Keystone North America Inc. reports third quarter 2009 results
Highlights:
Third Quarter 2009:
- Revenue was $29.1 million, compared to $28.6 million in the third
quarter of 2008.
- Average revenue per service increased 3.1% compared to the third
quarter of 2008.
- Gross profit increased $0.9 million or 11.2% compared to the third
quarter of 2008.
- Cost and expenses decreased $0.3 million or 1.5% compared to the
third quarter of 2008.
- Cash from operating activities of $3.0 million fell short of
dividends by $2.1 million during the seasonally weaker third quarter
2009.
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE
SERVICES/
Overview
For the third quarter of 2009, revenues were slightly higher than the prior year, totaling
For the third quarter of 2009, the Company's cash from operations fell short of dividends declared by
"Despite mild funeral volume weakness, a modestly increased cremation mix coupled with challenging economic times, during the third quarter, we have once again demonstrated our ability to increase gross profit from operating activity," said
Support Agreement with Service Corporation International
The Company, SCI and SCI Alliance Acquisition Corporation (the "Offeror") entered into a definitive support agreement on
Outlook
Following the entering into of the Support Agreement described above, the Company will continue to operate as a going concern through the closing of the Transactions (as defined in the Support Agreement). The Support Agreement requires that the Company not declare, pay or set aside for payment any further dividends following the dividend that was paid on
The Company's cash flow from operations fell short of dividends declared by
Third Quarter 2009 Earnings Conference Call Tuesday, November 10, 2009
10:00 am (EST)
Keystone
To participate in the conference call, please dial (416) 646-3096 or (800) 732-6179 confirmation No.4176071. A live audio webcast of the conference call will be available at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2854060.
An archived recording of the call will be available at (416) 640-1917 or (877) 289-8525 (passcode 4176071 followed by the No. sign) through
About Keystone
KNA, through its subsidiaries, is a leading funeral service provider in
The Company's unaudited consolidated financial statements for the three and nine month periods ended
Consolidated Financial Statements (unaudited)
Keystone North America Inc.
Consolidated Balance Sheets (unaudited)
(000's of U.S. Dollars)
As at As at
September December
30, 2009 31, 2008
-----------------------
Assets
Current assets:
Cash and cash equivalents $ 6,388 $ 4,514
Restricted short-term investments 1,145 2,163
Trade receivables, less allowances for doubtful
accounts of $1,733 and $2,219 at September 30,
2009 and December 31, 2008, respectively 7,403 8,333
Inventories and cemetery property 9,506 9,787
Income tax receivable 587 114
Prepaid and other current assets 545 626
Future income taxes 377 374
-----------------------
Total current assets 25,951 25,911
Preneed receivables and trust funds 70,131 71,868
Restricted cemetery care trust funds 6,559 6,085
Restricted long-term investments 3,330 4,132
Property and equipment, net 106,019 105,493
Tradenames 34,894 34,739
Goodwill 358 -
Covenants not to compete, less accumulated
amortization of $7,189 and $7,600 at September
30, 2009 and December 31, 2008, respectively 10,099 11,103
Derivative contracts 927 -
Other assets 127 114
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Total assets $ 258,395 $ 259,445
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-----------------------
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 8,232 $ 7,430
Current derivative contract liability 394 1,907
Dividends payable 1,698 1,492
Current maturities of long-term debt 1,667 2,134
-----------------------
Total current liabilities 11,991 12,963
Deferred revenue 87,441 89,697
Long-term debt 84,174 79,006
Future income taxes 10,787 10,744
Derivative contracts liability - 8,332
Other long-term liabilities 66 173
Non-controlling interests in preneed funds 6,559 6,085
Shareholders' equity:
Share capital 244,313 244,313
Accumulated deficit (175,748) (181,384)
Accumulated other comprehensive loss (11,188) (10,484)
-----------------------
Total shareholders' equity 57,377 52,445
-----------------------
Total liabilities and shareholders' equity $ 258,395 $ 259,445
-----------------------
-----------------------
Unaudited Consolidated Statements of Operations
(000's of U.S. Dollars - except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
------------------------------------------
Revenues:
Funeral services $ 26,966 $ 27,264 $ 85,509 $ 88,197
Other 2,161 1,319 6,065 4,692
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Total Revenue 29,127 28,583 91,574 92,889
Costs and expenses 20,175 20,535 60,240 62,289
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Gross Profit 8,952 8,048 31,334 30,600
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Corporate, general and
administrative 3,671 2,112 8,870 8,032
Depreciation 1,102 1,049 3,295 3,116
Amortization 541 709 1,765 2,157
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3,638 4,178 17,404 17,295
Interest expense 1,456 1,847 4,711 12,031
Unrealized (gain) loss on
derivative contracts (5,564) 5,000 (7,162) 9,890
Litigation (benefit) expense (1,047) - 1,281 -
Expense on extinguishment of
subordinated notes - 53 - 4,578
Loss on subordinated notes
extinguishment - 3,167 - 32,794
Other income (572) (1,157) (765) (4,264)
------------------------------------------
Income (loss) from continuing
operations before income taxes 9,365 (4,732) 19,339 (37,734)
Income tax (benefit) expense (7) 959 970 2,500
------------------------------------------
Income (loss) from continuing
operations 9,372 (5,691) 18,369 (40,234)
Loss from discontinued operations (1,505) (101) (2,096) (37)
------------------------------------------
Net income (loss) $ 7,867 (5,792) $ 16,273 (40,271)
------------------------------------------
------------------------------------------
