UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 4, 2016

StoneMor Partners L.P.
(Exact name of registrant as specified in its charter)

 
					
Delaware	 	001-32270	 	80-0103159	
(State or other jurisdiction
of incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification No.)	
3600 Horizon Boulevard, Trevose, PA 19053
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (215) 826-2800
Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

Item 1.01	Entry into a Material Definitive Agreement.	
On August 4, 2016, StoneMor Operating LLC (the “Operating Company”), a wholly-owned subsidiary of StoneMor Partners L.P. (the “Partnership”), entered into the Credit Agreement (the “Credit Agreement”) among each of the Subsidiaries of the Operating Company (together with the Operating Company, “Borrowers”), the Lenders identified therein, Capital One, National Association (“Capital One”), as Administrative Agent, Issuing Bank and Swingline Lender, Citizens Bank of Pennsylvania, as Syndication Agent, and TD Bank, N.A. and Raymond James Bank, N.A., as Co-Documentation Agents. In addition, on the same date, the Partnership, the Borrowers and Capital One, as Administrative Agent, entered into the Guaranty and Collateral Agreement (the “Guaranty Agreement,” and together with the Credit Agreement, “New Agreements”).
The New Agreements replaced the Partnership’s Fourth Amended and Restated Credit Agreement, as amended with Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer and other lenders party thereto (the “Prior Credit Agreement”), Second Amended and Restated Security Agreement, and Second Amended and Restated Pledge Agreement, each dated as of December 19, 2014 (collectively, “Prior Agreements”). The Prior Credit Agreement provided for a revolving credit facility of $180.0 million, with borrowings classified as either acquisition draws or working capital draws, maturing on December 19, 2019.
The summary of the material terms of the New Agreements is set forth below. Capitalized terms which are not defined in the following description shall have the meaning assigned to such terms in the New Agreements.
The Credit Agreement provides for up to $210.0 million initial aggregate amount of Revolving Commitments, which may be increased, from time to time, in minimum increments of $5.0 million so long as the aggregate amount of such increases does not exceed $100.0 million. The Operating Company may also request the issuance of Letters of Credit for up to $15.0 million in the aggregate. The Maturity Date under the Credit Agreement is the earlier of (i) August 4, 2021 and (ii) the date that is six months prior to the earliest scheduled maturity date of any outstanding Permitted Unsecured Indebtedness (at present, such date is December 1, 2020, which is six months prior to June 1, 2021 maturity date of outstanding 7.875% senior notes).
As of August 4, 2016, the outstanding amount of borrowings under the Credit Agreement was $126.1 million, which was used to (i) pay down outstanding obligations under the Prior Credit Agreement and (ii) pay fees, costs and expenses related to the New Agreements. Generally, proceeds of the Loans under the Credit Agreement can be used to finance the working capital needs and for other general corporate purposes of the Borrowers and Guarantors, including acquisitions and distributions permitted under the Credit Agreement.
Each Borrowing under the Credit Agreement is comprised of Base Rate Loans or Eurodollar Loans. The Loans comprising each Base Rate Borrowing (including each Swingline Loan) bear interest at the Base Rate plus the Applicable Rate, and the Loans comprising each Eurodollar Borrowing bear interest at the Eurodollar Rate plus the Applicable Rate.
The Applicable Rate is determined based on the Consolidated Leverage Ratio of the Partnership and its Subsidiaries and ranges from 1.75% to 3.25% for Eurodollar Rate Loans and 0.75% to 2.25% for Base Rate Loans. As of August 4, 2016, the Applicable Rate for Eurodollar Rate Loans was 2.75% and for Base Rate Loans – 1.75%. The Credit Agreement also requires the Borrowers to pay a quarterly unused commitment fee, which accrues at the Applicable Rate on the amount by which the commitments under the Credit Agreement exceed the usage of such commitments.
The Credit Agreement contains financial covenants, pursuant to which the Partnership will not permit:
 
