Release Details

Carriage Services Announces First Quarter 2024 Results

May 1, 2024 at 4:35 PM EDT
Conference call on Thursday, May 2, 2024 at 9:30 a.m. central time

HOUSTON, May 01, 2024 (GLOBE NEWSWIRE) -- Carriage Services, Inc. (NYSE: CSV) today announced its financial results for the first quarter ended March 31, 2024.

Company Highlights:

  • Total revenue of $103.5 million led to growth of 8.4% over the prior-year quarter, primarily driven by a 38.4% increase in cemetery preneed sales;
  • GAAP diluted EPS of $0.45 and Adjusted diluted EPS of $0.75, compared to $0.57 and $0.56 in the prior-year quarter, respectively;
  • Completed the divestiture of previously announced non-core assets;
  • The Company paid down $25.0 million of debt on its credit facility during the first quarter; and
  • Reaffirm full-year 2024 outlook.

Carlos Quezada, Vice Chairman and CEO, stated, “We are pleased to announce another solid performance in the first quarter of 2024, which reflects our consistent focus on executing our five-year strategic objectives. Our preneed cemetery sales team achieved a remarkable 38.4% year-over-year increase in preneed sales, highlighting the continued effectiveness of our cemetery sales growth plan. This solid cemetery performance contributed significantly to an increase in total revenue of 8.4% compared to the previous year.

Despite the anticipated operating volume decline of 1.9% in our Funeral segment due to the COVID-related “pull forward” effect, we continued to improve our top line through targeted enhancements to our pricing strategy, leading to total funeral operating revenue growth of 1.8% over the same quarter last year. Furthermore, we have made noticeable progress with our cost management initiatives, which led to an increase in adjusted consolidated EBITDA of 20.9% and an expansion of our adjusted consolidated EBITDA margin of 340 basis points to 32.5% when compared to the same quarter last year.

We remain excited about the future at Carriage. As we continue to focus on the implementation of our strategic objectives, as highlighted in our recent 2023 shareholder letter, we are encouraged by these positive results and remain fully committed to our new purpose statement: 'Creating premier experiences through innovation, empowered partnership, and elevated service',” concluded Mr. Quezada.

FINANCIAL HIGHLIGHTS

    Three months ended March 31,
(in millions except margins and EPS)     2023       2024  
         
GAAP Metrics:        
Total revenue   $ 95.5     $ 103.5  
Operating income   $ 20.6     $ 19.5  
Operating income margin     21.6 %     18.8 %
Net income   $ 8.8     $ 7.0  
Diluted EPS   $ 0.57     $ 0.45  
Cash provided by operating activities   $ 25.9     $ 19.7  
         
Non-GAAP Metrics(1):        
Adjusted consolidated EBITDA   $ 27.8     $ 33.6  
Adjusted consolidated EBITDA margin     29.1 %     32.5 %
Adjusted diluted EPS   $ 0.56     $ 0.75  
Adjusted free cash flow   $ 17.0     $ 20.9  
(1)  We present both GAAP and non-GAAP measures to provide investors with additional information and to allow for the increased comparability of our ongoing performance from period to period. 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.
 
  • Revenue for the three months ended March 31, 2024 increased $8.0 million compared to the three months ended March 31, 2023, as we experienced a 37.3% increase in the number of preneed interment rights (property) sold, a 7.9% increase in the average price per preneed interment right sold and a 4.1% increase in the average revenue per funeral contract, offset by a 2.6% decrease in consolidated funeral contract volume.
  • Net income for the three months ended March 31, 2024 decreased $1.9 million compared to the three months ended March 31, 2023, as the $6.2 million increase in profit contribution from our businesses was offset by a $6.1 million increase in general, administrative and other expenses and $1.3 million increase in loss on divestitures.

CALL AND INVESTOR RELATIONS CONTACT

Carriage Services has scheduled a conference call for tomorrow, May 2, 2024 at 9:30 a.m. central time. To participate in the call, please dial 888-224-1005 (Conference ID - 6599558) or to listen 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 email InvestorRelations@carriageservices.com.
 

