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Carriage Services Announces First Quarter Results

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Carriage Services (CSV) reported record quarterly revenue of $98.2 million for Q1 2022, an increase of 1.6% year-over-year. GAAP diluted EPS rose 40.8% to $1.00, driven by a lower share count and tax rate. The company has repurchased 3.4 million shares since May 2021, representing 19% of outstanding shares. Management remains focused on internal growth and acquisitions, with an intrinsic value estimate of $70 to $80 per share. Despite a slight decline in EBITDA margins, the outlook for future acquisitions is positive, with one deal anticipated to close within 90 days.

Positive
  • Record quarterly revenue of $98.2 million, up 1.6% year-over-year.
  • GAAP diluted EPS increased by 40.8% to $1.00.
  • Repurchased 3.4 million shares (19% of outstanding) since May 2021.
  • Focused capital allocation on internal growth and high-quality acquisitions.
  • Intrinsic value estimated between $70 and $80 per share.
Negative
  • Adjusted EBITDA declined by $2.2 million to $32.5 million, a decrease of 6.3%.
  • Total Field EBITDA margin decreased by 110 basis points to 46.3%.
  • GAAP Funeral Operating Income fell by 1.6%, and Cemetery Operating Income decreased by 13.4%.

Conference call on Thursday, April 28, 2022 at 10:00 a.m. central time

HOUSTON, April 27, 2022 (GLOBE NEWSWIRE) -- Carriage Services, Inc. (NYSE: CSV): today announced results for the first quarter ended March 31, 2022.

  • Record Quarterly Revenue of $98.2 million, GAAP Diluted EPS of $1.00 and Adjusted Diluted EPS of $0.92;
  • Invested $168.5 million since May 13, 2021 to repurchase 3.4 million shares (19% of outstanding) at $49.60 per share;
  • Capital Allocation now focused on internal growth (mostly cemetery property development) and high quality acquisitions;
  • Updated Rolling Four Quarter Outlook and Three Year Roughly Right Ranges Performance Scenario Through 2024;
  • Discretionary Trust Fund Positive Total Return of 4.3%; and
  • Management’s Opinion of Intrinsic Value Roughly Right Range remains at $70 to $80 per share.

Mel Payne, Chairman and CEO, stated, “I highly recommend that anyone interested in Carriage for any reason read my most recent 2021 Shareholder Letter, co-written by the three other members of our Strategic Vision and Principles Group (SVPG), Carlos Quezada, Ben Brink and Steve Metzger, together with our Proxy Statement for our Annual Meeting of stockholders on May 17, 2022. In particular, you hopefully will find unique value and maybe a little surprise wisdom in my new two page beginning “Introduction To Shareholder Letter” and six page ending (Pages 41-46), concluding with the customary joint letter from me and Bryan Leibman (Lead Director) to all shareholders on the first page of our Proxy Statement, after which there are 2⅓ pages with the heading “P.S. A Personal Note From Mel Payne.”

After writing extensively and comprehensively about the High Performance Transformation of Carriage since the end of 2018 during a once in a lifetime COVID-19 Pandemic that has become endemic but hopefully manageable, we will no longer include in each quarterly release as much highly detailed and transparent performance data along with narrative interpretation by each member of SVPG. However, we will be very active in our “in-person” investor relations program in the future with investors both new and old to the Carriage story, in addition to Zoom one-on-one calls during virtual conferences that were necessitated over the last two years and undoubtedly have been highly productive and efficient and therefore will be selectively continued.

We believe that Carriage is entering a long term “shareholder value creation sweet spot” from outstanding execution of our three core models and savvy yet flexible capital allocation with the next few years particularly focused on high quality acquisitions. A more normalized post-pandemic crisis industry landscape is offering up both quantity and quality acquisition candidates in new strategic markets that we haven’t experienced since the end of 2019, which was itself unique in our over thirty-year history of consolidation of the funeral and cemetery industries.

The First Quarter of 2022 is the beginning of the Third Five Year Timeframe of our Good To Great Journey that never ends, which I first began to write about in our first quarter 2012 earnings release. I don’t remember anything about our performance in that quarter ten years ago, or much about any one of the thirty-nine quarters since then, but I remember well that our share price closed at $5.60 per share at year-end 2011 and $64.44 at year-end 2021. Over the last ten years ending 2021, our Good To Great Journey has rewarded our “long term shareholders” with a Total Return of 1,268% including dividends, and a share price CAGR including dividends of 28.9%.

When Carlos Quezada joined Carriage on June 26, 2020, he immediately coined the phrase, “It’s A Great Time To Be At Carriage.” EVERYONE in any Carriage leadership role knows Carlos nailed the emotional connection between all of us to our Being The Best High Performance Culture, so the mantra has become, “Glad To Be Here!®” Which is why we all have AN UNBREAKABLE UNION OF BELIEF that the second half of Carlos’ coined phrase is the exciting half and depicted as the Carriage “Sistine Chapel” Flywheel on the front cover of our 2021 Shareholder Letter/Annual Report with the theme: “THE BEST IS YET TO COME!”, concluded Mr. Payne.

Carlos Quezada, President and Chief Operating Officer, stated, “As Mel mentioned on page one of this release, 2022 is the beginning of a new five year Good To Great Journey. While we have had record performance since the High Performance transformation that began in 2018, we have now turned the page to focus on executing our strategy to continue building momentum to accelerate our High Performance Flywheel speed for the next five years ending 2026.

We started our new five-year timeframe with a record first-quarter performance even after a very high comparable performance last year influenced by the peak of COVID-19 cases in January of 2021. Total Revenue was $98.2 million, an increase of $1.5 million or 1.6%, driven entirely by a $3.3 million or 4.9% increase in our funeral home portfolio. While our Total Field EBITDA declined $0.3 million to $45.5 million, the Field EBITDA Margin declined 110 basis points to 46.3%, and our Adjusted EBITDA declined by $2.2 million to $32.5 million reducing our Adjusted EBITDA Margin by 280 basis points to 33.1%. The good news in the first quarter against last year’s difficult COVID-19 lift performance is that our Adjusted Diluted EPS was $0.92 (up $0.11 or 13.6%), and GAAP Diluted EPS was $1.00 (up $0.29 or 40.8%) a function of a 1.8 million lower GAAP diluted share count and 445 basis points lower tax rate of 26.55%.

The balance of this 2022 first quarter earnings release will be shown on the following pages as follows:

  1. First Quarter 2022 Comparative Performance Highlights;
  2. Five Quarter Trend Report ending March 31, 2022;
  3. Same Store Funeral Revenue Monthly Trends and Drivers Six Months Ending March 2022;
  4. Cemetery Segment;
  5. Operations Update;
  6. Update On Growth Through Acquisition Outlook;
  7. Three years Roughly Right Ranges Scenario/Rolling Four Quarter Outlook;
  8. Capital Allocation/Share Repurchase update;
  9. Adjusted Free Cash Flow;
  10. Trust Fund Investment Portfolio; and
  11. Intrinsic Value.

FIRST QUARTER 2022 COMPARATIVE PERFORMANCE HIGHLIGHTS

  • Total Revenue(1) of $98.2 million, an increase of $1.5 million or 1.6%;

  • GAAP Funeral Operating Income of $25.5 million, a decrease of $0.4 million or 1.6%;
  • GAAP Funeral Operating Income Margin of 34.2%, a decrease of 190 basis points;
  • GAAP Cemetery Operating Income of $8.2 million, a decrease of $1.3 million or 13.4%;
  • GAAP Cemetery Operating Income Margin of 34.5%, a decrease of 370 basis points;
  • GAAP Net Income of $16.4 million, an increase of $3.5 million or 26.8%;
  • GAAP Net Income Margin of 16.7%, an increase of 330 basis points;
  • GAAP Diluted EPS of $1.00, an increase of $0.29 or 40.8%;
  • GAAP Net Cash Provided by Operating Activities of $15.8 million, a decrease of 41.1%; and
  • GAAP Net Cash Provided by Operating Activities as a percentage of Total Revenue of 16.1%, a decrease of 1,165 basis points.