 	•	 	the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA, or the Consolidated Leverage Ratio, as of the last day of any fiscal quarter, commencing on September 30, 2016, determined for the period of four consecutive fiscal quarters ending on such date (the “Measurement Period”), to be greater than 4.00 to 1.0, which may be increased to 4.25 to 1.0 (in case of a Designated Acquisition made subsequent to the last day of the immediately preceding fiscal quarter) as of the last day of the fiscal quarter in which such Designated Acquisition occurs and as of the last day of the immediately succeeding fiscal quarter; and	

 	•	 	the ratio of Consolidated EBITDA to Consolidated Debt Service, or the Consolidated Debt Service Coverage Ratio, as of the last day of any fiscal quarter, commencing on September 30, 2016 to be less than 2.50 to 1.0 for any Measurement Period.	
Additional covenants include customary limitations, subject to certain exceptions, on, among others: (i) the incurrence of Indebtedness; (ii) granting of Liens; (iii) fundamental changes and dispositions; (iv) investments, loans, advances, guarantees and acquisitions; (v) swap agreements; (vi) transactions with Affiliates; (vii) Restricted Payments; and (viii) Sale and Leaseback Transactions.
Events of Default under the Credit Agreement include, but are not limited to, the following:
 
 	•	 	non-payment of any principal, interest or other amounts due under the Credit Agreement;	
 
 	•	 	failure to observe or perform any covenant, condition or agreement related to: (i) the delivery of financial statements, compliance certificates, reports and other information; (ii) providing prompt notice of any Default or Event of Default; (iii) the preservation of the legal existence of the Loan Parties; (iv) the ability of the Administrative Agent and each Lender to visit and inspect properties, examine books and records, and discuss financial and business affairs with officers and independent public accountants of each Borrower; (v) restrictions on the use of proceeds; (vi) guarantees by new Subsidiaries; (vii) the maintenance of Trust Funds and Trust Accounts; and (viii) any of the negative covenants, including, but not limited to, financial covenants, contained in the Credit Agreement;	
 
 	•	 	failure to observe or perform any other covenant, condition or agreement contained in the Credit Agreement or other Loan Document, and such failure continues unremedied for a period of 30 days after the earlier of (i) notice thereof provided by the Administrative Agent or (ii) a Responsible Officer has obtained knowledge thereof;	
 
 	•	 	any default under any other Material Indebtedness of the Partnership and/or its Subsidiaries;	
 
 	•	 	any insolvency proceedings related to a Borrower or Guarantor; and	
 
 	•	 	any Change in Control.	
The Borrowers’ obligations under the Credit Agreement are guaranteed by the Partnership and the Borrowers. Pursuant to the Guaranty Agreement, the Borrowers’ obligations under the Credit Agreement are secured by a first priority lien and security interest (subject to permitted liens and security interests) in substantially all of the Partnership’s and Borrowers’ assets, whether then owned or thereafter acquired, excluding certain excluded assets, which include, among others: (i) Trust Accounts, certain proceeds required by law to be placed into such Trust Accounts and funds held in such Trust Accounts; and (ii) Excluded Real Property, including owned and leased real property that may not be pledged as a matter of law.
The New Agreements also include various representations, warranties and covenants and indemnification provisions customary for transactions of this nature.
Some of the lenders and their respective affiliates under the Credit Agreement acted as lenders under the Prior Credit Agreement. In addition, some of the lenders under the Prior Credit Agreement and the Credit Agreement engaged in, and may in the future engage in, investment banking and other commercial dealings with the Partnership and its affiliates for which they received, and will receive, customary fees and expenses.
The foregoing summary of the New Agreements is not complete and is qualified in its entirety by reference to the New Agreements, which the Partnership intends to file with the Securities and Exchange Commission as exhibits to the Quarterly Report on Form 10-Q for the quarter ending September 30, 2016.

