National Association of Publicly
Traded Partnerships
MLP Conference
May, 2014
Confidential
2
This presentation contains certain statements that may be deemed to be forward-looking
statements within th...
StoneMor Partners L.P.
3
 StoneMor is the second largest owner and operator of cemeteries in
the US
• 278 cemeteries and ...
Investment Highlights
 9.9%* yield superior to 2013 year end MLP average yield of 5.8%**
 Strong historical performance
...
5
Attractive Yield
 9.9% Yield vs. 5.8% Average MLP Yield*
 37 consecutive quarterly distributions
Distribution Per Unit...
2014 Highlights
American Infrastructure MLP Fund (AIM)
 StoneMor receives $130 million commitment from AIM
– Includes AIM...
7
Recent Developments
Archdiocese of Philadelphia
 13 cemeteries leased
 60 year management arrangement
 7000 existing ...
8
Recent Developments
Service Corporation International
 Will acquire 9 funeral homes, 12 cemeteries and 2
crematories
 ...
9
Recent Developments.
Continued strength in financial results
 2013 Full Year Financial Results
• Production based reven...
Historical Performance
10
($ in millions)
($ in millions)
REVENUE OPERATING PROFIT
$181
$197
$228
$243 $246 $251
$218
$247...
Diversified Revenue Streams
11
STONEMOR BUSINESS MIX BY REVENUE – TWELVE MONTHS ENDED DECEMBER 31, 2013
StoneMor’s +800 pe...
Proven Growth and Acquisition Strategy
 A consistent track record of growth and financial performance
• 145 cemeteries an...
13
 Acquisitions have contributed to strong corporate growth
 Discipline in selecting target -- “Never break the model”
...
14
Acquisition Criteria
 Internal rate of return greater than cost of capital
• 10 year discounted cash flow
• Terminal v...
15
 Large trust funds
 Significant available inventory for sale
 Proximity to metropolitan market areas
 Historical in...
Major Improvements
Post Acquisition
 Institute pre-need sales program
 Seasoned, professional management
 Significantly...
Favorable Demographics
 Aging of the Baby Boom Generation will accelerate the death rate
and expand our target pre-need m...
Favorable Demographics
 Sharply increasing population in our target pre-need market
18
ProjectedU.S.Population
(inthousan...
Substantial Industry and Financial
Barriers to Entry
 Scarcity and cost of real estate near densely populated areas
 Zon...
20
Highly Fragmented Industry
Cemeteries,
9,600, 30%
Funeral
Homes,
22,000, 70%
$11 billion
$6 billion
___________________...
21
Conservative Financial Profile
Adjusted Operating Profits (Accrual) Exceed Distributions
Adjusted Operating Profit, or ...
Sustained Business Growth While
Maintaining Stable Credit Profile
Asset base has grown while total leverage has remained s...
Strong Cash Position
23
$462 Million in Cash & Merchandise Trust Assets Net of
Liabilities
$594
$462
$132
$0
$100
$200
$30...
Recap
 9.9%* yield superior to 2013 year end MLP average yield of 5.8%**
 Strong historical performance
 Proven acquisi...
Thank You
of 25

Naptp new may 2014

Published on: Mar 3, 2016
Published in: Business      Economy & Finance      
Source: www.slideshare.net