  • Same Store Funeral Contracts of 11,675, an increase of 372 or 3.3%;
  • Same Store Funeral Revenue of $61.6 million, an increase of $2.6 million or 4.5%;
  • Same Store Funeral EBITDA of $27.5 million, an increase of $0.9 million or 3.2%;
  • Same Store Funeral EBITDA Margin of 44.6%, a decrease of 60 basis points;
  • Acquisition Funeral Revenue of $8.6 million, an increase of $0.6 million or 7.8%;
  • Acquisition Funeral EBITDA of $3.7 million, an increase of $0.1 million or 2.9%;
  • Acquisition Funeral EBITDA Margin of 43.6%, a decrease of 200 basis points;

  • Same Store Cemetery Revenue of $14.2 million, a decrease of $0.4 million or 2.6%;
  • Acquisition Cemetery Revenue of $6.3 million, a decrease of $0.7 million or 9.8%;
  • Financial Revenue remained flat at $5.7 million;

  • Total Field EBITDA of $45.5 million, a decrease of $0.3 million or 0.7%;
  • Total Field EBITDA Margin of 46.3%, a decrease of 110 basis points;

  • Adjusted Consolidated EBITDA of $32.5 million, a decrease of $2.2 million or 6.3%;
  • Adjusted Consolidated EBITDA Margin of 33.1%, a decrease of 280 basis points; and
  • Adjusted Diluted EPS of $0.92, an increase of $0.11 or 13.6%.

(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 March 31, 2022

Mr. Quezada continued, “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. The next page is our Five Quarter Operating, and Financial Trend Report followed by commentary on the first quarter of 2022.”

We report acquisitions for both funeral homes and cemeteries separately for five years to highlight their High Performance nature after integration into Carriage Services Standards Operating Model. Upon completion of the fifth year, the acquired business transfers to same store reporting. We have updated our Five Quarter Operating and Financial Trend Report tables to reflect five businesses that recently moved into same store from acquisition.

FIVE QUARTER OPERATING AND FINANCIAL TREND REPORT
(000’s except for volume, averages & margins) 1ST QTR 2021 2ND QTR 2021 3RD QTR 2021 4TH QTR 2021 1ST QTR 2022
Funeral Same Store Contracts  11,303   9,259   10,848   10,716   11,675 
Average Revenue Per Contract (1) $5,218  $5,294  $5,273  $5,346  $5,279 
Funeral Same Store Burial Contracts  4,202   3,304   3,705   3,808   4,087 
Funeral Same Store Burial Rate  37.2%  35.7%  34.2%  35.5%  35.0%
Average Revenue Per Burial Contract $9,053  $9,306  $9,489  $9,429  $9,381 
Funeral Same Store Cremation Contracts  6,389   5,236   6,203   6,057   6,647 
Funeral Same Store Cremation Rate  56.5%  56.6%  57.2%  56.5%  56.9%
Average Revenue Per Cremation Contract $3,325  $3,466  $3,482  $3,498  $3,450 
Funeral Same Store Revenue $58,983  $49,015  $57,205  $57,285  $61,632 
Funeral Same Store EBITDA $26,652  $19,158  $25,562  $24,306  $27,510 
Funeral Same Store EBITDA Margin  45.2%  39.1%  44.7%  42.4%  44.6%
Funeral Acquisition Revenue $7,985  $6,939  $7,651  $8,007  $8,610 
Funeral Acquisition EBITDA $3,644  $2,769  $3,373  $3,578  $3,750 
Funeral Acquisition EBITDA Margin  45.6%  39.9%  44.1%  44.7%  43.6%
Cemetery Same Store Preneed Property Contracts Sold  1,161   1,211   1,280   1,120   1,068 
Cemetery Same Store Preneed Sales Revenue $9,718  $11,445  $11,366  $10,926  $9,011 
Cemetery Same Store Revenue $14,635  $16,906  $16,342  $16,288  $14,251 
Cemetery Same Store EBITDA $5,704  $7,907  $6,465  $6,939  $5,300 
Cemetery Same Store EBITDA Margin  39.0%  46.8%  39.6%  42.6%  37.2%
Cemetery Acquisition Preneed Property Contracts Sold  338   475   294   361   299 
Cemetery Acquisition Preneed Sales Revenue $5,089  $6,839  $5,148  $5,045  $4,298 
Cemetery Acquisition Revenue $6,980  $8,175  $6,362  $6,312  $6,297 
Cemetery Acquisition EBITDA $4,102  $4,737  $3,547  $3,140  $3,299 
Cemetery Acquisition EBITDA Margin  58.8%  57.9%  55.8%  49.7%  52.4%
Total Financial Revenue $5,706  $5,405  $5,639  $6,167  $5,692 
Total Financial EBITDA $5,305  $5,058  $5,225  $5,777  $5,263 
Total Financial EBITDA Margin  93.0%  93.6%  92.7%  93.7%  92.5%
Total Revenue $96,637  $88,277  $95,041  $95,931  $98,161 
Total Field EBITDA $45,787  $40,014  $44,651  $44,189  $45,454 
Total Field EBITDA Margin  47.4%  45.3%  47.0%  46.1%  46.3%
Adjusted Consolidated EBITDA $34,657  $28,720  $32,389  $30,395  $32,476 
Adjusted Consolidated EBITDA Margin  35.9%  32.5%  34.1%  31.7%  33.1%
Adjusted Diluted EPS $0.81  $0.64  $0.82  $0.78  $0.92 
Adjusted Free Cash Flow $27,140  $12,313  $25,922  $10,308  $12,357 
Adjusted Free Cash Flow Margin  28.1%  13.9%  27.3%  10.7%  12.6%
GAAP Net Income (Loss) $12,933  $(6,167) $13,046  $13,347  $16,402 
GAAP Net Income (Loss) Margin  13.4%  (7.0)%  13.7%  13.9%  16.7%
GAAP Diluted Earnings (Loss) Per Share $0.71  $(0.33) $0.71  $0.77  $1.00 
(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. 

We continue to observe sustained performance in our funeral same store portfolio, where the contract volume of 11,675 hit a record in the first quarter of 2022 compared to the previous four quarters. Similarly, funeral same store average revenue per contract (ARPC) increased to $5,279 from $5,218 in the first quarter of 2021. Funeral home same store revenue increased by $2.6 million or 4.5% compared to the first quarter of 2021 while our funeral home acquisition revenue increased by $0.6 million or 7.8% over the same quarter last year. 

SAME STORE FUNERAL REVENUE MONTHLY TRENDS AND DRIVERS SIX MONTHS ENDING MARCH 2022
(000’s except for volume, averages) 2021 / 2020
 2022 / 2021
Same Store Funeral OCTNOVDEC JANFEBMAR
Contracts (volume) 2021 /2022  3,727  3,343 3,646   4,218  3,934 3,523 
Contracts (volume) 2020 / 2021  3,128  3,125 4,143   4,293  3,629 3,381 
Volume Variance  599  218 (497)  (75) 305 142 
Average Revenue Per Contract 2021 / 2022(1) $5,269 $5,406$5,370  $5,370 $5,248$5,205 
Average Revenue Per Contract 2020 / 2021(1) $5,341 $5,207$5,153  $5,231 $5,116$5,312 
Average Revenue Per Contract Variance (ARPC) $(72)$199$217  $139 $132$(107)
Operating Revenue 2021 / 2022(1) $19,636 $18,070$19,580  $22,650 $20,644$18,339 
Operating Revenue 2020 /2021(1) $16,708 $16,271$21,351  $22,458 $18,565$17,961 
Operating Revenue Variance $2,928 $1,799$(1,771) $192 $2,079$378 
Net Revenue Volume Variance $3,199 $1,135$(2,561) $(393)$1,560$754 
Net Revenue Average Variance $(271)$664$790  $585 $519$(376)
Net Revenue Variance $2,928 $1,799$(1,771) $192 $2,079$378 
         
(1) Excludes Preneed Funeral interest earnings reflected in Total Financial Revenue.

Funeral same store six-month trends show positive trends leading to sustained volumes and increased averages.

CEMETERY SEGMENT

We ended the quarter on our Cemetery Same Store Revenue with $14.2 million, which decreased by $0.4 million or 2.6%. Cemetery Same Store EBITDA was $5.3 million, a decrease of $0.4 million or 7.1%, and Cemetery Same Store Margin was 37.2%, a reduction of 180 basis points compared to the first quarter of 2021. For our Cemetery Acquisition Revenue in the first quarter of 2022, we ended at $6.3 million, a decrease of $0.7 million or 9.8%. Cemetery Acquisition EBITDA was $3.3 million, a decrease of $0.8 million or 19.6%. And Cemetery Acquisition EBITDA Margin was 52.4%, a reduction of 640 basis points compared to the first quarter of 2021. While we have very high margins in our cemetery acquisition portfolio, the main reason for this variance was found at Fairfax Memorial Park in Fairfax, Virginia, where we had atypical group and larger sales. We are confident that as we continue to develop cemetery inventory, this type of sales will become consistent over time.