Item 1.02	Termination of a Material Definitive Agreement.	
On August 4, 2016, the Partnership entered into the New Agreements that replaced the Prior Agreements and effectively terminated the Prior Agreements, as described in Item 1.01 of this Current Report on Form 8-K, which description is incorporated in its entirety by reference herein. In connection with entering into the Credit Agreement, the Partnership incurred an extinguishment of debt charge of approximately $1.2 million.
 
Item 2.02	Results of Operations and Financial Condition.	
On August 5, 2016, the Partnership issued a press release announcing its financial results for the quarter ended June 30, 2016. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.
 
Item 2.03	Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.	
On August 4, 2016, the Partnership entered into the Credit Agreement. The terms of the Credit Agreement are described in Item 1.01 of this Current Report on Form 8-K, which description is incorporated in its entirety by reference herein.
 
Item 9.01	Financial Statements and Exhibits.	
 
 	(d)	Exhibits:	

Exhibit
No.	  	Description	
		
99.1	  	Press Release dated August 5, 2016.	

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

STONEMOR PARTNERS L.P.	
		
By:	 	StoneMor GP LLC	
	 	its general partner	
		
By:	 	/s/ Sean P. McGrath	
Name:	 	Sean P. McGrath	
Title:	 	Chief Financial Officer	
Date: August 5, 2016

EXHIBIT INDEX

Exhibit
No.	  	Description	
		
99.1	  	Press Release dated August 5, 2016.	

Exhibit 99.1

 
			
CONTACT:	  	John McNamara	
	  	Director - Investor Relations	
	  	StoneMor Partners L.P.	
	  	(215) 826-2945	

STONEMOR PARTNERS L.P. REPORTS OPERATING
AND FINANCIAL RESULTS FOR SECOND QUARTER 2016
 
 	•	 	Continuing efforts to strengthen salesforce and drive pre-need sales	
 
 	•	 	Entered into a new $210 million revolving credit facility, representing a $30 million increase from previous facility	
 
 	•	 	Declared a quarterly cash distribution of $0.66 per limited partner unit	
 
 	•	 	Results will be discussed on a conference call at 11 a.m. ET on Friday, August 5, 2016	
TREVOSE, PA – August 5, 2016 —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 47 th 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.	
 
2

 	•	 	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.	
 
3

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	  	
	  	 	 	 	
*    *    *
 
4

Investor Conference Call and Webcast
The Partnership will conduct a conference call to discuss second quarter 2016 financial results today, Friday, August 5, 2016 at 11:00 a.m. ET. The conference call can be accessed by calling (800) 683-0779. An audio replay of the conference call will be available by calling (800) 633-8284 through 1:00 p.m. ET on August 19, 2016. The reservation number for the audio replay is 21815496. A live webcast of the conference call will also be available to investors who may access the call through the investors section of www.stonemor.com . An audio replay of the conference call will also be archived on the Partnership’s website at www.stonemor.com .
About StoneMor Partners L.P.
StoneMor Partners L.P., headquartered in Trevose, Pennsylvania, is an owner and operator of cemeteries and funeral homes in the United States, with 307 cemeteries and 107 funeral homes in 28 states and Puerto Rico.
StoneMor is the only publicly traded death care company structured as a partnership. StoneMor’s cemetery products and services, which are sold on both a pre-need (before death) and at-need (at death) basis, include: burial lots, lawn and mausoleum crypts, burial vaults, caskets, memorials, and all services which provide for the installation of this merchandise. For additional information about StoneMor Partners L.P., please visit StoneMor’s website, and the investors section, at http://www.stonemor.com.
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.
 
5

STONEMOR PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands)

 	  	June 30,
2016	 	 	December 31,
2015	 	
ASSETS	  				 				
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.
 
6

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.
 
7

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.
 
8

STONEMOR PARTNERS L.P.
FINANCIAL AND OPERATING DATA
(unaudited)

 	  	Three Months Ended
June 30,	 	 	Six Months Ended
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.	
 