CARRIAGE SERVICES, INC.
CONDENSED OPERATING AND FINANCIAL TREND REPORT
(in thousands - except per share amounts)
       
  Three months ended March 31,
    2023       2024  
Funeral operating revenue $         65,407     $         66,578  
Cemetery operating revenue           21,317               27,581  
Financial revenue           6,068               6,936  
Ancillary revenue           1,057               1,247  
Divested revenue           1,665               1,151  
Total revenue $         95,514     $         103,493  
       
Funeral operating EBITDA $         26,327     $         27,527  
Funeral operating EBITDA margin           40.3 %             41.3 %
       
Cemetery operating EBITDA           8,312               11,952  
Cemetery operating EBITDA margin           39.0 %             43.3 %
       
Financial EBITDA           5,727               6,505  
Financial EBITDA margin           94.4 %             93.8 %
       
Ancillary EBITDA           146               173  
Ancillary EBITDA margin           13.8 %             13.9 %
       
Divested EBITDA           538               170  
Divested EBITDA margin           32.3 %             14.8 %
Total field EBITDA $         41,050     $         46,327  
Total field EBITDA margin           43.0 %             44.8 %
       
Total overhead $         13,265     $         19,356  
Overhead as a percentage of revenue           13.9 %             18.7 %
       
Consolidated EBITDA $         27,785     $         26,971  
Consolidated EBITDA margin           29.1 %             26.1 %
       
Other expenses and interest      
Depreciation & amortization $         4,769     $         5,460  
Non-cash stock compensation           2,141               489  
Interest expense           8,539               8,712  
Other           (10 )             1,588  
Pretax income $         12,346     $         10,722  
Net tax expense           3,502               3,749  
Net income $         8,844     $         6,973  
Special items(1) $         (177 )   $         6,795  
Tax on special items           (51 )             2,229  
Adjusted net income $         8,718     $         11,539  
Adjusted net income margin           9.1 %             11.1 %
       
Adjusted basic earnings per share $         0.58     $         0.77  
Adjusted diluted earnings per share $         0.56     $         0.75  
       
GAAP basic earnings per share $         0.59     $         0.46  
GAAP diluted earnings per share $         0.57     $         0.45  
       
Weighted average shares o/s - basic           14,758               14,876  
Weighted average shares o/s - diluted           15,468               15,309  
       
Reconciliation of Consolidated EBITDA to Adjusted consolidated EBITDA      
Consolidated EBITDA $         27,785     $         26,971  
Special items(1)           —               6,630  
Adjusted consolidated EBITDA $         27,785     $         33,601  
Adjusted consolidated EBITDA margin           29.1 %             32.5 %
(1)  A detail of our Special items presented in this table can be found in the Reconciliation of Non-GAAP Financial Measures section of this press release.
 

 

 

CARRIAGE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited and in thousands)
 
