Carriage Services, Inc. (NYSE: CSV): today announced results for
the third quarter and nine months ended September 30, 2022.
- Third Quarter Total
Revenue of $87.5 million and Adjusted Diluted EPS of $0.45, a
decrease of 7.9% and 45.1%, respectively;
- Acquisition of
Heritage Funeral Homes and Cremation Services and Forest Lawn East
Cemetery in Charlotte, North Carolina, and a letter of intent
signed with a large business in a new strategic market;
- Robbie Pape joins
Carriage as Senior Vice President of Operations and Regional
Partner of Eastern Region.
Mel Payne, Chairman and CEO, stated, “Much like
we experienced higher year over year volumes, revenues, earnings
and margins comparisons starting in the second quarter of 2020 and
continuing through the first quarter of 2022 (most revenue
comparisons in the second quarter of 2022 were also higher), we are
now experiencing lower volumes, revenues, earnings and margins
comparisons across much of our funeral and cemetery portfolios, a
downtrend that accelerated in September. Combined with the higher
discretionary overhead that we elaborated on in our second quarter
release, our Adjusted Diluted EPS, Adjusted Consolidated EBITDA,
and Adjusted Free Cash Flow for the third quarter and nine months
of 2022 are materially below those of our record performance
metrics in 2021, yet our volumes, revenues and other performance
metrics are mostly higher than 2019 and even 2020. The particulars
of the various portfolio performance categories as well as our
consolidated performance will be covered by Carlos Quezada, Steve
Metzger and Ben Brink in subsequent sections of this release.
Despite the inevitable normalizing of death
rates from the elevated pandemic levels, our Company continues to
broadly get better as a Being The Best Operating
and Consolidation Company. And sooner rather than later, we will
resume our Good To Great Journey as a Shareholder
Value Creation Company based on broadly higher comparative
performance metrics over time, as we are currently positioned to
accelerate our growth by acquisition of larger, high-quality
businesses in new strategic markets, as covered by Steve Metzger
later in this release.
Because there are various conflicting volume,
revenue and margin crosscurrents in our near-term outlook,
primarily related to normalizing death rates (offset to a
meaningful degree by higher revenue averages) and expected
acquisition activity, we are not updating our Rolling Four Quarter
Outlook in this release. However, we expect to have a much more
crystalized picture of our performance outlook when we report our
full year 2022 performance in late February 2023, and therefore
plan to resume our Rolling Four Quarter Outlook at that time,”
concluded Mr. Payne.
THIRD QUARTER 2022 COMPARATIVE
PERFORMANCE HIGHLIGHTS
- Total Revenue(1) of $87.5 million,
a decrease of $7.5 million or 7.9%;
- Funeral GAAP Operating Income of
$17.6 million, a decrease of $5.3 million or 23.3%;
- Funeral GAAP Operating Income
Margin of 28.0%, a decrease of 530 basis points;
- Cemetery GAAP Operating Income of
$8.0 million, a decrease of $1.4 million or 15.3%;
- Cemetery GAAP Operating Income
Margin of 32.5%, a decrease of 370 basis points;
- GAAP Net Income of $5.9 million, a
decrease of $7.2 million or 55.1%;
- GAAP Net Income Margin of 6.7%, a
decrease of 700 basis points;
- GAAP Diluted EPS of $0.38, a
decrease of $0.33 or 46.5%;
- GAAP Cash Provided by Operating
Activities of $19.9 million, a decrease of 29.7%;
- GAAP Cash Provided by Operating
Activities as a percentage of Total Revenue of 22.7%, a decrease of
702 basis points;
- Funeral Same Store Contracts of
9,499, a decrease of 1,390 or 12.8%;
- Funeral Same Store Revenue of $51.3
million, a decrease of $6.1 million or 10.6%;
- Funeral Same Store EBITDA of $18.7
million, a decrease of $6.9 million or 27.0%;
- Funeral Same Store EBITDA Margin of
36.5%, a decrease of 820 basis points;
- Funeral Acquisition Revenue of $7.8
million, an increase of $0.2 million or 2.1%;
- Funeral Acquisition EBITDA of $3.0
million, a decrease of $0.3 million or 9.9%;
- Funeral Acquisition EBITDA Margin
of 38.9%, a decrease of 520 basis points;
- Cemetery Same Store Revenue of
$15.4 million, a decrease of $0.9 million or 5.8%;
- Cemetery Acquisition Revenue of
$5.9 million, a decrease of $0.4 million or 6.5%;
- Financial Revenue of $5.8 million,
an increase of $0.2 million or 3.4%;
- Total Field EBITDA of $35.3
million, a decrease of $9.4 million or 21.0%;
- Total Field EBITDA Margin of 40.3%,
a decrease of 670 basis points;
- Adjusted Consolidated EBITDA of
$22.9 million, a decrease of $9.5 million or 29.4%;
- Adjusted Consolidated EBITDA Margin
of 26.1%, a decrease of 800 basis points;
- Adjusted Diluted EPS of $0.45, a
decrease of $0.37 or 45.1%;
- Adjusted Free Cash Flow of $16.5
million, a decrease of $9.4 million or 36.3%; and
- Adjusted Free Cash Flow Margin of
18.9%, a decrease of 840 basis points.
FIRST NINE MONTHS 2022 COMPARATIVE PERFORMANCE
HIGHLIGHTS
- Total Revenue(1) of $276.3 million,
a decrease of $3.7 million or 1.3%;
- Funeral GAAP Operating Income of
$61.5 million, a decrease of $3.9 million or 5.9%;
- Funeral GAAP Operating Income
Margin of 30.9%, a decrease of 170 basis points;
- Cemetery GAAP Operating Income of
$26.7 million, a decrease of $3.8 million or 12.5%;
- Cemetery GAAP Operating Income
Margin of 34.5%, a decrease of 380 basis points;
- GAAP Net Income of $33.2 million,
an increase of $13.3 million or 67.4%;
- GAAP Net Income Margin of 12.0%, an
increase of 490 basis points;
- GAAP Diluted EPS of $2.09, an
increase of $1.01 or 93.5%;
- GAAP Cash Provided by Operating
Activities of $50.0 million, a decrease of 28.2%;
- GAAP Cash Provided by Operating
Activities as a percentage of Total Revenue of 18.1%, a decrease of
678 basis points;
- Funeral Same Store Contracts of
30,686, a decrease of 817 or 2.6%;
- Funeral Same Store Revenue of
$163.8 million, a decrease of $1.7 million or 1.0%;
- Funeral Same Store EBITDA of $65.3
million, a decrease of $6.2 million or 8.7%;
- Funeral Same Store EBITDA Margin of
39.9%, a decrease of 330 basis points;
- Funeral Acquisition Revenue of
$24.1 million, an increase of $1.5 million or 6.6%;
- Funeral Acquisition EBITDA of $9.8
million remained flat;
- Funeral Acquisition EBITDA Margin
of 40.9%, a decrease of 240 basis points;
- Cemetery Same Store Revenue of
$46.6 million, a decrease of $1.3 million or 2.6%;
- Cemetery Acquisition Revenue of
$20.4 million, a decrease of $1.1 million or 5.0%;
- Financial Revenue of $17.4 million,
an increase of $0.6 million or 3.4%;
- Total Field EBITDA of $119.3
million, a decrease of $11.1 million or 8.5%;
- Total Field EBITDA Margin of 43.2%,
a decrease of 340 basis points;
- Adjusted Consolidated EBITDA of
$80.7 million, a decrease of $15.1 million or 15.8%;
- Adjusted Consolidated EBITDA Margin
of 29.2%, a decrease of 500 basis points;
- Adjusted Diluted EPS of $1.96, a
decrease of $0.31 or 13.7%;
- Adjusted Free Cash Flow of $40.9
million, a decrease of $24.5 million or 37.5%; and
- Adjusted Free Cash Flow Margin of
14.8%, a decrease of 860 basis points.
(1) Total Revenue is comprised of Same Store
Funeral Revenue, Acquisition Funeral Revenue, Same Store Cemetery
Revenue, Acquisition Cemetery Revenue, Divested Revenue, Ancillary
Revenue and Financial Revenue. The most comparable GAAP measures to
the Non-GAAP measures presented in this table can be found in the
Reconciliation of Non-GAAP Financial Measures section of this press
release.
FIVE QUARTER TREND REPORT ENDING
SEPTEMBER 30, 2022
FIVE QUARTER OPERATING AND FINANCIAL TREND
REPORT |
(000’s except for volume, averages &
margins) |
|
3RD QTR2021 |
|
4TH QTR2021 |
|
1ST QTR2022 |
|
2ND QTR2022 |
|
3RD QTR2022 |
Funeral Same Store Contracts |
|
10,889 |
|
10,772 |
|
11,719 |
|
9,468 |
|
9,499 |
Funeral Same Store Average
Revenue Per Contract (1) |
|
$5,264 |
|
$5,333 |
|
$5,270 |
|
$5,361 |
|
$5,396 |
Funeral Same Store Burial
Contracts |
|
3,712 |
|
3,815 |
|
4,094 |
|
3,240 |
|
3,202 |
Funeral Same Store Burial
Rate |
|
34.1% |
|
35.4% |
|
34.9% |
|
34.2% |
|
33.7% |
Funeral Same Store Average
Revenue Per Burial Contract |
|
$9,489 |
|
$9,428 |
|
$9,388 |
|
$9,599 |
|
$9,810 |
Funeral Same Store Cremation
Contracts |
|
6,230 |
|
6,103 |
|
6,679 |
|
5,441 |
|
5,530 |
Funeral Same Store Cremation
Rate |
|
57.2% |
|
56.7% |
|
57.0% |
|
57.5% |
|
58.2% |
Funeral
Same Store Average Revenue Per Cremation Contract |
|
$3,475 |
|
$3,488 |
|
$3,442 |
|
$3,517 |
|
$3,589 |
Funeral Same Store Revenue |
|
$57,321 |
|
$57,441 |
|
$61,761 |
|
$50,757 |
|
$51,258 |
Funeral Same Store EBITDA |
|
$25,644 |
|
$24,390 |
|
$27,560 |
|
$19,036 |
|
$18,717 |
Funeral
Same Store EBITDA Margin |
|
44.7% |
|
42.5% |
|
44.6% |
|
37.5% |
|
36.5% |
Funeral Acquisition Revenue |
|
$7,651 |
|
$8,007 |
|
$8,610 |
|
$7,641 |
|
$7,813 |
Funeral Acquisition
EBITDA |
|
$3,371 |
|
$3,578 |
|
$3,750 |
|
$3,059 |
|
$3,036 |
Funeral
Acquisition EBITDA Margin |
|
44.1% |
|
44.7% |
|
43.6% |
|
40.0% |
|
38.9% |
Cemetery Same Store Preneed Property Contracts Sold |
|
1,280 |
|
1,120 |
|
1,068 |
|
1,228 |
|
1,091 |
Cemetery Same Store Preneed
Sales Revenue |
|
$11,366 |
|
$10,926 |
|
$9,011 |
|
$12,364 |
|
$10,222 |
Cemetery Same Store
Revenue |
|
$16,342 |
|
$16,288 |
|
$14,251 |
|
$16,969 |
|
$15,396 |
Cemetery Same Store
EBITDA |
|
$6,465 |
|
$6,939 |
|
$5,300 |
|
$6,479 |
|
$5,020 |
Cemetery Same Store EBITDA Margin |
|
39.6% |
|
42.6% |
|
37.2% |
|
38.2% |
|
32.6% |
Cemetery Acquisition Preneed Property Contracts Sold |
|
294 |
|
361 |
|
299 |
|
392 |
|
277 |
Cemetery Acquisition Preneed
Sales Revenue |
|
$5,148 |
|
$5,045 |
|
$4,298 |
|
$6,486 |
|
$4,149 |
Cemetery Acquisition
Revenue |
|
$6,362 |
|
$6,312 |
|
$6,297 |
|
$8,193 |
|
$5,947 |
Cemetery Acquisition
EBITDA |
|
$3,547 |
|
$3,140 |
|
$3,299 |
|
$4,640 |
|
$2,827 |
Cemetery Acquisition EBITDA Margin |
|
55.8% |
|
49.7% |
|
52.4% |
|
56.6% |
|
47.5% |
Total Financial Revenue |
|
$5,653 |
|
$6,173 |
|
$5,726 |
|
$5,785 |
|
$5,848 |
Total Financial EBITDA |
|
$5,239 |
|
$5,783 |
|
$5,297 |
|
$5,345 |
|
$5,449 |
Total
Financial EBITDA Margin |
|
92.7% |
|
93.7% |
|
92.5% |
|
92.4% |
|
93.2% |
Total Revenue |
|
$95,041 |
|
$95,931 |
|
$98,161 |
|
$90,600 |
|
$87,497 |
Total Field EBITDA |
|
$44,651 |
|
$44,189 |
|
$45,454 |
|
$38,635 |
|
$35,253 |
Total Field EBITDA Margin |
|
47.0% |
|
46.1% |
|
46.3% |
|
42.6% |
|
40.3% |
Adjusted Consolidated
EBITDA |
|
$32,389 |
|
$30,395 |
|
$32,476 |
|
$25,322 |
|
$22,855 |
Adjusted Consolidated EBITDA
Margin |
|
34.1% |
|
31.7% |
|
33.1% |
|
27.9% |
|
26.1% |
Adjusted Diluted EPS |
|
$0.82 |
|
$0.78 |
|
$0.92 |
|
$0.58 |
|
$0.45 |
Adjusted Free Cash Flow |
|
$25,922 |
|
$10,308 |
|
$12,357 |
|
$12,006 |
|
$16,525 |
Adjusted Free Cash Flow Margin |
|
27.3% |
|
10.7% |
|
12.6% |
|
13.3% |
|
18.9% |
GAAP Net Income |
|
$13,046 |
|
$13,347 |
|
$16,402 |
|
$10,899 |
|
$5,860 |
GAAP Net Income Margin |
|
13.7% |
|
13.9% |
|
16.7% |
|
12.0% |
|
6.7% |
GAAP
Diluted Earnings Per Share |
|
$0.71 |
|
$0.77 |
|
$1.00 |
|
$0.69 |
|
$0.38 |
(1) Excludes Preneed Funeral interest earnings
reflected in Total Financial Revenue. The most comparable GAAP
measures to the Non-GAAP measures presented in this table can be
found in the Reconciliation of Non-GAAP Financial Measures section
of this press release.