9

STONEMOR PARTNERS L.P.
FINANCIAL AND OPERATING HIGHLIGHTS
(unaudited; in thousands, except per unit data)

 	  	Three Months Ended
June 30,	 	 	Six Months Ended
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	  	
 
10

 

(1)  	Although not prescribed under generally accepted accounting principles (“GAAP”), the Partnership’s management believes the presentation of its non-GAAP financial measures, including Adjusted EBITDA, Distributable Cash Flow (“DCF”) and Distributable Available Cash, is relevant and useful because management uses these non-GAAP measures in managing the Partnership’s business and measuring the operating performance of the Partnership. In addition, management believes it allows for easier comparison of its results with other master limited partnerships (“MLP”), and is a critical component in the determination of quarterly cash distributions. As a MLP, the Partnership is required to distribute 100% of available cash, subject to cash reserves established by its general partner and as defined in its limited partnership agreement (excluding cash held in merchandise and perpetual care trusts, “Available Cash”), to investors on a quarterly basis, in compliance with applicable Delaware law. The Partnership refers to Available Cash prior to the establishment of cash reserves as Distributable Available Cash. Adjusted EBITDA, DCF and Distributable Available Cash should not be considered in isolation of, or as a substitute for, net income (loss) as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. While the Partnership’s management believes that its presentation format of Adjusted EBITDA, DCF and Distributable Available Cash is generally consistent with the common practice of other MLPs, such metrics may not be consistent and, as such, may not be comparable to measures reported by other MLPs, who may use other adjustments related to their specific businesses. Non-GAAP financial measures, including Adjusted EBITDA, DCF and Distributable Available Cash, are supplemental financial measures used by the Partnership’s management and by external users of the Partnership’s financial statements such as investors, lenders under the Partnership’s credit facility, research analysts, rating agencies and others to assess its:	
 
 	•	 	Operating performance as compared to other publicly traded partnerships, without regard to financing methods, historical cost basis or capital structure;	
 
 	•	 	Ability to generate sufficient cash flows to support its distributions to unitholders;	
 
 	•	 	Ability to incur and service debt and fund acquisitions and growth opportunities; and	
 
 	•	 	Ability to comply with financial covenants in its Credit Facility, which is calculated based upon Adjusted EBITDA with certain adjustments.	
Non-GAAP financial measures used by the Partnership include (i) certain revenues and related expenses that are deferred in accordance with GAAP because certain delivery and performance requirements have not yet been met during the period the contracts were written, and (ii) exclude certain revenues and related expenses that are recognized in accordance with GAAP due to their inclusion in non-GAAP measures during earlier periods when the contracts were written. A portion of the cash received with regard to revenues that are deferred under GAAP is held in trust until the Partnership meets certain delivery and performance requirements. See footnote 3 below.
DCF is determined by calculating EBITDA, which is defined as net income (loss) plus interest expense, income tax, and depreciation and amortization, then adjusting it for non-cash, non-recurring and other items to achieve Adjusted EBITDA, and then deducting cash interest expense, net cash income tax, maintenance capital expenditures and other items. Distributable Available Cash is then determined by adding cash on hand at the beginning of the period. The Partnership defines Adjusted EBITDA as net income (loss) plus the following adjustments:
 
 	•	 	Interest expense;	
 
 	•	 	Income tax expense;	
 
 	•	 	Depreciation and amortization.	
 
 	•	 	Asset impairments;	
 
 	•	 	Acquisition and related costs;	
 
 	•	 	Non-cash stock compensation;	
 
 	•	 	(Gains) losses on asset disposal; and	
 
 	•	 	Other items.	
 