  December 31, 2023   March 31, 2024
ASSETS      
Current assets:      
Cash and cash equivalents $         1,523     $         1,689  
Accounts receivable, net           27,060               26,549  
Inventories           8,347               8,252  
Prepaid and other current assets           4,791               3,905  
Total current assets           41,721               40,395  
Preneed cemetery trust investments           96,374               98,757  
Preneed funeral trust investments           107,842               109,833  
Preneed cemetery receivables, net           35,575               36,854  
Receivables from preneed funeral trusts, net           21,530               21,632  
Property, plant and equipment, net           287,484               281,965  
Cemetery property, net           114,580               114,002  
Goodwill           423,643               414,895  
Intangible and other non-current assets, net           37,677               37,872  
Operating lease right-of-use assets           16,295               16,512  
Cemetery perpetual care trust investments           85,331               87,802  
Total assets $         1,268,052     $         1,260,519  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Current portion of debt and lease obligations $         3,842     $         3,953  
Accounts payable           11,866               12,727  
Accrued and other liabilities           35,362               39,380  
Total current liabilities           51,070               56,060  
Acquisition debt, net of current portion           5,461               5,380  
Credit facility           177,794               152,932  
Senior notes           395,905               396,075  
Obligations under finance leases, net of current portion           5,831               5,434  
Obligations under operating leases, net of current portion           15,797               15,802  
Deferred preneed cemetery revenue           61,048               61,219  
Deferred preneed funeral revenue           39,537               39,745  
Deferred tax liability           52,127               49,785  
Other long-term liabilities           1,855               1,942  
Deferred preneed cemetery receipts held in trust           96,374               98,757  
Deferred preneed funeral receipts held in trust           107,842               109,833  
Care trusts’ corpus           84,351               88,000  
Total liabilities           1,094,992               1,080,964  
Commitments and contingencies:      
Stockholders’ equity:      
Common stock           266               268  
Additional paid-in capital           241,291               240,811  
Retained earnings           210,256               217,229  
Treasury stock           (278,753 )             (278,753 )
Total stockholders’ equity           173,060               179,555  
Total liabilities and stockholders’ equity $         1,268,052     $         1,260,519  

 

 
CARRIAGE SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share data)
 
  Three months ended March 31,
    2023       2024  
       
Revenue:      
Service revenue $         48,207     $         49,699  
Property and merchandise revenue           40,011               45,502  
Other revenue           7,296               8,292  
            95,514               103,493  
Field costs and expenses:      
Cost of service           23,477               23,708  
Cost of merchandise           29,734               31,950  
Cemetery property amortization           1,201               1,756  
Field depreciation expense           3,357               3,467  
Regional and unallocated funeral and cemetery costs           5,437               3,842  
Other expenses           1,253               1,508  
            64,459               66,231  
Gross profit           31,055               37,262  
       
Corporate costs and expenses:      
General, administrative and other           10,180               16,240  
Net loss on divestitures, disposals and impairments charges           241               1,545  
Operating income           20,634               19,477  
       
Interest expense           8,539               8,712  
Loss on property damage, net of insurance claims           271               —  
Other, net           (522 )             43  
Income before income taxes           12,346               10,722  
Expense for income taxes           3,568               3,519  
(Benefit) expense related to discrete items           (66 )             230  
Total expense for income taxes           3,502               3,749  
Net income $         8,844     $         6,973  
       
Basic earnings per common share: $         0.59     $         0.46  
Diluted earnings per common share: $         0.57     $         0.45  
       
Dividends declared per common share: $         0.1125     $         0.1125  
       
Weighted average number of common and common equivalent shares outstanding:      
Basic           14,758               14,876  
Diluted           15,468               15,309  

 

 
CARRIAGE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
 
  Three months ended March 31,
    2023       2024  
Cash flows from operating activities:      
Net income $         8,844     $         6,973  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization           4,769               5,460  
Provision for credit losses           699               782  
Stock-based compensation expense           2,141               489  
Deferred income tax benefit           (178 )             (2,342 )
Amortization of intangibles           321               332  
Amortization of debt issuance costs           174               176  
Amortization and accretion of debt           127               132  
Net loss on divestitures, disposals and impairment charges           241               1,545  
Loss on property damage, net of insurance claims           271               —  
Gain on sale of excess land           (530 )             —  
       
Changes in operating assets and liabilities that provided (used) cash:      
Accounts and preneed receivables           120               (1,800 )
Inventories, prepaid and other current assets           884               814  
Intangible and other non-current assets           (1,277 )             (834 )
Preneed funeral and cemetery trust investments           5,356               (15,255 )
Accounts payable           (246 )             862  
Accrued and other liabilities           1,924               4,831  
Deferred preneed funeral and cemetery revenue           8,132               2,267  
Deferred preneed funeral and cemetery receipts held in trust           (5,903 )             15,271  
Net cash provided by operating activities           25,869               19,703  
       