We are excited to announce that Elizabeth Perez-Montes joined Carriage on March 21, 2022 and will be taking over Shane Pudenz’ previous responsibility prior to his promotion as Vice President of Sales and Marketing. Elizabeth as our new Director of Sales Support will be supporting our preneed cemetery sales teams to achieve sustainable High Performance. Welcome to the CAREdge Team Elizabeth.

OPERATIONS UPDATE

We had our first ever CAREdge Forum on March 14th through March 17th of 2022 in Houston, TX; with the theme of: UNBREAKABLE. Over 150 of our Managing Partners and Houston Support Center influencers immersed themselves in the transformation of Carriage’s Service and Guest Experience Standard in our Funeral Standards Operating Model weighted at 10%.

The forum had three goals. Number one was to inspire High Performance in every attendee through John “Gucci” Foley’s message on execution excellence and a Glad To Be Here® Attitude. John is a former lead solo pilot of the Blue Angels, a top rated Keynote Speaker, ‘Gratitude Guru’ and expert in the “how” of high performance teams. Number two was to have all of our leaders experience first-class service excellence firsthand and become enthused by the worldwide recognized service standards and excellence of the Ritz Carlton hotels imparted by the Ritz Carlton Leadership Center. Number three was to emphasize Carriage High Performance Culture and our unique “UNBREAKABLE UNION OF BELIEF,” which was evident with everyone and in every moment.

The CAREdge Forum was a success when measured by the outstanding feedback we have received from the Managing Partners, who went back very inspired, highly motivated, and totally engaged in delivering a Service and Guest Experience second to none in each of their businesses. This will ultimately lead to additional market share gains and higher three-year compounded revenue, which are two of the High Performance Standards that combined have a weighting of up to 50% of 100% in our Funeral Standards Operating Model.

Our new marketing department led by Alfred White is up and running at full speed. Since joining Carriage on January 2, 2022, Alfred has been able to put together an entire team of talented marketing specialists who are now supporting Managing Partners across the nation with their marketing needs including digital marketing, online presence, SEO, graphic design, content management, content library, and social media.

Alfred and his team are poised to deliver exciting products and services that will catapult our opportunities and new possibilities as we continue to gain market share and build an excellent reputation within Carriage’s portfolio of businesses.

ROB FRANCH JOINS CARRIAGE AS NEW CHIEF INFORMATION OFFICER

We are very excited to announce that Rob Franch, our new Chief Information Officer, joined Carriage on April 1, 2022. Before joining Carriage, he served as the Chief Technology Officer for Cushman & Wakefield from 2014 to 2022, where he led the application, infrastructure, and collaboration delivery to over 48,000 colleagues across 60 countries. He has also held senior leadership roles for AON Corporation, Bank of America, and LaSalle Bank. Rob is a graduate of the University of Iowa.

As Carriage Services Chief Information Officer, Rob’s innovation and creative leadership style will enable our Managing Partners and their teams of field employees and our Houston Support Center to engage through the design of a customer-centric service chain that will wow our guest families. A snapshot of our five-year plan for transformative technology innovation is covered on page 22 of our 2021 shareholder letter. We welcome Rob and wish him extraordinary success!        

FIVE REASONS WHY THE BEST IS YET TO COME

A lot is going on at Carriage, and our prospects for the future are higher than ever before. To share the excitement that we have about our future, I will give you these five reasons:
1) We will continue to develop our preneed cemetery sales teams across our portfolio of cemeteries with an emphasis on growing our sales force while selecting the Right Who salespeople, expanding their sales skills, and generating engagement that will deliver growth in new preneed property sales.
2) Our CAREdge forum inspired all of our Managing Partners who left with the tools needed to create a customer-centric culture of excellence that will generate organic growth in our funeral home portfolio for years to come (it’s not over, there is a lot more coming. Stay tuned for updates!).
3) Our digital marketing strategy has started to deliver results in the pilot businesses with an ambitious plan to replicate success through the collaboration and teamwork of our Managing Partners.
4) Our business development efforts are generating significant activity towards adding new businesses, new partnerships and new revenue for Carriage (Steve will elaborate on this point later in this release).
5) At Carriage, we are proud to say that we focus on people as the primary driver of our Carriage Services High Performance Culture. This focus is the fuel that lights our internal fire for the never-ending pursuit of our Mission and Vision of Being The Best operator, consolidator, and value creator company that happens to be in the death care industry.

These are just five of the many reasons for our passion for our “The Best Is Yet To Come” motto at Carriage. When paired with our one-year plan, five-year strategy, and 10-year Being The Best Vision of the future, we know why the beginning of the motto is: “It’s a Great Time To Be At Carriage,” concluded Mr. Quezada.

UPDATE ON GROWTH THROUGH ACQUISITION OUTLOOK

Steve Metzger, Executive Vice President, Chief Administrative Officer and General Counsel stated, “We have written extensively about our approach to growth through acquisition and, after two years of focusing our allocation of capital on paying down debt and opportunistic share repurchases of approximately 19% of the Company, we are now well positioned and laser focused on getting back to growth through acquisition. We previously shared our expectation that our conversations and work with owners to learn more about specific candidates that fit our strategic focus would result in the announcement of new businesses joining the Carriage Family during the second half of 2022. That forecast continues to be in line with the strong activity we are currently experiencing within our pipeline, much of it in new strategic markets with significant growth potential over the next 5-10 years.

In his book, The Outsiders, Will Thorndike described seven key traits shared by the standout executives he profiled in his book and noted, “With acquisitions, patience is a virtue…as is occasional boldness.” We knew that our patience, following some bold acquisitions in 2019 and 2020, would ultimately pay off as we did our homework and waited for those unique businesses that fit the Carriage profile to be ready to move forward with their succession plans. We take a similar approach to Berkshire Hathaway when we look at acquisitions. As Charlie Munger has pointed out, “Two-thirds of acquisitions don’t work. Ours work because we don’t try to do acquisitions – we wait for no-brainers.” We have also learned to wait for the “no brainers” and then dedicate the time to learn about the owners and what is important to them before we prepare a customized offer and post-acquisition plan based on those conversations.

As Mel mentioned, the level of activity involving high quality businesses is as strong as we have seen in more than two years. We believe our patience will begin to pay off, as we are now well positioned to partner with the best remaining independent funeral home and cemetery businesses at a time when more of the best businesses seem keenly aware of the succession plan and support benefits of Carriage’s unique High Performance Culture Framework.

As previously mentioned, we will have more details to share during the second half of the year. With that said, we are excited to announce that we recently signed a letter of intent with a fantastic business in a growing area of Florida, which we expect to close in the next 90 days. We are also working on several other potential deals in new strategic markets across the country with businesses that possess great history, unique owner vision, and exciting upside in the years to come.

As we have learned throughout our 30 year history, and the reason we do not project annual acquisition spend targets, you never know when the right businesses will be ready to move forward with a succession plan. While we remain patient and thoughtful in our approach, we will continue to build relationships with high quality candidates, do our homework and remain prepared for the “no brainers” when those businesses and owners are ready. We look forward to sharing more details regarding additions to the Carriage Family in the months to come,” concluded Mr. Metzger.

THREE YEAR ROUGHLY RIGHT RANGES SCENARIO/ROLLING FOUR QUARTER OUTLOOK

THREE YEAR ROUGHLY RIGHT RANGES PERFORMANCE SCENARIO 2022 THROUGH 2024
 
Performance Outlook RangesActual PerformanceThree Year Scenario 
Yrs. Ending 12/31 (Millions)2019A2020A2021A202220232024CAGR
Total Revenue$274.1 $329.4 $375.9 $380 - $390$410 - $420$450 - $46010.7%
Total Field EBITDA$109.8 $141.9 $174.6 $178 - $184$190 - $200$210 - $22014.4%
Total Field EBITDA Margin 40.0% 43.1% 46.5%46% - 47%46.5% - 47.5%47% - 48%3.5%
Adj. Consol. EBITDA$76.6 $104.3 $126.2 $128 - $133$140 - $145$155 - $16015.5%
Adj. Consol. EBITDA Margin 27.9% 31.6% 33.6%33.5% - 34.5%33.5% - 34.5%34% - 35%4.3%
Adjusted Diluted EPS$1.25 $1.86 $3.02 $3.55 - $3.65$3.90 - $4.00$4.40 - $4.5028.9%
Diluted Shares Outstanding 18.0  18.1  18.3 16.016.416.7(1.5%)
Adjusted Free Cash Flow$38.8 $70.0 $75.7 $78 - $82$86 - $90$94 - $10020.1%
Adj. Free Cash Flow Margin 14.2% 21.2% 20.1%20.5% - 21.5%21.0% - 22.0%21.0% - 22.0%8.7%
Total Debt Outstanding$534.0(1)$461.1 $565.4 $560 - $570$560 - $580$570 - $5901.7%
Total Debt to EBITDA Ratio7.0(2) 4.4  4.5 4.3 - 4.63.8 - 4.23.8 - 4.2(10.6%)
(1) January 3, 2020 acquisition of Oakmont Memorial Park & Mortuary and peak debt.
(2) Does not include Proforma EBITDA for acquisitions.
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.