Transcripts - Naptp new may 2014

  • 1. National Association of Publicly Traded Partnerships MLP Conference May, 2014
  • 2. Confidential 2 This presentation contains certain statements that may be deemed to be forward-looking statements within the meaning of the Securities Acts. All statements, other than statements of historical facts, that address activities, events or developments that the Partnership expects, projects, believes or anticipates will or may occur in the future, including, without limitation, the outlook for population growth and death rates, general industry conditions including future operating results of the Partnerships properties, capital expenditures, asset sales, expansion and growth opportunities, bank borrowings, financing activities and other such matters, are forward- looking statements. Although the Partnership believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ from those projected in the forward-looking statements. For a more detailed discussion of risk factors, please refer to the annual Report on Form 10-K and quarterly reports on form 10-Q filed with the SEC and the prospectus and the prospectus supplement relating to this offering. In addition, the projected impact of acquisitions reflect managements projections as to possible future results based on a number of assumptions that are inherently uncertain, including without limitation the organic growth of the Partnership, the availability of acquisition targets, the purchase prices for the targets, the availability of debt or equity financing from either third parties or the targets and the Partnership’s ability to integrate and manage such acquisitions. The assumptions involve significant elements of subjective judgment and analysis, and no representation is made as to their or the projections attainability.
  • 3. StoneMor Partners L.P. 3  StoneMor is the second largest owner and operator of cemeteries in the US • 278 cemeteries and 90 funeral homes, diversely located across 28 states and Puerto Rico* • As of 12/31/2013, over 12,490 acres of land, equivalent to an aggregate weighted average sales life of 240 years *Does not include 9 funeral homes and 12 cemeteries acquired in recent transaction with SCI, nor the 13 cemeteries included in the agreement with the Archdiocese of Philadelphia
  • 4. Investment Highlights  9.9%* yield superior to 2013 year end MLP average yield of 5.8%**  Strong historical performance  Proven acquisition record  Favorable demographic trends  High barriers to entry  Conservative financial profile 4 *As of May13, 2014 **Source: Clearbridge Investments
  • 5. 5 Attractive Yield  9.9% Yield vs. 5.8% Average MLP Yield*  37 consecutive quarterly distributions Distribution Per Unit *Source: Clearbridge $2.16 $2.22 $2.25 $2.33 $2.36 $2.40 $2.00 $2.05 $2.10 $2.15 $2.20 $2.25 $2.30 $2.35 $2.40 $2.45 2008 2009 2010 2011 2012 2013
  • 6. 2014 Highlights American Infrastructure MLP Fund (AIM)  StoneMor receives $130 million commitment from AIM – Includes AIM acquiring an indirect majority interest in the general partner • Aligns StoneMor L.P. with strategic, well capitalized MLP sector expert – StoneMor L.P. to use $55 million for purchase of Archdiocese of Philadelphia properties • Four year non cash common, priced at market (no discount) • Reduces reliance on working capital borrowings • Improves cash flow optics – $50 million to be available to StoneMor L.P. for future acquisitions 6
  • 7. 7 Recent Developments Archdiocese of Philadelphia  13 cemeteries leased  60 year management arrangement  7000 existing burials per year  Will be introducing and growing pre-need sales business to a very large and growing population  Opportunities for Archdioceses beyond Philadelphia
  • 8. 8 Recent Developments Service Corporation International  Will acquire 9 funeral homes, 12 cemeteries and 2 crematories  Properties located in Central Florida, North Carolina, Southeastern Pennsylvania and Virginia  1,140 acres of land  3,500 interments per year  1,900 annual funeral home calls  Immediately accretive
  • 9. 9 Recent Developments. Continued strength in financial results  2013 Full Year Financial Results • Production based revenue increased 10.2% to $326.6 million • Adjusted operating profits increased 24.9% to $67.2 million • Distributable cash flow increased 42.6% to $76.0 million  2014 First Quarter Financial Results • Production based revenue increased 7% to $85.7 million • Adjusted operating profits increased 24.3% to $22.0 million • Distributable cash flow increased 25.6% to $22.1 million
  • 10. Historical Performance 10 ($ in millions) ($ in millions) REVENUE OPERATING PROFIT $181 $197 $228 $243 $246 $251 $218 $247 $281 $296 $327 $332 $- $50 $100 $150 $200 $250 $300 $350 2009 2010 2011 2012 2013 TTM GAAP Accrual $13 $3 $10 $14 $6 $10 $36 $38 $49 $54 $67 $71 $- $10 $20 $30 $40 $50 $60 $70 $80 2009 2010 2011 2012 2013 ttm GAAP Accrual
  • 11. Diversified Revenue Streams 11 STONEMOR BUSINESS MIX BY REVENUE – TWELVE MONTHS ENDED DECEMBER 31, 2013 StoneMor’s +800 person sales team creates an unparalleled advantage in pre-need sales performance ~60% of StoneMor’s revenue is generated through highly predictable at-need business Pre-need Sales, 37.0% At-need Sales, 30.6% Investment Income, 9.9% Interest Income, 2.8% Funeral Home Revenues, 18.2% Other Cemetery Revenues, 1.5%