11

A supplemental reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is provided below:

 	  	Three Months Ended
June 30, 2016	 	  	Three Months Ended
June 30, 2015	 	
 	  	(unaudited; in thousands)	 	
 	  	GAAP
Results	 	 	Net Deferral
Adjustments	 	 	Other
Adjustments	 	 	Non-GAAP
Results	 	  	GAAP
Results	 	 	Net Deferral
Adjustments	 	 	Other
Adjustments	 	 	Non-GAAP
Results	 	
Revenues	  				 				 				 				  				 				 				 				
Pre-need cemetery revenues	  	$	27,425	  	 	$	14,777	  	 	$	—  	  	 	$	42,202	  	  	$	27,825	  	 	$	16,187	  	 	$	—  	  	 	$	44,012	  	
At-need cemetery revenues	  	 	24,874	  	 	 	1,031	  	 	 	—  	  	 	 	25,905	  	  	 	26,235	  	 	 	1,200	  	 	 	—  	  	 	 	27,435	  	
Other cemetery revenues (4)	  	 	1,487	  	 	 	(252	) 	 	 	1,283	  	 	 	2,518	  	  	 	2,008	  	 	 	(25	) 	 	 	—  	  	 	 	1,983	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total cemetery revenues	  	 	53,786	  	 	 	15,556	  	 	 	1,283	  	 	 	70,625	  	  	 	56,068	  	 	 	17,362	  	 	 	—  	  	 	 	73,430	  	
Funeral home revenues	  	 	14,739	  	 	 	2,818	  	 	 	—  	  	 	 	17,557	  	  	 	13,494	  	 	 	2,240	  	 	 	—  	  	 	 	15,734	  	
Investment income from trusts	  	 	4,772	  	 	 	4,474	  	 	 	—  	  	 	 	9,246	  	  	 	9,079	  	 	 	6,562	  	 	 	—  	  	 	 	15,641	  	
Interest income	  	 	2,252	  	 	 	—  	  	 	 	—  	  	 	 	2,252	  	  	 	2,184	  	 	 	—  	  	 	 	—  	  	 	 	2,184	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	  	 	75,549	  	 	 	22,848	  	 	 	1,283	  	 	 	99,680	  	  	 	80,825	  	 	 	26,164	  	 	 	—  	  	 	 	106,989	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Costs and expenses	  				 				 				 				  				 				 				 				
Cost of goods sold (5)	  	 	9,737	  	 	 	2,115	  	 	 	(2,437	) 	 	 	9,415	  	  	 	9,807	  	 	 	2,722	  	 	 	(2,869	) 	 	 	9,660	  	
Cemetery expense	  	 	17,485	  	 	 	—  	  	 	 	—  	  	 	 	17,485	  	  	 	19,279	  	 	 	—  	  	 	 	—  	  	 	 	19,279	  	
Selling expense	  	 	16,391	  	 	 	3,151	  	 	 	—  	  	 	 	19,542	  	  	 	15,769	  	 	 	3,969	  	 	 	—  	  	 	 	19,738	  	
General and administrative expense	  	 	8,993	  	 	 	—  	  	 	 	—  	  	 	 	8,993	  	  	 	9,192	  	 	 	—  	  	 	 	—  	  	 	 	9,192	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total cemetery expenses	  	 	52,606	  	 	 	5,266	  	 	 	(2,437	) 	 	 	55,435	  	  	 	54,047	  	 	 	6,691	  	 	 	(2,869	) 	 	 	57,869	  	