Ben Brink, Executive Vice President and Chief Financial Officer, stated, “The above updated Roughly Right Ranges Scenario for the remainder of 2022, 2023 and 2024 includes capital allocation of 100% of our Adjusted Free Cash Flow towards primarily acquisitions followed by internal growth projects. Small updates to our Roughly Right Ranges Scenario for 2022 include a lower range for Adjusted Free Cash Flow with $78 to $82 million and a lower projected year end Diluted outstanding share count of 16 million due to continued execution of our share repurchase program in the first quarter.

We are updating our Rolling Four Quarter Outlook for operating and financial performance through the end of the first quarter 2023. Unlike our Three Year Roughly Right Ranges Scenario, our updated Rolling Four Quarter Outlook will only include capital allocation expectations for acquisitions that we currently have under letter of intent that are on track to close within the next 90 days. As Steve has previously mentioned in his comments, we currently have one acquisition under letter of intent and have included conservative projections of initial performance within the Rolling Four Quarter Outlook below:

Revenue: $380 - $390 million
Adjusted Consolidated EBITDA: $128 - $134 million
Adjusted Consolidated EBITDA Margin: 33.5% - 34.5%
Adjusted Diluted Earnings Per Share: $3.57 - $3.67
Adjusted Free Cash Flow: $82 - $86 million
Adjusted Free Cash Flow Margin: 21.5% - 22.5%

Our goal with the Rolling Four Quarter Outlook is to provide investors with the most up to date view of our performance over the next 12 months including our ability to execute on our Strategic Acquisition Model and the initial accretion from any acquisitions completed to our operating and financial performance.

CAPITAL ALLOCATION/SHARE REPURCHASE UPDATE

During the first quarter we invested $26 million to repurchase 490,000 of CSV shares at an average purchase price of $53.08. Since resuming our share repurchase program during the second quarter 2021, we have repurchased approximately 3.4 million shares at an average cost of $49.60. The 3.4 million shares repurchased is a 19% reduction of our shares outstanding since resuming repurchases and the average purchase price is an approximate 30% discount to the current low end of our Roughly Right Range of Intrinsic Value.

Considering the full impact of the 490,000 shares we repurchased in the first quarter, our basic shares outstanding are approximately 14.9 million and our diluted shares outstanding are approximately 16.0 million.

As we outlined in our 2021 Shareholder Letter, we intend to focus most of our capital allocation for the remainder of 2022 towards acquisitions of the best remaining independent funeral home and cemetery businesses while continuing to make investments across our portfolio in high return on invested capital growth projects. We intend to fund all of our anticipated capital allocation for the remainder of 2022 through internally generated Free Cash Flow which will in turn will allow us to maintain our Proforma Debt Leverage Ratio at or below 4.5x by year-end, compared to 4.7x at the end of the first quarter.

ADJUSTED FREE CASH FLOW

 Three Months Ended March 31,
  2021     2022   
Cash Flow Provided by Operating Activities$26,811  $15,801 
Cash used for Maintenance Capital Expenditures (2,140)  (3,612)
Free Cash Flow$24,671  $12,189 
    
Plus: Incremental Special Items:   
Severance and Separation Costs 1,575   — 
Disaster Recovery and Pandemic Costs 894   168 
Adjusted Free Cash Flow$27,140  $12,357 
    
Revenue$96,637  $98,161 
Adjusted Free Cash Flow Margin 28.1%  12.6%

For the first quarter our Adjusted Free Cash Flow declined $14.8 million, and our Adjusted Free Cash Flow Margin declined 1550 basis points primarily due to $9 million of higher cash incentive compensation payments made in the first quarter that had previously been earned and accrued for, an increase in maintenance capital spending of approximately $1.5 million and $1.0 million of higher cash taxes in the quarter.

In our 2021 Shareholder Letter Steve detailed the increase in both our one year Being The Best, and five year Good To Great incentive programs based on the High Performance results achieved by our Managing Partners and their teams during the past year and five years. In particular, approximately $3 million of additional cash incentive compensation paid in the first quarter was related to our five year Good To Great award, earned by Managing Partners if they are able to grow their revenue at a compound annual growth rate at 1% or above for a full five years.

Last year was the tenth year that we have had the Good To Great incentive program and was by far our largest group of winners at thirty-four. The group of thirty-four Good To Great award winners had a compound annual growth rate of revenue of 5.4% from 2017-2021. The award is paid half in cash and half in appreciated Carriage shares (2021 was a proof of concept year) during the first quarter of the following year in which it was earned. This amount had been accrued for over the past five years and represented the largest amount of cash incentive payments in our history.

We expect Adjusted Free Cash Flow to be materially higher during the remainder of the year given the timing of the large incentive compensation cash outflows in the first quarter, normalized maintenance capital expenditures and lower cash interest payment on our 4.25% Senior Notes that is paid in the second quarter.

TRUST FUND INVESTMENT PORTFOLIO

  Q1 2022 Annualized
2009 – Q1 2022
CSV Discretionary Portfolio 4.3% 14.4%
S&P 500 -4.6% 15.2%
DJIA -4.1% 13.7%
NASDAQ -8.9% 19.4%
HY Bond Index -4.8% 10.0%
70/30 HY/S&P Bond -4.8% 11.9%

As we outlined in our 2021 Shareholder Letter, we believed we had positioned our Discretionary Trust Fund Portfolio for continued outperformance even in a market environment of high inflation, rising interest rates and, as it turned out, significant geopolitical turmoil with the invasion of Ukraine by Russia. For the quarter our Discretionary Trust Funds had a total positive return of 4.3% compared to a total negative return of 4.6% for the S&P 500. The 8.9% difference in our total return for the first quarter compared to the S&P 500 was driven by the performance of our equity portfolio with a positive return of 11.2%, which was offset slightly by a 3.9% decline in our fixed income portfolio. The decline in our fixed income portfolio was entirely due to the increase in interest rates and therefore higher yields and lower prices on our fixed income securities, not a decrease in underlying credit quality.

The 1580 basis point outperformance of our equity portfolio compared to the S&P 500 in the first quarter is a great example of Mel’s investment philosophy that:

“Great investment returns are produced by those fearless yet analytical souls who go where everyone else has fled and find a fundamental reason to stay.”

During the depths of the Coronavirus Market Crisis and subsequently, we built our equity portfolio based on companies that have strong balance sheets, pay sustainable and growing dividends, and have opportunities to continue to grow their businesses over the long-term, while maintaining pricing power to offset the accelerating inflationary trends that we expected from the trillions of monetary and fiscal stimulus deployed repeatedly by the Fed and Congress during the COVID-19 Pandemic Crisis and recession.  

We began selling our entire group of high-tech growth stocks (Apple, Advanced Micro Devices, Resmed, Align Technology, Salesforce, Netflix, Amazon, Google) at the end of 2019 and early 2020 to raise cash for redeployment into high dividend stocks during the subsequent market crash (got “a little” lucky on timing, but not on subsequent security purchases). We have eschewed since then the urge to chase the crowd back into high growth, large market capitalization technology stocks (FAANG+) and have never made investment decisions based on dogmatic yet confusing at best ESG investment style criteria.

In the first quarter and year-to-date some of our leading performers included refiners (Phillips 66, Valero), energy master limited partnerships (Enterprise Products, Williams Companies, Westlake Chemical Partners, Enviva Partners), miners (Freeport-McMoRan, Cleveland-Cliffs, both of which we recently fully exited 52 week highs to create $10 million of new cash and lock in large capital gains), large diversified chemical companies (Dow, LyondellBasel) and large pharmaceutical companies (Pfizer, AbbVie, Bristol Myers-Squibb). We also initiated new positions in high dividend energy infrastructure and natural gas companies (Enbridge, Magellan Midstream Partners, Chesapeake Energy, Cotera Energy).