Basic and diluted income (loss)
from continuing operations $ 0.36 $ (0.22) $ 0.71 $ (2.61)
------------------------------------------
------------------------------------------
Basic and diluted loss from
discontinued operations $ (0.06) $ (0.00) $ (0.08) $ (0.00)
------------------------------------------
------------------------------------------
Basic and diluted income (loss)
per common share $ 0.30 $ (0.22) $ 0.63 $ (2.61)
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Unaudited Consolidated Statements of Cash Flows
(000's of U.S. Dollars)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
------------------------------------------
Operating activities:
Net income (loss) $ 7,867 $ (5,792) $ 16,273 $ (40,271)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Payments on Class B shares of
subsidiary - - - (191)
Unrealized loss on change in
fair value of Class B
shares of subsidiary - - - (533)
Provision for future income taxes (41) 498 112 1,674
Loss on subordinated notes
extinguishment - 3,167 - 32,794
Provision for bad debts 172 312 399 771
Unrealized (gain) loss on
derivative contracts (5,563) 5,000 (7,162) 9,890
Amortization expense 544 718 1,785 2,218
Depreciation expense 1,119 1,082 3,367 3,222
Loss (gain) on disposal of
businesses and assets 1,428 (224) 1,898 (125)
Changes in operating assets
and liabilities (2,481) 819 354 3,322
------------------------------------------
Net cash provided by operating
activities 3,045 5,580 17,026 12,771
Investing activities:
Business acquisitions, net of
cash acquired (3,293) - (4,719) (1,895)
Cash paid to repurchase Class
B shares, net of cash
received from management - - - (592)
Purchases of property and
equipment (1,227) (831) (2,627) (2,226)
Proceeds from dispositions
of businesses 1,388 399 1,957 2,501
Proceeds from restricted
investments 406 843 1,830 3,041
------------------------------------------
Net cash provided by (used in)
investing activities (2,726) 411 (3,559) 829
Financing activities:
Repurchase of 14.5% Separate
Subordinated Notes - (16,913) - (16,913)
Proceeds from credit facility 6,000 17,250 7,000 19,750
Payments on credit facility - (1,000) (2,500) (2,400)
Borrowings on long-term debt - 110 - 238
Payments on long-term debt (493) (1,140) (2,440) (3,395)
Cash paid for Keystone North
America
Common Share dividends (4,551) (4,560) (13,653) (9,784)
------------------------------------------
Net cash provided by (used in)
financing activities 956 (6,253) (11,593) (12,504)
------------------------------------------
Net increase (decrease) in cash 1,275 (262) 1,874 1,096
Cash and cash equivalents,
beginning of period 5,113 3,953 4,514 2,595
------------------------------------------
Cash and cash equivalents, end
of the period $ 6,388 $ 3,691 $ 6,388 $ 3,691
------------------------------------------
------------------------------------------
Supplement disclosure of cash
flow information:
Cash paid for interest $ 1,412 $ 1,826 $ 4,496 $ 12,503
------------------------------------------
------------------------------------------
Cash paid (recovered) for
income taxes $ 428 $ 115 $ 1,341 $ 1,000
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FORWARD-LOOKING INFORMATION
This press release may contain "forward-looking statements" that reflect the current expectations of management regarding potential future outcomes relating to the Company or other matters, such as the Company's future growth, results of operations, performance and business prospects and opportunities. Forward-looking statements are only expectations and are not guarantees of future performance or other future outcomes. Wherever possible, words such as "may", "would", "could", "will", "anticipate", "believe", "plan", "expect", "intend", "estimate", "aim", "endeavor" and similar expressions, and the negative forms thereof, have been used to identify these forward-looking statements.
Forward-looking statements reflect management's beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. The material factors and assumptions used to develop the forward-looking statements contained in this press release may include, in addition to those described elsewhere herein, competitive conditions in our markets, consumer preferences, key employee retention, identification of quality acquisition targets, integration of acquired businesses, current and future capital expenditures and other expenses, customer and supplier retention, insurance benefits related to pre-need funeral contracts, earnings from and performance of trust fund investments, compliance with regulations and licensing requirements, changes in the law, natural disasters, unanticipated litigation, number of deaths, access to capital, compliance with financial covenants, interest rates, exchange rates, applicable accounting rules, current and historical results of operations and performance and general economic conditions. Many risks and uncertainties could cause the Company's actual results, performance or achievements or other outcomes to be materially different from any future results, performance, achievements or other outcomes that may be expressed or implied by such forward-looking statements including, without limitation, those factors listed and discussed in the "Risk Factors" section of the Company's Annual Information Form for the year ended
Any forward-looking statements contained in this press release are, unless otherwise indicated, made as of the date of this press release, and are expressly qualified in their entirety by this cautionary language. We do not intend, and do not assume any obligation, to update or revise these forward-looking statements, except as required by applicable law.
%SEDAR: 00021578E
For further information: Steven A. Tidwell, Chief Executive Officer, (813) 225-4653, [email protected]; Stephen Shaffer, Executive Vice-President and Chief Financial Officer, (813) 225-4654, [email protected] or please visit our investor website at http://www.keystonenorthamerica.ca/
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