Funeral home expenses	  	 	12,732	  	 	 	748	  	 	 	—  	  	 	 	13,480	  	  	 	12,149	  	 	 	526	  	 	 	—  	  	 	 	12,675	  	
Corporate overhead (6)	  	 	9,737	  	 	 	—  	  	 	 	(1,929	) 	 	 	7,808	  	  	 	10,429	  	 	 	—  	  	 	 	(611	) 	 	 	9,818	  	
Depreciation and amortization	  	 	3,155	  	 	 	—  	  	 	 	(3,155	) 	 	 	—  	  	  	 	2,944	  	 	 	—  	  	 	 	(2,944	) 	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total costs and expenses	  	 	78,230	  	 	 	6,014	  	 	 	(7,521	) 	 	 	76,723	  	  	 	79,569	  	 	 	7,217	  	 	 	(6,424	) 	 	 	80,362	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Operating profit (loss) & Adjusted EBITDA	  	$	(2,681	) 	 	$	16,834	  	 	$	8,804	  	 	$	22,957	  	  	$	1,256	  	 	$	18,947	  	 	$	6,424	  	 	$	26,627	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total cemetery revenues	  	$	53,786	  	 	$	15,556	  	 	$	1,283	  	 	$	70,625	  	  	$	56,068	  	 	$	17,362	  	 	$	—  	  	 	$	73,430	  	
Total cemetery expenses	  	 	52,606	  	 	 	5,266	  	 	 	(2,437	) 	 	 	55,435	  	  	 	54,047	  	 	 	6,691	  	 	 	(2,869	) 	 	 	57,869	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cemetery margin	  	$	1,180	  	 	$	10,290	  	 	$	3,720	  	 	$	15,190	  	  	$	2,021	  	 	$	10,671	  	 	$	2,869	  	 	$	15,561	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Funeral home revenues	  	$	14,739	  	 	$	2,818	  	 	$	—  	  	 	$	17,557	  	  	$	13,494	  	 	$	2,240	  	 	$	—  	  	 	$	15,734	  	
Funeral home expenses	  	 	12,732	  	 	 	748	  	 	 	—  	  	 	 	13,480	  	  	 	12,149	  	 	 	526	  	 	 	—  	  	 	 	12,675	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Funeral home margin	  	$	2,007	  	 	$	2,070	  	 	$	—  	  	 	$	4,077	  	  	$	1,345	  	 	$	1,714	  	 	$	—  	  	 	$	3,059	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Same store cemetery margin	  	$	1,022	  	 	$	9,897	  	 	$	3,709	  	 	$	14,628	  	  	$	2,021	  	 	$	10,671	  	 	$	2,869	  	 	$	15,561	  	
Same store funeral home margin	  	$	1,808	  	 	$	1,678	  	 	$	—  	  	 	$	3,486	  	  	$	1,457	  	 	$	1,714	  	 	$	—  	  	 	$	3,171	  	
			
