Carriage Services Announces Closing of Senior Notes Offering and New Intrinsic Value Roughly Right Range

Rhea-AI Summary

Carriage Services (CSV) recently shared a significant press release detailing its transformational journey since 2018, highlighting capital allocation priorities and intrinsic share value. The release extends the insights from their 50-page shareholder letter and previous record earnings. CEO Mel Payne reflects on investment philosophy through examples from notable investors. The document emphasizes quality franchises, durable earnings, and sustainable competitive advantages. It also mentions a $400 million bond refinancing and comparisons with Service Corporation International, emphasizing Carriage's robust financial positioning.

Positive

• Successful transformation since 2018, enhancing intrinsic share value.
• Highlighted $400 million bond refinancing, improving capital structure.
• CEO reflects strong investment philosophy with quality growth focus.

Negative

• None.

HOUSTON, May 13, 2021 (GLOBE NEWSWIRE) -- Carriage Services, Inc. (NYSE: CSV) (“Carriage Services” or the “Company”). Mel Payne, Chairman and CEO, issued the following statement: I have been waiting almost thirty years to write a press release like this one. Everything from this point on should be considered my personal yet educated opinion about various aspects of Carriage and “Mr. Market,” the famous allegory created by investor Benjamin Graham to describe what he believed were the irrational or contradictory traits of the stock market and the risk of following groupthink. Mr. Market was first introduced in his 1949 book, The Intelligent Investor, and its most famous practitioner is Warren Buffett. My favorite book on investing and human nature remains, “Seeking Wisdom: From Darwin to Munger,” written by the Swedish investor Peter Bevelin in 2005, who observed and studied the philosophy of Charlie Munger and concluded that his “simplicity and clarity of thought” was unequal to anything Bevelin had seen before.

This press release should be considered the second extension to my recent 50 Page Shareholder Letter titled, “A TALE OF HIGH PERFORMANCE TRANSFORMATION,” following the first extension which was our record first quarter earnings release on April 21, 2021. The story of Carriage’s transformation since September 12, 2018 is now complete, and this press release will lay out the last chapter of our transformation related to capital allocation priorities and current intrinsic value of our shares with selective data and hopefully entertaining and colorful narrative, in the following sections:

	SECTION		PAGE
I.	The current Nature of Carriage;		1
II.	Service Corporation International: THANK YOU;		4
III.	The Story of Carriage’s $400 million Bond Refinancing;		5
IV.	Service Corporation International versus Carriage Tom Brady Bond Valuation Comparisons;		6
V.	Service Corporation International versus Carriage Rodney Dangerfield Equity Valuation Comparisons;		8
VI.	The Future: The Best of Times With Everything Before Us;		10
VII.	What It All Means and Why It Matters.		12

I.  The Current Nature of Carriage

As my wife and I were returning to Houston from Brooklyn (Williamsburg) this past Sunday from three days of celebrating our son Preston’s 35^th Birthday with his sister and many friends at a rooftop party on Saturday night, I was catching up on my reading and came across an article in Barron’s on Page 24 that featured an interview with Larry Puglia, the retiring Manager after 28 years of T. Rowe Price Blue Chip Growth Fund. As a self-taught professional equity investor and Chief Investment Officer of our preneed trust funds since October 14, 2008 (see Sections II, Pages 20-22, and IX, Pages 36-40 in my 2020 Shareholder Letter), I was immediately struck by the headline, “How to Top The S&P for 28 Years.”

The headline reminded me of a similar but even higher performance beating The S&P 500 Index from 1991 to 2005 by Bill Miller when he was Portfolio Manager of the Legg Mason Capital Management Value Trust. Unfortunately, Bill subsequently got clobbered with huge losses when he doubled down on various financial stocks in the 2008/2009 financial sector crisis and crash. The headline also brought to mind Foster Friess of Friess Associates, who had an incredible run of over 20% annual returns during the decade of the 80’s and into the 90’s as Manager of the Brandywine Fund, who in 1999 was called by CNBC as one of the century’s greatest investors. There have been many other master investors that I have studied over the last thirty years, but Larry’s interview with Barron’s was custom made for this release.

During Larry Puglia’s 28 years at the helm of one of the flagship funds at T. Rowe Price, the $102 billion T. Rowe Price Blue Chip Growth Fund at April 30^th had returned an annualized 12.2% versus 10.5% for the S&P 500.   The first question to Larry from Barron’s was: “What led to your outperformance?” Larry’s answer below serves as a summary version of my view of the “Current Nature of Carriage:”

“A few things. First, a focus on quality franchises with durable compounding of earnings and, especially, free cash flow. Second, one of the frameworks we use to examine companies is [Harvard Business School Professor Michael] Porter’s concept of sustainable competitive advantage. The framework – looking for an industry or company with high barriers to entry, low threat of substitute products, and power vis-à-vis its suppliers and customers – really appealed to me and was utilized extensively.

Third, we had a focus on [corporate] management and how well they were allocating capital. Capital allocation is extraordinari

FAQ

What is the main focus of Carriage Services' recent press release?

The press release emphasizes the company's transformational journey, capital allocation priorities, and intrinsic share value.

What significant financial event did Carriage Services discuss in the release?

The release discusses a $400 million bond refinancing that enhances the company's capital structure.

How has Carriage Services performed since 2018?

Carriage Services has undergone a successful transformation since 2018, focusing on enhancing intrinsic share value.

Who is the CEO of Carriage Services and what does he emphasize in the release?

CEO Mel Payne emphasizes the importance of a strong investment philosophy and the focus on quality franchises and earnings.

What comparisons were made in the press release?

The release includes comparisons with Service Corporation International regarding bond and equity valuations.