Another large equity position that almost doubled in the first quarter was the offshore petroleum supply boat services company Tidewater. Prior to the COVID-19 pandemic we joined with an activist industry specific investment group to make a large investment in Tidewater after it had emerged from bankruptcy with a strong balance sheet and “best in-class” assets. The investment thesis was that there would be a comeback in offshore oil and gas exploration activity and Tidewater would be a major beneficiary of more activity, improved pricing and further consolidation.

You might say we got lucky again, but betting against the groupthink ESG Funds that had "fled energy pipeline and natural gas companies" to "stop climate change" is not exactly rocket science!!

The continued performance of our discretionary preneed trust fund portfolio will drive incremental growth of our reported Financial Revenue and Financial EBITDA through increased earnings on matured preneed contracts and recurring income earned through our cemetery perpetual care trusts. Since the execution of our Trust Fund Repositioning Strategy during the depths of the Coronavirus Market Crisis, we have recognized approximately $34 million of long-term capital gains in the portfolio and approximately doubled our recurring annual income earned in the portfolio to $17.7 million. We expect those totals to grow to approximately $40 million in long-term capital gains and over $18 million in recurring annual income over the course of this year. This embedded value within our discretionary preneed trust fund portfolio will be accretive to Carriage’s operating and financial results for the foreseeable future.

INTRINSIC VALUE

We are reaffirming our opinion of the Roughly Right Range of Intrinsic Value for CSV shares at $70 - $80 based on the free cash flow equity yield methodology we have previously used. We believe it continues to be appropriate to use a free cash flow equity yield range of 6.4% - 7.4%, based on our current estimated weighted average cost of capital of 6.4% and the weighted average cost of capital of 7.4% prior to the refinancing of our $400 million of senior notes at 4.25% in May 2021. Our updated mid-point for Adjusted Free Cash Flow in our Rolling Four Quarter Outlook is $84 million. Using the 6.4% - 7.4% free cash flow equity yield range would equal an equity market capitalization range of $1,135 million – $1,312 million. Dividing this range by our updated diluted shares outstanding of 16.0 million equals the Roughly Right Range of Intrinsic Value of $71 - $82, conservatively rounded to $70 - $80 per Carriage share,” concluded Mr. Brink.

CONFERENCE CALL AND INVESTOR RELATIONS CONTACT

Carriage Services has scheduled a conference call for tomorrow, April 28, 2022 at 10:00 a.m. Central time. To participate in the call, please dial 866-374-5140 (conference ID - 31845407) and ask for the Carriage Services conference call. The conference call will also be available at www.carriageservices.com. 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 March 31,
  2021  2022 % Change
     
Same Store Contracts    
Atneed Contracts 9,548  9,987 4.6%
Preneed Contracts 1,755  1,688 (3.8%)
Total Same Store Funeral Contracts 11,303  11,675 3.3%
Acquisition Contracts   
Atneed Contracts 1,624  1,514 (6.8%)
Preneed Contracts 124  192 54.8%
Total Acquisition Funeral Contracts 1,748  1,706 (2.4%)
Total Funeral Contracts 13,051  13,381 2.5%
    
Funeral Operating Revenue   
Same Store Revenue$58,983 $61,632 4.5%
Acquisition Revenue 7,985  8,610 7.8%
Total Funeral Operating Revenue$66,968 $70,242 4.9%
    
Cemetery Operating Revenue   
Same Store Revenue$14,635 $14,251 (2.6%)
Acquisition Revenue 6,980  6,297 (9.8%)
Total Cemetery Operating Revenue$21,615 $20,548 (4.9%)
    
Total Financial Revenue$5,706 $5,692 (0.2%)
    
Ancillary Revenue$1,207 $1,070 (11.4%)
    
Total Divested/Planned Divested Revenue$1,141 $609 (46.6%)
    
Total Revenue$96,637 $98,161 1.6%
    
Field EBITDA   
Same Store Funeral Field EBITDA$26,652 $27,510 3.2%
Same Store Funeral Field EBITDA Margin 45.2% 44.6%(60 bp)
Acquisition Funeral Field EBITDA 3,644  3,750 2.9%
Acquisition Funeral Field EBITDA Margin 45.6% 43.6%(200 bp)
Total Funeral Field EBITDA$30,296 $31,260 3.2%
Total Funeral Field EBITDA Margin 45.2% 44.5%(70 bp)
    
Same Store Cemetery Field EBITDA$5,704 $5,300 (7.1%)
Same Store Cemetery Field EBITDA Margin 39.0% 37.2%(180 bp)
Acquisition Cemetery Field EBITDA 4,102  3,299 (19.6%)
Acquisition Cemetery Field EBITDA Margin 58.8% 52.4%(640 bp)
Total Cemetery Field EBITDA$9,806 $8,599 (12.3%)
Total Cemetery Field EBITDA Margin 45.4% 41.8%(360 bp)
    
Total Financial Field EBITDA$5,305 $5,263 (0.8%)
Total Financial Field EBITDA Margin 93.0% 92.5%(50 bp)
    
Ancillary EBITDA$242 $221 (8.7%)
Ancillary EBITDA Margin 20.0% 20.7%70 bp
    
Total Divested/Planned Divested EBITDA$138 $111 (19.6%)
Total Divested/Planned Divested EBITDA Margin 12.1% 18.2%610 bp
    
Total Field EBITDA$45,787 $45,454 (0.7%)
Total Field EBITDA Margin 47.4% 46.3%(110 bp)
OPERATING AND FINANCIAL TREND REPORT
(IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
    
 Three Months Ended March 31,
  2021  2022 % Change
     
Overhead    
Total Variable Overhead$6,900 $5,175 (25.0%)
Total Regional Fixed Overhead 1,199  1,340 11.8%
Total Corporate Fixed Overhead 5,500  6,631 20.6%
Total Overhead$13,599 $13,146 (3.3%)
Overhead as a percentage of Revenue 14.1% 13.4%(70 bp)
    
Consolidated EBITDA$32,188 $32,308 0.4%
Consolidated EBITDA Margin 33.3% 32.9%(40 bp)
    
Other Expenses and Interest   
Depreciation & Amortization$4,942 $4,783  
Non-Cash Stock Compensation 1,308  1,607  
Interest Expense 7,584  5,542  
Accretion of Discount on Convertible Sub. Notes 20  —  
Net (Gain) Loss on Divestitures (308) 703  
Net Gain on Insurance Reimbursements —  (1,899) 
Net Loss on Disposal of Fixed Assets —  64  
Other, Net 68  24  
Pre-Tax Income$18,574 $21,484  
Net Tax Expense 5,641  5,082  
GAAP Net Income$12,933 $16,402 26.8%
    
Special Items   
Severance and Separation Costs 1,575  —  
Accretion of Discount on Convertible Sub. Notes 20  —  
Net (Gain) Loss on Divestitures and Other Costs (308) 703  
Net Gain on Insurance Reimbursements —  (1,899) 
Disaster Recovery and Pandemic Costs 894  168  
Change in Uncertain Tax Reserves and Other —  (533) 
Sum of Special Items$2,181 $(1,561) 
Tax Effect on Special Items 424  (273) 
Adjusted Net Income$14,690 $15,114 2.9%
Adjusted Net Income Margin 15.2% 15.4%20 bp
    
Adjusted Basic Earnings Per Share$0.82 $0.99 20.7%
Adjusted Diluted Earnings Per Share$0.81 $0.92 13.6%
    
GAAP Basic Earnings Per Share$0.72 $1.07 48.6%
GAAP Diluted Earnings Per Share$0.71 $1.00 40.8%
    
Weighted Average Basic Shares Outstanding 17,965  15,244  
Weighted Average Diluted Shares Outstanding 18,199  16,369  
    
Reconciliation to Adjusted Consolidated EBITDA   
Consolidated EBITDA$32,188 $32,308 0.4%
Severance and Separation Costs 1,575  —  
Disaster Recovery and Pandemic Costs 894  168  
Adjusted Consolidated EBITDA$34,657 $32,476 (6.3%)
Adjusted Consolidated EBITDA Margin 35.9% 33.1%(280 bp)


CARRIAGE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited and in thousands)