 	  	Six Months Ended
June 30, 2016	 	  	Six Months Ended
June 30, 2015	 	
 	  	(unaudited; in thousands)	 	
 	  	GAAP
Results	 	 	Net Deferral
Adjustments	 	 	Other
Adjustments	 	 	Non-GAAP
Results	 	  	GAAP
Results	 	 	Net Deferral
Adjustments	 	 	Other
Adjustments	 	 	Non-GAAP
Results	 	
Revenues	  				 				 				 				  				 				 				 				
Pre-need cemetery revenues	  	$	50,395	  	 	$	25,623	  	 	$	—  	  	 	$	76,018	  	  	$	48,487	  	 	$	31,418	  	 	$	—  	  	 	$	79,905	  	
At-need cemetery revenues	  	 	48,760	  	 	 	2,878	  	 	 	—  	  	 	 	51,638	  	  	 	49,553	  	 	 	3,858	  	 	 	—  	  	 	 	53,411	  	
Other cemetery revenues (4)	  	 	5,073	  	 	 	(482	) 	 	 	1,283	  	 	 	5,874	  	  	 	3,449	  	 	 	(405	) 	 	 	—  	  	 	 	3,044	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total cemetery revenues	  	 	104,228	  	 	 	28,019	  	 	 	1,283	  	 	 	133,530	  	  	 	101,489	  	 	 	34,871	  	 	 	—  	  	 	 	136,360	  	
Funeral home revenues	  	 	31,062	  	 	 	5,789	  	 	 	—  	  	 	 	36,851	  	  	 	28,754	  	 	 	4,395	  	 	 	—  	  	 	 	33,149	  	
Investment income from trusts	  	 	10,360	  	 	 	9,501	  	 	 	—  	  	 	 	19,861	  	  	 	13,615	  	 	 	14,011	  	 	 	—  	  	 	 	27,626	  	
Interest income	  	 	4,481	  	 	 	—  	  	 	 	—  	  	 	 	4,481	  	  	 	4,384	  	 	 	—  	  	 	 	—  	  	 	 	4,384	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	  	 	150,131	  	 	 	43,309	  	 	 	1,283	  	 	 	194,723	  	  	 	148,242	  	 	 	53,277	  	 	 	—  	  	 	 	201,519	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Costs and expenses	  				 				 				 				  				 				 				 				
Cost of goods sold (5)	  	 	18,294	  	 	 	3,435	  	 	 	(4,443	) 	 	 	17,286	  	  	 	16,890	  	 	 	5,376	  	 	 	(4,917	) 	 	 	17,349	  	
Cemetery expense	  	 	33,341	  	 	 	—  	  	 	 	—  	  	 	 	33,341	  	  	 	35,544	  	 	 	—  	  	 	 	—  	  	 	 	35,544	  	
Selling expense	  	 	30,967	  	 	 	6,220	  	 	 	—  	  	 	 	37,187	  	  	 	29,679	  	 	 	8,563	  	 	 	—  	  	 	 	38,242	  	
General and administrative expense	  	 	18,197	  	 	 	—  	  	 	 	—  	  	 	 	18,197	  	  	 	18,521	  	 	 	—  	  	 	 	—  	  	 	 	18,521	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total cemetery expenses	  	 	100,799	  	 	 	9,655	  	 	 	(4,443	) 	 	 	106,011	  	  	 	100,634	  	 	 	13,939	  	 	 	(4,917	) 	 	 	109,656	  	
Funeral home expenses	  	 	26,472	  	 	 	1,417	  	 	 	—  	  	 	 	27,889	  	  	 	24,299	  	 	 	987	  	 	 	—  	  	 	 	25,286	  	
Corporate overhead (6)	  	 	20,048	  	 	 	—  	  	 	 	(4,073	) 	 	 	15,975	  	  	 	19,512	  	 	 	—  	  	 	 	(1,232	) 	 	 	18,280	  	
Depreciation and amortization	  	 	6,220	  	 	 	—  	  	 	 	(6,220	) 	 	 	—  	  	  	 	5,896	  	 	 	—  	  	 	 	(5,896	) 	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total costs and expenses	  	 	153,539	  	 	 	11,072	  	 	 	(14,736	) 	 	 	149,875	  	  	 	150,341	  	 	 	14,926	  	 	 	(12,045	) 	 	 	153,222	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Operating profit (loss) & Adjusted EBITDA	  	$	(3,408	) 	 	$	32,237	  	 	$	16,019	  	 	$	44,848	  	  	$	(2,099	) 	 	$	38,351	  	 	$	12,045	  	 	$	48,297	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total cemetery revenues	  	$	104,228	  	 	$	28,019	  	 	$	1,283	  	 	$	133,530	  	  	$	101,489	  	 	$	34,871	  	 	$	—  	  	 	$	136,360	  	
Total cemetery expenses	  	 	100,799	  	 	 	9,655	  	 	 	(4,443	) 	 	 	106,011	  	  	 	100,634	  	 	 	13,939	  	 	 	(4,917	) 	 	 	109,656	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cemetery margin	  	$	3,429	  	 	$	18,364	  	 	$	5,726	  	 	$	27,519	  	  	$	855	  	 	$	20,932	  	 	$	4,917	  	 	$	26,704	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Funeral home revenues	  	$	31,062	  	 	$	5,789	  	 	$	—  	  	 	$	36,851	  	  	$	28,754	  	 	$	4,395	  	 	$	—  	  	 	$	33,149	  	
Funeral home expenses	  	 	26,472	  	 	 	1,417	  	 	 	—  	  	 	 	27,889	  	  	 	24,299	  	 	 	987	  	 	 	—  	  	 	 	25,286	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Funeral home margin	  	$	4,590	  	 	$	4,372	  	 	$	—  	  	 	$	8,962	  	  	$	4,455	  	 	$	3,408	  	 	$	—  	  	 	$	7,863	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Same store cemetery margin	  	$	3,303	  	 	$	17,516	  	 	$	5,700	  	 	$	26,519	  	  	$	855	  	 	$	20,932	  	 	$	4,917	  	 	$	26,704	  	
Same store funeral home margin	  	$	4,235	  	 	$	3,522	  	 	$	—  	  	 	$	7,757	  	  	$	4,642	  	 	$	3,408	  	 	$	—  	  	 	$	8,050	  	
 