Carlos Quezada, President, and Chief Operating
Officer stated, “We report our performance results publicly using
the same highly transparent Non-GAAP “Trend Reports” that we use
internally and which have been explained in previous shareholder
letters, including Five Quarter Trend Reports that reflect
short-term trends in our core operating, financial and overhead
sectors over time. Our Five Quarter Operating and Financial Trend
Report is shown on the previous page.
From April 2020 through June 2022, we
experienced elevated volumes and excess deaths due to a
once-in-a-lifetime COVID-19 pandemic. As Mel shared at the
beginning of this release, volume normalization continued in the
third quarter, with additional declines in July and August and
accelerating to its highest drop in September. While the decline in
volume is significant in the third quarter of 2022 compared to the
third quarter of 2021, our funeral same store contracts of
9,499 in the third quarter of 2022 reflect a 14.3% volume
growth from the third quarter of 2019 and was relatively flat when
compared to the third quarter of 2020, which included a significant
volume increase due to the initial pandemic spike. The variance in
the third quarter of 2022 compared to the same period last year is
more evident due to a historically abnormal seasonal peak
experienced only in the third quarter of 2021.
The chart below demonstrates the typical
seasonality of volumes on our Funeral Home Same Store Portfolio,
where historically, the first quarter is the highest volume
quarter, followed closely by the fourth quarter, then the second
quarter, with the lowest volume in the third quarter. This
seasonality prior to the pandemic has been highly correlated with
past flu seasons during the winter months. The chart points out the
“abnormal” seasonal peak of volumes in the third quarter of 2021,
which made for an impossibly difficult comparison against a more
normalized volume and seasonalized third quarter in 2022.
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/36291871-8987-41bf-9fcb-6f49db3653b5
For the third quarter of 2022, Total Revenue was
$87.5 million, a decrease of 7.9% or $7.5 million compared to the
same period last year. Our Funeral Home Acquisition portfolio
continued to gain market share after integrating and optimizing
into the Carriage Services model and had revenue of $7.8 million or
2.1% over the third quarter of 2021. Same Store Funeral Contracts
were down by 1,390 or 12.8% due to the high comparable COVID-19
excess deaths experienced in the third quarter of 2021. However,
Same Store Average Revenue Per Contract was up by $132 or 2.5%,
equivalent to 232 contracts or $1.3 million of revenue. Same Store
Funeral EBITDA Margin of 36.5% compared to 44.7% during the same
period last year, a decrease of 820 basis points.
Same Store Cemetery Revenue was $15.4 million, a
decrease of $0.95 million or 5.8%, and Same Store Cemetery EBITDA
Margin was 32.6% compared to 39.6% in the same period last year.
This decrease results from lower true at-need interments from a
high COVID-19 comparable. True at-need interments typically bring a
higher average per contract than pre-need contracts and higher
margins in the range of 20% - 23% over the last three years.
Moreover, the lower at-need interments count led to lower preneed
cemetery sales as fewer families visited the cemetery to make
arrangements than the year before. The good news is that our
preneed cemetery sales strategy has adapted to this post-pandemic
environment, and we will deliver higher and more sustainable
preneed sales growth over time. Cemetery Acquisition Revenue was
$5.9 million, a decrease of $0.4 million or 6.5%, and Cemetery
Acquisition EBITDA Margin was 47.5% against 55.8%, a decrease of
830 basis points compared to the same period last year. A 47.5%
Cemetery Acquisition EBITDA Margin is at the top of our range of
High Performance margins.
We experienced lower Field EBITDA Margins in the
third quarter of 2022 compared to the same period in 2021, a
consequence of lower volumes on higher fixed costs due to
inflation, which was concentrated on full-time hourly base rate,
utility, funeral supplies, and insurance. We continue to monitor
these recent inflationary costs while making the necessary
adjustments to keep them within reasonable historical cost
ranges.
We ended the third quarter of 2022 with an
Adjusted Consolidated EBITDA of $22.9 million, a decrease of $9.5
million or 29.4%, and an Adjusted Consolidated EBITDA Margin of
26.1%, a decrease of 800 basis points when compared to the same
period last year. Moreover, Adjusted Diluted EPS of $0.45 cents, a
decrease of $0.37 cents or 45.1% compared to the previous year’s
period.
Our Adjusted Consolidated EBITDA Margins are
lower than at any point since the beginning of the pandemic, which
is a natural compression of margins due to inflationary costs and
the negative operating leverage impact of lower revenues over
higher fixed costs in many of our businesses. However, the third
quarter results are NOT the new normal. We are confident the
efforts to reduce the inflationary impact in each of our businesses
over the next few months will improve our cost percentages against
normalizing revenue. Furthermore, the Company continues to get
better everyday because we have the best talent in the history of
Carriage. For all these reasons and many more, we are confident
that we will reach our goal of long-term sustainable ranges of
Total Field EBITDA Margins of 43% - 44% and Adjusted Consolidated
EBITDA Margins of 30% - 31% by 2024.
OVERHEAD INVESTMENTS UPDATE AND
PROGRESS
More “A” players join Carriage
Services:We are excited to share that Robbie Pape joined
Carriage Good To Great Journey on September 26,
2022, as our new Senior Vice President of Operations and Regional
Partner for the Eastern Region. Robbie has over 30 years of
industry experience, including positions in funeral/cemetery
operations, finance, sales, systems, process improvement, and
audit. She is a Certified Public Accountant with a Marketing and
Information Systems degree from Baylor University in Waco, Texas.
She serves as President-Elect for the International Cemetery,
Cremation and Funeral Association (“ICCFA”) and is a Finance
Committee member. Robbie is also active in the Cremation
Association of North America and served as a board member until the
fall of 2021. Robbie’s experience and vast knowledge, in addition
to her leadership coach/mentor style, will be transformational for
the East Region. Welcome to the Carriage family, Robbie.
We also welcome Jeremy Weaver, who joined
Carriage as a Director of Operations Support for the East Region on
May 23, 2022. Jeremy has over 25 years of death care experience,
including other consolidators. He is a graduate of the Dallas
Institute of Funeral Service. Chad Frye joined our Carriage Good to
Great Journey as Director of Operations Support for the East Region
on August 1, 2022. Chad has over 25 years of funeral service
industry experience and has held various operational positions with
oversight over multiple funeral homes, cemeteries, and crematory
operations. He holds a bachelor’s degree in business management
from Western Governors University and an associate degree in
funeral service from Piedmont Technical College. We welcome Jeremy
and Chad to Carriage.
This powerful team supporting our Eastern Region
will become pivotal to the success of each business as they partner
and collaborate with each Managing Partner and pursue our
Being The Best Mission and Vision.
Marketing:Our marketing team,
led by Alfred White, continues to execute and deliver High
Performance. The adoption of marketing services offered by
our marketing team has grown organically based on the value
everyone on the marketing team is creating. While many may consider
marketing an expense, we see it as an investment due to the unique
opportunity that our decentralized operating model offers, which in
terms of dollar value in the third quarter of 2022 has generated
total savings of approximately $213,000 generated through our
strategy on Digital Advertising, Social Media Platforms, and
External Agency Savings.
The marketing team will continue to create value
organically and focus on incorporating all businesses under the
marketing umbrella over time, expecting that leverage maximization
will optimize marketing and advertising investments. Some examples
of these include: optimized paid digital spending, leveraging a new
call tracking system, increasing social media portfolio, and
creating new website designs for funeral homes and cemeteries.
Information Technology:During
the first six months of Rob Franch’s tenure as the Company’s CIO,
he has focused on strengthening the foundational technology across
critical infrastructure and security services. Our IT
transformation must begin with creating a solid and sustainable
technology bedrock we expect to build further. Our IT team’s
initial investments and efforts have focused on cybersecurity,
connectivity, and compliance. As we further improve in these areas,
we believe Carriage is well-positioned to capitalize on future
digital capabilities by advancing data security, proactive threat
detection, and secure connectivity to our IT systems and
services.
While these investments provide excellent value
to our colleagues and the families we serve, Rob intends to also
look for opportunities to reduce overhead in parallel. In that
respect, the IT team’s mission would include identifying and
driving duplicative costs that do not align with the Company’s
long-term vision and roadmap. To that end, we have set a goal to
reduce overhead within IT by approximately $240,000 year over year
by the first quarter of 2023. Rob’s commitment to our shareholders
will always be to deliver the most outstanding value through
technology while maintaining a stable and predictable cost.
The Best is Yet to Come:Great
things are happening at Carriage, from the fast start High
Performance marketing team, which is now hitting on all
cylinders, as well as our technology-savvy future, which we expect
will enable a second-to-none customer-centric experience, to our
exciting growth through acquisitions. And while there is much
economical and geopolitical uncertainty both globally and locally,
in addition to unknown post-pandemic volume levels, we believe
those levels will be above pre-pandemic levels. However, most
important is that we have a Being The Best company
which means that each day we become a little better than we were
the day before, an effect that has a materially compounding impact
over time.
We believe our Company has a bright future
within the adversity-resilient death care industry, as proven by
its long history. We have also learned from history that humankind
will continue to honor loved ones lost and say goodbye with
dignity, respect, and reverence for those no longer with us, which
is why we define the noble nature of our business as high-value
personal service and sales.
Our focus will continue on the things we
control. At the same time, our agility and execution ability
provide the foundation to ensure that regardless of the future
death rate, our Managing Partners and their Being The Best
Teams stand ready to serve a more significant share in
each of their businesses. For these reasons and many more, we
continue to say that it is a great time to be at Carriage, and the
best is yet to come,” concluded Mr. Quezada.
STRATEGIC ACQUISITION
UPDATESteve Metzger, Executive Vice President, Chief
Administrative Officer and General Counsel stated, “As Mel
mentioned earlier, we are currently well positioned to take
advantage of some very attractive opportunities to accelerate our
growth by acquisition. We are excited to announce our most recent
addition to the Carriage Family, Heritage Funeral and Cremation
Services and Forest Lawn East Cemetery in Charlotte, North
Carolina. Heritage, with three funeral homes, a cemetery, and a
dedicated cremation business, is a leader in the growing Charlotte
market with an approximately 25% market share. The Heritage
reputation and footprint allows us to enter Charlotte with a
premier business with an outstanding reputation which provides an
excellent foundation from which to expand our presence in one of
the more attractive markets in the country.