 December 31, 2021 March 31, 2022
ASSETS   
Current assets:   
Cash and cash equivalents$1,148  $887 
Accounts receivable, net 25,314   25,570 
Inventories 7,346   7,645 
Prepaid and other current assets 6,404   4,005 
Total current assets 40,212   38,107 
Preneed cemetery trust investments 100,903   102,533 
Preneed funeral trust investments 113,658   113,332 
Preneed cemetery receivables, net 23,150   22,561 
Receivables from funeral preneed trusts, net 19,009   19,160 
Property, plant and equipment, net 269,367   271,175 
Cemetery property, net 100,701   101,646 
Goodwill 391,972   391,071 
Intangible and other non-current assets, net 29,378   29,617 
Operating lease right-of-use assets 17,881   17,622 
Cemetery perpetual care trust investments 72,400   73,525 
Total assets$1,178,631  $1,180,349 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Current portion of debt and lease obligations$2,809  $2,895 
Accounts payable 14,205   13,573 
Accrued and other liabilities 43,773   31,345 
Total current liabilities 60,787   47,813 
Acquisition debt, net of current portion 3,979   3,935 
Credit facility 153,857   172,746 
Senior notes 394,610   394,765 
Obligations under finance leases, net of current portion 5,157   5,052 
Obligations under operating leases, net of current portion 18,520   18,181 
Deferred preneed cemetery revenue 50,202   51,064 
Deferred preneed funeral revenue 30,584   30,891 
Deferred tax liability 45,784   45,860 
Other long-term liabilities 1,419   1,309 
Deferred preneed cemetery receipts held in trust 100,903   102,533 
Deferred preneed funeral receipts held in trust 113,658   113,332 
Care trusts’ corpus 71,156   72,847 
Total liabilities 1,050,616   1,060,328 
Commitments and contingencies   
Stockholders’ equity:   
Common stock 263   263 
Additional paid-in capital 236,809   238,423 
Retained earnings 135,462   151,864 
Treasury stock (244,519)  (270,529)
Total stockholders’ equity 128,015   120,021 
Total liabilities and stockholders’ equity$1,178,631  $1,180,349 


CARRIAGE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share data)

 Three Months Ended March 31,
  2021   2022 
    
Revenue:   
Service revenue$47,757  $49,737 
Property and merchandise revenue 41,896   41,612 
Other revenue 6,984   6,812 
  96,637   98,161 
Field costs and expenses:   
Cost of service 20,967   22,104 
Cost of merchandise 28,520   29,325 
Cemetery property amortization 1,517   1,332 
Field depreciation expense 3,136   3,297 
Regional and unallocated funeral and cemetery costs 6,073   6,347 
Other expenses 1,363   1,278 
  61,576   63,683 
Gross profit 35,061   34,478 
    
Corporate costs and expenses:   
General, administrative and other 9,123   8,560 
Net (gain) loss on divestitures, disposals and impairment charges (308)  767 
Operating income 26,246   25,151 
    
Interest expense (7,584)  (5,542)
Accretion of discount on convertible subordinated notes (20)  — 
Gain on insurance reimbursements —   1,899 
Other, net (68)  (24)
Income before income taxes 18,574   21,484 
Expense for income taxes (5,758)  (5,704)
Tax adjustment related to certain discrete items 117   622 
Total expense for income taxes (5,641)  (5,082)
Net income$12,933  $16,402 
    
Basic earnings per common share:$0.72  $1.07 
Diluted earnings per common share:$0.71  $1.00 
    
Dividends declared per common share:$0.1000  $0.1125 
    
Weighted average number of common and common equivalent shares outstanding:   
Basic 17,965   15,244 
Diluted 18,199   16,369 


CARRIAGE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)

 Three Months Ended March 31,
  2021   2022 
Cash flows from operating activities:   
Net income$12,933  $16,402 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization 4,942   4,783 
Provision for credit losses 588   837 
Stock-based compensation expense 1,307   1,607 
Deferred income tax expense 1,514   76 
Amortization of intangibles 320   318 
Amortization of debt issuance costs 193   122 
Amortization and accretion of debt 100   121 
Net loss on divestitures, disposals and impairment charges 21   767 
Gain on insurance reimbursements —   (1,899)
Changes in operating assets and liabilities that provided (used) cash:   
Accounts and preneed receivables (1,521)  (504)
Inventories, prepaid and other current assets (153)  2,913 
Intangible and other non-current assets (291)  (340)
Preneed funeral and cemetery trust investments (2,952)  (201)
Accounts payable (1,712)  (987)
Accrued and other liabilities 6,853   (9,999)
Deferred preneed funeral and cemetery revenue 1,183   628 
Deferred preneed funeral and cemetery receipts held in trust 3,486   1,157 
Net cash provided by operating activities 26,811   15,801 
    
Cash flows from investing activities:   
Acquisitions of real estate (350)  (2,575)
Proceeds from divestitures and sale of other assets 2,800   1,026 
Proceeds from insurance reimbursements —   676 
Capital expenditures (4,347)  (6,883)
Net cash used in investing activities (1,897)  (7,756)
    
Cash flows from financing activities:   
Borrowings from the credit facility 15,168   70,700 
Payments against the credit facility (34,068)  (51,900)
Conversions and maturity of the convertible notes (3,980)  — 
Payments on acquisition debt and obligations under finance leases (233)  (100)
Payments on contingent consideration recorded at acquisition date (461)  — 
Proceeds from the exercise of stock options and employee stock purchase plan contributions 625   663 
Taxes paid on restricted stock vestings and exercises of stock options (642)  (289)
Dividends paid on common stock (1,799)  (1,725)
Purchase of treasury stock —   (25,655)
Other financing costs (7)  — 
Net cash used in financing activities (25,397)  (8,306)
    
Net decrease in cash and cash equivalents (483)  (261)
Cash and cash equivalents at beginning of period 889   1,148 
Cash and cash equivalents at end of period$406  $887 

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 Accretion of Discount on Convertible Subordinated Notes and the Change in Uncertain Tax Reserves and Other were not tax effected. In Q1 2021, Special Items were taxed at the federal statutory rate of 21.0%, except the Net (Gain) Loss on Divestitures and Other Costs, which was taxed at the operating tax rate. In Q1 2022, all 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.
  • 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 bank credit facility, Senior Notes due 2029, acquisition debt and finance leases.
  • Total Debt to EBITDA Multiple/Ratio is defined as Total Debt Outstanding to 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 (Loss) to Adjusted Net Income (in thousands):

  1STQTR 2021 2NDQTR 2021 3RDQTR 2021 4THQTR 2021 1STQTR 2022
Net Income (Loss) $12,933  $(6,167) $13,046 $13,347  $16,402 
Special Items          
Severance and Separation Costs  1,575   —   —  —   — 
Accretion of Discount on Convertible Subordinated Notes(1)  20   —   —  —   — 
Loss on Extinguishment of Debt  —   23,807   —  —   — 
Net (Gain) Loss on Divestitures and Other Costs  (308)  205   282  (1,035)  703 
Net Impact of Impairment of Goodwill and Other  —   —   500  —   — 
Net Gain on Insurance Reimbursements  —   —   —  —   (1,899)
Litigation Reserve  —   —   —  1,050   — 
Disaster Recovery and Pandemic Costs  894   145   1,002  116   168 
Other Special Items  —   1,334   1,020  —   — 
Change in Uncertain Tax Reserves and Other(1)  —   —   —  —   (533)
Sum of Special Items $2,181  $25,491  $2,804 $131  $(1,561)
Tax Effect on Special Items(2)  424   7,457   738  (116)  (273)
Adjusted Net Income $14,690  $11,867  $15,112 $13,594  $15,114 
                    
(1) The Accretion of Discount on Convertible Subordinated Notes and the Change in Uncertain Tax Reserves are not tax effected.
(2) In Q1 2021, Special Items were taxed at the federal statutory rate of 21.0%, except the Net (Gain) Loss on Divestitures and Other Costs, which was taxed at the operating tax rate. In Q1 2022, all Special Items were taxed at the operating tax rate.