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(2)  	Maintenance capital expenditures include those capitalized costs that the Partnership incurs to maintain its properties and equipment as well as corporate expenditures.	
(3)  	Consists of adjustments to (i) include certain revenues and related expenses deferred in accordance with GAAP because certain delivery and performance requirements have not yet been met during the period the contracts were written, and (ii) exclude certain revenues and related expenses that are recognized in accordance with GAAP due to their inclusion in non-GAAP financial measures during earlier periods when the contracts were written. The Partnership’s management has provided this data to present its results in a manner consistent with its internal managerial accounting practices. Under these practices, revenues are recognized at their contract value at the point in time at which the contract is written, less a historic cancellation reserve, while all related costs are expensed in the period the contract is recognized as revenue. In contrast, GAAP requires the Partnership defer all revenues and the direct costs associated with these revenues, until it meets certain delivery and performance requirements. Under GAAP, the Partnership recognizes pre-need cemetery sales for sales of burial lots and mausoleum crypts when the product is constructed and at least 10% of the sales price is collected, while other products are recognized when the criteria for delivery under GAAP are met, which include purchase of the product, delivery and installation, and transfer of title, among other items. The nature of the Partnership’s business is such that there is no meaningful relationship between the time that elapses from the date a contract is executed and the date the underlying merchandise is delivered or the service, delivery and performance requirements are met. Further, certain factors affecting this time period, such as weather and supplier issues, are out of its control. As a result, during a period of growth, operating profits as defined by GAAP will tend to lag behind operating profits on this alternative view because of the deferral of revenues required under GAAP. The Partnership’s management believes that the data presented herein is relevant and useful to its investors so as to better understand its operating performance and allow for easier comparison to other MLPs. Refer to footnote 1 for more information.	
(4)  	Includes a gain on sale of real property during the current period of $1.3 million.	
(5)	The non-GAAP financial measure excludes non-cash amortization of cemetery property.	
(6)	The non-GAAP financial measure excludes non-cash stock compensation expense and acquisition and related costs.	
(7)	Excludes non-cash amortization of deferred finance costs and other non-cash items.	
(8)  	Represents cash distributions declared for the respective period and paid by the Partnership within 45 days after the end of each quarter, based upon the DCF and Distributable Available Cash generated during the respective period.	
(9)  	The Partnership seeks to at least maintain its current cash distribution in future quarterly periods, and expects to only increase such cash distributions when future DCF and Distributable Available Cash amounts allow for it and are expected to be sustained. The Partnership’s determination of quarterly cash distributions and its resulting determination of the amount of excess (shortfall) those cash distributions generate in comparison to DCF and Distributable Available Cash are based upon its assessment of numerous factors, including but not limited to the variability of cash flow from the Partnership’s pre-need and at-need sales and its trust investments performance, interest rate movements, and financial leverage. The Partnership also considers its historical trailing four quarters of excess or shortfalls and future forecasted excess or shortfalls that its cash distributions generate in comparison to DCF and Distributable Available Cash due to the variability of its DCF and Distributable Available Cash generated each quarter, which could have more or less excess (shortfalls) generated quarter to quarter.	
 
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