We are also excited to share that we are under a
letter of intent with another fantastic business in an attractive
market with three funeral homes, two cemeteries, and a growing
dedicated cremation business. This business, which is the leader in
a large and growing strategic market in which we had no prior
presence, is on pace to finish 2022 with more than $15 million in
revenue and has already made significant investments to allow for
future growth in the years ahead. We look forward to providing
additional detail once we close this transaction.
When we look at the two businesses we recently
acquired in the Orlando and Charlotte markets and combine their
performance with the large business we currently have under letter
of intent, Carriage would add approximately 4,500 funeral calls and
1,500 interments to our existing portfolio. These additional
funeral calls represent an approximately 10% increase to Company
wide totals for 2021, while the additional interments would
represent a roughly 15% increase to our totals for last year. It is
also important to note that these acquisitions include several
large cemeteries with decades of heritage, which results in
significant trust funds that can contribute to meaningful financial
revenue, as Ben will highlight in more detail later. Moreover, two
of these three acquisitions allow us to enter new markets where we
did not previously have a presence with premier names that possess
strong legacies and reputations.
We will continue to focus on identifying similar
businesses to support our long-term growth strategy. We never know
when a premier business will be ready for a succession plan, so we
always want to be sure we are well positioned to act quickly when
the right opportunity is identified. To that end we have great
relationships with our bank partners, led by Bank of America, and
while we balance our goal of reducing leverage with being
opportunistic when unique acquisition opportunities arise, we will
continue to work with our banks to ensure we maintain the financial
flexibility necessary to manage those priorities,” concluded Mr.
Metzger.
ADJUSTED FREE CASH FLOW/LEVERAGE
RATIOBen Brink, Executive Vice President and Chief
Financial Officer stated, “In the near term, we will work with our
banking partners on capital capacity strategies for financial
flexibility to accelerate our growth by acquisition. We will then
use internally generated Free Cash Flow to rapidly pay down debt in
a similar manner to 2020 and early 2021 post the large
transformative acquisitions we made at the end of 2019 and early
2020, when leverage fell from 6.0 times on a proforma basis at the
beginning of 2020 to 3.8 times in the span of 15 months.
Our bank covenant compliance leverage ratio was
5.14 times at the end of the third quarter compared to 4.87 times
at the end of the second quarter and 4.51 times at year end 2021.
Total Debt was $581.0 million in the third quarter compared to
$587.3 million at end of the second quarter and $567.7 million at
year end 2021. Going forward we intend to focus our capital
allocation on high return internal growth projects like cemetery
inventory, transformative acquisitions and paying down our debt
over the next two years.
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
Cash Provided by Operating
Activities |
|
$ |
28,258 |
|
|
$ |
19,869 |
|
|
$ |
69,699 |
|
|
$ |
50,046 |
|
Cash used for Maintenance
Capital Expenditures |
|
|
(4,358 |
) |
|
|
(3,728 |
) |
|
|
(8,960 |
) |
|
|
(9,710 |
) |
Free Cash Flow |
|
$ |
23,900 |
|
|
$ |
16,141 |
|
|
$ |
60,739 |
|
|
$ |
40,336 |
|
|
|
|
|
|
|
|
|
|
Plus: Incremental Special
Items: |
|
|
|
|
|
|
|
|
Severance and Separation
Costs |
|
|
— |
|
|
|
384 |
|
|
|
1,575 |
|
|
|
384 |
|
Disaster Recovery and Pandemic
Costs |
|
|
1,002 |
|
|
|
— |
|
|
|
2,041 |
|
|
|
168 |
|
Other Special Items |
|
|
1,020 |
|
|
|
— |
|
|
|
1,020 |
|
|
|
— |
|
Adjusted Free Cash Flow |
|
$ |
25,922 |
|
|
$ |
16,525 |
|
|
$ |
65,375 |
|
|
$ |
40,888 |
|
|
|
|
|
|
|
|
|
|
Total Revenue |
|
$ |
95,041 |
|
|
$ |
87,497 |
|
|
$ |
279,955 |
|
|
$ |
276,258 |
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash Flow
Margin |
|
|
27.3% |
|
|
|
18.9% |
|
|
|
23.4% |
|
|
|
14.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third quarter Adjusted Free Cash Flow declined
$9.4 million or 36.2% to $16.5 million compared to third quarter
2021 due to the normalization of seasonal death rates and the
significant decline in COVID-19 related deaths. Adjusted Free Cash
Flow Margin declined 840 basis points in the third quarter to 18.9%
compared to last year. The $16.5 million of Adjusted Free Cash Flow
and the 18.9% Adjusted Free Cash Flow Margin represent the highest
amount of each over the past four quarters, which allowed us to
reduce our Total Debt outstanding while closing on one acquisition
in the quarter.
Adjusted Free Cash Flow for the nine months
ending September 30, 2022 decreased 37.5% to $40.9 million and the
Adjusted Free Cash Flow Margin decreased 860 basis points to 14.8%.
Adjusted Free Cash Flow declined primarily due to lower Adjusted
Consolidated EBITDA and substantially higher 2021 incentive cash
compensation payments that were made in the first quarter of 2022
as the result of a record pandemic performance year, including
$4 million for our five-year Good To Great Incentive Award that
will not be repeated in 2023. Additionally, we had various
incentive trips and the first Managing Partner Forum in four years
with a combined cost of approximately $3.5 million, which will be
significantly less in 2023 as performance normalizes above
pre-pandemic levels, resulting in fewer incentive trip winners.
The Adjusted Free Cash Flow Margin represents
the amount of cash generated for every dollar of Revenue that is
available for shareholder value creation capital allocation through
debt paydown or by acquisition of high-quality funeral homes and
cemeteries. We believe it is an important metric for investors to
gauge the recurring nature of the Free Cash Flow earnings power of
Carriage.
TRUST FUND INVESTMENT
PERFORMANCE
|
|
YTD 2022 |
|
Annualized2009 - Q3 2022 |
CSV Discretionary
Portfolio |
|
(8.5)% |
|
12.8% |
S&P 500 |
|
(23.9)% |
|
12.8% |
DJIA |
|
(19.7)% |
|
11.7% |
NASDAQ |
|
(32.0)% |
|
16.1% |
HY Bond Index |
|
(14.7)% |
|
8.7% |
70/30
HY/S&P Bond |
|
(17.5)% |
|
10.1% |
|
|
|
|
|
Through the third quarter, our year-to-date
return for our discretionary trust portfolio was negative 8.5%
versus negative 23.9% for the S&P 500 and negative 17.5% for
our 70/30 HY Bond/S&P 500 benchmark. For the last twelve months
our total return for our discretionary trust portfolio was negative
4.1% compared to negative 15.5% for the S&P 500 and negative
14.5% for our 70/30 HY Bond/S&P 500 benchmark.
The third quarter marked a continued relative
outperformance for our discretionary preneed trust funds compared
to the broader market in an environment of geopolitical
instability, persistent inflation, a historically rapid rise in
interest rates and significant shifts in currency valuations across
the world that have led to year-to-date historical declines in both
the equity and fixed income markets. The relative outperformance
has allowed us to position the discretionary trust fund portfolio
to have the flexibility to deploy additional capital in potentially
weaker or more volatile markets while being able to continue to
generate a high amount of recurring investment income in the
portfolio, which has grown to approximately $19.2 million compared
to $17.5 million at the end of 2021. Our dividend equity portfolio
is comprised of securities that continue to be attractive to other
investors which has provided resiliency to our overall portfolio in
the current turbulent market environment.
As of last Friday, October 21, our market value
($233.9 million) trust fund allocations (only trusts that we
manage, which represent 86% of total) were 46.1% core equity, 44.3%
core fixed income, 2.4% non-core equity and fixed income, and 7.2%
cash. The recurring income yield on the market value of our core
equity portfolio as of Friday was 7.2%, whereas the recurring
income yield on our core fixed income portfolio was 9.9%. The total
recurring income of $19.2 million is a historical record and
represents an 8.2% yield on total market value of $233.9
million.
One of the many attractive characteristics of
the acquisitions being announced is that they have significant
trust funds that once integrated into our pooled partnership
framework should produce another step up in our reported Financial
Revenue and EBITDA in future years. This high amount of recurring
income generated in the portfolio combined with the approximately
$43 million in realized capital gains we have booked to underlying
preneed funeral and cemetery contracts over the past two years has
led to a year-to-date increase of 3.4% in Financial Revenue and
3.0% in Financial EBITDA, and we expect will lead to continued
incremental growth in our reported Financial Revenue and EBITDA for
the foreseeable future,” concluded Mr. Brink.
CONFERENCE CALL AND INVESTOR RELATIONS
CONTACTCarriage Services has scheduled a conference call
for tomorrow, October 27, 2022 at 9:30 a.m. central time. To
participate live over the phone via audio conferencing click link
or live over the Internet via webcast click link. An audio archive
of the call will be available on demand via the Company's website
at www.carriageservices.com. For any investor relations questions,
please contact Ben Brink at 713-332-8441 or email
InvestorRelations@carriageservices.com.
