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Keystone Today

Keystone Today. 173 homes in 27 U.S. States and Canada No state more than 15% of revenue. Funeral Homes Cemeteries. As of August 2006. Favourable Industry Dynamics. Predictable and stable demand Inevitable and culturally essential service Ageing demographic

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Keystone Today

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  1. Keystone Today • 173 homes in 27 U.S. States and Canada • No state more than 15% of revenue Funeral Homes Cemeteries As of August2006

  2. Favourable Industry Dynamics • Predictable and stable demand • Inevitable and culturally essential service • Ageing demographic • U.S. Census Bureau projects a 23.2% increase in annual deaths from 2004 to 2025 Historical and Projected Deaths in the U.S. Deaths(Millions) 3.0 2.5 2.0 1.5 1.0 Historical Projected 1940 1950 1960 1970 1980 1990 2000 2010 2020

  3. Favourable Industry Dynamics • Significant barriers to entry • Mature industry • Local heritage and tradition key factorsin choice of funeral home • Regulatory restrictions Reasons for Selecting a Funeral Home % ofRespondents 80 60 40 20 0 Location Reputation PreviousRelationship Pre-Arranged Price Recommendedby Friend Advertising

  4. Favourable Industry Dynamics • Attractive margins • Largely fixed cost structure yields generous margins for incremental revenues • Customer focused on service vs. price • Average price of a funeral has risensteadily over last 20 years Average Price of Regular Adult Funeral Price(US$) $6,000 $5,000 $4,000 $3,000 $2,000 1985 1990 1995 2000 2003

  5. Favourable Industry Dynamics 2004 Industry Revenues - $15 Billion • Highly fragmented ownership • Despite active consolidation in 1990’s - industry remains highly fragmented • Majority of homes small, family owned • Significant opportunities for further consolidation and operating efficiencies • Keystone focused on rural and suburban markets • Competes against small privately owned businesses • Large public companies primarily in urban markets 20% 80% 4 Public Death Care Companies Small PrivatelyOwned Businesses 2004 # Funeral Homes - 22,000 11% 89%

  6. Strong Franchise Value • Approximately 90% of funeral home businesses established before 1960 Year Businesses Established # of Facilities 48 45 39 26 15 4 <1900 1901-1920 1921-1940 1941-1960 1961-1980 1981-2000 Date of Establishment

  7. Strong Franchise Value • Former owners typically remain active in the daily operations Former Owner InvolvementPost Acquisition 18.9% 29.5% Managed by Former Owner Former Owner still active No involvement of Former Owner 51.6%

  8. Significant Consolidation Opportunities • Fifth largest player in highly fragmented industry • Significant acquisition opportunities exist at reasonable valuations • Shared resources among existing operations means lower costs • Focus on acquisitions with heritageand tradition with growth potential • High priority on firms within 30 miles of existing homes • Target firms with annual revenues between $800,000 and $2 million • Acquisitions program active in 2006

  9. Acquisitions • Closed Deals • Revenues of approximately US$7.0 million • EBITDA of approximately US$2.5 million • Financed with Cash and approximately $5 million draw on senior credit facility. • Pending Deals • 39 candidates • US$45 million in revenues • 5.5 X EBITDA Multiple • Anticipate US$10 to $15 million revenues acquired in 2006 • Approximately 20% of purchase price in form of owner non-compete arrangement or other owner deferreds

  10. New Credit Agreement • Provides for an additional $15 million in capacity • Reduces the interest rate by 200 basis points with an additional 50 basis point reduction contingent on achieving certain covenant levels • Extends the term from February 8, 2008 to February 8, 2011 • Allows for favorable adjustments to certain debt covenant ratios • Based on current outstanding amounts, savings are estimated at approximately US$669,000 annually

  11. Experienced Management Team Yearswith Company Yearsin Industry Bob HornChairman and CEO 10 44 Steve TidwellPresident 10 26 Jim PriceCOO 10 40 Steve ShafferCFO 10 19

  12. Seasonality

  13. Stable and Consistent Performance Combined Keystone Revenue 40% 30% 20% 10% 0% $88.2 $86.4 $85.6 $85.5 $85.7 $83.4 $68.6 29.1%* 27.5% 29.1% 28.4% 29.2% 28.2% $ Millions 24.3% Revenue EBITDA Margin EBITDA % for 2005 represents actual results for Keystone and Hamilton for 327 days ended12/31/2005

  14. Stable Financial Performance Combined Keystone EBITDA Margin 29.1% 29.2% 29.1% 28.4% 28.2% 28.3% 27.5% 24.3% Combined results for Keystone and Hamilton

  15. Capital Expenditures Maintenance CAPEX $3.0 $2.9 $2.9 $2.2 $2.0 U.S.$ Millions $0.8 2001 20022003 2005 2006 Actual YTD Projected 6/30/2006

  16. Summary of Distributable Cash

  17. Summary of Distributable Cash

  18. Foreign Exchange • 5 year hedge on 100% of current cash distributions of the company • Rolling hedge - quarterly • Weighted Average Rate $1.2007 As of June 30,2006

  19. Table of Comparables

  20. Investment Highlights • Favourable industry dynamics • Strong franchise value • Focus on stable funeral service business • Geographically diversified,high quality assets • Significant opportunities for growth • Experienced management team • 12.5% Yield (as of August 31, 2006)

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