Reconciliation of Net Income (Loss) to Consolidated EBITDA, Adjusted Consolidated EBITDA (in thousands) and Adjusted Consolidated EBITDA Margin:

  1STQTR 2021 2NDQTR 2021 3RDQTR 2021 4THQTR 2021 1STQTR 2022
Net Income (Loss) $12,933  $(6,167) $13,046  $13,347  $16,402 
Total Expense (Benefit) for Income Taxes  5,641   (4,192)  5,122   4,574   5,082 
Income (Loss) Before Income Taxes $18,574  $(10,359) $18,168  $17,921  $21,484 
           
Interest Expense  7,584   7,478   5,076   5,307   5,542 
Accretion of Discount on Convertible Subordinated Notes  20   —   —   —   — 
Non-Cash Stock Compensation  1,308   1,230   1,294   1,681   1,607 
Depreciation & Amortization  4,942   5,594   4,950   5,034   4,783 
Loss on Extinguishment of Debt  —   23,807   —   —   — 
Net (Gain) Loss on Divestitures  (308)  205   282   (1,035)  703 
Impairment of Goodwill and Other  —   —   500   —   — 
Net Gain on Insurance Reimbursements  —   —   —   —   (1,899)
Net Loss on Disposal of Fixed Assets  —   622   76   324   64 
Other, Net  68   (2)  21   (3)  24 
Consolidated EBITDA $32,188  $28,575  $30,367  $29,229  $32,308 
Adjusted For:          
Severance and Separation Costs  1,575   —   —   —   — 
Litigation Reserve  —   —   —   1,050   — 
Disaster Recovery and Pandemic Costs  894   145   1,002   116   168 
Other Special Items  —   —   1,020   —   — 
Adjusted Consolidated EBITDA $34,657  $28,720  $32,389  $30,395  $32,476 
           
Total Revenue $96,637  $88,277  $95,041  $95,931  $98,161 
           
Adjusted Consolidated EBITDA Margin  35.9%  32.5%  34.1%  31.7%  33.1%
Net Income (Loss) Margin  13.4%  (7.0)%  13.7%  13.9%  16.7%


Components of Total Revenue (in thousands):

 1STQTR 2021 2NDQTR 2021 3RDQTR 2021 4THQTR 2021 1STQTR 2022
Same Store Funeral Revenue$58,983  $49,015  $57,205  $57,285  $61,632 
Acquisition Funeral Revenue 7,985   6,939   7,651   8,007   8,610 
Same Store Cemetery Revenue 14,635   16,906   16,342   16,288   14,251 
Acquisition Cemetery Revenue 6,980   8,175   6,362   6,312   6,297 
Funeral Financial Revenue 2,538   2,111   2,251   2,506   2,434 
Cemetery Financial Revenue 3,168   3,294   3,388   3,661   3,258 
Ancillary Revenue 1,207   1,088   1,096   1,046   1,070 
Divested/Planned Divested Funeral Revenue 1,061   679   694   740   609 
Divested Cemetery Revenue 80   70   52   86   — 
Total Revenue$96,637  $88,277  $95,041  $95,931  $98,161 


Reconciliation of Funeral and Cemetery Operating Income to Funeral and Cemetery Field EBITDA (in thousands):

  1STQTR 2021 2NDQTR 2021 3RDQTR 2021 4THQTR 2021 1STQTR 2022
Funeral Operating Income (GAAP) $25,876  $16,604  $22,924  $23,187  $25,463 
Depreciation & Amortization  2,769   2,766   2,761   2,766   2,871 
Regional & Unallocated Costs  4,569   4,023   4,907   5,419   4,634 
Net (Gain) Loss on Divestitures, Disposals and Impairment Charges  (308)  791   763   (810)  767 
Less:          
Funeral Financial EBITDA  (2,261)  (1,888)  (1,960)  (2,245)  (2,143)
Ancillary EBITDA  (242)  (274)  (274)  (216)  (221)
Funeral Divested/Planned Divested EBITDA  (107)  (95)  (186)  (217)  (111)
Funeral Field EBITDA $30,296  $21,927  $28,935  $27,884  $31,260 
           
Funeral Revenue $71,774  $59,832  $68,897  $69,584  $74,355 
           
Funeral Operating Income Margin  36.1%  27.8%  33.3%  33.3%  34.2%


  1STQTR 2021 2NDQTR 2021 3RDQTR 2021 4THQTR 2021 1STQTR 2022
Cemetery Operating Income (GAAP) $9,493  $11,498  $9,471  $9,891  $8,248 
Depreciation & Amortization  1,884   2,551   1,914   1,868   1,758 
Regional & Unallocated Costs  1,504   1,747   1,905   1,772   1,713 
Net Loss on Divestitures, Disposals and Impairment Charges  —   34   6   96   — 
Less:          
Cemetery Financial EBITDA  (3,044)  (3,170)  (3,265)  (3,532)  (3,120)
Cemetery Divested EBITDA  (31)  (16)  (19)  (16)  — 
Cemetery Field EBITDA $9,806  $12,644  $10,012  $10,079  $8,599 
           
Cemetery Revenue $24,863  $28,445  $26,144  $26,347  $23,806 
           
Cemetery Operating Income Margin  38.2%  40.4%  36.2%  37.5%  34.6%


Components of Total Field EBITDA (in thousands):

  1STQTR 2021 2NDQTR 2021 3RDQTR 2021 4THQTR 2021 1STQTR 2022
Funeral Field EBITDA $30,296  $21,927  $28,935  $27,884  $31,260 
Cemetery Field EBITDA  9,806   12,644   10,012   10,079   8,599 
Funeral Financial EBITDA  2,261   1,888   1,960   2,245   2,143 
Cemetery Financial EBITDA  3,044   3,170   3,265   3,532   3,120 
Ancillary EBITDA  242   274   274   216   221 
Funeral Divested/Planned Divested EBITDA  107   95   186   217   111 
Cemetery Divested EBITDA  31   16   19   16   — 
Total Field EBITDA $45,787  $40,014  $44,651  $44,189  $45,454 


Reconciliation of GAAP Basic Earnings (Loss) Per Share to Adjusted Basic Earnings Per Share:

  1STQTR 2021 2NDQTR 2021 3RDQTR 2021 4THQTR 2021 1STQTR 2022
GAAP Basic Earnings (Loss) Per Share $0.72  $(0.34) $0.74  $0.82  $1.07 
Special Items  0.10   1.00   0.12   0.01   (0.08)
Adjusted Basic Earnings Per Share $0.82  $0.66  $0.86  $0.83  $0.99 


Reconciliation of GAAP Diluted Earnings (Loss) Per Share to Adjusted Diluted Earnings Per Share:

  1STQTR 2021 2NDQTR 2021 3RDQTR 2021 4THQTR 2021 1STQTR 2022
GAAP Diluted Earnings (Loss) Per Share $0.71  $(0.33) $0.71  $0.77  $1.00 
Special Items  0.10   0.97   0.11   0.01   (0.08)
Adjusted Diluted Earnings Per Share $0.81  $0.64  $0.82  $0.78  $0.92 


Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow (in thousands) and Adjusted Free Cash Flow Margin:

  1STQTR 2021 2NDQTR 2021 3RDQTR 2021 4THQTR 2021 1STQTR 2022
Cash Flow Provided by Operating Activities $26,811  $14,630  $28,258  $14,547  $15,801 
Cash used for Maintenance Capital Expenditures  (2,140)  (2,462)  (4,358)  (4,355)  (3,612)
Free Cash Flow $24,671  $12,168  $23,900  $10,192  $12,189 
           
Plus: Incremental Special Items:          
Severance and Separation Costs  1,575   —   —   —   — 
Disaster Recovery and Pandemic Costs  894   145   1,002   116   168 
Other Special Items  —   —   1,020   —   — 
Adjusted Free Cash Flow $27,140  $12,313  $25,922  $10,308  $12,357 
           
Total Revenue $96,637  $88,277  $95,041  $95,931  $98,161 
           
Adjusted Free Cash Flow Margin  28.1%  13.9%  27.3%  10.7%  12.6%
Net Cash Provided by Operating Activities as a Percentage of Total Revenue  27.7%  16.6%  29.7%  15.2%  16.1%


Components of Total Revenue (in thousands):

 2019A 2020A 2021A
Same Store Funeral Revenue$188,026  $199,294  $222,488 
Acquisition Funeral Revenue 8,834   27,924   30,582 
Same Store Cemetery Revenue 49,258   51,767   64,171 
Acquisition Cemetery Revenue 295   17,584   27,829 
Funeral Financial Revenue 8,510   9,177   9,406 
Cemetery Financial Revenue 7,440   10,713   13,511 
Ancillary Revenue 748   4,661   4,437 
Divested/Planned Divested Funeral Revenue 10,750   8,082   3,174 
Divested Cemetery Revenue 246   246   288 
Total Revenue$274,107  $329,448  $375,886 


Reconciliation of Funeral Operating Income to Funeral Field EBITDA (in thousands) and Funeral Operating Income Margin:

