StoneMor Partners L.P. First Quarter 2008 Results

Market Wire, May, 2008

StoneMor Partners L.P. (NASDAQ: STON) today announced its operating results for the first quarter 2008.

The first quarter of 2008 yielded a 75% increase in distributable free cash flow, exceeding $6 million, and record revenue for the company, exceeding $43 million. This represents an increase of 42% over the first quarter of 2007. Many of the other metrics that the company uses to evaluate its operational performance similarly improved. The acquisition of 45 cemeteries and 30 funeral homes completed on December 21, 2007 has significantly contributed to the company's improved operating results.

The following table summarizes selected comparative items relating to the company's operating performance for the periods presented.

                                               Three Months Ended March 31,
                                              -----------------------------
                                                  2007           2008
                                              -------------- --------------
                                                      (in thousands)
Distributable Free Cash Flow (a)              $        3,450 $        6,066
Total Revenues                                        30,540         43,413
Operating Profit                                       1,611          3,733

(a) This is a non-GAAP financial measure, as defined by the Securities and
    Exchange Commission.
    Please see the reconciliation to GAAP measures within this
    press release.

As previously indicated, the acquisition that the company completed in December 2007 (the largest acquisition since the company went public in September 2004) significantly contributed to the 42% increase in revenues for the first quarter. Not only did revenues significantly increase, operating profit increased by over 130%, and all major metrics that the company uses to evaluate its operating performance increased.

Overall, expenses were in line with company projections. Costs of Goods Sold increased slightly as a percentage of revenues, primarily due to a minor change in product mix. Cemetery Expenses increased 40%, General & Administrative Expenses increased 40%, Corporate Overhead slightly increased; however, non-cash, unit-based compensation expense decreased by $542,000 during the quarter, the effect of which, when eliminated from corporate overhead, results in a 15% increase in Corporate Overhead. All of the increases in these items are directly attributable to the 75 properties acquired in December 2007.

As the company makes acquisitions, operational expenses are incurred immediately at their full levels; however, because revenues cannot be recognized until products are serviced, the corresponding revenue significantly lags operational expenses. Even though the company generated a significant increase in revenues, this revenue increase is smaller than the revenue increases that the company expects to recognize in the future as it fully integrates in the remaining quarters of 2008 its merchandise purchase program, which in turn will result in revenue recognition for the cemeteries that were recently acquired. The significant increase in Interest Expense (52%) is directly related to debt incurred as a result of the company's new acquisitions and working capital borrowings related to the build in the company's pre-need business.

The company's disproportionately less income tax provision results from a continuing effort to minimize taxes through restructure of the company's taxable entities and the benefits the company achieves from qualifying as a Master Limited Partnership.

We have not experienced and, although there are no assurances, we do not expect to experience, any significant reduction in pre-need sales as a result of the current economic climate. The majority of our pre-need sales are made to individuals over 55 years old who have achieved a certain stability in their economic situation. When these individuals contract to purchase pre-need, they generally follow through. The only circumstance, historically, where we have suffered some economic pre-need decline is in areas of significantly increased unemployment. That does not appear to be the current economic situation. Although we are cognizant and concerned about the current economic climate, we consider our business to be stable and predictable.

Net Cash Provided by (Used in) Operating Activities

Net Cash Used in Operating Activities for the first quarter of 2008 significantly decreased. This decrease is directly related to the approximate $5.2 million increase in Accounts Receivable and $3.5 million increase in merchandise trust fund receivables during the first quarter of 2008. The increase in these two items was over $5.4 million more than the increase for these two items during the first quarter of 2007. Increases in these two items were funded by working capital borrowings of approximately $5.2 million that are reflected within the financing activity section of the company's consolidated statement of cash flows. This presentation is required under GAAP; however, the company has indicated that as acquisitions are consummated, its operating philosophy is to build the business and capture market share through the selling of its products on a pre-need basis. The company considers working capital borrowings to be normal and necessary in its business and believes these are operating in nature. The company anticipates continuing to build its pre-need business and, as a result, will be borrowing an additional $5-8 million during the remaining course of 2008. See further discussion included within the Distributable Free Cash Flow section.