Cash flows from investing activities:      
Acquisitions of businesses and real estate           (44,000 )             —  
Proceeds from divestitures and sale of other assets           1,275               10,877  
Proceeds from insurance claims           421               46  
Capital expenditures           (4,982 )             (3,551 )
Net cash (used in) provided by investing activities           (47,286 )             7,372  
       
Cash flows from financing activities:      
Borrowings from the credit facility           51,700               13,600  
Payments against the credit facility           (28,800 )             (38,600 )
Payments on acquisition debt and obligations under finance leases           (127 )             (152 )
Proceeds from the exercise of stock options and employee stock purchase plan contributions           526               347  
Taxes paid on restricted stock vestings and exercise of stock options           (98 )             (418 )
Dividends paid on common stock           (1,661 )             (1,686 )
Net cash provided by (used in) financing activities           21,540               (26,909 )
       
Net increase in cash and cash equivalents           123               166  
Cash and cash equivalents at beginning of period           1,170               1,523  
Cash and cash equivalents at end of period $         1,293     $         1,689  


NON-GAAP FINANCIAL MEASURES

This earnings release uses Non-GAAP financial measures to present the financial performance of the Company. 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 earnings release.

The Non-GAAP financial measures used in this earnings release and the definitions of them used by the Company for our internal management purposes in this earnings 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. 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 operating income, plus depreciation and amortization expense, non-cash stock compensation and net loss on divestitures, disposals and impairment charges. 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 severance and separation costs and other special items. Adjusted consolidated EBITDA margin is defined as adjusted consolidated EBITDA as a percentage of total revenue.
  • Adjusted free cash flow is defined as cash provided by operating activities, adjusted by special items as deemed necessary, less cash for maintenance capital expenditures, which include facility repairs and improvements, equipment, furniture and vehicle purchases. Adjusted free cash flow margin is defined as adjusted free cash flow as a percentage of total revenue.
  • Funeral operating EBITDA is defined as funeral gross profit, plus depreciation and amortization and regional and unallocated costs, less financial EBITDA, ancillary EBITDA and divested EBITDA related to the funeral home segment. Funeral operating EBITDA margin is defined as funeral operating EBITDA as a percentage of funeral operating revenue.
  • Cemetery operating EBITDA is defined as cemetery gross profit, plus depreciation and amortization and regional and unallocated costs, less financial EBITDA and divested EBITDA related to the cemetery segment. Cemetery operating EBITDA margin is defined as cemetery operating EBITDA as a percentage of cemetery operating revenue.
  • Preneed cemetery sales is defined as cemetery property, merchandise and services sold prior to death.
  • Financial EBITDA is defined as financial revenue, less the related expenses. Financial revenue and the related expenses are presented within Other revenue and Other expenses, respectively, on the Consolidated Statement of Operations. Financial EBITDA margin is defined as financial EBITDA as a percentage of financial revenue.
  • Ancillary revenue is defined as revenues from our ancillary businesses, which include a flower shop, a monument business, a pet cremation business and our online cremation businesses. 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 revenue is defined as revenues from certain funeral home and cemetery businesses that we have divested.
  • Divested EBITDA is defined as divested revenue, less field level and financial expenses related to the divested businesses noted above. Divested EBITDA margin is defined as divested EBITDA as a percentage of divested revenue.
  • Overhead expenses are defined as regional and unallocated funeral and cemetery costs and general, administrative and other costs, excluding home office depreciation and non-cash stock compensation.
  • 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.

Funeral Operating EBITDA and Cemetery Operating EBITDA

Our operations are reported in two business segments: Funeral Home operations and Cemetery operations. Our operating level results highlight trends in volumes, revenue, operating EBITDA (the individual business’ cash earning power/locally controllable business profit) and operating EBITDA margin (the individual business’ controllable profit margin).

Funeral operating EBITDA and cemetery operating EBITDA are defined above. Funeral and cemetery gross profit 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, and iii) regional and unallocated funeral and cemetery costs. 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.

Usefulness and Limitations of These Measures

When used in conjunction with GAAP financial measures, our total 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.