 2019A 2020A 2021A
Funeral Operating Income (GAAP)$58,756  $57,622  $88,591 
Depreciation & Amortization 11,128   11,586   11,062 
Regional & Unallocated Costs 11,007   14,348   18,918 
Net (Gain) Loss on Divestitures, Disposals and Impairment Charges 4,846   21,442   436 
Less:     
Funeral Financial Field EBITDA (7,491)  (8,267)  (8,354)
Ancillary EBITDA (298)  (1,186)  (1,006)
Divested/Planned Divested Funeral EBITDA (2,261)  (2,068)  (605)
Funeral Field EBITDA$75,687  $93,477  $109,042 
      
Funeral Revenue$216,868  $249,138  $270,087 
      
Funeral Operating Income Margin 27.1%  23.1%  32.8%


Reconciliation of Cemetery Operating Income to Cemetery Field EBITDA (in thousands) and Cemetery Operating Income Margin:

 2019A 2020A 2021A
Cemetery Operating Income (GAAP)$15,983  $26,859  $40,353 
Depreciation & Amortization 5,227   6,376   8,217 
Regional & Unallocated Costs 2,820   3,709   6,928 
Net Loss on Divestitures, Disposals and Impairment Charges —   —   136 
Less:     
Cemetery Financial Field EBITDA (6,853)  (10,292)  (13,011)
Divested Cemetery EBITDA (76)  (23)  (82)
Cemetery Field EBITDA$17,101  $26,629  $42,541 
      
Cemetery Revenue$57,239  $80,310  $105,799 
      
Cemetery Operating Income Margin 27.9%  33.4%  38.1%


Components of Total Field EBITDA (in thousands):

 2019A 2020A 2021A
Funeral Field EBITDA$75,687  $93,477  $109,042 
Cemetery Field EBITDA 17,101   26,629   42,541 
Funeral Financial Field EBITDA 7,491   8,267   8,354 
Cemetery Financial Field EBITDA 6,853   10,292   13,011 
Ancillary EBITDA 298   1,186   1,006 
Divested/Planned Divested Funeral EBITDA 2,261   2,068   605 
Divested Cemetery EBITDA 76   23   82 
Total Field EBITDA$109,767  $141,942  $174,641 


Reconciliation of Actual Results for years ended December 31, 2019, 2020 and 2021 and Estimated Results for years ended December 31, 2022, 2023 and 2024.

Earlier in this press release, we present the Three Year Roughly Right Ranges Performance Scenario which reflects management’s opinion on the performance of the portfolio of existing businesses, including performance of existing trusts, and excludes size and timing of acquisitions. This Performance Scenario is not intended to be management estimates or forecasts of our future performance, as we believe precise estimates will be precisely wrong all the time. The following reconciliations are presented within the ranges in this Performance Scenario.

Reconciliation of Net Income to Consolidated EBITDA, Total Field EBITDA (in thousands) and Total Field EBITDA Margin:

 2019A 2020A 2021A 2022E 2023E 2024E
Net Income$14,533  $16,090  $33,159  $57,500  $65,000  $74,000 
Total Tax Expense 7,883   8,552   11,145   21,500   24,000   29,000 
Pretax Income$22,416  $24,642  $44,304  $79,000  $89,000  $103,000 
Net Interest Expense, including Accretion of Discount on Convertible Subordinated Notes 25,763   32,731   25,465   22,000   24,500   24,600 
Depreciation & Amortization, including Non-cash Stock Compensation, Gain on Insurance Reimbursements and Other, Net 19,188   22,607   26,117   28,000   29,000   31,000 
Net Loss on Divestitures, Disposals, Impairment Charges 4,846   21,442   666   —   —   — 
Net Loss on Extinguishment of Debt —   6   23,807   —   —   — 
Consolidated EBITDA$72,213  $101,428  $120,359  $129,000  $142,500  $158,600 
Overhead 37,554   40,514   54,282   52,000   54,000   58,000 
Total Field EBITDA$109,767  $141,942  $174,641  $181,000  $196,500  $216,600 
            
Total Revenue$274,107  $329,448  $375,886  $387,000  $414,000  $455,000 
            
Total Field EBITDA Margin 40.0%  43.1%  46.5%  46.8%  47.5%  47.6%


Reconciliation of Consolidated EBITDA to Adjusted Consolidated EBITDA (in thousands) and Adjusted Consolidated EBITDA Margin:

 2019A 2020A 2021A 2022E 2023E 2024E
Consolidated EBITDA$72,213  $101,428  $120,359  $129,000  $142,500  $158,600 
Special Items 4,374   2,822   5,802   —   —   — 
Adjusted Consolidated EBITDA$76,587  $104,250  $126,161  $129,000  $142,500  $158,600 
            
Total Revenue$274,107  $329,448  $375,886  $387,000  $414,000  $455,000 
            
Adjusted Consolidated EBITDA Margin 27.9%  31.6%  33.6%  33.3%  34.4%  34.9%


Reconciliation of Net Income to Adjusted Net Income (in thousands):

 2019A 2020A 2021A 2022E 2023E 2024E
Net Income$14,533  $16,090  $33,159  $57,500  $65,000  $74,000 
Special Items 7,999   17,593   22,104   —   —   — 
Adjusted Net Income$22,532  $33,683  $55,263  $57,500  $65,000  $74,000 


Reconciliation of GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share:

 2019A 2020A 2021A 2022E 2023E 2024E
GAAP Diluted Earnings Per Share$0.80  $0.89  $1.81  $3.55  $3.94  $4.43 
Special Items 0.45   0.97   1.21   —   —   — 
Adjusted Diluted Earnings Per Share$1.25  $1.86  $3.02  $3.55  $3.94  $4.43 


Reconciliation of Cash Flow Provided by Operating Activities to Adjusted Free Cash Flow (in thousands) and Adjusted Free Cash Flow Margin:

 2019A 2020A 2021A 2022E 2023E 2024E
Cash Flow Provided by Operating Activities$43,216  $82,915  $84,246  $94,000  $100,500  $110,000 
Cash used for Maintenance Capital Expenditures (8,795)  (8,762)  (13,315)  (12,000)  (12,500)  (13,000)
Special Items 4,374   (4,190)  4,752   —   —   — 
Adjusted Free Cash Flow$38,795  $69,963  $75,683  $82,000  $88,000  $97,000 
            
Total Revenue$274,107  $329,448  $375,886  $387,000  $414,000  $455,000 
            
Adjusted Free Cash Flow Margin 14.2%  21.2%  20.1%  21.2%  21.3%  21.3%
Net Cash Provided by Operating Activities as a Percentage of Total Revenue 15.8%  25.2%  22.4%  24.3%  24.3%  24.2%


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, capital allocation, debt levels, equity performance, market share growth, overhead, including 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 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. 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 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 and optimization plan;
  • the investment performance of our funeral and cemetery trust funds;
  • fluctuations in interest rates;
  • 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 three-year roughly right range and performance scenario, our rolling four quarter outlook, and intrinsic value per share range, 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.


FAQ

What were Carriage Services' revenue results for Q1 2022?

Carriage Services reported record quarterly revenue of $98.2 million for Q1 2022.

How much did Carriage Services' GAAP diluted EPS increase in Q1 2022?

GAAP diluted EPS increased by 40.8% to $1.00 in Q1 2022.

What is Carriage Services' intrinsic value estimate?

Carriage Services estimates its intrinsic value to be between $70 and $80 per share.

How many shares has Carriage Services repurchased since May 2021?

Carriage Services has repurchased 3.4 million shares since May 2021.

What is the outlook for Carriage Services' acquisitions?

Carriage Services has a positive outlook for acquisitions, with one anticipated to close within the next 90 days.

Stock CSV logo
Carriage Services, Inc.

NYSE:CSV

CSV Rankings

#2966 Ranked by Market Cap
#1720 Ranked by Dividends

CSV Latest News

Oct 30, 2024
Carriage Services Announces Strong Third Quarter 2024 Results and Increases Full-Year 2024 Outlook
Oct 16, 2024
Carriage Services Declares Quarterly Cash Dividend
Oct 15, 2024
Carriage Services Announces 2024 Third Quarter Earnings Release and Conference Call Schedule
Jul 31, 2024
Carriage Services Announces Strong Second Quarter 2024 Results and Increases Full-Year 2024 Outlook
Jul 17, 2024
Carriage Services Declares Quarterly Cash Dividend

CSV Stock Data

602.23M
12.46M
16.63%
70.28%
1.19%
Personal Services
Services-personal Services
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United States of America
HOUSTON