CARRIAGE SERVICES, INC. |
OPERATING AND FINANCIAL TREND REPORT |
(IN THOUSANDS - EXCEPT PER SHARE AMOUNTS) |
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2021 |
|
|
|
2022 |
|
|
% Change |
|
|
2021 |
|
|
2022 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
Same Store
Contracts |
|
|
|
|
|
|
|
|
|
Atneed Contracts |
|
9,341 |
|
|
|
8,029 |
|
|
(14.0 |
%) |
|
|
26,829 |
|
|
26,073 |
|
(2.8 |
%) |
Preneed Contracts |
|
1,548 |
|
|
|
1,470 |
|
|
(5.0 |
%) |
|
|
4,674 |
|
|
4,613 |
|
(1.3 |
%) |
Total Same Store Funeral
Contracts |
|
10,889 |
|
|
|
9,499 |
|
|
(12.8 |
%) |
|
|
31,503 |
|
|
30,686 |
|
(2.6 |
%) |
Acquisition
Contracts |
|
|
|
|
|
|
|
|
|
Atneed Contracts |
|
1,445 |
|
|
|
1,403 |
|
|
(2.9 |
%) |
|
|
4,408 |
|
|
4,254 |
|
(3.5 |
%) |
Preneed Contracts |
|
110 |
|
|
|
167 |
|
|
51.8 |
% |
|
|
341 |
|
|
511 |
|
49.9 |
% |
Total Acquisition Funeral
Contracts |
|
1,555 |
|
|
|
1,570 |
|
|
1.0 |
% |
|
|
4,749 |
|
|
4,765 |
|
0.3 |
% |
Total Funeral
Contracts |
|
12,444 |
|
|
|
11,069 |
|
|
(11.0 |
%) |
|
|
36,252 |
|
|
35,451 |
|
(2.2 |
%) |
|
|
|
|
|
|
|
|
|
|
Funeral Operating
Revenue |
|
|
|
|
|
|
|
|
|
Same Store Revenue |
$ |
57,321 |
|
|
$ |
51,258 |
|
|
(10.6 |
%) |
|
$ |
165,481 |
|
$ |
163,776 |
|
(1.0 |
%) |
Acquisition Revenue |
|
7,651 |
|
|
|
7,813 |
|
|
2.1 |
% |
|
|
22,575 |
|
|
24,064 |
|
6.6 |
% |
Total Funeral
Operating Revenue |
$ |
64,972 |
|
|
$ |
59,071 |
|
|
(9.1 |
%) |
|
$ |
188,056 |
|
$ |
187,840 |
|
(0.1 |
%) |
|
|
|
|
|
|
|
|
|
|
Cemetery Operating
Revenue |
|
|
|
|
|
|
|
|
|
Same Store Revenue |
$ |
16,342 |
|
|
$ |
15,396 |
|
|
(5.8 |
%) |
|
$ |
47,883 |
|
$ |
46,616 |
|
(2.6 |
%) |
Acquisition Revenue |
|
6,362 |
|
|
|
5,947 |
|
|
(6.5 |
%) |
|
|
21,517 |
|
|
20,437 |
|
(5.0 |
%) |
Total Cemetery
Operating Revenue |
$ |
22,704 |
|
|
$ |
21,343 |
|
|
(6.0 |
%) |
|
$ |
69,400 |
|
$ |
67,053 |
|
(3.4 |
%) |
|
|
|
|
|
|
|
|
|
|
Total Financial
Revenue |
$ |
5,653 |
|
|
$ |
5,848 |
|
|
3.4 |
% |
|
$ |
16,786 |
|
$ |
17,359 |
|
3.4 |
% |
|
|
|
|
|
|
|
|
|
|
Ancillary
Revenue |
$ |
1,096 |
|
|
$ |
1,049 |
|
|
(4.3 |
%) |
|
$ |
3,391 |
|
$ |
3,099 |
|
(8.6 |
%) |
|
|
|
|
|
|
|
|
|
|
Total Divested/Planned
Divested Revenue |
$ |
616 |
|
|
$ |
186 |
|
|
(69.8 |
%) |
|
$ |
2,322 |
|
$ |
907 |
|
(60.9 |
%) |
Total
Revenue |
$ |
95,041 |
|
|
$ |
87,497 |
|
|
(7.9 |
%) |
|
$ |
279,955 |
|
$ |
276,258 |
|
(1.3 |
%) |
|
|
|
|
|
|
|
|
|
|
Field
EBITDA |
|
|
|
|
|
|
|
|
|
Same Store Funeral Field EBITDA |
$ |
25,644 |
|
|
$ |
18,717 |
|
|
(27.0 |
%) |
|
$ |
71,520 |
|
$ |
65,313 |
|
(8.7 |
%) |
Same Store Funeral Field EBITDA Margin |
|
44.7 |
% |
|
|
36.5 |
% |
|
(820 bp) |
|
|
43.2 |
% |
|
39.9 |
% |
(330 bp) |
Acquisition Funeral Field EBITDA |
|
3,371 |
|
|
|
3,036 |
|
|
(9.9 |
%) |
|
|
9,784 |
|
|
9,845 |
|
0.6 |
% |
Acquisition Funeral Field EBITDA Margin |
|
44.1 |
% |
|
|
38.9 |
% |
|
(520 bp) |
|
|
43.3 |
% |
|
40.9 |
% |
(240 bp) |
Total Funeral Field
EBITDA |
$ |
29,015 |
|
|
$ |
21,753 |
|
|
(25.0 |
%) |
|
$ |
81,304 |
|
$ |
75,158 |
|
(7.6 |
%) |
Total Funeral Field
EBITDA Margin |
|
44.7 |
% |
|
|
36.8 |
% |
|
(790 bp) |
|
|
43.2 |
% |
|
40.0 |
% |
(320 bp) |
|
|
|
|
|
|
|
|
|
|
Same Store Cemetery Field EBITDA |
$ |
6,465 |
|
|
$ |
5,020 |
|
|
(22.4 |
%) |
|
$ |
20,076 |
|
$ |
16,799 |
|
(16.3 |
%) |
Same Store Cemetery Field EBITDA Margin |
|
39.6 |
% |
|
|
32.6 |
% |
|
(700 bp) |
|
|
41.9 |
% |
|
36.0 |
% |
(590 bp) |
Acquisition Cemetery Field EBITDA |
|
3,547 |
|
|
|
2,827 |
|
|
(20.3 |
%) |
|
|
12,386 |
|
|
10,766 |
|
(13.1 |
%) |
Acquisition Cemetery Field EBITDA Margin |
|
55.8 |
% |
|
|
47.5 |
% |
|
(830 bp) |
|
|
57.6 |
% |
|
52.7 |
% |
(490 bp) |
Total Cemetery Field
EBITDA |
$ |
10,012 |
|
|
$ |
7,847 |
|
|
(21.6 |
%) |
|
$ |
32,462 |
|
$ |
27,565 |
|
(15.1 |
%) |
Total Cemetery Field
EBITDA Margin |
|
44.1 |
% |
|
|
36.8 |
% |
|
(730 bp) |
|
|
46.8 |
% |
|
41.1 |
% |
(570 bp) |
|
|
|
|
|
|
|
|
|
|
Total Financial Field
EBITDA |
$ |
5,239 |
|
|
$ |
5,449 |
|
|
4.0 |
% |
|
$ |
15,625 |
|
$ |
16,091 |
|
3.0 |
% |
Total Financial Field
EBITDA Margin |
|
92.7 |
% |
|
|
93.2 |
% |
|
50 bp |
|
|
93.1 |
% |
|
92.7 |
% |
(40 bp) |
|
|
|
|
|
|
|
|
|
|
Ancillary
EBITDA |
$ |
274 |
|
|
$ |
188 |
|
|
(31.4 |
%) |
|
$ |
790 |
|
$ |
560 |
|
(29.1 |
%) |
Ancillary EBITDA
Margin |
|
25.0 |
% |
|
|
17.9 |
% |
|
(710 bp) |
|
|
23.3 |
% |
|
18.1 |
% |
(520 bp) |
|
|
|
|
|
|
|
|
|
|
Total Divested/Planned
Divested EBITDA |
$ |
111 |
|
|
$ |
16 |
|
|
(85.6 |
%) |
|
$ |
271 |
|
$ |
(32 |
) |
(111.8 |
%) |
Total Divested/Planned
Divested EBITDA Margin |
|
18.0 |
% |
|
|
8.6 |
% |
|
(940 bp) |
|
|
11.7 |
% |
|
(3.5 |
)% |
(1,520 bp) |
Total Field
EBITDA |
$ |
44,651 |
|
|
$ |
35,253 |
|
|
(21.0 |
%) |
|
$ |
130,452 |
|
$ |
119,342 |
|
(8.5 |
%) |
Total Field EBITDA
Margin |
|
47.0 |
% |
|
|
40.3 |
% |
|
(670 bp) |
|
|
46.6 |
% |
|
43.2 |
% |
(340 bp) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING AND FINANCIAL TREND REPORT |
(IN THOUSANDS - EXCEPT PER SHARE AMOUNTS) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2021 |
|
|
|
2022 |
|
|
% Change |
|
|
2021 |
|
|
2022 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
Overhead |
|
|
|
|
|
|
|
|
|
Total Variable Overhead |
$ |
7,103 |
|
|
$ |
5,627 |
|
|
(20.8 |
%) |
|
$ |
18,548 |
|
$ |
15,322 |
|
(17.4 |
%) |
Total Regional Fixed Overhead |
|
1,326 |
|
|
|
1,159 |
|
|
(12.6 |
%) |
|
|
3,881 |
|
|
4,094 |
|
5.5 |
% |
Total Corporate Fixed Overhead |
|
5,855 |
|
|
|
7,043 |
|
|
20.3 |
% |
|
|
16,893 |
|
|
21,072 |
|
24.7 |
% |
Total
Overhead |
$ |
14,284 |
|
|
$ |
13,829 |
|
|
(3.2 |
%) |
|
$ |
39,322 |
|
$ |
40,488 |
|
3.0 |
% |
Overhead as a
percentage of Revenue |
|
15.0 |
% |
|
|
15.8 |
% |
|
80 bp |
|
|
14.0 |
% |
|
14.7 |
% |
70 bp |
Consolidated
EBITDA |
$ |
30,367 |
|
|
$ |
21,424 |
|
|
(29.4 |
%) |
|
$ |
91,130 |
|
$ |
78,854 |
|
(13.5 |
%) |
Consolidated EBITDA
Margin |
|
32.0 |
% |
|
|
24.5 |
% |
|
(750 bp) |
|
|
32.6 |
% |
|
28.5 |
% |
(410 bp) |
|
|
|
|
|
|
|
|
|
|
Other Expenses and
Interest |
|
|
|
|
|
|
|
|
|
Depreciation & Amortization |
$ |
4,950 |
|
|
$ |
4,716 |
|
|
|
|
$ |
15,486 |
|
$ |
14,611 |
|
|
Non-Cash Stock Compensation |
|
1,294 |
|
|
|
1,493 |
|
|
|
|
|
3,832 |
|
|
4,578 |
|
|
Interest Expense |
|
5,076 |
|
|
|
6,678 |
|
|
|
|
|
20,138 |
|
|
18,208 |
|
|
Accretion on Convertible Sub. Notes |
|
— |
|
|
|
— |
|
|
|
|
|
20 |
|
|
— |
|
|
Loss on Extinguishment of Debt |
|
— |
|
|
|
— |
|
|
|
|
|
23,807 |
|
|
— |
|
|
Net (Gain) Loss on Divestitures |
|
282 |
|
|
|
— |
|
|
|
|
|
179 |
|
|
(575 |
) |
|
Impairment of Goodwill and Other |
|
500 |
|
|
|
— |
|
|
|
|
|
500 |
|
|
— |
|
|
Net Gain on Insurance Reimbursements |
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
(3,275 |
) |
|
Net Loss on Disposal of Fixed Assets |
|
76 |
|
|
|
(7 |
) |
|
|
|
|
698 |
|
|
142 |
|
|
Other, Net |
|
21 |
|
|
|
(95 |
) |
|
|
|
|
87 |
|
|
(78 |
) |
|
Pre-Tax
Income |
$ |
18,168 |
|
|
$ |
8,639 |
|
|
|
|
$ |
26,383 |
|
$ |
45,243 |
|
|
Net Tax
Expense |
|
5,122 |
|
|
|
2,779 |
|
|
|
|
|
6,571 |
|
|
12,082 |
|
|
GAAP Net
Income |
$ |
13,046 |
|
|
$ |
5,860 |
|
|
(55.1 |
%) |
|
$ |
19,812 |
|
$ |
33,161 |
|
67.4 |
% |
|
|
|
|
|
|
|
|
|
|
Special
Items |
|
|
|
|
|
|
|
|
|
Severance and Separation Costs |
|
— |
|
|
|
1,431 |
|
|
|
|
|
1,575 |
|
|
1,431 |
|
|
Accretion on Convertible Sub. Notes |
|
— |
|
|
|
— |
|
|
|
|
|
20 |
|
|
— |
|
|
Net (Gain) Loss on Divestitures |
|
282 |
|
|
|
— |
|
|
|
|
|
179 |
|
|
(575 |
) |
|
Impairment of Goodwill and Other |
|
500 |
|
|
|
— |
|
|
|
|
|
500 |
|
|
— |
|
|
Litigation Reserve |
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
200 |
|
|
Loss on Extinguishment of Debt |
|
— |
|
|
|
— |
|
|
|
|
|
23,807 |
|
|
— |
|
|
Net Gain on Insurance Reimbursements |
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
(3,275 |
) |
|
Disaster Recovery and Pandemic Costs |
|
1,002 |
|
|
|
— |
|
|
|
|
|
2,041 |
|
|
168 |
|
|
Change in Uncertain Tax Reserves |
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
(533 |
) |
|
Other Special Items |
|
1,020 |
|
|
|
— |
|
|
|
|
|
2,354 |
|
|
— |
|
|
Sum of Special Items |
$ |
2,804 |
|
|
$ |
1,431 |
|
|
|
|
$ |
30,476 |
|
$ |
(2,584 |
) |
|
Tax Effect on Special Items |
|
738 |
|
|
|
356 |
|
|
|
|
|
8,619 |
|
|
(570 |
) |
|
Adjusted Net
Income |
$ |
15,112 |
|
|
$ |
6,935 |
|
|
(54.1 |
%) |
|
$ |
41,669 |
|
$ |
31,147 |
|
(25.3 |
%) |
Adjusted Net Income
Margin |
|
15.9 |
% |
|
|
7.9 |
% |
|
(800 bp) |
|
|
14.9 |
% |
|
11.3 |
% |
(360 bp) |
|
|
|
|
|
|
|
|
|
|
Adjusted Basic Earnings Per
Share |
$ |
0.86 |
|
|
$ |
0.47 |
|
|
(45.3 |
%) |
|
$ |
2.34 |
|
$ |
2.08 |
|
(11.1 |
%) |
Adjusted Diluted Earnings Per
Share |
$ |
0.82 |
|
|
$ |
0.45 |
|
|
(45.1 |
%) |
|
$ |
2.27 |
|
$ |
1.96 |
|
(13.7 |
%) |
|
|
|
|
|
|
|
|
|
|
GAAP Basic Earnings Per
Share |
$ |
0.74 |
|
|
$ |
0.40 |
|
|
(45.9 |
%) |
|
$ |
1.11 |
|
$ |
2.22 |
|
100.0 |
% |
GAAP Diluted Earnings Per
Share |
$ |
0.71 |
|
|
$ |
0.38 |
|
|
(46.5 |
%) |
|
$ |
1.08 |
|
$ |
2.09 |
|
93.5 |
% |
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
o/s - Basic |
|
17,499 |
|
|
|
14,689 |
|
|
|
|
|
17,809 |
|
|
14,908 |
|
|
Weighted Average Shares
o/s - Diluted |
|
18,246 |
|
|
|
15,537 |
|
|
|
|
|
18,365 |
|
|
15,849 |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Adjusted Consolidated
EBITDA |
|
|
|
|
|
|
|
|
Consolidated
EBITDA |
$ |
30,367 |
|
|
$ |
21,424 |
|
|
(29.4 |
%) |
|
$ |
91,130 |
|
$ |
78,854 |
|
(13.5 |
%) |
Severance and Separation Costs |
|
— |
|
|
|
1,431 |
|
|
|
|
|
1,575 |
|
|
1,431 |
|
|
Litigation Reserve |
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
200 |
|
|
Disaster Recovery and Pandemic Costs |
|
1,002 |
|
|
|
— |
|
|
|
|
|
2,041 |
|
|
168 |
|
|
Other Special Items |
|
1,020 |
|
|
|
— |
|
|
|
|
|
1,020 |
|
|
— |
|
|