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 operating EBITDA, cemetery operating EBITDA, financial EBITDA, ancillary EBITDA and divested EBITDA are not consolidated measures of profitability.

Our total 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.

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 operating 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. We strongly encourage 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

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 Operating income to Consolidated EBITDA and Adjusted consolidated EBITDA (in thousands) and Operating income margin to Adjusted consolidated EBITDA margin for the three months ended March 31, 2023 and 2024:

  Three months ended March 31,
   2023    2024
Operating income $         20,634     $         19,477  
Depreciation & amortization           4,769               5,460  
Non-cash stock compensation           2,141               489  
Net loss on divestitures, disposals and impairment charges           241               1,545  
Consolidated EBITDA $         27,785     $         26,971  
Adjusted for:      
Severance and separation costs(1) $         —     $         5,457  
Other special items(2)           —               1,173  
Adjusted consolidated EBITDA $         27,785     $         33,601  
       
Total revenue $         95,514     $         103,493  
Operating income margin           21.6 %             18.8 %
Adjusted consolidated EBITDA margin           29.1 %             32.5 %
(1)  Primarily represents the severance and performance award settlement expense recognized during the first quarter of 2024 for our former Executive Chairman of the Board per his Transition Agreement which was effective February 22, 2024.
(2)  Represents expenses related to the review of strategic alternatives.
 

Special items affecting Adjusted net income (in thousands) for the three months ended March 31, 2023 and 2024:

  Three months ended March 31,
    2023       2024  
Severance and separation costs(1) $         —     $         5,457  
Equity award cancellation(2)           —               (1,336 )
Net (gain) loss on divestitures and sale of real estate(3)           (448 )             1,501  
Loss on property damage, net of insurance claims(4)           271               —  
Other special items(5)           —               1,173  
Total $         (177 )   $         6,795  
(1)  Primarily represents the severance and performance award settlement expense recognized during the first quarter of 2024 for our former Executive Chairman of the Board per his Transition Agreement, which was effective February 22, 2024.
(2)  Primarily represents the stock compensation benefit recognized during the first quarter of 2024 for equity awards cancelled for our former Executive Chairman of the Board per his Transition Agreement, which was effective February 22, 2024.
(3)  Represents the net gain or loss recognized for the sale of businesses and real estate during the periods presented.
(4)  Represents the loss on property damage, net of insurance claims for property damaged by a fire that occurred during first quarter of 2023.
(5)  Represents expenses related to the review of strategic alternatives.
 

Reconciliation of GAAP basic earnings per share to Adjusted basic earnings per share for the three months ended March 31, 2023 and 2024:

  Three months ended March 31,
    2023       2024  
GAAP basic earnings per share $         0.59     $         0.46  
Special items           (0.01 )             0.31  
Adjusted basic earnings per share $         0.58     $         0.77  


Reconciliation of GAAP diluted earnings per share to Adjusted diluted earnings per share for the three months ended March 31, 2023 and 2024:

  Three months ended March 31,
    2023       2024  
GAAP diluted earnings per share $         0.57     $         0.45  
Special items           (0.01 )             0.30  
Adjusted diluted earnings per share $         0.56     $         0.75  


Reconciliation of Cash provided by operating activities to Adjusted free cash flow (in thousands) for the three months ended March 31, 2023 and 2024:

  Current(1)   Adjustments(1)   Revised(1)
  Three months ended March 31,
    2023       2024       2023       2024       2023       2024  
Cash provided by operating activities $         25,869     $         19,703     $         —     $         —     $         25,869     $         19,703  
Cash used for capital expenditures           (1,842 )             (1,162 )             (3,140 )             (2,389 )             (4,982 )             (3,551 )
Free cash flow $         24,027     $         18,541     $         (3,140 )   $         (2,389 )   $         20,887     $         16,152  
                       