  • 12. Proven Growth and Acquisition Strategy  A consistent track record of growth and financial performance • 145 cemeteries and 85 funeral homes acquired since 2004 IPO* • Production based revenue has increased from $218 million in 2009 to $332 million TTM • 8.76% ’09- 2014 TTM CAGR • Adjusted operating profits have increased from $36 million in 2009 to $71 million in TTM • 14.5% ’09-2014 TTM CAGR *Does not include 9 funeral homes & 12 cemeteries from recently announced transaction with SCI, or 13 cemeteries from the Archdiocese of Philadelphia 12
  • 13. 13  Acquisitions have contributed to strong corporate growth  Discipline in selecting target -- “Never break the model”  Focus on acquisitions that generate incremental cash flow in excess of financing costs  Accretive from day one Disciplined Acquisition Philosophy
  • 14. 14 Acquisition Criteria  Internal rate of return greater than cost of capital • 10 year discounted cash flow • Terminal value equal to 5 times year-10 cash flow  Positive cash flow after repaying acquisition price over a 10 year period  Generate cash flow toward an increased distribution  Cemetery property must have minimum of 25 years sales life at projected rate  Reasonably be able to fit within the companies debt leverage calculation
  • 15. 15  Large trust funds  Significant available inventory for sale  Proximity to metropolitan market areas  Historical interments in excess of 200 annually  Significant at-need historical volume Properties Generally Have:
  • 16. Major Improvements Post Acquisition  Institute pre-need sales program  Seasoned, professional management  Significantly reduce product costs  Consolidate office functions into home office  Professional trust fund management which improves trust fund returns  Price increases do not support purchase price 16
  • 17. Favorable Demographics  Aging of the Baby Boom Generation will accelerate the death rate and expand our target pre-need market 17 Source: Department of Health and Human Services. ANNUAL BIRTHS IN THE UNITED STATES 1930-1960
  • 18. Favorable Demographics  Sharply increasing population in our target pre-need market 18 ProjectedU.S.Population (inthousands) Source: U.S. Department of Commerce Census Bureau. PROJECTED U.S. POPULATION IN 55-65 YEAR OLD CATEGORY Target Market More Resilient to Economic Downturns  Target 55 to 65 age range  Near retirement – low unemployment risk  Mortgage paid-off (or almost) – minimal debt obligations  Adult children – no tuition costs
  • 19. Substantial Industry and Financial Barriers to Entry  Scarcity and cost of real estate near densely populated areas  Zoning restrictions  Initial capital requirements  Strength of family tradition and heritage  Administratively complex business for new entrants  Deferred revenue accounting (SAB 101) makes cemetery acquisitions unattractive to “C-corps” valued on EPS and EBITDA, keeping consolidators out of the market 19 Barriers to Entry Because of the barriers to entry, there are few new cemeteries built. The only way to enter the industry is to buy an existing cemetery
  • 20. 20 Highly Fragmented Industry Cemeteries, 9,600, 30% Funeral Homes, 22,000, 70% $11 billion $6 billion ___________________________ Source: National Directory of Morticians; Public Filings. ___________________________ Source: ABN Amro Research; Public Filings. (1) Includes StoneMor, SCI, Stewart, Carriage and Loewen. $17 Billion Market Large Death Care Industry Highly Fragmented Industry Revenue Owned by Consolidators 20% Independent Operators, 80% (1) Economies of scale and consolidation opportunities provide competitive advantages
  • 21. 21 Conservative Financial Profile Adjusted Operating Profits (Accrual) Exceed Distributions Adjusted Operating Profit, or the Accrual method, is the measure by which management operates the business GAAP Distributions Accrual $- $10 $20 $30 $40 $50 $60 $70 $80 2009 2010 2011 2012 2013 ttm $13 $3 $10 $14 $6 $10 $27 $32 $45 $47 $52 $53 $36 $38 $49 $54 $67 $71 GAAP Distributions Accrual
  • 22. Sustained Business Growth While Maintaining Stable Credit Profile Asset base has grown while total leverage has remained steady 22 Total Assets, Debt and Partners’ Capital Total Debt / Accrual EBITDA ($ in millions) $738 $859 $1,147 $1,249 $1,344 $1,473 $1,492 $161 $183 $220 $195 $255 $292 $253 $119 $112 $128 $180 $135 $107 $148 $0 $300 $600 $900 $1,200 $1,500 2008 2009 2010 2011 2012 2013 Q1 2014 Total Assets Total Debt Total Partners' Capital 3.6x 3.8x 3.1x 2.8x 3.4x 3.5x 3.5 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 2008 2009 2010 2011 2012 2013 Q1 '14
  • 23. Strong Cash Position 23 $462 Million in Cash & Merchandise Trust Assets Net of Liabilities $594 $462 $132 $0 $100 $200 $300 $400 $500 $600 $700 Cash, AR and Merchandise Trust Merchandise Liability Excess Cash and Assets
  • 24. Recap  9.9%* yield superior to 2013 year end MLP average yield of 5.8%**  Strong historical performance  Proven acquisition record  Favorable demographic trends  High barriers to entry  Conservative financial profile 24 *As of May 13,, 2014 Source: Clearbridge Investments
  • 25. Thank You

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