Adjusted Consolidated
EBITDA |
$ |
32,389 |
|
|
$ |
22,855 |
|
|
(29.4 |
%) |
|
$ |
95,766 |
|
$ |
80,653 |
|
(15.8 |
%) |
Adjusted Consolidated
EBITDA Margin |
|
34.1 |
% |
|
|
26.1 |
% |
|
(800 bp) |
|
|
34.2 |
|
|
29.2 |
|
(500 bp) |
CARRIAGE SERVICES, INC. |
CONDENSED CONSOLIDATED BALANCE SHEET |
(unaudited and in thousands) |
|
|
|
|
|
December 31, 2021 |
|
September 30, 2022 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
1,148 |
|
|
$ |
821 |
|
Accounts receivable, net |
|
25,314 |
|
|
|
23,352 |
|
Inventories |
|
7,346 |
|
|
|
7,675 |
|
Prepaid and other current assets |
|
6,404 |
|
|
|
4,131 |
|
Total current assets |
|
40,212 |
|
|
|
35,979 |
|
Preneed cemetery trust
investments |
|
100,903 |
|
|
|
87,030 |
|
Preneed funeral trust
investments |
|
113,658 |
|
|
|
98,638 |
|
Preneed cemetery receivables,
net |
|
23,150 |
|
|
|
25,873 |
|
Receivables from funeral
preneed trusts, net |
|
19,009 |
|
|
|
20,119 |
|
Property, plant and equipment,
net |
|
269,367 |
|
|
|
275,977 |
|
Cemetery property, net |
|
100,701 |
|
|
|
101,691 |
|
Goodwill |
|
391,972 |
|
|
|
393,765 |
|
Intangible and other
non-current assets, net |
|
29,378 |
|
|
|
30,451 |
|
Operating lease right-of-use
assets |
|
17,881 |
|
|
|
17,295 |
|
Cemetery perpetual care trust
investments |
|
72,400 |
|
|
|
60,569 |
|
Total assets |
$ |
1,178,631 |
|
|
$ |
1,147,387 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Current portion of debt and lease obligations |
$ |
2,809 |
|
|
$ |
3,104 |
|
Accounts payable |
|
14,205 |
|
|
|
9,325 |
|
Accrued and other liabilities |
|
43,773 |
|
|
|
37,123 |
|
Total current liabilities |
|
60,787 |
|
|
|
49,552 |
|
Acquisition debt, net of
current portion |
|
3,979 |
|
|
|
3,846 |
|
Credit facility |
|
153,857 |
|
|
|
167,410 |
|
Senior notes |
|
394,610 |
|
|
|
395,082 |
|
Obligations under finance
leases, net of current portion |
|
5,157 |
|
|
|
4,842 |
|
Obligations under operating
leases, net of current portion |
|
18,520 |
|
|
|
17,638 |
|
Deferred preneed cemetery
revenue |
|
50,202 |
|
|
|
52,173 |
|
Deferred preneed funeral
revenue |
|
30,584 |
|
|
|
32,006 |
|
Deferred tax liability |
|
45,784 |
|
|
|
47,483 |
|
Other long-term
liabilities |
|
1,419 |
|
|
|
2,700 |
|
Deferred preneed cemetery
receipts held in trust |
|
100,903 |
|
|
|
87,030 |
|
Deferred preneed funeral
receipts held in trust |
|
113,658 |
|
|
|
98,638 |
|
Care trusts’ corpus |
|
71,156 |
|
|
|
60,067 |
|
Total liabilities |
|
1,050,616 |
|
|
|
1,018,467 |
|
Commitments and
contingencies: |
|
|
|
Stockholders’ equity: |
|
|
|
Common stock |
|
263 |
|
|
|
263 |
|
Additional paid-in capital |
|
236,809 |
|
|
|
238,787 |
|
Retained earnings |
|
135,462 |
|
|
|
168,623 |
|
Treasury stock |
|
(244,519 |
) |
|
|
(278,753 |
) |
Total stockholders’ equity |
|
128,015 |
|
|
|
128,920 |
|
Total liabilities and stockholders’
equity |
$ |
1,178,631 |
|
|
$ |
1,147,387 |
|
CARRIAGE SERVICES, INC. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(unaudited and in thousands, except per share
data) |
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
Service revenue |
$ |
46,210 |
|
|
$ |
42,992 |
|
|
$ |
134,086 |
|
|
$ |
135,279 |
|
Property and merchandise revenue |
|
42,043 |
|
|
|
37,607 |
|
|
|
125,545 |
|
|
|
120,495 |
|
Other revenue |
|
6,788 |
|
|
|
6,898 |
|
|
|
20,324 |
|
|
|
20,484 |
|
|
|
95,041 |
|
|
|
87,497 |
|
|
|
279,955 |
|
|
|
276,258 |
|
Field costs and expenses: |
|
|
|
|
|
|
|
Cost of service |
|
20,523 |
|
|
|
22,317 |
|
|
|
61,073 |
|
|
|
65,805 |
|
Cost of merchandise |
|
28,632 |
|
|
|
28,668 |
|
|
|
84,672 |
|
|
|
87,304 |
|
Cemetery property amortization |
|
1,521 |
|
|
|
1,278 |
|
|
|
5,213 |
|
|
|
4,314 |
|
Field depreciation expense |
|
3,154 |
|
|
|
3,281 |
|
|
|
9,432 |
|
|
|
9,831 |
|
Regional and unallocated funeral and cemetery costs |
|
6,812 |
|
|
|
5,096 |
|
|
|
18,655 |
|
|
|
17,409 |
|
Other expenses |
|
1,235 |
|
|
|
1,259 |
|
|
|
3,758 |
|
|
|
3,807 |
|
|
|
61,877 |
|
|
|
61,899 |
|
|
|
182,803 |
|
|
|
188,470 |
|
Gross profit |
|
33,164 |
|
|
|
25,598 |
|
|
|
97,152 |
|
|
|
87,788 |
|
|
|
|
|
|
|
|
|
Corporate costs and
expenses: |
|
|
|
|
|
|
|
General, administrative and other |
|
9,041 |
|
|
|
10,383 |
|
|
|
25,340 |
|
|
|
28,123 |
|
Net (gain) loss on divestitures,
disposals and impairment charges |
|
858 |
|
|
|
(7 |
) |
|
|
1,377 |
|
|
|
(433 |
) |
Operating income |
|
23,265 |
|
|
|
15,222 |
|
|
|
70,435 |
|
|
|
60,098 |
|
|
|
|
|
|
|
|
|
Interest expense |
|
(5,076 |
) |
|
|
(6,678 |
) |
|
|
(20,138 |
) |
|
|
(18,208 |
) |
Accretion of discount on
convertible subordinated notes |
|
— |
|
|
|
— |
|
|
|
(20 |
) |
|
|
— |
|
Loss on extinguishment of
debt |
|
— |
|
|
|
— |
|
|
|
(23,807 |
) |
|
|
— |
|
Gain on insurance
reimbursements |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,275 |
|
Other, net |
|
(21 |
) |
|
|
95 |
|
|
|
(87 |
) |
|
|
78 |
|
Income before income taxes |
|
18,168 |
|
|
|
8,639 |
|
|
|
26,383 |
|
|
|
45,243 |
|
Expense for income taxes |
|
(5,125 |
) |
|
|
(2,640 |
) |
|
|
(7,466 |
) |
|
|
(12,578 |
) |
Tax adjustment related to certain
discrete items |
|
3 |
|
|
|
(139 |
) |
|
|
895 |
|
|
|
496 |
|
Total expense for income
taxes |
|
(5,122 |
) |
|
|
(2,779 |
) |
|
|
(6,571 |
) |
|
|
(12,082 |
) |
Net income |
$ |
13,046 |
|
|
$ |
5,860 |
|
|
$ |
19,812 |
|
|
$ |
33,161 |
|
|
|
|
|
|
|
|
|
Basic earnings per common
share: |
$ |
0.74 |
|
|
$ |
0.40 |
|
|
$ |
1.11 |
|
|
$ |
2.22 |
|
Diluted earnings per common
share: |
$ |
0.71 |
|
|
$ |
0.38 |
|
|
$ |
1.08 |
|
|
$ |
2.09 |
|
|
|
|
|
|
|
|
|
Dividends declared per common
share: |
$ |
0.1000 |
|
|
$ |
0.1125 |
|
|
$ |
0.3000 |
|
|
$ |
0.3375 |
|
|
|
|
|
|
|
|
|
Weighted average number of
common and common equivalent shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
17,499 |
|
|
|
14,689 |
|
|
|
17,809 |
|
|
|
14,908 |
|
Diluted |
|
18,246 |
|
|
|
15,537 |
|
|
|
18,365 |
|
|
|
15,849 |
|
CARRIAGE SERVICES, INC. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(unaudited and in thousands) |
|
|
|
Nine Months Ended September 30, |
|
|
2021 |
|
|
|
2022 |
|
Cash flows from operating
activities: |
|
|
|
Net income |
$ |
19,812 |
|
|
$ |
33,161 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
15,486 |
|
|
|
14,611 |
|
Provision for credit losses |
|
1,426 |
|
|
|
2,292 |
|
Stock-based compensation expense |
|
3,832 |
|
|
|
4,577 |
|
Deferred income tax expense (benefit) |
|
(3,433 |
) |
|
|
1,699 |
|
Amortization of intangibles |
|
968 |
|
|
|
957 |
|
Amortization of debt issuance costs |
|
459 |
|
|
|
397 |
|
Amortization and accretion of debt |
|
319 |
|
|
|
368 |
|
Loss on extinguishment of debt |
|
23,807 |
|
|
|
— |
|
Net (gain) loss on divestitures, disposals and impairment
charges |
|
1,558 |
|
|
|
(433 |
) |
Gain on insurance reimbursements |
|
— |
|
|
|
(3,275 |
) |
Other |
|
— |
|
|
|
(153 |
) |
Changes in operating assets and
liabilities that provided (used) cash: |
|
|
|
Accounts and preneed receivables |
|
(4,387 |
) |
|
|
(3,053 |
) |
Inventories, prepaid and other current assets |
|
(266 |
) |
|
|
2,785 |
|
Intangible and other non-current assets |
|
(887 |
) |
|
|
(1,381 |
) |
Preneed funeral and cemetery trust investments |
|
(23,355 |
) |
|
|
(12,585 |
) |
Accounts payable |
|
(845 |
) |
|
|
(2,451 |
) |
Accrued and other liabilities |
|
9,643 |
|
|
|
(3,080 |
) |
Deferred preneed funeral and cemetery revenue |
|
3,587 |
|
|
|
2,852 |
|
Deferred preneed funeral and cemetery receipts held in trust |
|
21,975 |
|
|
|
12,758 |
|
Net cash provided by operating activities |
|
69,699 |
|
|
|
50,046 |
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
Acquisitions of businesses and real estate |
|
(3,285 |
) |
|
|
(8,876 |
) |
Proceeds from divestitures and sale of other assets |
|
4,375 |
|
|
|
4,313 |
|
Proceeds from insurance reimbursements |
|
2,946 |
|
|
|
2,209 |
|
Capital expenditures |
|
(15,252 |
) |
|
|
(20,346 |
) |
Net cash used in investing activities |
|
(11,216 |
) |
|
|
(22,700 |
) |
|
|
|
|
Cash flows from financing
activities: |
|
|
|
Borrowings from the credit facility |
|
154,968 |
|
|
|
114,600 |
|
Payments against the credit facility |
|
(115,268 |
) |
|
|
(101,000 |
) |
Payment to redeem the senior notes due 2026 |
|
(400,000 |
) |
|
|
— |
|
Payment of call premium for the redemption of the senior notes due
2026 |
|
(19,876 |
) |
|
|
— |
|
Proceeds from the issuance of the senior notes due 2029 |
|
395,500 |
|
|
|
— |
|
Payment of debt issuance costs for the credit facility and senior
notes due 2029 |
|
(2,054 |
) |
|
|
(339 |
) |
Conversions and maturity of the convertible notes |
|
(3,980 |
) |
|
|
— |
|
Payments on acquisition debt and obligations under finance
leases |
|
(658 |
) |
|
|
(314 |
) |
Payments on contingent consideration recorded at acquisition
date |
|
(461 |
) |
|
|
— |
|
Proceeds from the exercise of stock options and employee stock
purchase plan contributions |
|
2,107 |
|
|
|
1,438 |
|
Taxes paid on restricted stock vestings and exercises of stock
options |
|
(1,433 |
) |
|
|
(287 |
) |
Dividends paid on common stock |
|
(5,390 |
) |
|
|
(5,108 |
) |
Purchase of treasury stock |
|
(61,739 |
) |
|
|
(36,663 |
) |
Net cash used in financing activities |
|
(58,284 |
) |
|
|
(27,673 |
) |
|
|
|
|
Net increase (decrease) in cash
and cash equivalents |
|
199 |
|
|
|
(327 |
) |
Cash and cash equivalents at
beginning of period |
|
889 |
|
|
|
1,148 |
|
Cash and cash equivalents at end
of period |
$ |
1,088 |
|
|
$ |
821 |
|
NON-GAAP FINANCIAL MEASURES
This press release uses Non-GAAP financial
measures to present the financial performance of the Company. Our
Non-GAAP reporting provides a transparent framework of our
operating and financial performance that reflects the earning power
of the Company as an operating and consolidation platform.
