Flow from continuing operations


$           23,900

 

 

SOURCE Carriage Services, Inc.



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