Plus: incremental special items:                      
Withdrawal from preneed funeral and cemetery trust investments(2) $         (7,002 )   $         —     $         —     $         —     $         (7,002 )   $         —  
Severance and separation costs(3)           —               1,211               —               —               —               1,211  
Other special items(4)           —               1,173               —               —               —               1,173  
Adjusted free cash flow $         17,025     $         20,925     $         (3,140 )   $         (2,389 )   $         13,885     $         18,536  
(1)  We have provided full year 2024 guidance for adjusted free cash flow based on the calculation in the current column above, which includes cash used for maintenance expenditures. However, in years subsequent to 2024, we plan to provide adjusted free cash flow guidance based on a revised adjusted free cash flow calculation, which includes cash used for total capital expenditures. The adjustments column above reflects the cash used for growth capital expenditures. The revised column above reflects adjusted free cash flow based on a calculation which includes cash used for total capital expenditures.
(2)  During the three months ended March 31, 2023, we withdrew $7.0 million of realized capital gains and earnings from our preneed funeral and cemetery trust investments. In certain states, we are allowed to withdraw these funds prior to the delivery of preneed merchandise and service contracts. While the realized capital gains and earnings are not recognized as revenue, they increase our cash flow from operations.
(3)  Primarily represents the cash paid to our former Executive Chairman of the Board per his Transition Agreement, which was effective February 22, 2024, during the first quarter of 2024.
(4)  Represents expenses related to the review of strategic alternatives.
 

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

This earnings release contains 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, and 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 made herein or elsewhere by us, or on our behalf, other than statements of historical information, should be deemed to be forward-looking statements, which 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, cost inflation, overhead, preneed sales or other financial items; any statements of the plans, strategies, objectives and timing of management for future operations or financing activities, including, but not limited to, technology improvements, product development, capital allocation, organizational performance, execution of our strategic objectives and growth plan, planned divestitures, the ability to obtain credit or financing, anticipated integration, performance and other benefits of recently completed and anticipated acquisitions, and cost management and debt reductions; any statements of the plans, timing and objectives of management for acquisition and divestiture activities; any statements regarding future economic conditions and market conditions or performance; any projections or expectations related to the conclusion of the Board's strategic review; 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. Words such as “may”, “will”, “estimate”, “intend”, “believe”, “expect”, “seek”, “project”, “forecast”, “foresee”, “should”, “would”, “could”, “plan”, “anticipate” and other similar words may be used to identify forward-looking statements; however, the absence of these words does not mean that the statements are not forward-looking. While we believe these assumptions concerning future events 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: 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 strategic objectives and growth strategy, if at all; the potential adverse effects on the Company’s business, financial and equity performance if management fails to meet the expectations of its strategic objectives and growth plan; our ability to execute and meet the objectives of our High Performance and Credit Profile Restoration Plan, if at all; the execution of our Standards Operating and Strategic Acquisition Models; the effects of competition; changes in the number of deaths in our markets, which are not predictable from market to market or over the short term; 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, including, but not limited to, the effects of increased borrowing costs under our Credit Facility and our ability to minimize such costs, if at all; the effects of inflation on our operational and financial performance, including the increased overall costs for 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 goals to our full year 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 merchandise, goods, insurance or taxes, and our ability to mitigate or minimize such costs, if at all; 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, such as the COVID-19 coronavirus, including any new or emerging public health threats, on customer preferences and on our business; government, social, business and other actions that have been and will be taken in response to pandemics and epidemics, such as those that were taken with the COVID-19 coronavirus, including potential responses to any new or emerging public health threats; effects and expense of litigation; consolidation in 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; potential adverse impacts resulting from shareholder or market perceptions of our recent announcement regarding the conclusion of our Board’s review of potential strategic alternatives; economic, financial and stock market fluctuations; interruptions or security lapses of our information technology, including any cybersecurity or ransomware incidents; adverse developments affecting the financial services industry; acts of war or terrorists acts and the governmental or military response to such acts; 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, 2023, and in other filings with the SEC, available at www.carriageservices.com. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of the applicable communication and we undertake no obligation to publicly update or revise any forward-looking statements except to the extent required by applicable law.


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Source: Carriage Services, Inc.