Non-GAAP financial measures should be viewed in
addition to, and not as an alternative for, the Company’s reported
operating results or cash flow from operations or any other measure
of performance as determined in accordance with GAAP. We believe
the Non-GAAP results are useful to investors to compare our results
to previous periods, to provide insight into the underlying
long-term performance trends in our business and to provide the
opportunity to differentiate ourselves as the best consolidation
platform in the industry against the performance of other funeral
and cemetery companies.
Reconciliations of the Non-GAAP financial
measures to GAAP measures are also provided in this press
release.
The term “same store” refers to funeral homes
and cemeteries acquired prior to January 1, 2018 and owned and
operated for the entirety of each period being presented, excluding
certain funeral home and cemetery businesses that we intend to
divest. The term “acquired” or “acquisition” refers to funeral
homes and cemeteries purchased after December 31, 2017, excluding
any funeral home and cemetery businesses that we intend to
divest.
The Non-GAAP financial measures used in this
press release and the definitions of them used by the Company for
our internal management purposes in this press release are
described below.
- Special Items are
defined as charges or credits included in our GAAP financial
statements that can vary from period to period and are not
reflective of costs incurred in the ordinary course of our
operations. The Change in Uncertain Tax Reserves and Other was not
tax effected. Special Items were taxed at the operating tax
rate.
- Adjusted Net Income
is defined as net income after adjustments for Special Items that
we believe do not directly reflect our core operations and may not
be indicative of our normal business operations.
- Adjusted Net Income
Margin is defined as Adjusted Net Income as a percentage of total
revenue.
- Consolidated EBITDA
is defined as net income before income taxes, interest expenses,
non-cash stock compensation, depreciation and amortization, and
interest income and other, net.
- Consolidated EBITDA
Margin is defined as Consolidated EBITDA as a percentage of total
revenue.
- Adjusted
Consolidated EBITDA is defined as Consolidated EBITDA after
adjustments for Special Items that we believe do not directly
reflect our core operations and may not be indicative of our normal
business operations.
- Adjusted
Consolidated EBITDA Margin is defined as Adjusted Consolidated
EBITDA as a percentage of total revenue.
- Adjusted Free Cash
Flow is defined as net cash provided by operating activities,
adjusted by Special Items as deemed necessary, less cash for
maintenance capital expenditures.
- Adjusted Free Cash
Flow Margin is defined as Adjusted Free Cash Flow as a percentage
of total revenue.
- Funeral Field
EBITDA is defined as funeral operating income, excluding
depreciation and amortization, regional and unallocated costs,
gain/loss on divestitures and fixed assets and impairment charges,
Financial Field EBITDA, Ancillary EBITDA and Divested/Planned
Divested EBITDA related to the Funeral Home segment.
- Funeral Field
EBITDA Margin is defined as Funeral Field EBITDA as a percentage of
total funeral operating revenue.
- Cemetery Field
EBITDA is defined as cemetery operating income, excluding
depreciation and amortization, regional and unallocated costs,
gain/loss on divestitures and fixed assets and impairment charges,
Financial Field EBITDA and Divested/Planned Divested EBITDA related
to the Cemetery segment.
- Cemetery Field
EBITDA Margin is defined as Cemetery Field EBITDA as a percentage
of total cemetery operating revenue.
- Preneed Cemetery
Property Sales is defined as cemetery property sold prior to
death.
- Total Preneed
Cemetery Sales Production is defined as all cemetery property,
merchandise and services sold prior to death.
- Funeral Financial
Field EBITDA is defined as Funeral Financial Revenue (preneed
funeral insurance commissions and preneed funeral trust and
insurance) less the related expenses. Funeral Financial Revenue and
the related expenses are presented within Other Revenue and Other
Expenses, respectively, on the Consolidated Statement of
Operations.
- Funeral Financial
Field EBITDA Margin is defined as Funeral Financial Field EBITDA as
a percentage of Funeral Financial Revenue.
- Cemetery Financial
Field EBITDA is defined as Cemetery Financial Revenue (preneed
cemetery trust earnings and preneed cemetery finance charges) less
the related expenses. Cemetery Financial Revenue and the related
expenses are presented within Other Revenue and Other Expenses,
respectively, on the Consolidated Statement of Operations.
- Cemetery Financial
Field EBITDA Margin is defined as Cemetery Financial Field EBITDA
as a percentage of Cemetery Financial Revenue.
- Total Financial
Revenue is the sum of Funeral Financial Revenue (preneed funeral
insurance commissions and preneed funeral trust and insurance) and
Cemetery Financial Revenue (preneed cemetery trust earnings and
preneed cemetery finance charges).
- Total Financial
Field EBITDA is the sum of Funeral Financial Field EBITDA and
Cemetery Financial Field EBITDA.
- Total Financial
Field EBITDA Margin is defined as Total Financial Field EBITDA as a
percentage of Total Financial Revenue.
- Ancillary Revenue
is defined as revenues from our ancillary businesses, which include
a flower shop, pet cremation business and online cremation
business. Ancillary Revenue and the related expenses are presented
within Other Revenue and Other Expenses, respectively, on the
Consolidated Statement of Operations.
- Ancillary EBITDA is
defined as Ancillary Revenue, less expenses related to our
ancillary businesses noted above.
- Ancillary EBITDA
Margin is defined as Ancillary EBITDA as a percentage of Ancillary
Revenue.
- Divested/Planned
Divested Revenue is defined as revenues from certain funeral home
and cemetery businesses that we have divested and intend to
divest.
- Divested/Planned
Divested EBITDA is defined as Divested/Planned Divested Revenue,
less field level and financial expenses related to the
divested/planned divested businesses noted above.
- Divested/Planned
Divested EBITDA Margin is defined as Divested/Planned Divested
EBITDA as a percentage of Divested/Planned Divested Revenue.
- Total Field EBITDA
is the sum of Funeral Field EBITDA, Cemetery Field EBITDA, Total
Financial Field EBITDA, Ancillary EBITDA and Divested/Planned
Divested EBITDA.
- Total Field EBITDA
Margin is defined as Total Field EBITDA as a percentage of total
revenue.
- Adjusted Basic
Earnings Per Share (EPS) is defined as GAAP basic earnings per
share, adjusted for Special Items.
- Adjusted Diluted
Earnings Per Share (EPS) is defined as GAAP diluted earnings per
share, adjusted for Special Items.
- Total Debt
Outstanding is defined as indebtedness under our senior notes due
2029, acquisition debt, finance leases and bank credit facility,
including our letter of credit.
- Proforma Trailing
Twelve Months of Adjusted Consolidated EBITDA is defined as
trailing twelve months of Adjusted Consolidated EBITDA including
proforma EBITDA for our August 2022 acquisition, as well as add
backs for deferred purchase price payments made during the last
twelve months.
- Bank Covenant
Compliance Leverage Ratio is defined as Total Debt Outstanding to
Proforma Trailing Twelve Months of Adjusted Consolidated
EBITDA.
Funeral Field EBITDA and Cemetery Field
EBITDA
Our operations are reported in two business
segments: Funeral Home Operations and Cemetery Operations. Our
Field level results highlight trends in volumes, Revenue, Field
EBITDA (the individual business’ cash earning power/locally
controllable business profit) and Field EBITDA Margin (the
individual business’ controllable profit margin).
Funeral Field EBITDA and Cemetery Field EBITDA
are defined above. Funeral and Cemetery Operating Income is defined
as Revenue less “Field costs and expenses” — a line item
encompassing these areas of costs: i) Funeral and cemetery field
costs, ii) Field depreciation and amortization expense, iii)
Regional and unallocated funeral and cemetery costs, and iv)
Gain/loss on divestitures, disposals and impairment charges.
Funeral and cemetery field costs include cost of service, funeral
and cemetery merchandise costs, operating expenses, labor and other
related expenses incurred at the business level.
Regional and unallocated funeral and cemetery
costs presented in our GAAP statement consist primarily of salaries
and benefits of our Regional leadership, incentive compensation
opportunity to our Field employees and other related costs for
field infrastructure. These costs, while necessary to operate our
businesses as currently operated within our unique, decentralized
platform, are not controllable operating expenses at the Field
level as the composition, structure and function of these costs are
determined by executive leadership in the Houston Support Center.
These costs are components of our overall overhead platform
presented within Consolidated EBITDA and Adjusted Consolidated
EBITDA. We do not directly or indirectly “push down” any of these
expenses to the individual business’ field level margins.
We believe that our “Regional and unallocated
funeral and cemetery costs” are necessary to support our
decentralized, high performance culture operating framework, and as
such, are included in Consolidated EBITDA and Adjusted Consolidated
EBITDA, which more accurately reflects the cash earning power of
the Company as an operating and consolidation platform.
Consolidated EBITDA and Adjusted Consolidated
EBITDA
Consolidated EBITDA and Adjusted Consolidated
EBITDA are defined above. Our Adjusted Consolidated EBITDA include
adjustments for Special Items that we believe do not directly
reflect our core operations and may not be indicative of our normal
business operations.
How These Measures Are Useful
When used in conjunction with GAAP financial
measures, our Total Field EBITDA, Consolidated EBITDA and Adjusted
Consolidated EBITDA are supplemental measures of operating
performance that we believe are useful measures to facilitate
comparisons to our historical consolidated and business level
performance and operating results.
