2 Executive Management Team 11 29 21 Years with Company Years in Industry Steve Tidwell President &...
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Transcript of 2 Executive Management Team 11 29 21 Years with Company Years in Industry Steve Tidwell President &...
2
Executive Management TeamExecutive Management Team
1111
1111
2929
2121
Yearswith Company
Yearsin Industry
Steve TidwellPresident & CEO
Steve ShafferCFO
Jim Price
COO
1111 4040
3
Company HighlightsCompany Highlights
4
Geographic OverviewGeographic Overview
5th largest provider of funeral services in North America
199 funeral homes and 16 cemeteries
5th largest provider of funeral services in North America
199 funeral homes and 16 cemeteries
Operations in 32 states and the province of Ontario
Focused on rural and suburban markets
Operations in 32 states and the province of Ontario
Focused on rural and suburban markets
5
Significant Accomplishments Significant Accomplishments
Revenue grew by more than 22%
Successfully integrated the 2007 acquisition class
Refreshed our Strategic Plan
Began developing 20 existing key leaders to manage geographic clusters of homes, further leveraging our scale and resources
Completion of our Non – Cash Rights offering and related transactions transforming Keystone to a common share company
Repurchase and cancellation of C$16 million of separate subordinated notes in July 2008
Revenue grew by more than 22%
Successfully integrated the 2007 acquisition class
Refreshed our Strategic Plan
Began developing 20 existing key leaders to manage geographic clusters of homes, further leveraging our scale and resources
Completion of our Non – Cash Rights offering and related transactions transforming Keystone to a common share company
Repurchase and cancellation of C$16 million of separate subordinated notes in July 2008
6
Non-Cash Rights Offering SummaryNon-Cash Rights Offering Summary
Offering closed on May 16th, 2008
91% of subordinated notes exchanged for new common shares
$107 Million dollars of IPS debt was exchanged for common shares
Keystone is now a common share company trading under the symbol KNA
C$16 Million of separate subordinated notes repurchased and cancelled in July of 2008
Total impact of all transactions is estimated to be $300,000 reduction in outflows monthly
Offering closed on May 16th, 2008
91% of subordinated notes exchanged for new common shares
$107 Million dollars of IPS debt was exchanged for common shares
Keystone is now a common share company trading under the symbol KNA
C$16 Million of separate subordinated notes repurchased and cancelled in July of 2008
Total impact of all transactions is estimated to be $300,000 reduction in outflows monthly
7
Benefits of the OfferingBenefits of the Offering
Reduced Exposure to Canadian Dollar Appreciation
Lower Payout Ratio While Preserving After Tax Income for Taxable Canadian Unitholders
Access Broader Market for Common Shares
Reduced Consolidated Indebtedness
Full Management and Director Participation
Reduced Exposure to Canadian Dollar Appreciation
Lower Payout Ratio While Preserving After Tax Income for Taxable Canadian Unitholders
Access Broader Market for Common Shares
Reduced Consolidated Indebtedness
Full Management and Director Participation
8
Financial HighlightsFinancial Highlights
9
Stable and Consistent PerformanceStable and Consistent Performance
Revenue and Operating Income Margin
RevenueRevenue Operating Income MarginOperating Income Margin
$21 $21 $21 $23$25 $26
$27
$32
$19$20$21
18%20% 21%
17% 17%20% 21%
16% 16%20%19%
$0
$5
$10
$15
$20
$25
$30
$35
Q22005
Q32005
Q42005
Q12006
Q22006
Q32006
Q42006
Q12007
Q22007
Q32007
Q42007
US
$M
M
10%
20%
30%
40%
50%$35
Q12008
22%
$31
15%
Q22008
10
Strong Growth in Case VolumeStrong Growth in Case Volume
Case Count
3,800
4,1864,359 4,392
4,682
5,443
3,8073,979
3,000
3,500
4,000
4,500
5,000
5,500
Q1 2006
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
5,9176,000
Q2 2008
5,034
11
Increasing Revenue Per CaseIncreasing Revenue Per Case
Average Revenue Per Case
$5,059
$5,226 $5,247 $5,308 $5,274
$5,519
$5,029
$5,122
$4,800
$5,000
$5,400
$5,800
Q12006
Q22006
Q32006
Q42006
Q12007
Q22007
Q32007
Q42007
US
$
$5,491
Q12008
$5,485
Q22008
$5,200
$5,600
12
Strategic PlanOpportunities and Challenges
Strategic PlanOpportunities and Challenges
13
Demographic TrendsDemographic Trends
Projected US 65+ & 78+ Population
65+ Population65+ Population 78+ Population78+ Population
4041 43 44
55
64
39 40
14.2 14.3 14.5 14.6 14.7 14.9 15.1 15.216.7 19.9
14
0
30
40
50
60
70
80
90
2007 2008 2009 2010 2011 2012 2013 2014 2015 2020 2025
Po
pu
latio
n (
in m
illio
ns) 72
2030
24.638
4547
Projected population amounts extracted from the US Department Commerce, Bureau of the Census
14
Growth of the Cremation SegmentGrowth of the Cremation Segment
Percentage of Total Deaths Selecting Cremation
14.9
26.229.4 30.8
32.2
39.1
9.0
19.210%
20%
40%
60%
1980 1985 1995 2000 2003 2004 2005 2010*
Pe
rce
nta
ge
2025*
30%
50%
* Historical & projected percentages extracted from the Cremation Association of North America (CANA) final statistics and projections report.