We believe our presentation of Adjusted
Consolidated EBITDA, a key metric used internally by our
management, provides investors with a supplemental view of our
operating performance that facilitates analysis and comparisons of
our ongoing business operations because it excludes items that may
not be indicative of our ongoing operating performance.
Limitations of the Usefulness of These
Measures
Our Total Field EBITDA, Consolidated EBITDA and
Adjusted Consolidated EBITDA are not necessarily comparable to
similarly titled measures used by other companies due to different
methods of calculation. Our presentation is not intended to be
considered in isolation or as a substitute for, or superior to, the
financial information prepared and presented in accordance with
GAAP. Funeral Field EBITDA, Cemetery Field EBITDA, Funeral
Financial Field EBITDA, Cemetery Financial Field EBITDA, Ancillary
EBITDA and Divested/Planned Divested EBITDA are not consolidated
measures of profitability.
Funeral and Cemetery Field EBITDA excludes
certain costs presented in our GAAP statement that we do not
allocate to the individual business’ field level margins, as noted
above. A reconciliation to Funeral and Cemetery Operating Income,
the most directly comparable GAAP measure, is set forth below.
Consolidated EBITDA excludes certain items that
we believe do not directly reflect our core operations and may not
be indicative of our normal business operations. A reconciliation
to Net Income, the most directly comparable GAAP measure, is set
forth below.
Therefore, these measures may not provide a
complete understanding of our performance and should be reviewed in
conjunction with our GAAP financial measures. Carriage Services
strongly encourages investors to review the Company's consolidated
financial statements and publicly filed reports in their entirety
and not rely on any single financial measure.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
This press release includes the use of certain
financial measures that are not GAAP measures. The Non-GAAP
financial measures are presented for additional information and are
reconciled to their most comparable GAAP measures, all of which are
reflected in the tables below.
Reconciliation of Net Income to Adjusted
Net Income (in thousands):
|
|
3RDQTR2021 |
|
4THQTR2021 |
|
1STQTR2022 |
|
2NDQTR2022 |
|
3RDQTR2022 |
Net Income |
|
$ |
13,046 |
|
|
$ |
13,347 |
|
|
$ |
16,402 |
|
|
$ |
10,899 |
|
|
$ |
5,860 |
|
Special Items |
|
|
|
|
|
|
|
|
|
|
Severance and Separation Costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,431 |
|
Net (Gain) Loss on Divestitures |
|
|
282 |
|
|
|
(1,035 |
) |
|
|
703 |
|
|
|
(1,278 |
) |
|
|
— |
|
Impairment of Goodwill and Other Intangibles |
|
|
500 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net Gain on Insurance Reimbursements |
|
|
— |
|
|
|
— |
|
|
|
(1,899 |
) |
|
|
(1,376 |
) |
|
|
— |
|
Litigation Reserve |
|
|
— |
|
|
|
1,050 |
|
|
|
— |
|
|
|
200 |
|
|
|
— |
|
Disaster Recovery and Pandemic Costs |
|
|
1,002 |
|
|
|
116 |
|
|
|
168 |
|
|
|
— |
|
|
|
— |
|
Other Special Items |
|
|
1,020 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Change in Uncertain Tax Reserves and Other(1) |
|
|
— |
|
|
|
— |
|
|
|
(533 |
) |
|
|
— |
|
|
|
— |
|
Sum of Special Items |
|
$ |
2,804 |
|
|
$ |
131 |
|
|
$ |
(1,561 |
) |
|
$ |
(2,454 |
) |
|
$ |
1,431 |
|
Tax Effect on Special Items(2) |
|
|
738 |
|
|
|
(116 |
) |
|
|
(273 |
) |
|
|
(653 |
) |
|
|
356 |
|
Adjusted Net Income |
|
$ |
15,112 |
|
|
$ |
13,594 |
|
|
$ |
15,114 |
|
|
$ |
9,098 |
|
|
$ |
6,935 |
|
(1) |
|
The Change in Uncertain Tax Reserves and Other are not tax
effected. |
(2) |
|
Special Items are taxed at the operating tax rate. |
Reconciliation of Net Income to
Consolidated EBITDA, Adjusted Consolidated EBITDA (in thousands)
and Adjusted Consolidated EBITDA Margin:
|
|
3RDQTR2021 |
|
4THQTR2021 |
|
1STQTR2022 |
|
2NDQTR2022 |
|
3RDQTR2022 |
Net Income |
|
$ |
13,046 |
|
|
$ |
13,347 |
|
|
$ |
16,402 |
|
|
$ |
10,899 |
|
|
$ |
5,860 |
|
Total Expense for Income
Taxes |
|
|
5,122 |
|
|
|
4,574 |
|
|
|
5,082 |
|
|
|
4,221 |
|
|
|
2,779 |
|
Income Before Income
Taxes |
|
$ |
18,168 |
|
|
$ |
17,921 |
|
|
$ |
21,484 |
|
|
$ |
15,120 |
|
|
$ |
8,639 |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation &
Amortization |
|
|
4,950 |
|
|
|
5,034 |
|
|
|
4,783 |
|
|
|
5,112 |
|
|
|
4,716 |
|
Non-Cash Stock
Compensation |
|
|
1,294 |
|
|
|
1,681 |
|
|
|
1,607 |
|
|
|
1,478 |
|
|
|
1,493 |
|
Interest Expense |
|
|
5,076 |
|
|
|
5,307 |
|
|
|
5,542 |
|
|
|
5,988 |
|
|
|
6,678 |
|
Net (Gain) Loss on
Divestitures |
|
|
282 |
|
|
|
(1,035 |
) |
|
|
703 |
|
|
|
(1,278 |
) |
|
|
— |
|
Impairment of Goodwill and
Other Intangibles |
|
|
500 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net Gain on Insurance
Reimbursements |
|
|
— |
|
|
|
— |
|
|
|
(1,899 |
) |
|
|
(1,376 |
) |
|
|
— |
|
Net (Gain) Loss on Disposal of
Fixed Assets |
|
|
76 |
|
|
|
324 |
|
|
|
64 |
|
|
|
85 |
|
|
|
(7 |
) |
Other, Net |
|
|
21 |
|
|
|
(3 |
) |
|
|
24 |
|
|
|
(7 |
) |
|
|
(95 |
) |
Consolidated EBITDA |
|
$ |
30,367 |
|
|
$ |
29,229 |
|
|
$ |
32,308 |
|
|
$ |
25,122 |
|
|
$ |
21,424 |
|
Adjusted For: |
|
|
|
|
|
|
|
|
|
|
Severance and Separation Costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,431 |
|
Litigation Reserve |
|
|
— |
|
|
|
1,050 |
|
|
|
— |
|
|
|
200 |
|
|
|
— |
|
Disaster Recovery and Pandemic Costs |
|
|
1,002 |
|
|
|
116 |
|
|
|
168 |
|
|
|
— |
|
|
|
— |
|
Other Special Items |
|
|
1,020 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjusted Consolidated
EBITDA |
|
$ |
32,389 |
|
|
$ |
30,395 |
|
|
$ |
32,476 |
|
|
$ |
25,322 |
|
|
$ |
22,855 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue |
|
$ |
95,041 |
|
|
$ |
95,931 |
|
|
$ |
98,161 |
|
|
$ |
90,600 |
|
|
$ |
87,497 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Consolidated EBITDA
Margin |
|
|
34.1 |
% |
|
|
31.7 |
% |
|
|
33.1 |
% |
|
|
27.9 |
% |
|
|
26.1 |
% |
Net Income Margin |
|
|
13.7 |
% |
|
|
13.9 |
% |
|
|
16.7 |
% |
|
|
12.0 |
% |
|
|
6.7 |
% |
Components of Total Revenue (in
thousands):
|
3RDQTR2021 |
|
4THQTR2021 |
|
1STQTR2022 |
|
2NDQTR2022 |
|
3RDQTR2022 |
Same Store Funeral Revenue |
$ |
57,321 |
|
|
$ |
57,441 |
|
|
$ |
61,761 |
|
|
$ |
50,757 |
|
|
$ |
51,258 |
|
Acquisition Funeral
Revenue |
|
7,651 |
|
|
|
8,007 |
|
|
|
8,610 |
|
|
|
7,641 |
|
|
|
7,813 |
|
Same Store Cemetery
Revenue |
|
16,342 |
|
|
|
16,288 |
|
|
|
14,251 |
|
|
|
16,969 |
|
|
|
15,396 |
|
Acquisition Cemetery
Revenue |
|
6,362 |
|
|
|
6,312 |
|
|
|
6,297 |
|
|
|
8,193 |
|
|
|
5,947 |
|
Funeral Financial Revenue |
|
2,265 |
|
|
|
2,512 |
|
|
|
2,468 |
|
|
|
2,285 |
|
|
|
2,474 |
|
Cemetery Financial
Revenue |
|
3,388 |
|
|
|
3,661 |
|
|
|
3,258 |
|
|
|
3,500 |
|
|
|
3,374 |
|
Ancillary Revenue |
|
1,096 |
|
|
|
1,046 |
|
|
|
1,070 |
|
|
|
980 |
|
|
|
1,049 |
|
Divested/Planned Divested
Funeral Revenue |
|
564 |
|
|
|
578 |
|
|
|
446 |
|
|
|
275 |
|
|
|
186 |
|
Divested Cemetery Revenue |
|
52 |
|
|
|
86 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total Revenue |
$ |
95,041 |
|
|
$ |
95,931 |
|
|
$ |
98,161 |
|
|
$ |
90,600 |
|
|
$ |
87,497 |
|
Reconciliation of Funeral and Cemetery
Operating Income to Funeral and Cemetery Field EBITDA (in
thousands):
|
|
3RDQTR2021 |
|
4THQTR2021 |
|
1STQTR2022 |
|
2NDQTR2022 |
|
3RDQTR2022 |
Funeral Operating Income (GAAP) |
|
$ |
22,924 |
|
|
$ |
23,187 |
|
|
$ |
25,463 |
|
|
$ |
18,485 |
|
|
$ |
17,584 |
|
Depreciation &
Amortization |
|
|
2,761 |
|
|
|
2,766 |
|
|
|
2,871 |
|
|
|
2,827 |
|
|
|
2,858 |
|
Regional & Unallocated
Costs |
|
|
4,907 |
|
|
|
5,419 |
|
|
|
4,634 |
|
|
|
4,034 |
|
|
|
3,731 |
|
Net (Gain) Loss on
Divestitures, Disposals and Impairment Charges |
|
|
763 |
|
|
|
(810 |
) |
|
|
767 |
|
|
|
(1,194 |
) |
|
|
— |
|
Less: |
|
|
|
|
|
|
|
|
|
|
Funeral Financial EBITDA |
|
|
(1,974 |
) |
|
|
(2,251 |
) |
|
|
(2,177 |
) |
|
|
(1,981 |
) |
|
|
(2,216 |
) |
Ancillary EBITDA |
|
|
(274 |
) |
|
|
(216 |
) |
|
|
(221 |
) |
|
|
(151 |
) |
|
|
(188 |
) |
Funeral Divested/Planned Divested EBITDA |
|
|
(92 |
) |
|
|
(127 |
) |
|
|
(27 |
) |
|
|
75 |
|
|
|
(16 |
) |
Funeral Field EBITDA |
|
$ |
29,015 |
|
|
$ |
27,968 |
|
|
$ |
31,310 |
|
|
$ |
22,095 |
|
|
$ |
21,753 |
|
|
|
|
|
|
|
|
|
|
|
|
Funeral Revenue |
|
$ |
68,897 |
|
|
$ |
69,584 |
|
|
$ |
74,355 |
|
|
$ |
61,938 |
|
|
$ |
62,780 |
|
|
|
|
|
|
|
|
|
|
|
|
Funeral Operating Income
Margin |
|
|
33.3 |
% |
|
|
33.3 |
% |
|
|
34.2 |
% |
|
|
29.8 |
% |
|
|
28.0 |
% |
|
|
3RDQTR2021 |
|
4THQTR2021 |
|
1STQTR2022 |
|
2NDQTR2022 |
|
3RDQTR2022 |
Cemetery Operating Income (GAAP) |
|
$ |
9,471 |
|
|
$ |
9,891 |
|
|
$ |
8,218 |
|
|
$ |
10,421 |
|
|
$ |
8,023 |
|
Depreciation &
Amortization |
|
|
1,914 |
|
|
|
1,868 |
|
|
|
1,758 |
|
|
|
2,130 |
|
|
|
1,701 |
|
Regional & Unallocated
Costs |
|
|
1,905 |
|
|
|
1,772 |
|
|
|
1,713 |
|
|
|
1,932 |
|
|
|
1,365 |
|
Net (Gain) Loss on
Divestitures, Disposals and Impairment Charges |
|
|
6 |
|
|
|
96 |
|
|
|
30 |
|
|
|
— |
|
|
|
(9 |
) |
Less: |
|
|
|
|
|
|
|
|
|
|
Cemetery Financial EBITDA |
|
|
(3,265 |
) |
|
|
(3,532 |
) |
|
|
(3,120 |
) |
|
|
(3,364 |
) |
|
|
(3,233 |
) |
Cemetery Divested EBITDA |
|
|
(19 |
) |
|
|
(16 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Cemetery Field EBITDA |
|
$ |
10,012 |
|
|
$ |
10,079 |
|
|
$ |
8,599 |
|
|
$ |
11,119 |
|
|
$ |
7,847 |
|
|
|
|
|
|
|
|
|
|
|
|
Cemetery Revenue |
|
$ |
26,144 |
|
|
$ |
26,347 |
|
|
$ |
23,806 |
|
|
$ |
28,662 |
|
|
$ |
24,717 |
|
|
|
|
|
|
|
|
|
|
|
|
Cemetery Operating Income
Margin |
|
|
36.2 |
% |
|
|
37.5 |
% |
|
|
34.5 |
% |
|
|
36.4 |
% |
|
|
32.5 |
% |
Components of Total Field EBITDA (in
thousands):
|
|
3RDQTR2021 |
|
4THQTR2021 |
|
1STQTR2022 |
|
2NDQTR2022 |
|
3RDQTR2022 |
Funeral Field EBITDA |
|
$ |
29,015 |
|
|
$ |
27,968 |
|
|
$ |
31,310 |
|
|
$ |
22,095 |
|
|
$ |
21,753 |
|
Cemetery Field EBITDA |
|
|
10,012 |
|
|
|
10,079 |
|
|
|
8,599 |
|
|
|
11,119 |
|
|
|
7,847 |
|
Funeral Financial EBITDA |
|
|
1,974 |
|
|
|
2,251 |
|
|
|
2,177 |
|
|
|
1,981 |
|
|
|
2,216 |
|
Cemetery Financial EBITDA |
|
|
3,265 |
|
|
|
3,532 |
|
|
|
3,120 |
|
|
|
3,364 |
|
|
|
3,233 |
|
Ancillary EBITDA |
|
|
274 |
|
|
|
216 |
|
|
|
221 |
|
|
|
151 |
|
|
|
188 |
|
Funeral Divested/Planned
Divested EBITDA |
|
|
92 |
|
|
|
127 |
|
|
|
27 |
|
|
|
(75 |
) |
|
|
16 |
|
Cemetery Divested EBITDA |
|
|
19 |
|
|
|
16 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total Field EBITDA |
|
$ |
44,651 |
|
|
$ |
44,189 |
|
|
$ |
45,454 |
|
|
$ |
38,635 |
|
|
$ |
35,253 |
|
Reconciliation of GAAP Basic Earnings
Per Share to Adjusted Basic Earnings Per Share:
|
|
3RDQTR2021 |
|
4THQTR2021 |
|
1STQTR2022 |
|
2NDQTR2022 |
|
3RDQTR2022 |
GAAP Basic Earnings Per Share |
|
$ |
0.74 |
|
|
$ |
0.82 |
|
|
$ |
1.07 |
|
|
$ |
0.74 |
|
|
$ |
0.40 |
|
Special Items |
|
|
0.12 |
|
|
|
0.01 |
|
|
|
(0.08 |
) |
|
|
(0.13 |
) |
|
|
0.07 |
|
Adjusted Basic Earnings Per
Share |
|
$ |
0.86 |
|
|
$ |
0.83 |
|
|
$ |
0.99 |
|
|
$ |
0.61 |
|
|
$ |
0.47 |
|
Reconciliation of GAAP Diluted Earnings
Per Share to Adjusted Diluted Earnings Per Share:
|
|
3RDQTR2021 |
|
4THQTR2021 |
|
1STQTR2022 |
|
2NDQTR2022 |
|
3RDQTR2022 |
GAAP Diluted Earnings Per Share |
|
$ |
0.71 |
|
|
$ |
0.77 |
|
|
$ |
1.00 |
|
|
$ |
0.69 |
|
|
$ |
0.38 |
|
Special Items |
|
|
0.11 |
|
|
|
0.01 |
|
|
|
(0.08 |
) |
|
|
(0.11 |
) |
|
|
0.07 |
|
Adjusted Diluted Earnings Per
Share |
|
$ |
0.82 |
|
|
$ |
0.78 |
|
|
$ |
0.92 |
|
|
$ |
0.58 |
|
|
$ |
0.45 |
|
Reconciliation of Cash Provided by
Operating Activities to Adjusted Free Cash Flow (in thousands) and
Adjusted Free Cash Flow Margin:
|
|
3RDQTR2021 |
|
4THQTR2021 |
|
1STQTR2022 |
|
2NDQTR2022 |
|
3RDQTR2022 |
Cash Provided by Operating Activities |
|
$ |
28,258 |
|
|
$ |
14,547 |
|
|
$ |
15,801 |
|
|
$ |
14,376 |
|
|
$ |
19,869 |
|
Cash used for Maintenance
Capital Expenditures |
|
|
(4,358 |
) |
|
|
(4,355 |
) |
|
|
(3,612 |
) |
|
|
(2,370 |
) |
|
|
(3,728 |
) |
Free Cash Flow |
|
$ |
23,900 |
|
|
$ |
10,192 |
|
|
$ |
12,189 |
|
|
$ |
12,006 |
|
|
$ |
16,141 |
|
|
|
|
|
|
|
|
|
|
|
|
Plus: Incremental Special
Items: |
|
|
|
|
|
|
|
|
|
|
Severance and Separation
Costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
384 |
|
Disaster Recovery and Pandemic
Costs |
|
|
1,002 |
|
|
|
116 |
|
|
|
168 |
|
|
|
— |
|
|
|
— |
|
Other Special Items |
|
|
1,020 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjusted Free Cash Flow |
|
$ |
25,922 |
|
|
$ |
10,308 |
|
|
$ |
12,357 |
|
|
$ |
12,006 |
|
|
$ |
16,525 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue |
|
$ |
95,041 |
|
|
$ |
95,931 |
|
|
$ |
98,161 |
|
|
$ |
90,600 |
|
|
$ |
87,497 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash Flow
Margin |
|
|
27.3 |
% |
|
|
10.7 |
% |
|
|
12.6 |
% |
|
|
13.3 |
% |
|
|
18.9 |
% |
Cash Provided by Operating
Activities as a Percentage of Total Revenue |
|
|
29.7 |
% |
|
|
15.2 |
% |
|
|
16.1 |
% |
|
|
15.9 |
% |
|
|
22.7 |
% |
CAUTIONARY STATEMENT ON FORWARD-LOOKING
STATEMENTS
Certain statements made herein or elsewhere by,
or on behalf of, the Company that are not historical facts are
intended to be forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. In addition
to historical information, this Press Release contains certain
statements and information that may constitute forward-looking
statements within the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. All statements, other
than statements of historical information, should be deemed to be
forward-looking statements. These statements include, but are not
limited to, statements regarding any projections of earnings,
revenue, cash flow, investment returns, capital allocation, debt
levels, equity performance, death rates, market share growth,
overhead, including talent recruitment, field and corporate
incentive compensation, or other financial items; any statements of
the plans, strategies and objectives of management for future
operations or financing activities, including, but not limited, to
capital allocation, the ability to obtain credit or financing, and
organizational performance; any statements of the plans, timing and
objectives of management for acquisition activities; any statements
regarding future economic conditions or performance; any statements
of belief; and any statements of assumptions underlying any of the
foregoing and are based on our current expectations and beliefs
concerning future developments and their potential effect on us.
The words “may”, “will”, “estimate”, “intend”, “believe”, “expect”,
“seek”, “project”, “forecast”, “foresee”, “should”, “would”,
“could”, “plan”, “anticipate” and other similar words or
expressions are intended to identify forward-looking statements,
which are generally not historical in nature. While management
believes that these forward-looking statements are reasonable as
and when made, there can be no assurance that future developments
affecting us will be those that we anticipate. All comments
concerning our expectations for future revenue and operating
results are based on our forecasts for our existing operations and
do not include the potential impact of any future acquisitions,
except where specifically noted. Our forward-looking statements
involve significant risks and uncertainties (some of which are
beyond our control) and assumptions that could cause actual results
to differ materially from our historical experience and our present
expectations or projections. Important factors that could cause
actual results to differ materially from those in the
forward-looking statements include, but are not limited to, those
summarized below:
- our ability to find
and retain skilled personnel;
- the effects of our
talent recruitment efforts, incentive and compensation plans and
programs, including such effects on our Standards Operating Model
and the Company’s operational and financial performance;
- our ability to
execute our growth strategy;
- the execution of
our Standards Operating, 4E Leadership and Standard Acquisition
Models;
- the effects of
competition;
- changes in the
number of deaths in our markets;
- changes in consumer
preferences and our ability to adapt to or meet those changes;
- our ability to
generate preneed sales, including implementing our cemetery
portfolio sales strategy, product development and optimization
plans;
- the investment
performance of our funeral and cemetery trust funds;
- fluctuations in
interest rates;
- the effects of inflation to our
business and financial condition and performance, including
increased overall costs to our goods and services, the impact on
customer preferences as a result of changes in discretionary
income, and our ability, if at all, to mitigate such effects;
- our ability to
obtain debt or equity financing on satisfactory terms to fund
additional acquisitions, expansion projects, working capital
requirements and the repayment or refinancing of indebtedness;
- our ability to meet
the timing, objectives and expectations related to our capital
allocation framework, including our forecasted rates of return,
planned uses of free cash flow and future capital allocation,
including share repurchases, potential strategic acquisitions,
internal growth projects, dividend increases, or debt repayment
plans;
- our ability to meet
the projected financial and equity performance metrics to our
updated rolling four quarter outlook, if at all;
- the timely and full
payment of death benefits related to preneed funeral contracts
funded through life insurance contracts;
- the financial
condition of third-party insurance companies that fund our preneed
funeral contracts;
- increased or
unanticipated costs, such as insurance or taxes;
- our level of
indebtedness and the cash required to service our
indebtedness;
- changes in federal
income tax laws and regulations and the implementation and
interpretation of these laws and regulations by the Internal
Revenue Service;
- effects of the
application of other applicable laws and regulations, including
changes in such regulations or the interpretation thereof;
- the potential
impact of epidemics and pandemics, including the COVID-19
coronavirus, including new variants of COVID-19, such as the Delta
and Omicron variants, on customer preferences and on our
business;
- government, social,
business and other actions that have been and will be taken in
response to pandemics, including potential responses to new
variants of COVID-19, such as the Delta and Omicron variants;
- effects and expense
of litigation;
- consolidation of
the funeral and cemetery industry;
- our ability to
identify and consummate strategic acquisitions, if at all, and
successfully integrate acquired businesses with our existing
businesses, including expected performance and financial
improvements related thereto;
- economic, financial
and stock market fluctuations,
- interruptions or
security lapses of our information technology, including any
cybersecurity or ransomware incidents,
- our failure to
maintain effective control over financial reporting; and
- other factors and
uncertainties inherent in the funeral and cemetery industry.
For additional information regarding known
material factors that could cause our actual results to differ from
our projected results, please see “Risk Factors” in our Annual
Report on Form 10-K for the year ended December 31, 2021, our
Quarterly Reports on Form 10-Q, and other public filings and press
releases, available at www.carriageservices.com.
Investors are cautioned not to place undue
reliance on forward-looking statements, which speak only as of the
date hereof. We undertake no obligation to publicly update or
revise any forward-looking statements after the date they are made,
whether as a result of new information, future events or
otherwise.
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