65%
70%
57.3
Keystone’s Q1 2008 actual cremation percentage (40.5%) Keystone’s projected cremation percentage
40.5%
15
Commitment to Innovation Commitment to Innovation
16
Floral Partnerships Floral Partnerships
Organic revenue growth by partnering with local florists
Convenient way for family to select during funeral planning conference
Organic revenue growth by partnering with local florists
Convenient way for family to select during funeral planning conference
17
Specialized Veterans CareSpecialized Veterans Care
Veterans Funeral Care initiative prepares Keystone professionals to provide specialized care to Veterans with confidence and high honor
Veterans Funeral Care initiative prepares Keystone professionals to provide specialized care to Veterans with confidence and high honor
18
US Veteran Population Age 65+US Veteran Population Age 65+
Projected US Veterans Population
Veterans PopulationVeterans Population
9.6
8.7
8.0
7.3
9.2 9.2
0
6.5
7
7.5
8
8.5
9
9.5
2008 2009 2010 2015 2020 2025 2030 2035
Po
pu
latio
n (
in m
illio
ns)
9.2
6.6
Projected population amounts extracted from the US Department of Veteran Affairs
19
Executor AssistanceExecutor Assistance
Key Documents – providing client families with the tools and assistance required to help organize and settle the affairs or estate of their loved one
Key Documents – providing client families with the tools and assistance required to help organize and settle the affairs or estate of their loved one
20
Catering and Receptions Catering and Receptions
A natural extension to the service we provide
Convenient way for families to gather and commemorate the life of their loved one in a casual setting
A natural extension to the service we provide
Convenient way for families to gather and commemorate the life of their loved one in a casual setting
21
2007 Industry Revenues - $15 Billion
External Growth Opportunities External Growth Opportunities
Highly fragmented ownership
Despite active consolidation in 1990’s - industry remains highly fragmented
Majority of homes are privately owned
Keystone focused on rural and suburban markets
Competes against other privately owned businesses
Other public companies primarily in urban markets
Further leveraging our infrastructure and operating synergies
Highly fragmented ownership
Despite active consolidation in 1990’s - industry remains highly fragmented
Majority of homes are privately owned
Keystone focused on rural and suburban markets
Competes against other privately owned businesses
Other public companies primarily in urban markets
Further leveraging our infrastructure and operating synergies
21%
2007 # Funeral Homes - 21,080
79%
10%
90%
5 Public Death Care Companies5 Public Death Care Companies
Small PrivatelyOwned BusinessesSmall PrivatelyOwned Businesses
22
Business Highlights Business Highlights
Favourable demographic trends
Strong franchise value
Focus on stable funeral service business
Geographically diversified,quality assets
Significant opportunities for growth
Experienced management team
Capital Structure which supports
our initiatives
Favourable demographic trends
Strong franchise value
Focus on stable funeral service business
Geographically diversified,quality assets
Significant opportunities for growth
Experienced management team
Capital Structure which supports
our initiatives
23
Certain statements in this presentation are “forward-looking statements”, which reflect the expectations of management regarding population demographic trends in the United States, preferences regarding mix of funeral services, and the Company's future growth, results of operations, performance and business prospects and opportunities. The Company uses words such as “may”, “would”, “could”, “will”, “likely”, “expect”, “anticipate”, “believe”, “intend”, “plan”, “forecast”, “project”, “estimate” and similar expressions to identify forward-looking statements. These forward-looking statements reflect management's current reasonable expectations regarding future events and operating performance and speak only as of the effective date of this presentation. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not or the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward looking statements including, among others, those factors discussed under those factors set out in the "Risk Factors" sections of the Company's annual information form dated March 27, 2008 and the final short form prospectus dated April 14, 2008, which risk factors are incorporated herein by reference. However, the risk factors are not exhaustive of the factors that may affect any of the Company's forward looking statements. Although the forward-looking statements contained in this presentation are based upon what management believes to be reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward-looking statements, and the differences may be material. These assumptions, which include management’s current expectations, estimates and assumptions about the markets the Company operates in, mix of funeral services, interest rates, exchange rates, tax considerations, population demographics, and the Company’s ability to attract and retain customers and to manage its assets and operating costs, may prove to be incorrect. Further information regarding these and other factors are included in the Company’s public filings with Canadian securities regulatory authorities, which are available electronically at www.sedar.com. These forward-looking statements are made as of the date of the this presentation and the Company assumes no obligation to update or revise them to reflect new events or circumstances, except as required by applicable law.
Certain statements in this presentation are “forward-looking statements”, which reflect the expectations of management regarding population demographic trends in the United States, preferences regarding mix of funeral services, and the Company's future growth, results of operations, performance and business prospects and opportunities. The Company uses words such as “may”, “would”, “could”, “will”, “likely”, “expect”, “anticipate”, “believe”, “intend”, “plan”, “forecast”, “project”, “estimate” and similar expressions to identify forward-looking statements. These forward-looking statements reflect management's current reasonable expectations regarding future events and operating performance and speak only as of the effective date of this presentation. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not or the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward looking statements including, among others, those factors discussed under those factors set out in the "Risk Factors" sections of the Company's annual information form dated March 27, 2008 and the final short form prospectus dated April 14, 2008, which risk factors are incorporated herein by reference. However, the risk factors are not exhaustive of the factors that may affect any of the Company's forward looking statements. Although the forward-looking statements contained in this presentation are based upon what management believes to be reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward-looking statements, and the differences may be material. These assumptions, which include management’s current expectations, estimates and assumptions about the markets the Company operates in, mix of funeral services, interest rates, exchange rates, tax considerations, population demographics, and the Company’s ability to attract and retain customers and to manage its assets and operating costs, may prove to be incorrect. Further information regarding these and other factors are included in the Company’s public filings with Canadian securities regulatory authorities, which are available electronically at www.sedar.com. These forward-looking statements are made as of the date of the this presentation and the Company assumes no obligation to update or revise them to reflect new events or circumstances, except as required by applicable law.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS