csv-20211231
0001016281false2021FYP1YP10YP1YP8YP5Yhttp://fasb.org/us-gaap/2021-01-31#PropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2021-01-31#PropertyPlantAndEquipmentNetP1YP1YP3YP3DP3DP7Y4.785.9416.7320.4922.5826.934.7826.9300010162812021-01-012021-12-3100010162812021-06-30iso4217:USD00010162812022-02-25xbrli:shares00010162812020-12-3100010162812021-12-310001016281us-gaap:SeniorNotesMember2020-12-310001016281us-gaap:SeniorNotesMember2021-12-31iso4217:USDxbrli:shares0001016281csv:ServiceRevenueMember2019-01-012019-12-310001016281csv:ServiceRevenueMember2020-01-012020-12-310001016281csv:ServiceRevenueMember2021-01-012021-12-310001016281csv:PropertyandMerchandiseMember2019-01-012019-12-310001016281csv:PropertyandMerchandiseMember2020-01-012020-12-310001016281csv:PropertyandMerchandiseMember2021-01-012021-12-310001016281csv:OtherRevenueMember2019-01-012019-12-310001016281csv:OtherRevenueMember2020-01-012020-12-310001016281csv:OtherRevenueMember2021-01-012021-12-3100010162812019-01-012019-12-3100010162812020-01-012020-12-310001016281us-gaap:CommonStockMember2018-12-310001016281us-gaap:AdditionalPaidInCapitalMember2018-12-310001016281us-gaap:RetainedEarningsMember2018-12-310001016281us-gaap:TreasuryStockMember2018-12-3100010162812018-12-310001016281us-gaap:RetainedEarningsMember2019-01-012019-12-310001016281us-gaap:CommonStockMember2019-01-012019-12-310001016281us-gaap:AdditionalPaidInCapitalMember2019-01-012019-12-310001016281srt:DirectorMemberus-gaap:CommonStockMember2019-01-012019-12-310001016281srt:DirectorMemberus-gaap:AdditionalPaidInCapitalMember2019-01-012019-12-310001016281srt:DirectorMember2019-01-012019-12-310001016281us-gaap:TreasuryStockMember2019-01-012019-12-310001016281us-gaap:CommonStockMember2019-12-310001016281us-gaap:AdditionalPaidInCapitalMember2019-12-310001016281us-gaap:RetainedEarningsMember2019-12-310001016281us-gaap:TreasuryStockMember2019-12-3100010162812019-12-310001016281us-gaap:RetainedEarningsMember2020-01-012020-12-310001016281us-gaap:CommonStockMember2020-01-012020-12-310001016281us-gaap:AdditionalPaidInCapitalMember2020-01-012020-12-310001016281srt:DirectorMemberus-gaap:CommonStockMember2020-01-012020-12-310001016281srt:DirectorMemberus-gaap:AdditionalPaidInCapitalMember2020-01-012020-12-310001016281srt:DirectorMember2020-01-012020-12-310001016281us-gaap:CommonStockMember2020-12-310001016281us-gaap:AdditionalPaidInCapitalMember2020-12-310001016281us-gaap:RetainedEarningsMember2020-12-310001016281us-gaap:TreasuryStockMember2020-12-310001016281us-gaap:RetainedEarningsMember2021-01-012021-12-310001016281us-gaap:CommonStockMember2021-01-012021-12-310001016281us-gaap:AdditionalPaidInCapitalMember2021-01-012021-12-310001016281srt:DirectorMemberus-gaap:CommonStockMember2021-01-012021-12-310001016281srt:DirectorMemberus-gaap:AdditionalPaidInCapitalMember2021-01-012021-12-310001016281srt:DirectorMember2021-01-012021-12-310001016281us-gaap:TreasuryStockMember2021-01-012021-12-310001016281us-gaap:CommonStockMember2021-12-310001016281us-gaap:AdditionalPaidInCapitalMember2021-12-310001016281us-gaap:RetainedEarningsMember2021-12-310001016281us-gaap:TreasuryStockMember2021-12-31csv:segment0001016281csv:FuneralHomesMember2021-12-31xbrli:pure0001016281csv:CemeteriesMember2021-12-310001016281csv:FuneralMember2021-01-012021-12-31csv:numberOfOperatingLocationcsv:state0001016281csv:CemeteryMember2021-01-012021-12-310001016281csv:FuneralAndCemeteryMember2021-01-012021-12-310001016281csv:CemeteryMember2021-01-012021-12-3100010162812020-01-032020-01-03csv:funeral_home0001016281csv:SeniorNotesDue2026Member2021-01-012021-12-31csv:divestiture0001016281stpr:KYus-gaap:DiscontinuedOperationsDisposedOfBySaleMember2021-12-310001016281csv:SeniorNotesDue2026Member2020-01-012020-12-310001016281srt:MaximumMember2021-01-012021-12-310001016281srt:MinimumMember2021-01-012021-12-310001016281us-gaap:BuildingAndBuildingImprovementsMembersrt:MinimumMember2021-01-012021-12-310001016281us-gaap:BuildingAndBuildingImprovementsMembersrt:MaximumMember2021-01-012021-12-310001016281srt:MinimumMemberus-gaap:FurnitureAndFixturesMember2021-01-012021-12-310001016281srt:MaximumMemberus-gaap:FurnitureAndFixturesMember2021-01-012021-12-310001016281srt:MinimumMemberus-gaap:MachineryAndEquipmentMember2021-01-012021-12-310001016281srt:MaximumMemberus-gaap:MachineryAndEquipmentMember2021-01-012021-12-310001016281srt:MinimumMemberus-gaap:AutomobilesMember2021-01-012021-12-310001016281srt:MaximumMemberus-gaap:AutomobilesMember2021-01-012021-12-310001016281us-gaap:LandMember2020-12-310001016281us-gaap:LandMember2021-12-310001016281us-gaap:BuildingAndBuildingImprovementsMember2020-12-310001016281us-gaap:BuildingAndBuildingImprovementsMember2021-12-310001016281csv:FurnitureEquipmentAndAutomobilesMember2020-12-310001016281csv:FurnitureEquipmentAndAutomobilesMember2021-12-310001016281csv:FuneralMember2021-01-012021-12-310001016281csv:LafayetteCaliforniaMember2020-12-310001016281csv:CemeteryMember2021-01-012021-12-310001016281srt:MinimumMember2021-12-310001016281srt:MaximumMember2021-12-310001016281csv:FuneralMember2020-12-310001016281csv:FuneralMember2021-12-3100010162812022-01-01csv:FuneralMember2021-12-310001016281csv:CemeteryMember2020-12-310001016281csv:CemeteryMember2021-12-310001016281csv:CemeteryMember2022-01-012021-12-310001016281csv:SeparateIncomeTaxReturnMember2021-01-012021-12-310001016281csv:CombinedAndUnitaryIncomeTaxReturnMember2021-01-012021-12-3100010162812020-06-302020-06-300001016281csv:LafayetteCaliforniaMember2020-01-032020-01-03csv:business0001016281csv:LafayetteCaliforniaMember2019-01-012019-12-310001016281csv:LafayetteCaliforniaMember2020-01-012020-12-310001016281csv:LafayetteCaliforniaMember2020-01-030001016281csv:LafayetteCaliforniaMember2021-01-012021-12-310001016281csv:LafayetteCaliforniaMember2021-12-310001016281csv:CemeteryMember2020-01-012020-12-310001016281csv:FuneralMember2020-01-012020-12-310001016281us-gaap:DiscontinuedOperationsDisposedOfBySaleMemberstpr:TN2019-01-012019-12-310001016281us-gaap:DiscontinuedOperationsDisposedOfBySaleMemberstpr:TN2020-01-012020-12-310001016281us-gaap:DiscontinuedOperationsDisposedOfBySaleMemberstpr:TN2021-01-012021-12-310001016281us-gaap:CorporateMember2021-12-310001016281us-gaap:CorporateMember2020-12-310001016281csv:PreneedCemeteryReceivablesMember2020-12-310001016281csv:PreneedCemeteryReceivablesMember2021-01-012021-12-310001016281csv:PreneedCemeteryReceivablesMember2021-12-310001016281csv:RecognizedRevenueMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-12-310001016281csv:RecognizedRevenueMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-12-310001016281csv:RecognizedRevenueMembercsv:FinancingReceivables90to120DaysPastDueMember2021-12-310001016281csv:RecognizedRevenueMembercsv:FinancingReceivablesGreaterThan120DaysPastDueMember2021-12-310001016281csv:RecognizedRevenueMemberus-gaap:FinancialAssetPastDueMember2021-12-310001016281csv:RecognizedRevenueMemberus-gaap:FinancialAssetNotPastDueMember2021-12-310001016281csv:RecognizedRevenueMember2021-12-310001016281csv:DeferredRevenueMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-12-310001016281us-gaap:FinancingReceivables60To89DaysPastDueMembercsv:DeferredRevenueMember2021-12-310001016281csv:DeferredRevenueMembercsv:FinancingReceivables90to120DaysPastDueMember2021-12-310001016281csv:FinancingReceivablesGreaterThan120DaysPastDueMembercsv:DeferredRevenueMember2021-12-310001016281csv:DeferredRevenueMemberus-gaap:FinancialAssetPastDueMember2021-12-310001016281us-gaap:FinancialAssetNotPastDueMembercsv:DeferredRevenueMember2021-12-310001016281csv:DeferredRevenueMember2021-12-310001016281us-gaap:FinancingReceivables30To59DaysPastDueMember2021-12-310001016281us-gaap:FinancingReceivables60To89DaysPastDueMember2021-12-310001016281csv:FinancingReceivables90to120DaysPastDueMember2021-12-310001016281csv:FinancingReceivablesGreaterThan120DaysPastDueMember2021-12-310001016281us-gaap:FinancialAssetPastDueMember2021-12-310001016281us-gaap:FinancialAssetNotPastDueMember2021-12-310001016281csv:RecognizedRevenueMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2020-12-310001016281csv:RecognizedRevenueMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2020-12-310001016281csv:RecognizedRevenueMembercsv:FinancingReceivables90to120DaysPastDueMember2020-12-310001016281csv:RecognizedRevenueMembercsv:FinancingReceivablesGreaterThan120DaysPastDueMember2020-12-310001016281csv:RecognizedRevenueMemberus-gaap:FinancialAssetPastDueMember2020-12-310001016281csv:RecognizedRevenueMemberus-gaap:FinancialAssetNotPastDueMember2020-12-310001016281csv:RecognizedRevenueMember2020-12-310001016281csv:DeferredRevenueMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2020-12-310001016281us-gaap:FinancingReceivables60To89DaysPastDueMembercsv:DeferredRevenueMember2020-12-310001016281csv:DeferredRevenueMembercsv:FinancingReceivables90to120DaysPastDueMember2020-12-310001016281csv:FinancingReceivablesGreaterThan120DaysPastDueMembercsv:DeferredRevenueMember2020-12-310001016281csv:DeferredRevenueMemberus-gaap:FinancialAssetPastDueMember2020-12-310001016281us-gaap:FinancialAssetNotPastDueMembercsv:DeferredRevenueMember2020-12-310001016281csv:DeferredRevenueMember2020-12-310001016281us-gaap:FinancingReceivables30To59DaysPastDueMember2020-12-310001016281us-gaap:FinancingReceivables60To89DaysPastDueMember2020-12-310001016281csv:FinancingReceivables90to120DaysPastDueMember2020-12-310001016281csv:FinancingReceivablesGreaterThan120DaysPastDueMember2020-12-310001016281us-gaap:FinancialAssetPastDueMember2020-12-310001016281us-gaap:FinancialAssetNotPastDueMember2020-12-310001016281csv:PreneedCemeteryTrustInvestmentsMember2020-12-310001016281csv:PreneedCemeteryTrustInvestmentsMember2021-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CashAndCashEquivalentsMember2021-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:ForeignGovernmentDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2021-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2021-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:PreferredStockMemberus-gaap:FairValueInputsLevel2Member2021-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CommonStockMember2021-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EquitySecuritiesMember2021-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FixedIncomeFundsMember2021-12-310001016281csv:AccruedInvestmentIncomeMembercsv:PreneedCemeteryTrustInvestmentsMember2021-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CashAndCashEquivalentsMember2020-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:ForeignGovernmentDebtSecuritiesMember2020-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:CorporateDebtSecuritiesMember2020-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:PreferredStockMember2020-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:MortgageBackedSecuritiesMember2020-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CommonStockMember2020-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FixedIncomeFundsMember2020-12-310001016281csv:PreneedCemeteryTrustInvestmentsMembercsv:TrustSecuritiesMember2020-12-310001016281csv:AccruedInvestmentIncomeMembercsv:PreneedCemeteryTrustInvestmentsMember2020-12-310001016281csv:PreneedCemeteryTrustInvestmentsMembercsv:ForeignDebtSecuritiesMember2021-12-310001016281csv:PreneedCemeteryTrustInvestmentsMemberus-gaap:CorporateDebtSecuritiesMember2021-12-310001016281csv:PreneedCemeteryTrustInvestmentsMembercsv:PreferredStockSecuritiesMember2021-12-310001016281csv:PreneedCemeteryTrustInvestmentsMembercsv:ForeignDebtSecuritiesMember2020-12-310001016281csv:PreneedCemeteryTrustInvestmentsMembercsv:PreferredStockSecuritiesMember2020-12-310001016281csv:PreneedCemeteryTrustInvestmentsMember2019-01-012019-12-310001016281csv:PreneedCemeteryTrustInvestmentsMember2020-01-012020-12-310001016281csv:PreneedCemeteryTrustInvestmentsMember2021-01-012021-12-310001016281csv:PreneedFuneralTrustInvestmentsMember2020-12-310001016281csv:PreneedFuneralTrustInvestmentsMember2021-12-310001016281us-gaap:FairValueInputsLevel1Memberus-gaap:CashAndCashEquivalentsMembercsv:PreneedFuneralTrustInvestmentsMember2021-12-310001016281us-gaap:ForeignGovernmentDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Membercsv:PreneedFuneralTrustInvestmentsMember2021-12-310001016281us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMembercsv:PreneedFuneralTrustInvestmentsMember2021-12-310001016281us-gaap:PreferredStockMemberus-gaap:FairValueInputsLevel2Membercsv:PreneedFuneralTrustInvestmentsMember2021-12-310001016281us-gaap:FairValueInputsLevel1Memberus-gaap:CommonStockMembercsv:PreneedFuneralTrustInvestmentsMember2021-12-310001016281us-gaap:FairValueInputsLevel2Membercsv:PreneedFuneralTrustInvestmentsMemberus-gaap:EquitySecuritiesMember2021-12-310001016281us-gaap:FixedIncomeSecuritiesMemberus-gaap:FairValueInputsLevel2Membercsv:PreneedFuneralTrustInvestmentsMember2021-12-310001016281us-gaap:FairValueInputsLevel2Membercsv:PreneedFuneralTrustInvestmentsMemberus-gaap:OtherInvestmentsMember2021-12-310001016281csv:AccruedInvestmentIncomeMembercsv:PreneedFuneralTrustInvestmentsMember2021-12-310001016281us-gaap:FairValueInputsLevel1Memberus-gaap:CashAndCashEquivalentsMembercsv:PreneedFuneralTrustInvestmentsMember2020-12-310001016281us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMembercsv:PreneedFuneralTrustInvestmentsMember2020-12-310001016281us-gaap:ForeignGovernmentDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Membercsv:PreneedFuneralTrustInvestmentsMember2020-12-310001016281us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMembercsv:PreneedFuneralTrustInvestmentsMember2020-12-310001016281us-gaap:PreferredStockMemberus-gaap:FairValueInputsLevel2Membercsv:PreneedFuneralTrustInvestmentsMember2020-12-310001016281us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Membercsv:PreneedFuneralTrustInvestmentsMember2020-12-310001016281us-gaap:FairValueInputsLevel1Memberus-gaap:CommonStockMembercsv:PreneedFuneralTrustInvestmentsMember2020-12-310001016281us-gaap:FixedIncomeSecuritiesMemberus-gaap:FairValueInputsLevel2Membercsv:PreneedFuneralTrustInvestmentsMember2020-12-310001016281us-gaap:FairValueInputsLevel2Membercsv:PreneedFuneralTrustInvestmentsMemberus-gaap:OtherInvestmentsMember2020-12-310001016281csv:AccruedInvestmentIncomeMembercsv:PreneedFuneralTrustInvestmentsMember2020-12-310001016281csv:ForeignDebtSecuritiesMembercsv:PreneedFuneralTrustInvestmentsMember2021-12-310001016281us-gaap:CorporateDebtSecuritiesMembercsv:PreneedFuneralTrustInvestmentsMember2021-12-310001016281csv:PreneedFuneralTrustInvestmentsMembercsv:PreferredStockSecuritiesMember2021-12-310001016281csv:ForeignDebtSecuritiesMembercsv:PreneedFuneralTrustInvestmentsMember2020-12-310001016281us-gaap:CorporateDebtSecuritiesMembercsv:PreneedFuneralTrustInvestmentsMember2020-12-310001016281csv:PreneedFuneralTrustInvestmentsMembercsv:PreferredStockSecuritiesMember2020-12-310001016281us-gaap:MortgageBackedSecuritiesMembercsv:PreneedFuneralTrustInvestmentsMember2020-12-310001016281csv:PreneedFuneralTrustInvestmentsMember2019-01-012019-12-310001016281csv:PreneedFuneralTrustInvestmentsMember2020-01-012020-12-310001016281csv:PreneedFuneralTrustInvestmentsMember2021-01-012021-12-310001016281csv:PerpetualCareTrustInvesmentsMember2020-12-310001016281csv:PerpetualCareTrustInvesmentsMember2021-12-310001016281us-gaap:FairValueInputsLevel1Membercsv:PerpetualCareTrustInvesmentsMemberus-gaap:CashAndCashEquivalentsMember2021-12-310001016281csv:PerpetualCareTrustInvesmentsMemberus-gaap:ForeignGovernmentDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2021-12-310001016281csv:PerpetualCareTrustInvesmentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2021-12-310001016281us-gaap:PreferredStockMembercsv:PerpetualCareTrustInvesmentsMemberus-gaap:FairValueInputsLevel2Member2021-12-310001016281us-gaap:FairValueInputsLevel1Memberus-gaap:CommonStockMembercsv:PerpetualCareTrustInvesmentsMember2021-12-310001016281csv:PerpetualCareTrustInvesmentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EquitySecuritiesMember2021-12-310001016281csv:PerpetualCareTrustInvesmentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FixedIncomeFundsMember2021-12-310001016281csv:PerpetualCareTrustInvesmentsMembercsv:TrustSecuritiesMember2021-12-310001016281csv:AccruedInvestmentIncomeMembercsv:PerpetualCareTrustInvesmentsMember2021-12-310001016281us-gaap:FairValueInputsLevel1Membercsv:PerpetualCareTrustInvesmentsMemberus-gaap:CashAndCashEquivalentsMember2020-12-310001016281csv:PerpetualCareTrustInvesmentsMemberus-gaap:ForeignGovernmentDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-12-310001016281csv:PerpetualCareTrustInvesmentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2020-12-310001016281us-gaap:PreferredStockMembercsv:PerpetualCareTrustInvesmentsMemberus-gaap:FairValueInputsLevel2Member2020-12-310001016281us-gaap:MortgageBackedSecuritiesMembercsv:PerpetualCareTrustInvesmentsMemberus-gaap:FairValueInputsLevel2Member2020-12-310001016281us-gaap:FairValueInputsLevel1Memberus-gaap:CommonStockMembercsv:PerpetualCareTrustInvesmentsMember2020-12-310001016281csv:PerpetualCareTrustInvesmentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FixedIncomeFundsMember2020-12-310001016281csv:PerpetualCareTrustInvesmentsMembercsv:TrustSecuritiesMember2020-12-310001016281csv:AccruedInvestmentIncomeMembercsv:PerpetualCareTrustInvesmentsMember2020-12-310001016281csv:ForeignDebtSecuritiesMembercsv:PerpetualCareTrustInvesmentsMember2021-12-310001016281csv:PerpetualCareTrustInvesmentsMemberus-gaap:CorporateDebtSecuritiesMember2021-12-310001016281csv:PerpetualCareTrustInvesmentsMembercsv:PreferredStockSecuritiesMember2021-12-310001016281csv:ForeignDebtSecuritiesMembercsv:PerpetualCareTrustInvesmentsMember2020-12-310001016281csv:PerpetualCareTrustInvesmentsMemberus-gaap:CorporateDebtSecuritiesMember2020-12-310001016281us-gaap:PreferredStockMembercsv:PerpetualCareTrustInvesmentsMember2020-12-310001016281us-gaap:MortgageBackedSecuritiesMembercsv:PerpetualCareTrustInvesmentsMember2020-12-310001016281csv:PerpetualCareTrustInvesmentsMembercsv:InterestExpenseNetofOtherIncomeMember2019-01-012019-12-310001016281csv:PerpetualCareTrustInvesmentsMembercsv:InterestExpenseNetofOtherIncomeMember2020-01-012020-12-310001016281csv:PerpetualCareTrustInvesmentsMembercsv:InterestExpenseNetofOtherIncomeMember2021-01-012021-12-310001016281csv:PerpetualCareTrustInvesmentsMember2019-01-012019-12-310001016281csv:PerpetualCareTrustInvesmentsMember2020-01-012020-12-310001016281csv:PerpetualCareTrustInvesmentsMember2021-01-012021-12-310001016281us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMemberus-gaap:CashAndCashEquivalentsMember2021-12-310001016281us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:CashAndCashEquivalentsMember2021-12-310001016281us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMemberus-gaap:FixedIncomeInvestmentsMember2021-12-310001016281us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FixedIncomeInvestmentsMember2021-12-310001016281csv:MutualFundsAndCommonStocksMemberus-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember2021-12-310001016281csv:MutualFundsAndCommonStocksMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001016281csv:AnnuitiesMemberus-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember2021-12-310001016281csv:AnnuitiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001016281us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember2021-12-310001016281us-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001016281us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMemberus-gaap:CashAndCashEquivalentsMember2020-12-310001016281us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:CashAndCashEquivalentsMember2020-12-310001016281us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMemberus-gaap:FixedIncomeInvestmentsMember2020-12-310001016281us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FixedIncomeInvestmentsMember2020-12-310001016281csv:MutualFundsAndCommonStocksMemberus-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember2020-12-310001016281csv:MutualFundsAndCommonStocksMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310001016281csv:AnnuitiesMemberus-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember2020-12-310001016281csv:AnnuitiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310001016281us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember2020-12-310001016281us-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310001016281csv:RevolvingCreditFacilitySecuredFloatingRateMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2021-12-310001016281us-gaap:NotesPayableOtherPayablesMembercsv:AcquisitionDebtMember2021-12-310001016281us-gaap:NoncompeteAgreementsMember2020-12-310001016281us-gaap:NoncompeteAgreementsMember2021-12-310001016281us-gaap:TradeNamesMember2020-01-012020-12-310001016281us-gaap:NoncompeteAgreementsMembersrt:MinimumMember2021-01-012021-12-310001016281us-gaap:NoncompeteAgreementsMembersrt:MaximumMember2021-01-012021-12-310001016281us-gaap:NoncompeteAgreementsMember2019-01-012019-12-310001016281us-gaap:NoncompeteAgreementsMember2020-01-012020-12-310001016281us-gaap:NoncompeteAgreementsMember2021-01-012021-12-310001016281us-gaap:NoncompeteAgreementsMembercsv:DivestitureMember2020-01-012020-12-310001016281us-gaap:NoncompeteAgreementsMembercsv:DivestitureMember2020-12-310001016281csv:CommissionsMember2021-12-310001016281csv:TermLoanMember2020-12-310001016281us-gaap:LetterOfCreditMember2020-12-310001016281csv:SwinglineMember2020-12-310001016281csv:NewTermLoanMember2021-05-1300010162812021-05-130001016281csv:RevolvingCreditFacilitySecuredFloatingRateMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2021-05-1300010162812020-09-292020-09-290001016281csv:CreditAgreementMember2021-05-132021-05-130001016281csv:CreditAgreementAmendmentMember2021-11-220001016281csv:RatioActualMembersrt:MinimumMember2021-12-310001016281csv:RatioActualMember2021-12-310001016281csv:RatioActualMembercsv:RevolvingCreditFacilitySecuredFloatingRateMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2021-12-310001016281csv:RevolvingCreditFacilitySecuredFloatingRateMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2020-12-310001016281csv:TermLoanMembercsv:CreditAgreementMember2020-12-310001016281csv:TermLoanMembercsv:CreditAgreementMember2021-12-310001016281us-gaap:NotesPayableOtherPayablesMembercsv:AcquisitionDebtMember2020-12-31csv:letter_of_credit0001016281csv:RevolvingCreditFacilitySecuredFloatingRateMember2018-05-312018-05-310001016281csv:RevolvingCreditFacilitySecuredFloatingRateMember2021-09-012021-09-010001016281csv:PrimeRateOptionMembercsv:RevolvingCreditFacilitySecuredFloatingRateMemberus-gaap:LineOfCreditMember2021-01-012021-12-310001016281csv:RevolvingCreditFacilitySecuredFloatingRateMemberus-gaap:LineOfCreditMembercsv:LiborMarginOptionMember2021-01-012021-12-310001016281csv:RevolvingCreditFacilitySecuredFloatingRateMembercsv:CreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2021-01-012021-12-310001016281csv:RevolvingCreditFacilitySecuredFloatingRateMembercsv:CreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2020-01-012020-12-310001016281csv:CreditAgreementMember2019-01-012019-12-310001016281csv:CreditAgreementMember2020-01-012020-12-310001016281csv:CreditAgreementMember2021-01-012021-12-310001016281us-gaap:LoansPayableMember2020-01-012020-12-310001016281us-gaap:LoansPayableMember2019-01-012019-12-310001016281csv:DeferredPurchasePriceNotesMembersrt:MinimumMember2021-12-310001016281srt:MaximumMembercsv:DeferredPurchasePriceNotesMember2021-12-310001016281csv:DeferredPurchasePriceNotesMembersrt:MinimumMember2021-01-012021-12-310001016281srt:MaximumMembercsv:DeferredPurchasePriceNotesMember2021-01-012021-12-310001016281csv:DeferredPurchasePriceNotesMember2019-01-012019-12-310001016281csv:DeferredPurchasePriceNotesMember2020-01-012020-12-310001016281csv:DeferredPurchasePriceNotesMember2021-01-012021-12-310001016281csv:CreditAgreementMember2021-12-310001016281csv:AcquisitionDebtMember2021-12-3100010162812014-03-190001016281us-gaap:ConvertibleSubordinatedDebtMember2014-03-1900010162812018-05-070001016281us-gaap:ConvertibleSubordinatedDebtMember2018-12-240001016281us-gaap:ConvertibleSubordinatedDebtMember2019-04-0400010162812020-09-0900010162812021-03-120001016281us-gaap:ConvertibleSubordinatedDebtMember2021-03-120001016281us-gaap:ConvertibleSubordinatedDebtMember2020-12-310001016281us-gaap:ConvertibleSubordinatedDebtMember2021-12-310001016281us-gaap:ConvertibleSubordinatedDebtMember2019-01-012019-12-310001016281us-gaap:ConvertibleSubordinatedDebtMember2020-01-012020-12-310001016281us-gaap:ConvertibleSubordinatedDebtMember2021-01-012021-12-310001016281us-gaap:SeniorNotesMember2021-05-130001016281csv:SeniorNoteTwoMembercsv:SeniorNotes425Member2021-05-130001016281us-gaap:SeniorNotesMembercsv:SeniorNotesDue2026Member2021-01-012021-12-310001016281us-gaap:SeniorNotesMembercsv:SeniorNotesDue2026Member2021-12-310001016281us-gaap:SeniorNotesMembercsv:SeniorNoteTwoMember2018-05-310001016281us-gaap:SeniorNotesMembercsv:SeniorNoteTwoMember2021-12-310001016281us-gaap:SeniorNotesMembercsv:SeniorNotesDue2026Memberus-gaap:DebtInstrumentRedemptionPeriodOneMember2018-05-312018-05-310001016281csv:SeniorNotes425Member2021-01-012021-12-310001016281us-gaap:SeniorNotesMemberus-gaap:DebtInstrumentRedemptionPeriodOneMember2018-05-312018-05-310001016281us-gaap:SeniorNotesMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMember2018-05-312018-05-310001016281us-gaap:SeniorNotesMemberus-gaap:DebtInstrumentRedemptionPeriodThreeMember2018-05-312018-05-310001016281us-gaap:SeniorNotesMemberus-gaap:DebtInstrumentRedemptionPeriodFourMember2018-05-312018-05-310001016281us-gaap:SeniorNotesMemberus-gaap:DebtInstrumentRedemptionPeriodFiveMember2018-05-312018-05-310001016281us-gaap:SeniorNotesMembercsv:DebtInstrumentRedemptionPeriodSixMember2018-05-312018-05-310001016281us-gaap:SeniorNotesMemberus-gaap:DebtInstrumentRedemptionPeriodFiveMember2021-01-012021-12-310001016281us-gaap:SeniorNotesMembercsv:DebtInstrumentRedemptionPeriodSixMember2021-01-012021-12-310001016281us-gaap:SeniorNotesMembercsv:SeniorNoteOneMember2021-01-012021-12-310001016281us-gaap:SeniorNotesMembercsv:SeniorNoteTwoMember2021-01-012021-12-310001016281us-gaap:SeniorNotesMembercsv:SeniorNoteTwoMember2020-12-310001016281us-gaap:SeniorNotesMembercsv:SeniorNoteOneMember2020-01-012020-12-310001016281us-gaap:SeniorNotesMembercsv:SeniorNoteTwoMember2020-01-012020-12-310001016281us-gaap:SeniorNotesMember2019-01-012019-12-310001016281us-gaap:SeniorNotesMember2020-01-012020-12-310001016281us-gaap:SeniorNotesMember2021-01-012021-12-310001016281csv:SeniorNoteTwoMember2019-01-012019-12-310001016281csv:SeniorNoteTwoMember2020-01-012020-12-310001016281csv:SeniorNoteTwoMember2021-01-012021-12-310001016281us-gaap:NoncompeteAgreementsMembersrt:MinimumMember2021-01-012021-12-310001016281us-gaap:NoncompeteAgreementsMembersrt:MaximumMember2021-01-012021-12-310001016281csv:ConsultingAgreementMembersrt:MinimumMember2021-01-012021-12-310001016281srt:MaximumMembercsv:ConsultingAgreementMember2021-01-012021-12-310001016281csv:EmploymentAgreementMembersrt:MinimumMember2021-01-012021-12-310001016281csv:EmploymentAgreementMembersrt:MaximumMember2021-01-012021-12-310001016281us-gaap:NoncompeteAgreementsMember2021-12-310001016281csv:ConsultingAgreementMember2021-12-310001016281csv:EmploymentAgreementMember2021-12-3100010162812017-05-102017-05-1000010162812020-08-072020-08-0700010162812020-11-032020-11-03csv:plan0001016281csv:A2017PlanMember2021-12-310001016281us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-12-310001016281us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-12-310001016281us-gaap:RestrictedStockMember2020-12-310001016281us-gaap:RestrictedStockMember2021-01-012021-12-310001016281us-gaap:RestrictedStockMember2021-12-310001016281us-gaap:RestrictedStockMember2019-01-012019-12-310001016281us-gaap:RestrictedStockMember2020-01-012020-12-310001016281csv:MonteCarloPricingModelMemberus-gaap:EmployeeStockOptionMember2021-01-012021-12-310001016281us-gaap:ShareBasedCompensationAwardTrancheOneMembercsv:MonteCarloPricingModelMemberus-gaap:EmployeeStockOptionMember2021-12-310001016281csv:MonteCarloPricingModelMemberus-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2021-12-310001016281csv:MonteCarloPricingModelMemberus-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2021-01-012021-12-310001016281us-gaap:ShareBasedCompensationAwardTrancheOneMembercsv:MonteCarloPricingModelMemberus-gaap:EmployeeStockOptionMember2021-01-012021-12-310001016281us-gaap:EmployeeStockOptionMembercsv:BlackScholesMember2020-01-012020-12-310001016281us-gaap:EmployeeStockOptionMembercsv:BlackScholesMember2021-01-012021-12-310001016281us-gaap:EmployeeStockOptionMember2020-01-012020-12-310001016281us-gaap:EmployeeStockOptionMember2021-01-012021-12-310001016281srt:MaximumMemberus-gaap:EmployeeStockOptionMember2021-01-012021-12-310001016281us-gaap:ShareBasedCompensationAwardTrancheTwoMember2021-01-012021-12-310001016281us-gaap:EmployeeStockOptionMember2019-01-012019-12-310001016281csv:RangeOfExercisePricesFourDollarsandSeventyEightCentsThroughFiveDollarsandNinetyFourCentsMember2021-12-310001016281csv:RangeOfExercisePricesFourDollarsandSeventyEightCentsThroughFiveDollarsandNinetyFourCentsMember2021-01-012021-12-310001016281csv:RangeOfExercisePricesSixteenDollarsandSeventyThreeCentsThroughSeventeenDollarsandTwentyOneCentsMember2021-12-310001016281csv:RangeOfExercisePricesSixteenDollarsandSeventyThreeCentsThroughSeventeenDollarsandTwentyOneCentsMember2021-01-012021-12-310001016281csv:RangeofExercisePricesEighteenDollarsAndEightySixCentsThroughTwentyDollarsandFortyNineCentsMember2021-12-310001016281csv:RangeofExercisePricesEighteenDollarsAndEightySixCentsThroughTwentyDollarsandFortyNineCentsMember2021-01-012021-12-310001016281csv:RangeofExercisePricesFourDollarsandSeventyEightCentsThroughTwentyDollarsandFortyNineCentsMember2021-12-310001016281csv:RangeofExercisePricesFourDollarsandSeventyEightCentsThroughTwentyDollarsandFortyNineCentsMember2021-01-012021-12-310001016281us-gaap:EmployeeStockOptionMember2021-12-310001016281us-gaap:PerformanceSharesMembercsv:EmployeesMember2020-01-012020-12-310001016281us-gaap:PerformanceSharesMembercsv:EmployeesMember2020-05-192020-05-190001016281us-gaap:PerformanceSharesMember2021-06-012021-06-010001016281us-gaap:PerformanceSharesMember2021-01-012021-12-310001016281us-gaap:PerformanceSharesMember2020-01-012020-12-310001016281us-gaap:PerformanceSharesMember2020-12-310001016281us-gaap:PerformanceSharesMember2021-12-310001016281us-gaap:PerformanceSharesMember2021-04-162021-04-160001016281us-gaap:PerformanceSharesMember2021-08-122021-08-120001016281us-gaap:PerformanceSharesMember2021-09-152021-09-150001016281us-gaap:PerformanceSharesMember2021-11-292021-11-290001016281us-gaap:PerformanceSharesMembersrt:ScenarioForecastMember2024-01-012024-12-310001016281csv:OfficersAndKeyEmployeesMember2019-01-012019-12-310001016281csv:OfficersAndKeyEmployeesMember2020-01-012020-12-310001016281csv:OfficersAndKeyEmployeesMember2021-01-012021-12-310001016281csv:EmployeeStockPurchasePlanMember2021-01-012021-12-310001016281csv:EmployeeStockPurchasePlanMember2019-01-012019-12-310001016281csv:EmployeeStockPurchasePlanMember2020-01-012020-12-310001016281csv:EmployeeStockPurchasePlanMember2019-01-012019-03-310001016281csv:EmployeeStockPurchasePlanMember2019-04-012019-06-300001016281csv:EmployeeStockPurchasePlanMember2019-07-012019-09-300001016281csv:EmployeeStockPurchasePlanMember2019-10-012019-12-310001016281csv:EmployeeStockPurchasePlanMember2020-01-012020-03-310001016281csv:EmployeeStockPurchasePlanMember2020-04-012020-06-300001016281csv:EmployeeStockPurchasePlanMember2020-07-012020-09-300001016281csv:EmployeeStockPurchasePlanMember2020-10-012020-12-310001016281csv:EmployeeStockPurchasePlanMember2021-01-012021-03-310001016281csv:EmployeeStockPurchasePlanMember2021-04-012021-06-300001016281csv:EmployeeStockPurchasePlanMember2021-07-012021-09-300001016281csv:EmployeeStockPurchasePlanMember2021-10-012021-12-310001016281csv:GoodToGreatIncentiveProgramMember2020-02-192020-02-190001016281csv:GoodToGreatIncentiveProgramMember2019-01-012019-12-310001016281srt:DirectorMember2020-02-192020-02-190001016281csv:ChairmanOfAuditCommitteeMember2020-02-192020-02-190001016281csv:LeadDirectorMember2020-02-192020-02-190001016281csv:ChairmanOfCompensationCommiteeMember2020-02-192020-02-190001016281csv:ChairmanOfCorporateGovernanceMember2020-02-192020-02-190001016281csv:AdvsiorMember2019-01-012019-12-310001016281csv:AdvsiorMember2020-01-012020-12-310001016281csv:AdvsiorMember2021-01-012021-12-310001016281csv:BoardofDirectorsMember2019-01-012019-12-310001016281csv:BoardofDirectorsMember2020-01-012020-12-310001016281csv:BoardofDirectorsMember2021-01-012021-12-3100010162812021-10-272021-10-2700010162812021-01-012021-03-3100010162812021-04-012021-06-3000010162812021-07-012021-09-3000010162812021-10-012021-12-3100010162812020-01-012020-03-3100010162812020-04-012020-06-3000010162812020-07-012020-09-3000010162812020-10-012020-12-3100010162812021-05-1800010162812021-07-2600010162812021-10-270001016281us-gaap:SubsequentEventMember2022-01-012022-01-010001016281us-gaap:PerformanceSharesMember2019-01-012019-12-310001016281us-gaap:PerformanceSharesMember2020-01-012020-12-310001016281us-gaap:PerformanceSharesMember2021-01-012021-12-310001016281csv:FuneralAndCemeteryServicesMembercsv:FuneralMember2021-01-012021-12-310001016281csv:CemeteryMembercsv:FuneralAndCemeteryServicesMember2021-01-012021-12-310001016281csv:FuneralAndCemeteryServicesMember2021-01-012021-12-310001016281csv:FuneralMembercsv:MerchandiseMember2021-01-012021-12-310001016281csv:CemeteryMembercsv:MerchandiseMember2021-01-012021-12-310001016281csv:MerchandiseMember2021-01-012021-12-310001016281csv:CemeteryIntermentRightsMembercsv:FuneralMember2021-01-012021-12-310001016281csv:CemeteryMembercsv:CemeteryIntermentRightsMember2021-01-012021-12-310001016281csv:CemeteryIntermentRightsMember2021-01-012021-12-310001016281csv:FuneralMembercsv:OtherRevenueMember2021-01-012021-12-310001016281csv:CemeteryMembercsv:OtherRevenueMember2021-01-012021-12-310001016281csv:FuneralAndCemeteryServicesMembercsv:FuneralMember2020-01-012020-12-310001016281csv:CemeteryMembercsv:FuneralAndCemeteryServicesMember2020-01-012020-12-310001016281csv:FuneralAndCemeteryServicesMember2020-01-012020-12-310001016281csv:FuneralMembercsv:MerchandiseMember2020-01-012020-12-310001016281csv:CemeteryMembercsv:MerchandiseMember2020-01-012020-12-310001016281csv:MerchandiseMember2020-01-012020-12-310001016281csv:CemeteryIntermentRightsMembercsv:FuneralMember2020-01-012020-12-310001016281csv:CemeteryMembercsv:CemeteryIntermentRightsMember2020-01-012020-12-310001016281csv:CemeteryIntermentRightsMember2020-01-012020-12-310001016281csv:FuneralMembercsv:OtherRevenueMember2020-01-012020-12-310001016281csv:CemeteryMembercsv:OtherRevenueMember2020-01-012020-12-310001016281csv:FuneralAndCemeteryServicesMembercsv:FuneralMember2019-01-012019-12-310001016281csv:CemeteryMembercsv:FuneralAndCemeteryServicesMember2019-01-012019-12-310001016281csv:FuneralAndCemeteryServicesMember2019-01-012019-12-310001016281csv:FuneralMembercsv:MerchandiseMember2019-01-012019-12-310001016281csv:CemeteryMembercsv:MerchandiseMember2019-01-012019-12-310001016281csv:MerchandiseMember2019-01-012019-12-310001016281csv:CemeteryIntermentRightsMembercsv:FuneralMember2019-01-012019-12-310001016281csv:CemeteryMembercsv:CemeteryIntermentRightsMember2019-01-012019-12-310001016281csv:CemeteryIntermentRightsMember2019-01-012019-12-310001016281csv:FuneralMembercsv:OtherRevenueMember2019-01-012019-12-310001016281csv:CemeteryMembercsv:OtherRevenueMember2019-01-012019-12-310001016281csv:FuneralMember2019-01-012019-12-310001016281csv:CemeteryMember2019-01-012019-12-310001016281us-gaap:CorporateMember2021-01-012021-12-310001016281us-gaap:CorporateMember2020-01-012020-12-310001016281us-gaap:CorporateMember2019-01-012019-12-310001016281csv:FuneralMember2018-12-310001016281csv:CemeteryMember2018-12-310001016281us-gaap:CorporateMember2018-12-310001016281us-gaap:DomesticCountryMember2020-12-310001016281us-gaap:DomesticCountryMember2021-12-310001016281us-gaap:SubsequentEventMember2022-01-052022-01-050001016281us-gaap:SubsequentEventMember2022-02-230001016281csv:SECSchedule1209ValuationAllowanceCurrentMember2018-12-310001016281csv:SECSchedule1209ValuationAllowanceCurrentMember2019-01-012019-12-310001016281csv:SECSchedule1209ValuationAllowanceCurrentMember2019-12-310001016281csv:SECSchedule1209ValuationAllowanceNoncurrentMember2018-12-310001016281csv:SECSchedule1209ValuationAllowanceNoncurrentMember2019-01-012019-12-310001016281csv:SECSchedule1209ValuationAllowanceNoncurrentMember2019-12-310001016281csv:ReserveForSeveranceMember2018-12-310001016281csv:ReserveForSeveranceMember2019-01-012019-12-310001016281csv:ReserveForSeveranceMember2019-12-310001016281us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2018-12-310001016281us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2019-01-012019-12-310001016281us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2019-12-310001016281csv:SECSchedule1209ValuationAllowanceCurrentMember2020-01-012020-12-310001016281csv:SECSchedule1209ValuationAllowanceCurrentMember2020-12-310001016281csv:SECSchedule1209ValuationAllowanceNoncurrentMember2020-01-012020-12-310001016281csv:SECSchedule1209ValuationAllowanceNoncurrentMember2020-12-310001016281csv:ReserveForSeveranceMember2020-01-012020-12-310001016281csv:ReserveForSeveranceMember2020-12-310001016281us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2020-01-012020-12-310001016281us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2020-12-310001016281csv:SECSchedule1209ValuationAllowanceCurrentMember2021-01-012021-12-310001016281csv:SECSchedule1209ValuationAllowanceCurrentMember2021-12-310001016281csv:SECSchedule1209ValuationAllowanceNoncurrentMember2021-01-012021-12-310001016281csv:SECSchedule1209ValuationAllowanceNoncurrentMember2021-12-310001016281csv:ReserveForSeveranceMember2021-01-012021-12-310001016281csv:ReserveForSeveranceMember2021-12-310001016281us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2021-01-012021-12-310001016281us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2021-12-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________ 
                      FORM10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended, December 31, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________                
Commission file number: 1-11961
________________________________________________ 
CARRIAGE SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 76-0423828
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
3040 Post Oak Boulevard, Suite 300
Houston, Texas, 77056
(Address of principal executive offices)
(713) 332-8400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, Par Value $.01 Per ShareCSVNew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
_______________________________________________ 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933.     Yes      No  
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes      No  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.
Large accelerated filerAccelerated filer
Non-accelerated filer
  (Do not check if a smaller reporting company)
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Securities Exchange Act of 1934.     Yes      No  
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2021 was approximately $597.5 million based on the closing price of $36.97 per share on the New York Stock Exchange.
The number of shares of the registrant’s Common Stock, $.01 par value per share, outstanding as of February 25, 2022 was 15,326,738.
DOCUMENTS INCORPORATED BY REFERENCE
_____________________________________ 
Certain information required to be disclosed in Part III of this report is incorporated by reference from the registrant’s definitive proxy statement or an amendment to this report, which will be filed with the SEC not later than 120 days after the end of the fiscal year covered by this report.



Table of Contents
 
  Page
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.




CAUTIONARY NOTE
Certain statements and information in this Annual Report on Form 10-K (this “Form 10-K”) may constitute “forward-looking statements” within the meaning 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. 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. These forward-looking statements include, but are not limited to, statements regarding any projections of earnings, revenue, asset sales, cash flow, debt levels or other financial items; any statements of the plans, strategies and objectives of management for future operations; including, but not limited to, technology innovations; any statements of the plans, timing and objectives of management for acquisition and divestiture activities; any statements of the plans, timing, expectations and objectives of management for future financing activities; any statements regarding future economic and market 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. 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 our operational and financial performance;
our ability to execute our growth strategy;
the execution of our Standards Operating, 4E Leadership and Strategic 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;
our ability to implement our technology innovation strategy;
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, internal growth projects, potential strategic acquisitions, dividend increases, or debt repayment plans;
the timely and full payment of death benefits related to preneed funeral contracts funded through life insurance contracts;
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;
1

our ability to consummate the divestiture of low performing businesses as currently expected, if at all, including expected use of proceeds related thereto;
our ability to 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 Part I, Item 1A, Risk Factors.
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.
2

PART I
ITEM 1.    BUSINESS.
GENERAL
Carriage Services, Inc. (“Carriage,” the “Company,” “we,” “us,” or “our”) was incorporated in the State of Delaware in December 1993 and is a leading provider of funeral and cemetery services and merchandise in the United States. We operate in two business segments: Funeral Home Operations, which currently accounts for approximately 70% of our total revenue, and Cemetery Operations, which currently accounts for approximately 30% of our total revenue.
At December 31, 2021, we operated 170 funeral homes in 26 states and 31 cemeteries in 11 states. We compete with other publicly held and independent operators of funeral and cemetery companies. We believe we are a market leader in most of our markets.
Funeral home and cemetery businesses provide products and services to families in three principal areas: (i) ceremony and tribute, generally in the form of a funeral or memorial service; (ii) disposition of remains, either through burial or cremation; and (iii) memorialization, generally through monuments, markers or inscriptions. Our funeral homes offer a complete range of services to meet a family’s funeral needs, including consultation, the removal and preparation of remains, the sale of caskets and related funeral merchandise, the use of funeral home facilities for visitation and memorial services and transportation services. Most of our funeral homes have a non-denominational chapel on the premises, which permits family visitation and services to take place at one location and thereby reduces transportation costs and inconvenience to the family.
Our cemeteries provide interment rights (primarily grave sites, lawn crypts, mausoleum spaces and niches), related cemetery merchandise (such as outer burial containers, memorial markers and floral placements) and services (interments, inurnments and installation of cemetery merchandise).
We provide funeral and cemetery services and products on both an “atneed” (time of death) and “preneed” (planned prior to death) basis.
CURRENT YEAR DEVELOPMENTS    
Executive Team
On June 1, 2021, C. Benjamin Brink, Steven D. Metzger and Carlos R. Quezada were each promoted to Executive Vice President. Our Board of Directors (our “Board”) also appointed Carlos R. Quezada to serve as the Company’s Chief Operating Officer and Steven D. Metzger to serve as the Company's Chief Administrative Officer.
On February 23, 2022, our Board appointed Carlos R. Quezada to serve as the Company's President and Chief Operating Officer.
Share Repurchase Program
During 2021, our Board increased our share repurchase program authorization by an additional $125.0 million that, including the addition of amounts previously authorized and outstanding, totaled up to $190.0 million in share repurchase authorizations. During the year ended December 31, 2021, we repurchased 2,906,983 shares of common stock for a total cost of $142.5 million at an average cost of $49.01 per share pursuant to the share repurchase program. At December 31, 2021, we had $8.1 million remaining available for repurchase under our approved program.
Dividends
On October 27, 2021, our Board approved an increase of $0.05 per share for a total annual dividend of $0.45 per share beginning with the dividend declaration in the fourth quarter. During 2021, we paid $7.3 million in dividends.
Senior Notes and Credit Facility
On May 13, 2021, we completed the issuance of $400.0 million in aggregate principal amount of 4.25% Senior Notes due 2029 (the “Senior Notes”). In connection with the issuance of the Senior Notes, we entered into an amended and restated $150.0 million senior secured revolving credit facility (the “Credit Facility”).
We used the proceeds of $395.5 million from the offering of the Senior Notes, which are net of a 1.125% debt discount of $4.5 million, together with cash on hand and borrowings under the Credit Facility, to redeem all of our existing $400.0 million in aggregate principal amount of 6.625% senior notes due 2026 (the “Original Senior Notes”).
3

On November 22, 2021, we entered into a first amendment and commitment increase to the Credit Facility with the financial institutions party thereto, as lenders, and Bank of America, N.A., as administrative agent. Pursuant to this amendment, the revolving credit commitment was increased from $150.0 million to $200.0 million.
Divestitures
During 2021, we sold two funeral homes and one cemetery for $2.5 million and real property for $5.2 million, for a total net gain of $0.9 million.
Litigation
Chinchilla v. Carriage Services, Inc., et al., Superior Court of California, San Joaquin County, Case No. STK-CV-UOE-2021-0004661. On May 19, 2021, a putative class action against the Company and several of our subsidiaries was filed. Plaintiff, a former employee, seeks monetary damages on behalf of himself and other similarly situated current and former non-exempt employees. Plaintiff claims that the Company failed to, among other things, pay minimum wages, provide meal and rest breaks, pay overtime, provide accurately itemized wage statements, reimburse employees for business expenses, and provide wages when due. On January 5, 2022, the parties mediated the matter and executed a Memorandum of Understanding for class settlement in the amount of $1.0 million. The parties will seek preliminary approval of the class settlement after executing a long-form class settlement agreement. At December 31, 2021, we accrued $1.1 million for the expected settlement amount and associated legal fees.
Business Impact under the Macroeconomic Environment of COVID-19
On March 11, 2020, COVID-19 was deemed a global pandemic and since then, the Company has continued to proactively monitor and assess the pandemic’s current and potential impact to the Company’s operations. Throughout the pandemic, the Company’s senior leadership team has taken steps to assist our businesses in appropriately adjusting and adapting to the conditions resulting from the COVID-19 pandemic.
Our businesses remain open and ready to provide service to their communities in this time of need. While our businesses provide an essential public function, along with a critical responsibility to the communities and families they serve, the health and safety of our employees and the families we serve remain our top priority. The Company took additional steps during this time to continually review and update our processes and procedures to comply with all regulatory mandates and procure additional supplies to ensure that each of our businesses have appropriate personal protective equipment to provide these essential services. The Company also implemented additional safety and precautionary measures as it concerns our businesses’ day-to-day interaction with the families and communities they serve.
The overall impact of the macroeconomic environment to the deathcare industry from the pandemic may provide varying results as compared to other industries. Our industry’s revenues are impacted by various factors, including the number of funeral services performed, the average price for a service and the mix of traditional burial versus cremation contracts. During 2021, changes in the macroeconomic environment as a result of the pandemic have, to this point, led to an increase in funeral volumes and the services we provide. Our businesses have remained focused on being innovative and resourceful, providing families immediate service as part of the grieving process.
Within our financial reporting environment, we have considered various areas that could affect the results of our operations, though the scope, severity and duration of these impacts remain uncertain at this time because the ultimate impact of COVID-19 remains uncertain, including the potential impacts of new variants of COVID-19, such as the Delta and Omicron variants, and any resulting government responses to such variants. We do not believe we are particularly vulnerable to concentrations, with respect to geographic area, revenue for specific products or our relationships with our vendors. Our relationships with our vendors and suppliers have remained consistent and we continue to receive reliable service. To date, we have not experienced any material supply chain impacts or disruptions from our vendors. Remote working arrangements, when utilized, have not materially affected our ability to maintain and support operations, including financial reporting systems, internal controls over financial reporting, and disclosure controls and procedures.
We believe our access to capital, the cost of our capital, or the sources and uses of our cash should be relatively consistent in the near term. While the expected duration of the pandemic is unknown, we have not currently experienced any material negative impacts to our liquidity position, access to capital, or cash flows as a result of COVID-19. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources for additional information related to our liquidity position.
During the latter half of 2021, we experienced a high growth rate in funeral home revenue due to elevated funeral volumes from broad market share gains and higher COVID-19 related deaths combined with incremental growth in the average revenue per funeral contract. We will continue to assess these impacts, including the potential impacts of new variants of COVID-19,
4

such as the Delta and Omicron variants, and implement appropriate procedures, plans, strategy, and issue any disclosures that may be required, as the situation surrounding the pandemic and related regulatory mandates and restrictions, if any, evolves.
OUR OPERATIONS
See Part II, Item 8, Financial Statements and Supplementary Data, Note 21 for segment data related to our operations.
Funeral Home and Cemetery Operations
Our funeral home and cemetery operations are managed by a team of experienced industry and sales professionals with substantial leadership experience.
Given the high fixed-cost structure associated with funeral home operations, we believe the following are key factors affecting our profitability:
our ability to establish and maintain market share positions supported by strong local heritage and relationships;
our ability to effectively respond to the increasing trends towards cremation by bundling complimentary services and merchandise;
our ability to successfully execute our Standards Operating Model;
our ability to control salary, merchandise and other controllable costs;
our ability to exercise pricing leverage related to our atneed business to increase average revenue per contract;
demographic trends in terms of population growth and average age, which impact death rates and number of deaths; and
our response to fluctuations in capital markets and interest rates, which affect investment earnings on trust funds and our securities portfolio within the trust funds, which would offset lower pricing power as preneed contracts mature.
Our cemetery operations are subject to many of the same profitability factors as our funeral home business, as well as the following key factors:
size and success of our sales organization;
local perceptions and heritage of our cemeteries;
our ability to adapt to changes in the economy and consumer confidence; and
our response to fluctuations in capital markets and interest rates, which affect investment earnings on trust funds, finance charges on installment contracts and our securities portfolio within the trust funds.
Personalization and pre-planning continue to be two important trends in the funeral and cemetery industry, but the national trend toward more cremations may be the most significant. While this trend is expected to continue, other factors are expected to lead to rising industry revenue, including an increase in spending on additional or unique funeral and cremation services. Shifting preferences will likely continue to lead to a considerable rise in cremations; as such, we are focused on educating and providing our cremation customers with additional services and products that are available. All of our funeral homes offer cremation products and services. While the average revenue for a cremation service is generally lower than that of an average traditional burial service, we have found that this revenue can be substantially enhanced by offering additional services and merchandise, including video tributes, flowers, burial garments and memorial items such as urns, keepsake jewelry and other items that hold a portion of the cremated remains.
We believe the following are our key strengths for our funeral home and cemetery operations:
Market Leader. We compete with other publicly held funeral and cemetery companies and smaller, independent operators and believe we are a market leader in most of our markets. We focus on markets that perform better than the industry average and are less subject to material economic and demographic changes.
High Performance, Decentralized, Partnership Culture. Our funeral homes and cemeteries are managed by entrepreneurially focused Managing Partners with extensive funeral and cemetery industry experience, often within their local markets. They are responsible for day-to-day operations and for growing the business by hiring, training and developing highly motivated and productive local teams. Our businesses are supported by a broader team of High Performance leaders across multiple disciplines in our support center located in Houston, Texas. This promotes more cooperation and synergy between our funeral and cemetery operations and supports the goal of market-share and volume growth in our most significant markets. We believe our decentralized and partnership culture is very attractive to owners of premier independent businesses that fit our profile of suitable acquisition candidates.
5

Flexible Capital Structure and Strong Cash Flows. We believe our capital structure provides us with financial flexibility by allowing us to invest our cash in growth opportunities, such as business acquisitions and cemetery inventory projects. While we reassess our capital allocation strategy annually, we currently believe that our financial goals will best be achieved by continuing to improve the operating and financial performance of our existing portfolio of businesses while selectively investing our cash in growth opportunities that generate a return on invested capital in excess of our weighted average cost of capital. For additional information regarding our capital structure, please see Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources.
Strong Field-Level Gross Profit Margins. We believe that we have strong field-level gross profit margins and that this performance is a testament to the success of our business strategies. Our strong margins and the ability to control costs are important advantages in a business such as ours that is characterized by a high fixed-cost structure. We will continue to seek ways to improve our financial performance, and we believe that our Standards Operating Model will continue to yield long-term improvement in our financial results.
Integrated Information Systems. We have implemented information systems to support local business decisions and to monitor performance of our businesses compared to financial and performance standards. Additionally, we have innovative technological and digital tools that enhance our ability to serve our client families in a remote environment. To further enhance the services we provide to our client families, we have begun developing a multi-year strategy with a greater focus on leveraging technology, specifically with customer facing opportunities. All of our funeral homes and cemeteries are connected to our support center located in Houston, Texas, which allows us to monitor and assess critical operating and financial data and analyze the performance of individual locations on a timely basis. Furthermore, our information system infrastructure provides senior management with a critical tool for monitoring and adhering to our established internal controls, which is critical given our decentralized model and the sensitive nature of our business operations.
Proven Leadership Team. Our leadership team, headed by our founder, Chairman and Chief Executive Officer, Melvin C. Payne, is characterized by a dynamic culture that focuses on addressing changing market conditions and emerging trends in the funeral services industry. We believe our culture of emphasizing the 4E (Energy, Energize Others, Edge and Execution) leadership characteristics is critical and will provide an important advantage as the funeral and cemetery industry evolves. We are committed to continue operating an efficient organization and strengthening our corporate and local business leadership.
Preneed Programs
Funeral and cemetery arrangements sold prior to death occurring are referred to as preneed contracts. We market funeral and cemetery services and products on a preneed basis at the local level. We operate under a decentralized preneed sales strategy whereby each business location customizes its preneed program to its local needs.
Preneed funeral or cemetery contracts enable families to establish, in advance, the type of service to be performed, the products to be used and the cost of such products and services. Preneed contracts permit families to eliminate the burden of making deathcare plans at the time of need and allow input from other family members before the death occurs. We guarantee the price and performance of the preneed contracts to the customer.
Approximately 15% of our funeral services performed are funded through preneed contracts, which are usually secured by placing the funds collected in trust for the benefit of the customer or by the purchase of a life insurance policy, the proceeds of which will pay for such services at the time of need. Insurance-funded contracts allow us to earn commission income to improve our near-term cash flow and offset a significant amount of the up-front costs associated with preneed sales. Trust funded contracts typically provide cash that is invested in various securities with the expectation that returns will exceed the growth factor in the insurance contracts. The cash flow and earnings from insurance contracts are more stable, but are generally lower than traditional trust fund investments. In markets that depend on preneed sales for market share, we supplement the arrangements written by our local funeral directors with sales sourced by our own sales counselors and by third party sellers. We sold 7,525 and 9,563 preneed funeral contracts, net of cancellations, during the years ended December 31, 2020 and 2021, respectively. At December 31, 2021, we had a backlog of 97,203 preneed funeral contracts to be delivered in the future.
In addition to preneed funeral contracts, we also offer “pre-planned” funeral arrangements whereby a customer determines in advance substantially all of the details of a funeral service without any financial commitment or other obligation on the part of the client until the actual time of need. Pre-planned funeral arrangements permit a family to avoid the burden of making deathcare plans at the time of need and enable a funeral home to establish relationships with a client that may eventually lead to an atneed sale.
Approximately 50% of our cemetery operating revenue is derived from preneed property sales. Our preneed cemetery strategy is to build family heritage in our cemeteries by selling property and interment rights prior to death through full time, highly motivated and entrepreneurial local sales teams. Our goal is to build broader and deeper teams of sales leaders and counselors in our larger and more strategically located cemeteries, including the development of standardized sales systems across our portfolio of cemeteries, in order to focus on growth of our preneed property sales. For example, during 2021, we
6

continued to grow our cemetery sales and marketing team to develop and implement our standardized sales system. Cemetery merchandise and services are often purchased in addition to cemetery property at the time of sale. The performance of these preneed cemetery contracts is secured by placing the funds collected in trust for the benefit of the customer, the proceeds of which will pay for such services at the time of need. General consumer confidence and discretionary income may have a significant impact on our preneed sales success rate. Cemetery revenue that originated from preneed contracts represented approximately 67% of our total cemetery revenue for both 2020 and 2021. At December 31, 2021, we had a backlog of 65,694 preneed cemetery contracts to be delivered in the future.
Trust Funds and Insurance Contracts
We have established a variety of trusts in connection with funeral home and cemetery operations as required under applicable state laws. Such trusts include (i) preneed funeral trusts; (ii) preneed cemetery merchandise and service trusts; and (iii) cemetery perpetual care trusts. These trusts are typically administered by independent financial institutions that we select. Investment management and advisory services are provided either by our wholly-owned registered investment advisory firm (“CSV RIA”) or by independent financial advisors. As of December 31, 2021, CSV RIA provided these services to approximately 80% of our trust assets, for a fee based on the market value of trust assets. Under state trust laws, we are allowed to charge the trust a fee for advising on the investment of the trust assets and these fees are recognized as income in the period in which services are provided. The investment advisors establish an investment policy that provides guidance on asset allocation, investment requirements, investment manager selection and performance monitoring. The investment objectives are tailored to generate long-term investment returns without assuming undue risk, while ensuring the management of assets complies with applicable laws.
Preneed sales generally require deposits to a trust or purchase of a third-party insurance product. Trust fund income earned, along with the receipt and recognition of any insurance benefits, are not reflected in our revenue until the service is performed or the merchandise is delivered. Trust fund holdings and deferred revenue are reflected on our Consolidated Balance Sheet, while our insurance funded contracts are not reflected on our Consolidated Balance Sheet. In most states, we are not permitted to withdraw principal or investment income from such trusts until the service is performed. Additionally, in most states, regulations require a portion (generally 10%) of the sale amount of cemetery property and memorials to be placed in a perpetual care trust. The income from these perpetual care trusts provides funds necessary to maintain cemetery property and memorials in perpetuity.
For additional information with respect to our trusts, see Part II, Item 8, Financial Statements and Supplementary Data, Note 7.
BUSINESS STRATEGY
Our business strategy is based on strong, local leadership with entrepreneurial principles that is focused on sustainable long-term market share, revenue, and profitability growth in each local business. We believe Carriage has the most innovative operating model in the funeral and cemetery industry, which we are able to achieve through a decentralized, high-performance culture and operating framework linked with incentive compensation programs that attract top-quality industry talent to our organization. We also believe that Carriage provides a unique consolidation and operating framework that offers a highly attractive succession planning solution for independent funeral home owners who want their legacy family business to remain operationally prosperous in their local communities.
Our Mission Statement states that “we are committed to being the most professional, ethical and highest quality funeral and cemetery service organization in our industry” and our Guiding Principles state our core values, which are comprised of:    
Honesty, integrity and quality in all that we do;
Hard work, pride of accomplishment and shared success through employee ownership;
Belief in the power of people through individual initiative and teamwork;
Outstanding service and profitability go hand-in-hand; and
Growth of the Company is driven by decentralization and partnership.
Our five Guiding Principles collectively embody our Being The Best high-performance culture and operating framework.
Our operations and business strategy are built upon the execution of the following three models:
Standards Operating Model;
7

4E Leadership Model; and
Strategic Acquisition Model.
Standards Operating Model
Our Standards Operating Model is focused on growing local market share, providing personalized high-value services to our client families and guests, and operating financial metrics that drive long-term, sustainable revenue growth and improved earning power of our portfolio of businesses by employing leadership and entrepreneurial principles that fit the nature of our high-value personal service business. Standards Achievement is the measure by which we judge the success of each business and incentivize our local managers and their teams. Our Standards Operating Model is not designed to produce maximum short-term earnings because we believe such performance is unsustainable and will ultimately stress the business, which very often leads to declining market share, revenue and earnings.
Important elements of our Standards Operating Model include:
Balanced Operating Model – We believe a decentralized structure works best in the funeral and cemetery industry. Successful execution of our Standards Operating Model is highly dependent on strong local leadership, intelligent risk taking, entrepreneurial drive and corporate support aligned with the key drivers of a successful operation organized around three primary areas - market share, high-value services and operating financial metrics.
Incentives Aligned with Standards – Empowering local managers, who we call Managing Partners, to do the right things in their operations and local communities, and providing appropriate support with operating and financial practices, will enable long-term growth and sustainable profitability. Each Managing Partner participates in a variable bonus plan whereby he or she earns a percentage of his or her respective business’ earnings based upon the actual standards achieved as long as the performance exceeds our minimum standards.
The Right Local Leadership – Successful execution of our operating model is highly dependent on strong local leadership as defined by our 4E Leadership Model, intelligent risk taking and entrepreneurial empowerment. A Managing Partner’s performance is judged according to achievement of the standards for that business.
4E Leadership Model
Our 4E Leadership Model requires strong local leadership in each business to grow an entrepreneurial, decentralized, high-value, personal service and sales business at sustainable profit margins. Our 4E Leadership Model is based upon principles established by Jack Welch during his tenure at General Electric, and is based upon 4E qualities essential to succeed in a high-performance culture: Energy to get the job done; the ability to Energize others; the Edge necessary to make difficult decisions; and the ability to Execute and produce results. To achieve a high level within our Standards in a business year after year, we require our Managing Partners that have the 4E Leadership skills to entrepreneurially grow the business by hiring, training and developing highly motivated and productive local teams.
Strategic Acquisition Model
Our Standards Operating Model led to the development of our Strategic Acquisition Model, which guides our acquisition strategy. We believe that both models, when executed effectively, will drive long-term, sustainable increases in market share, revenue, earnings and cash flow. We believe a primary driver of higher revenue and profits in the future will be the execution of our Strategic Acquisition Model using strategic ranking criteria to assess acquisition candidates. As we execute this strategy over time, we expect to acquire larger, higher margin strategic businesses.
We have learned that the long-term growth or decline of a local branded funeral and cemetery business is reflected by several criteria that correlate strongly with five to ten year performance in volumes (market share), revenue and sustainable field-level earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins (a non-GAAP measure). We use criteria such as cultural alignment, volume and price trends, size of business, size of market, competitive standing, demographics, strength of brand and barriers to entry to evaluate the strategic position of potential acquisition candidates. Our financial valuation of the acquisition candidate is then determined through the application of an appropriate after-tax cash return on investment that exceeds our cost of capital.
Our belief in our Mission Statement and Guiding Principles and proper execution of the three models that define our strategy have given us a competitive advantage in every market where we compete. We believe that we can execute our three models without proportionate incremental investment in our consolidation platform infrastructure and without additional fixed regional and corporate overhead. This gives us a competitive advantage that is evidenced by the sustained earning power of our portfolio as defined by our EBITDA margin.
8

COMPETITION
The operating environment in the funeral and cemetery industry has been highly competitive. The largest publicly held operators, in terms of revenue, of both funeral homes and cemeteries with operations in the United States are Service Corporation International (“SCI”), StoneMor, Inc. (“StoneMor”), Park Lawn Corporation (“Park Lawn”) and Carriage. We believe these four companies collectively represent approximately 25% of funeral and cemetery revenue in the United States Independent businesses, along with a few privately-owned consolidators, represent the remaining amount of industry revenue, accounting for an estimated 75% share of revenue.
Our funeral home and cemetery operations face competition in the markets that they serve. Our primary competition in most of our markets is from local independent operators. We have observed new start-up competition in certain areas of the country, which may impact our profitability in certain markets. Market share for funeral homes and cemeteries is largely a function of reputation and heritage, although competitive pricing, professional service and attractive, well-maintained and conveniently located facilities are also important. Because of the importance of reputation and heritage, market share increases are usually gained over a long period of time. The sale of preneed funeral services and cemetery property has increasingly been used by many companies as a marketing tool to build market share.
There has been increasing competition from providers specializing in specific services, such as cremations, who offer minimal service and low-end pricing. We also face competition from companies that market products and related merchandise over the internet and non-traditional casket stores in certain markets. These competitors have been successful in capturing a portion of the low-end market and product sales.
SEASONALITY
Our business can be affected by seasonal fluctuations in the death rate and may be further affected by epidemics and pandemics, like COVID-19. Generally, the number of deaths is higher during the winter months because the incidences of death from influenza and pneumonia are higher during this period than other periods of the year. However, we have experienced fluctuations in the death rate due to COVID-19, although the duration of these impacts on the death rate remain uncertain at this time because the ultimate impact of COVID-19 remains uncertain.
REGULATION
General. Our operations are subject to regulations, supervision and licensing under numerous federal, state and local laws, ordinances and regulations, including extensive regulations concerning trust funds, preneed sales of funeral and cemetery products and services and various other aspects of our business. We believe that we comply in all material respects with the provisions of these laws, ordinances and regulations. Legislative bodies and regulatory agencies frequently propose new laws and regulations, some of which could have a material impact on our business. We cannot predict the impact of any future laws and regulations or changes to existing laws and regulations.
Federal Trade Commission. Our funeral home operations are comprehensively regulated by the Federal Trade Commission (“FTC”) under Section 5 of the Federal Trade Commission Act and a trade regulation rule for the funeral industry promulgated thereunder referred to as the “Funeral Rule.” The Funeral Rule defines certain acts or practices as unfair or deceptive and contains certain requirements to prevent these acts or practices. The preventive measures require a funeral provider to give consumers accurate, itemized pricing information and various other disclosures about funeral goods and services and prohibit a funeral provider from: (i) misrepresenting legal, crematory and cemetery requirements; (ii) embalming for a fee without permission; (iii) requiring the purchase of a casket for direct cremation; (iv) requiring consumers to buy certain funeral goods or services as condition for furnishing other funeral goods or services; (v) misrepresenting state and local requirements for an outer burial container; and (vi) representing that funeral goods and services have preservative and protective value. Additionally, the Funeral Rule requires the disclosure of mark-ups, commissions, additional charges and rebates related to cash advance items. On February 4, 2020, the FTC has announced that it is reviewing the Funeral Rule, which may result in changes to the Funeral Rule. Among the subjects under review by the FTC is whether the scope of the Funeral Rule should be expanded to cover cemetery sales and merchandise and mandated disclosure of online pricing. We cannot predict what changes, if any, may be made to the Funeral Rule or the impact of any such changes on our business.
State Trust Laws. We have established a variety of trusts in connection with funeral home and cemetery operations as required under applicable state laws. Such trusts include (i) preneed funeral trusts; (ii) preneed cemetery merchandise and service trusts; and (iii) cemetery perpetual care trusts. These trusts are typically administered by independent financial institutions which we select. Under state trust laws, our wholly owned registered investment advisor is allowed to charge the trust a fee for advising on the investment of the trust assets and these fees are recognized as income in the period in which services are provided. Preneed funeral sales generally require deposits to a trust or purchase of a third-party insurance product. In most states, we are not permitted to withdraw principal or investment income from such trusts until the funeral service is performed. Some states, however, allow for the retention of a percentage (generally 10%) of the receipts to offset any
9

administrative and selling expenses. Additionally, we are generally required under applicable state laws to deposit a specified amount (which varies from state to state, generally 50% to 100% of the selling price) into a merchandise and service trust fund for preneed cemetery merchandise and services sales.
Environmental. Our operations are also subject to certain federal, regional, state and local laws and regulations relating to environmental protection, including legal requirements governing air emissions, waste management and disposal and wastewater discharges. For instance, the federal Clean Air Act and analogous state laws, which restrict the emission of pollutants from many sources, including crematories, may require us to apply for and obtain air emissions permits, install costly emissions control equipment, and conduct monitoring and reporting tasks. Also, in the course of our operations, we store and use chemicals and other regulated substances as well as generate wastes that may subject us to strict liability under the federal Resource Conservation and Recovery Act and comparable state laws, which govern the treatment, storage, and disposal of nonhazardous and hazardous wastes, and the federal Comprehensive Environmental Response, Compensation and Liability Act, a remedial statute that imposes cleanup obligations on current and past owners or operators of facilities where hazardous substance releases occurred and anyone who transported or disposed or arranged for the transportation or disposal of hazardous substances released into the environment from such sites. In addition, the Federal Water Pollution Control Act, also known as the federal Clean Water Act, and analogous state laws regulate discharges of pollutants to state and federal waters. Underground and above ground storage tanks that store chemicals and fuels for vehicle maintenance or general operations are located at certain of our facilities and any spills or releases from those facilities may cause us to incur remedial liabilities under the Clean Water Act or analogous state laws as well as potential liabilities for damages to properties or persons. Failure to comply with environmental laws and regulations could result in the assessment of sanctions, including administrative, civil, and criminal penalties, the imposition of investigatory, remedial and corrective action obligations, delays in permitting or performance of projects and the issuance of injunctions restricting or prohibiting some or all of our activities in affected areas. Moreover, accidental releases or spills may occur in the course of our operations, and we cannot assure that we will not incur significant costs and liabilities as a result of such releases or spills, including any third party claims for damages to property, natural resources or persons. Also, it is possible that implementation of stricter environmental laws and regulations or more stringent enforcement of existing environmental requirements could result in additional, currently unidentifiable costs or liabilities to us, such as requirements to purchase pollution control equipment or implement operational changes or improvements. While we believe we are in compliance with existing environmental laws and regulations, we cannot assure that we will not incur substantial costs in the future.
Worker Health and Safety. We are subject to the requirements of the federal Occupational Safety and Health Act, as amended (“OSHA”), and comparable state statutes whose purpose is to protect the health and safety of workers. In addition, the OSHA hazard communication standard, the Emergency Planning and Community Right to Know Act and implementing regulations and similar state statutes and regulations require that we organize and/or disclose information about hazardous materials used or produced in our operations and that this information be provided to employees, state and local governmental authorities and citizens. We believe that we are in compliance with all applicable laws and regulations relating to worker health and safety.
HUMAN CAPITAL
Our funeral homes and cemeteries are managed by entrepreneurially focused Managing Partners with extensive funeral and cemetery industry experience. They have responsibility for day-to-day operations and follow operating and financial metrics called “Standards” within our Standards Operating Model. Standards Achievement is the measure by which we judge the Managing Partner's performance and how we incentivize our Managing Partners and their teams. To achieve a high level within our Standards in a business year after year, we require local Managing Partners that have the 4E Leadership skills to entrepreneurially grow the business by hiring, training and developing highly motivated and productive local teams. See Part I, Item 1, Business Strategy for additional details about our Standards Operating Model and 4E Leadership Model. Additionally, we utilize short-term and long-term incentive performance programs to attract and retain talent in critical positions, ranging from sales counselors and sales managers to Houston support center leaders and employees.
As of December 31, 2021, we and our subsidiaries employed 2,657 employees, of whom 1,139 were full-time and 1,518 were part-time. All of our funeral directors and embalmers possess licenses required by applicable regulatory agencies. None of our employees are represented by unions.
AVAILABLE INFORMATION
We file annual, quarterly and other reports, and any amendments to those reports, and information with the United States Securities and Exchange Commission (“SEC”). The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.
Our website address is www.carriageservices.com. Available on our website under “Investors – SEC Filings,” free of charge, are Carriage’s annual reports on Form 10-K, quarterly reports on Form 10-Q, proxy statements, current reports on
10

Form 8-K, insider reports on Forms 3, 4 and 5 filed on behalf of directors and officers and amendments to those reports as soon as reasonably practicable after such materials are electronically filed with or furnished to the SEC.
Also posted on our website, and available in print upon request, are charters for our Audit Committee, Compensation Committee and Corporate Governance Committee. Copies of the Code of Business Conduct and Ethics and the Corporate Governance Guidelines are also posted on our website under “Investors – Corporate Governance.” Within the time period required by the SEC and the New York Stock Exchange, we will post on our website any modifications to the charters and any waivers applicable to senior officers as defined in the applicable charters, as required by the Sarbanes-Oxley Act of 2002. Information contained on our website is not part of this Annual Report on Form 10-K.
ITEM 1A.    RISK FACTORS
RISKS RELATED TO OUR BUSINESS
Key Employees and Compensation
The success of our businesses is typically dependent upon one or a few key employees for success because of the localized and personal nature of our business.
Funeral home and cemetery businesses have built local heritage and tradition through successive generations, providing a foundation for ongoing business opportunities from established client family relationships and related referrals. We believe these relationships build trust in the community and are a key driver to market share. Our businesses, which tend to serve small local markets, usually have one or a few key employees that drive our relationships. Our ability to attract and retain Managing Partners, sales force and other personnel is an important factor in achieving future success. We can give no assurance that we can retain these employees or that these relationships will drive market share. Our inability to attract and maintain qualified and productive Managing Partners and sales force could have a material adverse effect on our financial condition, results of operations and cash flows.
Our “Good To Great” incentive program could result in significant future payments to our Managing Partners.
Our Good To Great incentive program rewards our Managing Partners for achieving an average net revenue compounded annual growth rate equal to at least 1% (the “Minimum Growth Rate”) over a five year performance period (the “Performance Period”) with respect to our funeral homes that they operate, which aligns our incentives with long-term value creation. Each Managing Partner that achieves the Minimum Growth Rate during the applicable Performance Period and remains continuously employed as a Managing Partner of the same business throughout the Performance Period will receive a one-time bonus, payable in a combination of cash and shares of our common stock, determined at our discretion. We believe this incentive program will result in improved field-level margins, market share and overall financial performance.
Our “Good To Great II” incentive program could result in the issuance of a significant number of shares of common
stock to certain critical employees.
Our Good To Great II incentive program rewards certain employees who are not Managing Partners in alignment with the incentive programs for our Managing Partners. Specifically, the Good To Great II incentive program is tied to the future performance of the Company and requires the Company’s share price to reach one of five predetermined Common Stock Price Averages (as defined by the program) through a performance period ending December 31, 2024 in order for the award to be earned by the participants of the program. While the program aligns our incentives with long-term value creation, there is a potential risk of dilution to our shareholders if we achieve the highest performance tier under the Good To Great II incentive program, which equals a Common Stock Price Average (as defined by the program) of $77.34 per share. At December 31, 2021, under such a scenario, a total of 1,052,532 shares of common stock would be awarded to participants under the program. We believe this incentive program will result in improved overall financial performance.

Strategic Business Execution and Performance
Improved performance in our funeral and cemetery segments is dependent upon successful execution of our Standards Operating Model.
We have implemented our Standards Operating Model to improve and better measure performance in our funeral and cemetery operations. We developed standards according to criteria, each with a different weighting, designed around market share, high-value services and operational and financial metrics. We also incentivize our location Managing Partners by giving them the opportunity to earn a fixed percentage of the field-level earnings before interest, taxes, depreciation and amortization based upon the number and weighting of the standards achieved. Our expectation is that, over time, the Standards Operating Model will result in improving field-level margins, market share, customer satisfaction and overall financial performance, but
11

there is no assurance that these goals will be met. Failure to successfully implement our Standards Operating Model in our funeral and cemetery operations could have a material adverse effect on our financial condition, results of operations and cash flows.
Our ability to execute our growth strategy is highly dependent upon our ability to successfully identify suitable acquisition candidates and negotiate transactions on favorable terms.
There is no assurance that we will be able to continue to identify acquisition candidates that meet our criteria or that we will be able to reach terms with identified candidates for transactions that are acceptable to us, and even if we do, we may not be able to successfully complete the transaction or integrate the new business into our existing business. We intend to apply standards established under our Strategic Acquisition Model to evaluate acquisition candidates, and there is no assurance that we will continue to be successful in doing so or that we will find attractive candidates that satisfy these standards. Due in part to the presence of competitors who have been in certain markets longer than we have, such acquisitions or investments may be more difficult or expensive than we anticipate.
Divestitures could negatively impact our business and retained liabilities from businesses that we sell could adversely affect our financial results.
As part of our growth strategy, we periodically review our businesses which may no longer be aligned with our strategic business plan and long-term objectives and, as a result of these reviews of our businesses we may pursue additional divestitures. From time to time, we engage in discussions with third parties about potential divestitures of one or more of our businesses that, if fully consummated, could result in the divestiture of a material amount of assets and contribution to our results of operations that have historically contributed to our results of operations. Divestitures pose risks and challenges that could negatively impact our business, including disputes with buyers or potential impairment charges. For example, when we decide to sell a business, we may be unable to do so on our terms and within our anticipated time-frame, and even after reaching a definitive agreement to sell a business, the sale may be subject to satisfaction of pre-closing conditions, which may not be satisfied, as well as regulatory and governmental approvals, which may prevent us from completing a transaction on acceptable terms. If we do not realize the expected benefits of any divestiture transaction, our financial condition, results of operations, and cash flows could be materially adversely affected. For more information related to our divestitures, see Part II, Item 8, Financial Statements and Supplementary Data, Note 5.
Competitive Marketplace
The funeral and cemetery industry is competitive.
The funeral and cemetery industry is characterized by a large number of locally-owned, independent operations in the United States and a large number of operations owned by publicly and privately-held funeral home and cemetery consolidators. To compete successfully, our funeral service locations and cemeteries must maintain good reputations and high professional standards, as well as offer attractive products and services at competitive prices. In addition, we must market ourselves in such a manner as to distinguish us from our competitors. We have historically experienced price competition from independent and publicly held funeral service and cemetery operators, monument dealers, casket retailers, low-cost providers, and other nontraditional providers of merchandise and services. If we are unable to successfully compete, our financial condition, results of operations, and cash flows could be materially adversely affected.
Marketing and sales activities by existing and new competitors could cause us to lose market share and lead to lower revenue and margins.
We face competition in all of our markets. Most of our competitors are independently owned, and some are relatively recent market entrants. Some of the recent entrants are individuals who were formerly employed by us or by our competitors and have relationships and name recognition within our markets. As a group, independent competitors tend to be aggressive in distinguishing themselves by their independent ownership, and they promote their independence through television, radio and print advertising, direct mailings and personal contact. Increasing pressures from new market entrants and continued advertising and marketing by competitors in local markets could cause us to lose market share and revenue. The types of services and the prices offered for such services by our competitors may attract customers, causing us to lose market share and revenue as well as to incur costs in response to competition to vary the types or mix of products or services offered by us.
Price competition could also reduce our market share or cause us to reduce prices to retain or recapture market share, either of which could reduce revenue and margins.
We have historically experienced price competition primarily from independent funeral home and cemetery operators, and from monument dealers, casket retailers, low-cost providers and other non-traditional providers of services or products. New market entrants tend to attempt to build market share by offering lower cost alternatives. In the past, this price competition has resulted in our losing market share in some markets. In other markets, we have had to reduce prices or offer discounts thereby
12

reducing profit margins in order to retain or recapture market share. Increased price competition in the future could further reduce revenue, profits and our preneed backlog.
Change in Preneed Sales
Our ability to generate preneed sales depends on a number of factors, including sales incentives and local and general economic conditions.
Significant declines in preneed sales would reduce our backlog and revenue and could reduce our future market share. On the other hand, a significant increase in preneed sales can have a negative impact on cash flow as a result of commissions and other costs incurred initially without corresponding revenue.
As we have localized our preneed sales strategies, we are continuing to refine the mix of service and product offerings in both our funeral and cemetery segments, including changes in our sales commission and incentive structure. These changes could cause us to experience declines in preneed sales in the near term. In addition, economic conditions at the local or national level could cause declines in preneed sales either as a result of less discretionary income or lower consumer confidence. Declines in preneed cemetery property sales reduces current revenue, and declines in other preneed sales would reduce our backlog and future revenue and could reduce future market share.
Increased preneed sales could have a negative impact on our cash flows.
Preneed sales of funeral and cemetery products and services generally have an initial negative impact on our cash flows, as we are required in certain states to deposit a portion of the sales proceeds into trusts or escrow accounts and often incur other expenses at the time of sale. Furthermore, many preneed purchases are paid for in installments over a period of several years, further limiting our cash flows at the time of sale. Because preneed sales generally provide positive cash flows over the long term, we market the sale of such contracts at the local level. If our efforts to increase such sales are successful, however, our current cash flows could be materially and adversely affected, in the near term.
Trust Fund and Life Insurance Contracts
Our funeral and cemetery trust funds own investments in equity securities, fixed income securities, and mutual funds, which are affected by market conditions that are beyond our control.
In connection with our backlog of preneed funeral and preneed cemetery merchandise and service contracts, funeral and cemetery trust funds own investments in equity securities, fixed income securities and mutual funds. Our returns on these investments are affected by financial market conditions that are beyond our control.
The following table summarizes our investment returns (realized and unrealized), excluding certain fees, on our trust funds for the years ended December 31, 2019, 2020 and 2021:
201920202021
Preneed funeral trust funds21.2 %13.5 %16.0 %
Preneed cemetery trust funds26.0 %15.5 %19.3 %
Perpetual care trust funds25.2 %16.8 %19.1 %
Generally, earnings or gains and losses on our preneed funeral and cemetery trust investments are recognized, and we withdraw cash, when the underlying service is performed, merchandise is delivered, or upon contract cancellation. Our cemetery perpetual care trusts recognize earnings, and in certain states, capital gains and losses, and we withdraw cash when we incur qualifying cemetery maintenance costs. If the investments in our trust funds experience significant, recurring and sustained declines in subsequent years, there could be insufficient funds in the trusts to cover the costs of delivering services and merchandise or maintaining cemeteries in the future. We may be required to cover any such shortfall with cash flows from operations or other sources of cash, which could have a material adverse effect on our financial condition, results of operations or cash flows. For more information related to our trust investments, see Part II, Item 8, Financial Statements and Supplementary Data, Note 7.
If the fair market value of these trusts, plus any other amount due to us upon delivery of the associated contracts, were to decline below the estimated costs to deliver the underlying products and services at maturity, we would record a charge to earnings for the expected losses on the delivery of the associated contracts. For additional information, see Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Critical Accounting Policies and Estimates.
13

Earnings from and principal of trust funds could be reduced by changes in financial markets and the mix of securities owned.
Earnings and investment gains and losses on trust funds are affected by financial market conditions and the specific fixed-income and equity securities that we choose to maintain in the funds. We may not choose the optimal mix for any particular market condition. Declines in earnings from perpetual care trust funds would cause a decline in current revenue, while declines in earnings from other trust funds could cause a decline in future cash flows and revenue.
We may be required to replenish our funeral and cemetery trust funds in order to meet minimum funding requirements, which would have a negative effect on our earnings and cash flow.
Some states have laws that either require replenishment of investment losses under certain circumstances or impose various restrictions on withdrawals of future earnings when trust fund values drop below certain prescribed amounts. In the event of realized losses or market declines, we may be required to deposit portions or all of these amounts into the respective trusts in some future period.
Increasing death benefits related to preneed funeral contracts funded through life insurance contracts may not cover future increases in the cost of providing a price-guaranteed funeral service.
We sell price-guaranteed preneed funeral contracts through various programs providing for future funeral services at prices prevailing when the agreements are signed. For preneed funeral contracts funded through life insurance contracts, we receive in cash a general agency commission from the third-party insurance company. Additionally, there is an increasing death benefit associated with the contract that may vary over the contract life. There is no guarantee that the increasing death benefit will cover future increases in the cost of providing a price-guaranteed funeral service, and any such excess cost could be materially adverse to our future cash flows, revenue, and operating margins.
The financial condition of third-party insurance companies that fund our preneed funeral contracts may impact our future revenue.
Where permitted by state law, our customers may arrange their preneed funeral contract by purchasing a life insurance policy from third-party insurance companies. The customer/policy holder assigns the policy benefits to our funeral home to pay for the preneed funeral contract at the time of need. If the financial condition of the third-party insurance companies were to deteriorate materially because of market conditions or otherwise, there could be an adverse effect on our ability to collect all or part of the proceeds of the life insurance policy, including the annual increase in the death benefit, when we fulfill the preneed contract at the time of need. Failure to collect such proceeds could have a material adverse effect on our financial condition, results of operations, or cash flows.
Tax Changes
Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could have a material adverse effect on the results of our operations, financial condition, or cash flows.
We make judgments regarding the utilization of existing income tax credits and the potential tax effects of various financial transactions and results of operations to estimate our obligations to taxing authorities. Tax obligations include income, franchise, real estate, sales and use, and employment-related taxes. These judgments include reserves for potential adverse outcomes regarding our tax positions. Changes in federal, state, or local tax laws, adverse tax audit results, or adverse tax rulings on positions taken could have a material adverse effect on the results of our operations, financial condition, or cash flows.
New or revised tax regulations could have a material effect on our financial statements
New tax laws or regulations could be enacted at any time, and existing tax laws or regulations could be interpreted, amended, or applied in a manner that has a material effect on us, which could materially impact our business and financial condition. For example, on March 27, 2020, the CARES Act was enacted in response to the macroeconomic environment conditions posed by COVID-19. The CARES Act is a sweeping stimulus bill intended to bolster the U.S. economy, among other things, and provide emergency assistance to qualifying businesses and individuals. Under the CARES Act, the primary areas that should be considered for future earnings and cash impact are the changes to the interest expense limitation threshold and the technical correction to the Tax Cuts and Jobs Act regarding the qualified improvement property now being eligible for full expensing. Based on available guidance, we believe that the legislative changes will have a positive impact on our earnings and cash flow. As the enacted legislation includes provisions that would expire after certain periods of time, the fact that our business has the potential to change its operating situation, and the existence of potential changes by state tax authorities related to conformity with federal tax regulations, the possibility exists that the future benefit of the legislation could change. In
14

addition, it is uncertain if, and to what extent, various states will conform to the CARES Act, or any new or revised federal tax legislation will be enacted.
Litigation and Claims
Unfavorable results of litigation could have a material adverse impact on our financial statements.
We are subject to a variety of claims and lawsuits in the ordinary course of our business. Adverse outcomes in potential litigation related to our business may result in significant monetary damages or injunctive relief against us, as litigation and other claims are subject to inherent uncertainties. Any such adverse outcomes that may arise in the future, could have a material adverse impact on our financial position, results of operations, and cash flows.
RISKS RELATED TO THE FUNERAL AND CEMETERY INDUSTRY
Changes in Death Rates and Consumer Preferences
Declines in the number of deaths in our markets can cause a decrease in revenue. Changes in the number of deaths are not predictable from market to market or over the short term.
Declines in the number of deaths could cause atneed sales of funeral and cemetery services, property and merchandise to decline, which could decrease revenue. Although the United States Bureau of the Census estimates that the number of deaths in the United States will increase in the future, longer life spans could reduce the rate of deaths. In addition, changes in the number of deaths can vary among local markets and from quarter to quarter, and variations in the number of deaths in our markets or from quarter to quarter are not predictable. For example, we have seen the COVID-19 pandemic affect the death rate, with a result of increased deaths. These variations may cause our revenue to fluctuate and our results of operations to lack predictability.
The increasing number of cremations in the United States could cause revenue to decline because we could lose market share to firms specializing in cremations and because our average revenue for cremations is lower than that for traditional burials.
Our traditional cemetery and funeral service operations face competition from the increasing number of cremations in the United States. Industry studies indicate that the percentage of cremations has increased every year and this trend is expected to continue into the future. The trend toward cremation could cause cemeteries and traditional funeral homes to lose market share and revenue to firms specializing in cremations. Additionally, our average revenue for cremations is lower than that for traditional burials. If we are unable to continue to expand our cremation memorialization products and services, and cremations remain or increase as a significant percentage of our services, our financial condition, results of operations, and cash flows could be materially adversely affected.
If we are not able to respond effectively to changing consumer preferences, our market share, revenue and profitability could decrease.
Future market share, revenue and profits will depend in part on our ability to anticipate, identify and respond to changing consumer preferences. In past years, we have implemented new product and service strategies based on results of customer surveys that we conduct on a continuous basis. However, we may not correctly anticipate or identify trends in consumer preferences, or we may identify them later than our competitors. In addition, any strategies we may implement to address these trends may prove incorrect or ineffective.
Because the funeral and cemetery businesses are high fixed-cost businesses, changes in revenue can have a disproportionately large effect on cash flow and profits.
Funeral home and cemetery businesses incur the costs of operating and maintaining facilities, land and equipment regardless of the level of sales in any given period. For example, we must pay salaries, utilities, property taxes and maintenance costs on funeral homes and maintain the grounds of cemeteries regardless of the number of funeral services or interments performed. Because we cannot decrease these costs significantly or rapidly when we experience declines in sales, those declines can cause margins, profits and cash flow to decrease at a greater rate than the decline in revenue.
15

Regulatory Changes
Changes or increases in, or failure to comply with, regulations applicable to our business could increase costs or decrease cash flows.
The funeral and cemetery industry is subject to extensive and evolving regulation and licensing requirements under federal, state and local laws. For example, the funeral industry is regulated by the FTC, which requires funeral homes to take actions designed to protect consumers. State laws impose licensing requirements and regulate preneed sales. As such, we are subject to state trust fund and preneed sales practice audits, which could result in audit adjustments as a result of non-compliance. In addition, we may assume the liability for any audit adjustments for our acquired businesses for periods under audit that were prior to our ownership of the business depending upon the obligations outlined in the agreement. These audit adjustments could have a material adverse impact on our financial condition, results of operations and cash flows.
Embalming and cremation facilities are subject to stringent environmental and health regulations. Compliance with these regulations is burdensome, and we are always at risk of not complying with the regulations or facing costly and burdensome investigations from regulatory authorities.
In addition, from time to time, governments and agencies propose to amend or add regulations, which could increase costs or decrease cash flows. Several states and regulatory agencies have considered or are considering regulations that could require more liberal refund and cancellation policies for preneed sales of products and services, limit or eliminate our ability to use surety bonding, increase trust requirements and/or prohibit the common ownership of funeral homes and cemeteries in the same market. If adopted by the regulatory authorities of the jurisdictions in which we operate, these and other possible proposals could have a material adverse effect on us, our financial condition, our results of operations and our future prospects. For additional information regarding the regulation of the funeral and cemetery industry, see Part I, Item 1, Business, Regulation.
We are subject to environmental and worker health and safety laws and regulations that may expose us to significant costs and liabilities.
Our cemetery and funeral home operations are subject to certain federal, regional, state and local laws and regulations governing worker health and safety aspects of the operations, the release or disposal of materials into the environment or otherwise relating to environmental protection. These laws and regulations may restrict or impact our business in many ways, including requiring the acquisition of a permit before conducting regulated activities, restricting the types, quantities and concentration of substances that can be released into the environment, applying specific health and safety criteria addressing worker protection, and imposing substantial liabilities for any pollution resulting from our operations. We may be required to make significant capital and operating expenditures to comply with these laws and regulations and any failure to comply may result in the assessment of sanctions, including administrative, civil and criminal penalties, imposition of investigatory, remedial or corrective action obligations, delays in permitting or performance of projects and the issuance of injunctions restricting or prohibiting our activities. Failure to appropriately transport and dispose of generated wastes, used chemicals or other regulated substances, or any spills or other unauthorized releases of regulated substances in the course of our operations could expose us to material losses, expenditures and liabilities under applicable environmental laws and regulations, and result in neighboring landowners and other third parties filing claims for personal injury, property damage and natural resource damage allegedly caused by such non-compliant activities or spills or releases. Certain of these laws may impose strict, joint and several liabilities upon us for the remediation of contaminated property resulting from our or a predecessor owner's or operator's operations. We may not be able to recover some or any of these costs from insurance or contractual indemnifications. Moreover, changes in environmental laws, regulations and enforcement policies occur frequently, and any changes that result in more stringent or costly emissions control or waste handling, storage, transport, disposal or cleanup requirements could require us to make significant expenditures to attain and maintain compliance and may otherwise have a material adverse effect on our results of operations, competitive position or financial condition.
RISKS RELATED TO OUR CREDIT FACILITY AND FINANCIAL ACTIVITIES
Credit Facility and Debt Obligations
Covenant restrictions in our debt instruments may limit our flexibility to operate and grow our business, and if we are not able to comply with such covenants, our lenders could accelerate our indebtedness, proceed against certain collateral or exercise other remedies, which could have a material adverse effect on us.
The covenants in our Credit Facility and the Indenture governing our Senior Notes contain a number of provisions that impose operating and financial restrictions which, subject to certain exceptions, limit our ability and the ability of our subsidiaries to, among other things: incur additional indebtedness (including guarantees); pay dividends or make distributions or redeem or repurchase our common stock; make investments; grant liens on assets; make capital expenditures; enter into
16

transactions with affiliates; enter into sale-leaseback transactions; sell or dispose assets; and acquire the assets of, or merge or consolidate with, other companies.
We are required to comply with certain financial covenants in our Credit Facility. Complying with these financial covenants and other restrictive covenants, as well as those that may be contained in any future debt agreements, may limit our ability to finance our future operations or working capital needs or to take advantage of future business opportunities. Our ability to comply with these covenants will depend on our future performance, which may be affected by events beyond our control. Our failure to comply with any of these covenants or restrictions could result in a default under any future debt instrument, which could lead to an acceleration of the debt under that instrument and, in some cases, the acceleration of debt under other instruments that contain cross-default or cross-acceleration provisions, each of which could have a material adverse effect on us. In the case of an event of default, or in the event of a cross-default or cross-acceleration, we may not have sufficient funds available to make the required payments under our debt instruments. If we are unable to repay amounts owed under the terms of our Credit Facility, the lenders thereunder may choose to exercise their remedies in respect of the collateral, including a foreclosure of their lien which results in a sale of certain of our funeral assets to satisfy our obligations under the Credit Facility.
Pursuant to the terms of our Credit Facility, we must comply with, amongst other things, a maximum Total Leverage Ratio covenant that is measured quarterly. If we are unable to comply with the maximum Total Leverage Ratio, we will be in immediate default under the Credit Facility. For example, although we have not currently experienced any material negative impacts to our liquidity position, access to capital, or cash flows as a result of COVID-19, the expected duration of the pandemic is unknown and may have a future impact on our business that could result in our inability to comply with this Total Leverage Ratio covenant and other covenants in our Credit Facility. There can be no assurance that the lenders will agree to amend the Credit Facility in the future to adjust or eliminate this covenant or whether the lenders may agree to waive any non-compliance with this financial covenant or any other covenant in the future.
Moreover, if we do not maintain compliance with our continuing obligations or any covenants, terms and conditions of the Credit Facility, we could be in default and required to repay outstanding borrowings on an accelerated basis, which could subject us to decreased liquidity and other negative impacts on our business, results of operations and financial condition. It may be difficult for us to find an alternative lending source under these circumstances. Without access to borrowings under the Credit Facility, our liquidity would be adversely affected and we would lack sufficient working capital to operate our business as presently conducted. Any disruption in access to credit could force us to take measures to conserve cash.
Our level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt obligations.
Our indebtedness requires significant interest and principal payments. As of December 31, 2021, we had $559.9 million of total debt (excluding debt issuance costs, debt discounts and lease obligations), consisting of $4.5 million of acquisition debt (consisting of deferred purchase price and promissory notes payable to sellers of businesses we purchased), $400.0 million of our Senior Notes and $155.4 million of outstanding borrowings under our Credit Facility, with $42.3 million of availability under our Credit Facility after giving effect to $2.3 million of outstanding letters of credit.
Our and our subsidiaries’ level of indebtedness could have important consequences to us, including:
continuing to require us and certain of our subsidiaries to dedicate a substantial portion of our cash flow from operations to the payment of our indebtedness, thereby reducing the funds available for operations and any future business opportunities;
limiting flexibility in planning for, or reacting to, changes in our business or the industry in which we operate;
placing us at a competitive disadvantage compared to our competitors that have less indebtedness;
increasing our vulnerability to adverse general economic or industry conditions;
making us and our subsidiaries more vulnerable to increases in interest rates, as borrowings under our Credit Facility are at variable rates; and
limiting our ability to obtain additional financing to fund working capital, capital expenditures, acquisitions or other general corporate requirements and increasing our cost of borrowing.
Our ability to make payments on and to refinance our indebtedness will depend on our ability to generate cash in the future from operations, financings or asset sales. Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We may not generate sufficient funds to service our debt and meet our business needs, such as funding working capital or the expansion of our operations. If we are not able to repay or refinance our debt as it becomes due, we may be forced to take certain actions, including reducing spending on day-to-day operations, reducing future financing for working capital, capital expenditures and general corporate purposes, selling assets or dedicating an unsustainable level of our cash flow from operations to the payment of principal and interest on
17

our indebtedness. In addition, our ability to withstand competitive pressures and to react to changes in our industry could be impaired. The lenders who hold our debt could also accelerate amounts due in the event that we default, which could potentially trigger a default or acceleration of the maturity of our other debt, including the notes.
Additionally, our leverage could put us at a competitive disadvantage compared to our competitors that are less leveraged. These competitors could have greater financial flexibility to pursue strategic acquisitions and secure additional financing for their operations. Our leverage could also impede our ability to withstand downturns in our industry or the economy in general.
Despite our current levels of indebtedness, we may still incur additional indebtedness. This could further exacerbate the risks associated with our indebtedness.
We may incur additional indebtedness in the future. The terms of our Credit Facility and the Indenture governing our Senior Notes will limit, but not prohibit, us from incurring additional indebtedness. Additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also do not prevent us or our subsidiaries from incurring obligations, such as trade payables, that do not constitute indebtedness as defined under our debt agreements. To the extent new debt is added to our current debt levels, the leverage risks associated with our indebtedness would increase.
GENERAL RISKS
Economic Conditions and Natural Disasters
Unfavorable economic conditions, including those resulting from health and safety concerns, could adversely affect our business, financial condition or results of operations. 
Our business and operational results could be adversely affected by general conditions in the U.S. economy, including conditions that are outside of our control, such as the impact of health and safety concerns from the COVID-19 pandemic. The initial U.S. and global economic and financial conditions related to COVID-19 resulted in extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn, and the related adverse economic and health consequences could result in a variety of risks to our business, financial condition or results from operations, including weakened demand from our client families, decreased preneed sales, increased preneed installment contract defaults, increased cremation rates, reduced access to capital and credit markets or delays in obtaining client family payments. A weak or declining economy could also strain our supply partners. Additionally, our business relies heavily on our employees, including key employees due to the localized and personal nature of our business, and adverse events such as health-related concerns, the inability to travel and other matters affecting the general work environment could harm our business. In the event of a major disruption caused by the outbreak of pandemic diseases such as COVID-19, we may lose the services of a number of our key employees or experience system interruptions, which could lead to impacts to our regular business operations, inefficiencies and reputational harm. Due to the uncertainty around the ultimate impact of COVID-19 to our business and operations, the impact on our business and operational results cannot be reasonably estimated at this time. Any of the foregoing could harm our business and we cannot anticipate all the ways in which the current COVID-19 pandemic and financial market conditions could adversely impact our business.
Economic, financial and stock market fluctuations could affect future potential earnings and cash flows and could result in future goodwill, intangible assets and long-lived asset impairments.
In addition to an annual review, we assess the impairment of goodwill, intangible assets and other long-lived assets whenever events or changes in circumstances indicate that the carrying value may be greater than fair value. Factors that could trigger an interim impairment review include, but are not limited to, a significant decline in the market value of our stock or debt values, significant under-performance relative to historical or projected future operating results, and significant negative industry or economic trends. If these factors occur, we may have a triggering event, which could result in an impairment of our goodwill, intangible assets and other long-lived assets.
Based on the results of our annual goodwill and intangible assets impairment test we performed as of August 31, 2021 and our annual review of long-lived assets and leases at December 31, 2021, we concluded that there were no impairments of our goodwill, intangible assets or other long-lived assets and leases.
During 2020, as a result of economic conditions caused by COVID-19, we performed a quantitative assessment of our goodwill and we recorded an impairment to goodwill of $13.6 million, as the carrying amount of our funeral homes in the Eastern Region Reporting Unit exceeded the fair value. We also performed a quantitative assessment of our tradenames and we recorded an impairment for certain of our tradenames of $1.1 million, as the carrying amount of these tradenames exceeded the fair value. In connection with the goodwill impairment recorded for the Eastern Region Reporting Unit, we also evaluated the long-lived assets and leases of our funeral homes in the Eastern Region Reporting Unit and concluded that there was no impairment to our long-lived assets and leases.
18

For our 2020 annual impairment test, we performed a qualitative assessment and determined that there were no factors that would indicate the need to perform additional quantitative goodwill and tradenames impairment tests. We concluded that there was no additional impairment to goodwill or tradenames.
Additionally, if current economic conditions weaken causing deterioration in our operating revenue, operating margins and cash flows, we may have a triggering event that could result in a material impairment of our goodwill, intangible assets and/or long-lived assets and leases.
Significant weather events, natural disasters, or catastrophic events could adversely affect our business, financial condition or results of operations.
Over thirty-five percent of the businesses we operate are located in California, Texas and Florida, areas where natural disasters are more prevalent. Significant weather events, natural disasters or catastrophic events in these states or other key areas where our operations are concentrated could disrupt our business through injury to our employees or client families, physical damage, closure or destruction of one or more of our locations, data centers or office facilities, or disrupt the delivery of goods or services by one or more of our vendors, any or all of which could adversely impact our operations or increase our costs, which would adversely affect our financial results.
Information Technology and Internal Controls
We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents could harm our ability to operate our business effectively.
In the ordinary course of our business, we receive certain personal information, in both physical and electronic formats, about our customers, their loved ones, our employees, and our vendors. We maintain security measures and data backup systems to protect, store, and prevent unauthorized access to such information. Nevertheless, it is possible that computer hackers and others (through increasingly sophisticated cyberattacks or by other means) might circumvent our security measures in the future and obtain the personal information of customers, their loved ones, our employees or our vendors.
For example, in January 2021, we detected that our information technology system was affected by a ransomware attack. Upon learning of the incident, we undertook immediate steps to address the incident, including engaging information technology security and forensics experts and working diligently with these experts to assess the impact on our information technology systems, implement additional and enhanced security measures to help prevent a similar incident in the future, and to restore any of our information technology systems that were impacted by the incident. The restoration of any impacted systems is complete. We maintain insurance coverage for various cybersecurity risks, which covered substantially all of the costs associated with the January 2021 ransomware attack, but it is possible that such insurance coverage may not fully insure all future costs or losses associated with other cybersecurity incidents.
While we determined, based on our assessment of the information known to us, that the January 2021 ransomware incident did not have, nor do we expect it will have, a material impact on our business, operations or financial results, if we fail to protect our own information from any future breaches in data security, we could experience significant costs and expenses as well as damage to our reputation. Additionally, as the sophistication and frequency of attacks increase, our information technology security costs, including cybersecurity insurance, which are significant, may rise.
Additionally, legislation relating to cybersecurity threats could impose additional requirements on our operations. Various state governments, notably California, New York and Nevada, have enacted or enhanced data privacy regulations, and other state governments are considering establishing similar or stronger protections. These regulations impose certain obligations for securing, and potentially removing, specified personal information in our systems, and for apprising individuals of the information we have collected about them. We have incurred costs in an effort to comply with these data privacy risks and requirements, and our costs may increase significantly as risks become increasingly complex or if new or changing requirements are enacted, and based on how individuals exercise their rights. For example, in November 2020, California voters approved Proposition 24 (Consumer Personal Information Law and Agency Initiative), which will increase data privacy requirements for our business when its provisions take effect in 2023. Despite our efforts, any noncompliance could result in our incurring substantial penalties and reputational damage.
Our ability to manage and maintain our internal reports effectively and integration of new business acquisitions depends significantly on our enterprise resource planning system and other information systems. Some of our information technology systems may experience interruptions, delays or cessations of service or produce errors in connection with ongoing systems implementation work. The failure of our systems to operate effectively or to integrate with other systems, or a breach in security or other unauthorized access of these systems, may also result in reduced efficiency of our operations and could require significant capital investments to remediate any such failure, problem or breach and to comply with applicable regulations, all of which could adversely affect our business, financial condition and results of operations.
19

Failure to maintain effective internal control over financial reporting could adversely affect our results of operations, investor confidence, and our stock price.
The accuracy of our financial reporting depends on the effectiveness of our internal control over financial reporting. Internal control over financial reporting can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements and may not prevent or detect misstatements because of its inherent limitations. If we do not maintain effective internal control over financial reporting or implement controls sufficient to provide reasonable assurance with respect to the preparation and fair presentation of our financial statements, we could be unable to file accurate financial reports on a timely basis, and our results of operations, investor confidence, and stock price could be materially adversely affected.
ITEM 1B.    UNRESOLVED STAFF COMMENTS.
None.
ITEM 2.    PROPERTIES.
At December 31, 2021, we operated 170 funeral homes in 26 states and 31 cemeteries in 11 states. We own the real estate and buildings for 149 of our funeral homes and lease 21 facilities. We own 30 cemeteries and operate one cemetery under a long-term contract with a municipality, which we refer to as a managed property. We operate 18 funeral homes in combination with cemeteries as these locations are physically located on the same property or in very close proximity and are under the same leadership.
The 31 cemeteries that we operate have developed cemetery property of approximately 155,000 and 147,000 units available-for-sale at December 31, 2020 and 2021, respectively. In addition, we own approximately 500 acres that are available for future development or sale. We anticipate having a sufficient inventory of lots to maintain our property sales for the foreseeable future.
20

The following table sets forth certain information as of December 31, 2021, regarding our properties used by the funeral home segment and by the cemetery segment identified by state:
 Number of
Funeral Homes
Number of
Cemeteries
StateOwned
Leased(1)
OwnedManaged
California21 — 
Connecticut— — 
Florida— 
Georgia— — — 
Idaho— 
Illinois— — 
Kansas— — — 
Kentucky— — 
Louisiana— 
Massachusetts11 — — — 
Michigan— — — 
Montana— 
Nevada— 
New Jersey— — 
New Mexico— — — 
New York10 — — 
North Carolina— 
Ohio— — — 
Oklahoma— — 
Pennsylvania— — — 
Rhode Island— — — 
Tennessee— — — 
Texas23 — 
Virginia— 
Washington— — — 
Wisconsin— — — 
Total149 21 30 
(1)The leases, with respect to these funeral homes, generally have remaining terms ranging from one to twenty years, and generally, we have the right to renew past the initial terms and have a right of first refusal on any proposed sale of the property where these funeral homes are located.
Our support center occupies approximately 48,000 square feet of leased office space in Houston, Texas. At December 31, 2021, we owned and operated 427 vehicles.
The following table sets forth the number of funeral homes and cemeteries owned and operated by us for the periods presented:
 Years Ended December 31,
 201920202021
Funeral homes at beginning of period182 186 178 
Acquisitions— 
Divestitures (4)(8)(2)
Mergers of funeral homes(1)(1)(6)
Funeral homes at end of period186 178 170 
Cemeteries at beginning of period29 31 32 
Acquisitions— 
Divestitures— — (1)
Cemeteries at end of period31 32 31 

21

ITEM 3.    LEGAL PROCEEDINGS.
For more information regarding legal proceedings see Part II, Item 8, Financial Statements and Supplementary Data, Notes 16 and 24.
ITEM 4.    MINE SAFETY DISCLOSURES.
Not applicable.
PART II
 
ITEM 5.    MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
MARKET INFORMATION
Our common stock is traded on the New York Stock Exchange under the symbol “CSV.” At February 25, 2022, there were 15,326,738 shares of our common stock outstanding. The shares of common stock outstanding are held by approximately 330 stockholders of record. Each share is entitled to one vote on matters requiring the vote of stockholders. We believe there are approximately 8,700 beneficial owners of our common stock.
RECENT SALES OF UNREGISTERED SECURITIES
During the year ended December 31, 2021, we did not have any sales of securities in transactions that were not registered under the Securities Act of 1933 (as amended, the “Securities Act”) that have not been reported in a Form 8-K or Form 10-Q. 
DIVIDENDS
While we intend to pay regular quarterly cash dividends for the foreseeable future, covenant restrictions under our Credit Facility and the Indenture governing our Senior Notes may limit our ability to pay dividends in the future.
EQUITY PLANS
For information regarding securities authorized for issuance under our equity compensation plans, see Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER
Subject to market conditions, normal trading restrictions and satisfying certain financial covenants in our Credit Facility, and in the Indenture governing our Senior Notes, we may make purchases in the open market or through privately negotiated transactions under our Board authorized share repurchase program, in accordance with Rule 10b-18 of the Securities Exchange Act.
On May 18, 2021, July 26, 2021 and October 27, 2021, our Board increased our share repurchase authorization by an additional $25.0 million, $25.0 million and $75.0 million, respectively, that including amounts previously authorized and outstanding, totaled up to $190.0 million in share repurchase authorizations.
Share repurchase activity is as follows (dollar value of shares repurchased in thousands):
Years Ended December 31,
201920202021
Number of Shares Repurchased(1)
400,000 — 2,906,983 
Average Price Paid Per Share$19.39 $— $49.01 
Dollar Value of Shares Repurchased(1)
$7,756 $— $142,469 
(1)
These amounts may differ from the repurchases of common stock amounts in the consolidated statements of cash flows due to unsettled share repurchases at the end of a period. In December 2021, we repurchased 37,408 shares for $2.4 million, the settlement of which occurred in January 2022.
Our shares were purchased in the open market at times and in amounts as management determined appropriate based on factors such as market conditions, legal requirements and other business considerations. Shares purchased pursuant to the repurchase program are currently held as treasury stock. At December 31, 2021, we had $8.1 million remaining available for repurchase under our authorized program.
22

The following table sets forth certain information with respect to repurchases of our common stock during the quarter ended December 31, 2021:
PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Program
Dollar Value of Shares That May Yet Be Purchased Under the Program (1)
October 1, 2021 - October 31, 2021— $— — $85,061,552 
November 1, 2021 - November 30, 2021— $— 531,417 $57,594,459 
December 1, 2021 - December 31, 2021— $— 847,369 $8,132,056 
Total for quarter ended December 31, 2021— 1,378,786 
(1)
See the first paragraph under the caption Purchases of Equity Securities by the Issuer for more information on our publicly announced share repurchase program.
23

PERFORMANCE
The following graph compares the cumulative 5-year total shareholder return on our common stock relative to the cumulative total returns of the Russell 3000 Index, and a peer group selected by the Company comprising of SCI and StoneMor (the “Peer Group”). The returns of each member of the Peer Group are weighted according to their respective stock market capitalization as of the beginning of each period measured. The graph assumes that the value of the investment in our common stock, the Russell 3000 Index and the Peer Group was $100 on the last trading day of December 2016, and that all dividends were reinvested. Performance data for Carriage, the Russell 3000 Index and the Peer Group is provided as of the last trading day of each of our last five fiscal years.
The following graph and related information shall not be deemed “soliciting material” or “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities or the Exchange Act except to the extent that we specifically incorporate it by reference.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN(1)
Among Carriage, the Russell 3000 Index and the Peer Group
https://cdn.kscope.io/4db89bccdd546ee992541c0679f1d089-csv-20211231_g1.jpg
12/1612/1712/1812/1912/2012/21
Carriage Services, Inc.$100.00 $90.56 $55.34 $92.69 $115.15 $239.40 
Russell 3000100.00 121.12 114.77 150.35 181.74 228.33 
Peer Group100.00 129.84 143.30 166.92 177.14 262.53 
(1)Fiscal year ending December 31. $100 invested on December 31, 2016 in stock or index, including reinvestment of dividends. The Peer Group above includes SCI and StoneMor. The stock price performance included in this graph is not necessarily indicative of future stock price performance.

24

ITEM 6.    [RESERVED]
ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
OVERVIEW
Recent Trends
During the initial phase of the COVID-19 pandemic, we experienced an increase in volume that corresponded with the initial increase in COVID-related deaths. While we have seen the trend in COVID-related deaths begin to significantly decrease during the last half of 2021, we have not seen an adverse impact to our overall financial performance. However, we continue to closely monitor these death rates. Historically cremation trends have increased year over year and while that continues to be the case, we view this an opportunity to put greater focus on educating our client families on available cremation memorialization options.
General
We operate in two business segments: funeral home operations, which accounts for approximately 70% of our revenue, and cemetery operations, which accounts for approximately 30% of our revenue. Our funeral homes offer a complete range of high value personal services to meet a family’s funeral needs, including consultation, the removal and preparation of remains, the sale of caskets and related funeral merchandise, the use of funeral home facilities for visitation and remembrance services and transportation services. Our cemeteries provide interment rights (grave sites and mausoleum spaces) and related merchandise, such as markers and outer burial containers. We provide funeral and cemetery services and products on both an “atneed” (time of death) and “preneed” (planned prior to death) basis.
At December 31, 2021, we operated 170 funeral homes in 26 states and 31 cemeteries in 11 states within the United States. For additional discussion about our overall business strategy, see Part I, Item 1, Business – Business Strategy.
Funeral Home Operations
Factors affecting our funeral operating results include: demographic trends relating to population growth and average age, which impact death rates and number of deaths; establishing and maintaining leading market share positions supported by strong local heritage and relationships; effectively responding to increasing cremation trends by selling complementary services and merchandise; controlling salary and merchandise costs; and exercising pricing leverage related to our atneed business to increase average revenue per contract. In simple terms, volume and price are the two variables that affect funeral revenue. The average revenue per contract is influenced by the mix of traditional and cremation services because our average cremation service revenue is approximately one-third of the average revenue earned from a traditional burial service. Funeral homes have a relatively fixed cost structure.
Cemetery Operations
Factors affecting our cemetery operating results include: the size and success of our sales organization; local perceptions and heritage of our cemeteries; our ability to adapt to changes in the economy and consumer confidence; and our response to fluctuations in capital markets and interest rates, which affect investment earnings on trust funds, finance charges on installment contracts and our securities portfolio within the trust funds.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Our primary sources of liquidity and capital resources are internally generated cash flows from operating activities and availability under our Credit Facility.
We generate cash in our operations primarily from atneed sales and delivery of preneed sales. We also generate cash from earnings on our cemetery perpetual care trusts. Based on our recent operating results, current cash position and anticipated future cash flows, we do not anticipate any significant liquidity constraints in the foreseeable future. We have the ability to draw on our Credit Facility, subject to its customary terms and conditions. However, if our capital expenditures or acquisition plans change, we may need to access the capital markets to obtain additional funding. Further, to the extent operating cash flow or access to and cost of financing sources are materially different than expected, future liquidity may be adversely affected. Please read Part I, Item 1A, Risk Factors.
25

For 2022, our plan is to remain focused on integrating our recently acquired businesses and to use cash on hand and borrowings under our Credit Facility primarily for general corporate purposes, payment of dividends and debt obligations, strategic acquisitions, internal growth capital expenditures, share repurchases, dividend increases and further debt repayments. We also expect continued divestiture activity for the next three-six months, which could yield an aggregate of approximately $3-4 million of cash from the proceeds of the sale. From time to time we may also use available cash resources (including borrowings under our Credit Facility) to repurchase shares of our common stock, subject to satisfying certain financial covenants in our Credit Facility and in the Indenture governing our Senior Notes. We believe that our existing and anticipated cash resources will be sufficient to meet our anticipated working capital requirements, capital expenditures, scheduled debt payments, commitments and dividends for the next 12 months as well as our long-term financial obligations.
Cash Flows
We began 2021 with $0.9 million in cash and ended the year with $1.1 million in cash. At December 31, 2021, we had borrowings of $155.4 million outstanding on our Credit Facility compared to $47.2 million on our Former Credit Facility as of December 31, 2020 and $83.8 million as of December 31, 2019.
The following table sets forth the elements of cash flow (in thousands):
Years Ended December 31,
201920202021
Cash at beginning of year$644 $716 $889 
Net cash provided by operating activities43,216 82,915 84,246 
Acquisition of businesses and real estate(140,907)(28,011)(3,285)
Deposit on pending acquisition(5,000)— — 
Proceeds from divestiture and sale of other assets967 8,541 7,875 
Proceeds from insurance reimbursements1,433 248 7,758 
Capital expenditures(15,379)(15,198)(24,883)
Net cash used in investing activities(158,886)(34,420)(12,535)
Net borrowings on our Credit Facility, acquisition debt and finance lease obligations54,413 (38,345)106,869 
Payment to redeem the Original Senior Notes(400,000)
Payment of call premium related to the Original Senior Notes— — (19,876)
Proceeds from the issuance of the Senior Notes395,500 
Payment of debt issuance costs for the Credit Facility and Senior Notes(1,871)(78)(2,197)
Conversion and maturity of the Convertible Notes(27)(4,563)(3,980)
Proceeds from the issuance of the Senior Notes76,688 — — 
Net proceeds from employee equity plans1,251 881 (3)
Dividends paid on common stock(5,398)(6,048)(7,264)
Purchase of treasury stock(9,152)— (140,040)
Other financing costs(162)(169)(461)
Net cash provided by (used in) financing activities115,742 (48,322)(71,452)
Cash at end of year$716 $889 $1,148 
Operating Activities
For the year ended December 31, 2021, cash provided by operating activities was $84.2 million compared to $82.9 million for the year ended December 31, 2020 and $43.2 million for the year ended December 31, 2019. The increase of $1.3 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 is primarily due to the increase in net income, offset by unfavorable working capital changes in income tax receivables, accounts payable and accrued liabilities.
The increase of $39.7 million for the year ended December 31, 2020 compared to the year ended December 31, 2019 was primarily due to the increase in operating income (excluding the non-cash impact of the divestitures and impairment charges) of $26.4 million in addition to other favorable working capital changes.

26

Investing Activities
Our investing activities resulted in a net cash outflow of $12.5 million for the year ended December 31, 2021 compared to $34.4 million for the year ended December 31, 2020 and $158.9 million for the year ended December 31, 2019.
Acquisition and Divestiture Activity
During the year ended December 31, 2021, we sold two funeral homes and one cemetery for $2.5 million, sold real property for $5.2 million and purchased real property for $3.3 million. We also received proceeds of $7.8 million from our property insurance policy for the reimbursement of renovation costs for our funeral and cemetery businesses that were damaged by Hurricane Ida.
During the year ended December 31, 2020, we acquired one funeral home and cemetery combination business in Lafayette, California for $33.0 million in cash, of which $5.0 million was deposited in escrow in 2019 and $28.0 million was paid at closing in 2020. In addition, we sold eight funeral homes for $8.4 million and we sold real property for $0.1 million.
During the year ended December 31, 2019, we acquired, in three separate transactions, two funeral home and cemetery combination businesses, seven funeral home businesses and three ancillary service businesses for an aggregate purchase price of $140.9 million. In addition, we also paid a $5.0 million deposit for a funeral home and cemetery combination business that we acquired in January 2020. In addition, we sold a funeral home business for $0.9 million and we sold real property for $0.1 million related to a funeral home we merged with another business in an existing market.
Capital Expenditures
For the year ended December 31, 2021, our capital expenditures (comprising of growth and maintenance spend) totaled $24.9 million compared to $15.2 million for the year ended December 31, 2020, and $15.4 million for the year ended December 31, 2019.
The following tables present our growth and maintenance capital expenditures (in thousands):
Years Ended December 31,
201920202021
Growth
Cemetery development $4,111 $4,705 $5,845 
Renovations at certain businesses(1)
2,236 953 4,541 
Streaming equipment and cemetery sales software42 636 687 
Other195 142 495 
Total Growth$6,584 $6,436 $11,568 
(1)During the year ended December 31, 2021, we spent $2.0 million for renovations on four businesses that were affected by Hurricane Ida, all of which was reimbursed by our property insurance. During the year ended December 31, 2019, we spent $1.6 million for renovations on four businesses that were affected by Hurricane Michael, of which $1.4 million was reimbursed by our property insurance policy.
Years Ended December 31,
201920202021
Maintenance
Facility repairs and improvements$1,820 $2,053 $2,543 
General equipment and furniture3,032 2,892 6,377 
Vehicles1,950 1,493 2,329 
Paving roads and parking lots795 731 1,186 
Information technology infrastructure improvements977 949 — 
Other221 644 880 
Total Maintenance$8,795 $8,762 $13,315 
Financing Activities
Our financing activities resulted in a net cash outflow of $71.5 million for the year ended December 31, 2021 compared to a net cash outflow of $48.3 million for the year ended December 31, 2020 and a net cash inflow of $115.7 million for the year ended December 31, 2019.
For the year ended December 31, 2021, we had net borrowings on our Credit Facility, acquisition debt and finance leases of $106.9 million, offset by the following payments: i) $19.9 million for the call premium to redeem our Original Senior Notes; ii) $140.0 million for the purchase of treasury stock; iii) $2.2 million for debt issuance and transactions costs related to our
27

Senior Notes and Credit Facility; iv) $4.0 million for the conversions and maturity of our Convertible Notes; and v) $7.3 million in dividends.
For the year ended December 31, 2020, we had net payments on our Credit Facility, acquisition debt and finance leases of $38.3 million. In addition, we paid $6.0 million in dividends and $4.6 million for the repurchase of a portion of our Convertibles Notes.
For the year ended December 31, 2019, we had net proceeds related to the additional issuance of our Original Senior Notes of $75.7 million and net borrowing on our long-term debt obligations of $53.5 million. In addition, we purchased treasury stock for $9.2 million and paid $5.4 million in dividends on our common stock.
Dividends
On October 27, 2021, our Board approved an increase of $0.05 per share for a total annual dividend of $0.45 per share beginning with the dividend declaration in the fourth quarter.
Our Board declared the following dividends payable on the dates below (in thousands, except per share amounts):
2021Per ShareDollar Value
March 1st$0.1000 $1,799 
June 1st$0.1000 $1,808 
September 1st$0.1000 $1,783 
December 1st$0.1125 $1,873 
2020Per ShareDollar Value
March 1st$0.0750 $1,339 
June 1st$0.0750 $1,343 
September 1st$0.0875 $1,569 
December 1st$0.1000 $1,797 
2019Per ShareDollar Value
March 1st$0.0750 $1,360 
June 1st$0.0750 $1,365 
September 1st$0.0750 $1,336 
December 1st$0.0750 $1,337 
Share Repurchases
Subject to market conditions, normal trading restrictions and satisfying certain financial covenants in our Credit Facility, and in the Indenture governing our Senior Notes, we may make purchases in the open market or through privately negotiated transactions under our Board authorized share repurchase program, in accordance with Rule 10b-18 of the Securities Exchange Act. On May 18, 2021, July 26, 2021 and October 27, 2021, our Board increased our share repurchase authorization by an additional $25.0 million, $25.0 million and $75.0 million, respectively, that including amounts previously authorized and outstanding, totaled up to $190.0 million in share repurchase authorizations.
Share repurchase activity is as follows (dollar value of shares repurchased in thousands):
Years Ended December 31,
201920202021
Number of Shares Repurchased(1)
400,000 — 2,906,983 
Average Price Paid Per Share$19.39 $— $49.01 
Dollar Value of Shares Repurchased(1)
$7,756 $— $142,469 
(1)
These amounts may differ from the repurchases of common stock amounts in the consolidated statements of cash flows due to unsettled share repurchases at the end of a period. In December 2021, we repurchased 37,408 shares for $2.4 million, the settlement of which occurred in January 2022.
Our shares were purchased in the open market at times and in amounts as management determined appropriate based on factors such as market conditions, legal requirements and other business considerations. Shares purchased pursuant to the repurchase program are currently held as treasury stock. At December 31, 2021, we had $8.1 million remaining available for repurchase under our authorized program.
28

Credit Facility, Lease Obligations and Acquisition Debt
The outstanding principal of our long-term debt and lease obligations is as follows (in thousands): 
December 31, 2020December 31, 2021
Credit Facility$47,200 $155,400 
Finance leases5,854 5,532 
Operating leases22,384 20,433 
Acquisition debt5,509 4,500 
Total$80,947 $185,865 
Credit Facility
At December 31, 2020, our senior secured revolving credit facility (the "Former Credit Facility") was comprised of: (i) a $190.0 million revolving credit facility, including a $15.0 million subfacility for letters of credit and a $10.0 million swingline, and (ii) an accordion or incremental option allowing for future increases in the facility size by an additional amount of up to $75.0 million in the form of increased revolving commitments or incremental term loans. The final maturity of the Former Credit Facility was to occur on May 31, 2023.
On May 13, 2021, in connection with the issuance of the Senior Notes (defined in Senior Notes section below), we entered into an amended and restated $150.0 million senior secured revolving credit facility (the “Credit Facility”) with the Subsidiary Guarantors (as defined below), the financial institutions party thereto, as lenders, and Bank of America, N.A., as administrative agent. We incurred $0.8 million in transactions costs related to the Credit Facility, which were capitalized and will be amortized over the remaining term of the related debt using the straight-line method.
On May 13, 2021, we used $21.4 million of the availability under the Credit Facility to repay the then outstanding balances under our Former Credit Facility and all commitments thereunder were terminated. In connection with the repayment in full of all amounts due thereunder, the Former Credit Facility was retired and $2.1 million of letters of credit previously issued under the Former Credit Facility were deemed issued under (and remain outstanding under) the Credit Facility. In connection with the termination of the Former Credit Facility, we recognized a loss on the write-off of $0.1 million in unamortized debt issuance costs, which was recorded in Loss on extinguishment of debt.
On November 22, 2021, we entered into a first amendment and commitment increase to the Credit Facility with the financial institutions party thereto, as lenders, and Bank of America, N.A., as administrative agent. Pursuant to this amendment, the revolving credit commitment was increased from $150.0 million to $200.0 million. We incurred $0.1 million in transactions costs related to this amendment, which were capitalized and will be amortized over the remaining term of the related debt using the straight-line method.
Our obligations under the Credit Facility are unconditionally guaranteed on a joint and several basis by the same subsidiaries which guarantee the Senior Notes and certain of our subsequently acquired or organized domestic subsidiaries (collectively, the “Subsidiary Guarantors”). The Credit Facility allows for future increases in the facility size in the form of increased revolving commitments or new incremental term loans by an additional amount of up to $75.0 million in the aggregate. The final maturity of the Credit Facility will occur on May 13, 2026.
The Credit Facility is secured by a first-priority perfected security interest in and lien on substantially all of the Company’s personal property assets and those of the Subsidiary Guarantors. In addition, the Credit Facility includes provisions which require the Company and the Subsidiary Guarantors, upon the occurrence of an event of default or in the event the Company’s actual Total Leverage Ratio is not at least 0.25 less than the required Total Leverage Ratio covenant level under the Credit Facility, to grant additional liens on real property assets accounting for no less than 50% of the Company’s and the Subsidiary Guarantors’ funeral operations if requested by the administrative agent.
The Credit Facility contains customary affirmative covenants, including, but not limited to, covenants with respect to the use of proceeds, payment of taxes and other obligations, continuation of the Company’s business and the maintenance of existing rights and privileges, the maintenance of property and insurance, amongst others.
In addition, the Credit Facility also contains customary negative covenants, including, but not limited to, covenants that restrict (subject to certain exceptions) the ability of the Company and the Subsidiary Guarantors to incur indebtedness, grant liens, make investments, engage in mergers and acquisitions, and pay dividends and other restricted payments, and certain financial maintenance covenants. At December 31, 2021, we were subject to the following financial covenants under our Credit Facility: (A) a Total Leverage Ratio not to exceed, (i) 5.00 to 1.00 and (B) a Fixed Charge Coverage Ratio (as defined in the Credit Facility) of not less than 1.20 to 1.00 as of the end of any period of four consecutive fiscal quarters. These financial maintenance covenants are calculated for the Company and its subsidiaries on a consolidated basis.
We were in compliance with all of the covenants contained in our Credit Facility at December 31, 2021.
29

At December 31, 2021, we had outstanding borrowings under the Credit Facility of $155.4 million. We also had one letter of credit for $2.1 million under the Credit Facility, which was increased to $2.3 million on September 1, 2021. The letter of credit will expire on November 25, 2022 and is expected to automatically renew annually and secures our obligations under our various self-insured policies. At December 31, 2021, we had $42.3 million of availability under the Credit Facility.
Outstanding borrowings under our Credit Facility bear interest at either a prime rate or a LIBOR rate, plus an applicable margin based upon our leverage ratio. At December 31, 2021, the prime rate margin was equivalent to 0.75% and the LIBOR rate margin was 1.75%. The weighted average interest rate on our Credit Facility for the year ended December 31, 2021 was 2.4%. The weighted average interest rate on our Former Credit Facility for the year ended December 31, 2020 was 3.8%.
We have no material assets or operations independent of the Subsidiary Guarantors, as all of our assets and operations are held and conducted by Subsidiary Guarantors. Additionally, we do not currently have any significant restrictions on our ability to receive dividends or loans from any Subsidiary Guarantors.
The interest expense and amortization of debt issuance costs related to our Credit Facility are as follows (in thousands):
Years Ended December 31,
201920202021
Credit Facility interest expense$1,601 $3,738 $1,820 
Credit Facility amortization of debt issuance costs229 482 380 
The interest payments on our remaining borrowings under the Credit Facility will be determined based on the average outstanding balance of our borrowings and the prevailing interest rate during that time. See Part II, Item 8, Financial Statements and Supplementary Data, Note 12 to our Consolidated Financial Statements for further detail of our debt and interest payments.
Lease Obligations
Our lease obligations consist of operating and finance leases. We lease certain office facilities, certain funeral homes and equipment under operating leases with original terms ranging from one to twenty years. Many leases include one or more options to renew, some of which include options to extend the leases for up to forty years. We lease certain funeral homes under finance leases with original terms ranging from ten to forty years.
The lease cost related to our operating leases and short-term leases and depreciation expense and interest expense related to our finance leases are as follows (in thousands):
Years Ended December 31,
201920202021
Operating lease cost$3,722 $3,795 $3,762 
Short-term lease cost250 185 193 
Variable lease cost27 39 160 
Finance lease cost:
Depreciation of leased assets$498 $439 $438 
Interest on lease liabilities520 496 471 
At December 31, 2021, operating and finance lease obligations were $48.3 million, with $6.0 million payable within 12 months. See Part II, Item 8, Financial Statements and Supplementary Data, Note 15 to our Consolidated Financial Statements for further detail of our lease payments.
Acquisition Debt
Acquisition debt consists of deferred purchase price and promissory notes payable to sellers. A majority of the deferred purchase price and notes bear no interest and are discounted at imputed interest rates ranging from 7.3% to 10.0%. Original maturities typically range from five to twenty years. Acquisition debt obligations were $4.5 million, with $0.5 million payable within 12 months.
The imputed interest expense related to our acquisition debt is as follows (in thousands):
Years Ended December 31,
201920202021
Acquisition debt imputed interest expense$622 $489 $364 
At December 31, 2021, acquisition debt obligations were $4.5 million, with $0.5 million payable within 12 months. See Part II, Item 8, Financial Statements and Supplementary Data, Note 12 to our Consolidated Financial Statements for further detail of our debt payments.
30

Convertible Subordinated Notes due 2021
On March 19, 2014, we issued $143.75 million aggregate principal amount of our 2.75% convertible subordinated notes due 2021 (the “Convertible Notes”). The Convertible Notes were due on March 15, 2021 and bear interest at 2.75% per year, which was payable semi-annually in arrears on March 15 and September 15 of each year.
In May 2018, we exchanged $115.0 million in aggregate principal amount of Convertible Notes in a privately-negotiated exchange with a limited number of convertible noteholders. We completed privately-negotiated repurchases of $22.4 million, $25,000 and $3.8 million in aggregate principal amount of Convertible Notes in December 2018, April 2019 and September 2020, respectively.
During the year ended December 31, 2021, we converted $2.4 million in aggregate principal amount of our Convertible Notes held by certain holders for $3.8 million in cash and recorded $1.4 million for the reacquisition of the equity component. The Convertible Notes matured on March 15, 2021, at which time all Convertible Notes outstanding, $0.2 million in aggregate principal amount, were paid in full in cash at par value. Therefore, no Convertible Notes remain outstanding at December 31, 2021.
The interest expense and accretion of debt discount and debt issuance costs related to our Convertible Notes are as follows (in thousands):
Years Ended December 31,
201920202021
Convertible Notes interest expense$174 $149 $18 
Convertible Notes accretion of debt discount241 216 20 
Convertible Notes amortization of debt issuance costs24 20 
The effective interest rate on the unamortized debt discount and debt issuance costs for both years ended December 31, 2020 and 2021 was 11.4% and 3.1%, respectively.
Senior Notes
On May 13, 2021, we issued $400.0 million in aggregate principal amount of 4.25% Senior Notes due in May 2029 (the “Senior Notes”) and related guarantees by the Subsidiary Guarantors in a private offering under Rule 144A and Regulation S of the Securities Act.
We used the proceeds of $395.5 million from the offering of the Senior Notes, which are net of a 1.125% debt discount of $4.5 million, together with cash on hand and borrowings under the Credit Facility, to redeem all of our existing $400.0 million in aggregate principal amount of 6.625% senior notes due 2026 (the “Original Senior Notes”). We paid a premium of $19.9 million to redeem the Original Senior Notes on June 1, 2021 at a redemption price of 104.97% of the principal amount thereof, plus accrued and unpaid interest of $13.25 million. During the year ended December 31, 2021, we incurred $1.3 million in transaction costs related to the Senior Notes.
For the year ended December 31, 2021, we recognized a net loss of $23.7 million related to the redemption of the Original Senior Notes, which was recorded in Loss on extinguishment of debt. The loss is composed of the $19.9 million call premium, the write-off of $3.4 million in unamortized debt discount, the write-off of $1.8 million in unamortized debt issuance costs, offset by the write-off of $1.4 million in unamortized debt premium.
The Senior Notes were issued under an indenture, dated as of May 13, 2021 (the “Indenture”), among the Company, the Subsidiary Guarantors (as defined therein) and Wilmington Trust, National Association, as trustee (“Collateral Trustee”).
The Senior Notes bear interest at 4.25% per year. Interest on the Senior Notes is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2021. The Senior Notes mature on May 15, 2029, unless earlier redeemed or purchased. The Senior Notes are unsecured, senior obligations and are fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally by each of the Subsidiary Guarantors.
We may redeem the Senior Notes, in whole or in part, at the redemption price of 102.13% on or after May 15, 2024, 101.06% on or after May 15, 2025 and 100% on or after May 15, 2026, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. At any time before May 15, 2024, we may also redeem all or part of the Senior Notes at the redemption prices described in the Indenture, plus accrued and unpaid interest, if any, to (but excluding) the date of redemption. In addition, before May 15, 2024, we may redeem up to 40% of the aggregate principal amount of the Senior Notes outstanding using an amount of cash equal to the net proceeds of certain equity offerings, at a price of 104.25% of the principal amount of the Senior Notes, plus accrued and unpaid interest, if any, to (but excluding) the date of redemption; provided that (1) at least 50% of the aggregate principal amount of the Senior Notes (including any additional Senior Notes) outstanding under the Indenture remain outstanding immediately after the occurrence of such redemption (unless all Senior Notes are redeemed
31

concurrently), and (2) each such redemption must occur within 180 days of the date of the consummation of any such equity offering.
If a “change of control” occurs, holders of the Senior Notes will have the option to require us to purchase for cash all or a portion of their Senior Notes at a price equal to 101% of the principal amount of the Senior Notes, plus accrued and unpaid interest. In addition, if we make certain asset sales and do not reinvest the proceeds thereof or use such proceeds to repay certain debt, we will be required to use the proceeds of such asset sales to make an offer to purchase the Senior Notes at a price equal to 100% of the principal amount of the Senior Notes, plus accrued and unpaid interest.
The Indenture contains restrictive covenants limiting our ability and our Restricted Subsidiaries (as defined in the Indenture) to, among other things, incur additional indebtedness or issue certain preferred shares, create liens on certain assets to secure debt, pay dividends or make other equity distributions, purchase or redeem capital stock, make certain investments, sell assets, agree to certain restrictions on the ability of Restricted Subsidiaries to make payments to us, consolidate, merge, sell or otherwise dispose of all or substantially all assets, or engage in transactions with affiliates. The Indenture also contains customary events of default.
The debt discount and the debt issuance costs are being amortized using the effective interest method over the remaining term of 89 months of the Senior Notes. The effective interest rate on the unamortized debt discount and the unamortized debt issuance costs for the Senior Notes for the year ended December 31, 2021 was 4.42% and 4.30%, respectively.
The effective interest rate on the unamortized debt discount and the unamortized debt issuance costs for the Original Senior Notes, issued in May 2018, for the year ended December 31, 2020 was 6.69%. The effective interest rate on the unamortized debt premium and the unamortized debt issuance costs for the additional Original Senior Notes, issued in December 2019, for year ended December 31, 2020 was 6.90%.
The fair value of the Senior Notes, which are Level 2 measurements, was $401.6 million at December 31, 2021.
The interest expense and amortization of debt discount, debt premium and debt issuance costs related to our Senior Notes are as follows (in thousands):
Years Ended December 31,
201920202021
Senior Notes interest expense$21,711 $26,500 $21,767 
Senior Notes amortization of debt discount493 528 504 
Senior Notes amortization of debt premium— 221 85 
Senior Notes amortization of debt issuance costs139 280 195 
We have future interest payments on our outstanding balance of $125.3 million, with $17.0 million payable within 12 months. See Part II, Item 8, Financial Statements and Supplementary Data, Note 14 to our Consolidated Financial Statements for further detail of our debt and interest payments.
32

Off-Balance Sheet Arrangements
At December 31, 2021, our off-balance sheet arrangements were as follows:
Non-compete agreements - We have various non-compete agreements with former owners and employees of businesses we have acquired. These agreements are generally for one to ten years and provide for periodic payments over the term of the agreements. We have future payments on our non-compete agreements of $6.8 million, with $2.3 million payable within 12 months.
Consulting agreements - We have various consulting agreements with former owners of businesses we have acquired. Payments for such agreements are generally not made in advance. These agreements are generally for one to five years and provide for bi-weekly or monthly payments. We have future payments on our consulting agreements of $1.2 million, with $0.7 million payable within 12 months.
Employment agreements - We have employment agreements with our executive officers and certain senior leadership. These agreements are generally for three to five years and provide for participation in various incentive compensation arrangements. These agreements generally renew automatically on an annual basis after their initial term has expired, with the exception of our Chairman of the Board and Chief Executive Officer, which does not renew after the current term expiring in February 2028. We have future payments on our employment agreements of $8.3 million, with $3.3 million payable within 12 months.
Letter of credit - We have one letter of credit for $2.3 million under the Credit Facility, which secures our obligations under our various self-insurance policies in the event we are unable to meet the self-insurance portion of our claim payment obligations. As we already have reserves recorded for our self-insurance claims costs, these do not represent additional liabilities. The letter of credit will expire on November 25, 2022 and is expected to automatically renew annually.
The obligations related to our off-balance sheet arrangements are significant to our future liquidity; however, although we can provide no assurances, we anticipate that these obligations will be funded from cash provided from our operating activities. If we are not able to meet these obligations with cash provided by our operating activities, we may be required to access the capital markets or draw down on our Credit Facility, both of which may be more difficult to access. See Part II, Item 8, Financial Statements and Supplementary Data, Notes 12 and 16 to our Consolidated Financial Statements for further detail of our letter of credit and off-balance sheet agreements, respectively.
FINANCIAL HIGHLIGHTS
Below are our financial highlights (in thousands except for volumes and averages):
Years Ended December 31,
201920202021
Revenue$274,107 $329,448 $375,886 
Funeral contracts 38,940 47,190 49,249 
Average revenue per funeral contract$5,499 $5,145 $5,360 
Preneed interment rights (property) sold7,205 9,503 11,408 
Average price per interment right sold$3,653 $4,033 $4,718 
Gross profit$79,585 $105,923 $129,516 
Net income$14,533 $16,090 $33,159 
Revenue in 2021 increased $46.4 million compared to 2020, as we experienced a 20.0% increase in the number of preneed interment rights (property) sold, as well as a 17.0% increase in the average price per interment right sold, primarily due to (1) our sales personnel being less impacted by social distancing restrictions that were in place in 2020 due to COVID-19; (2) the full integration of the cemetery acquisitions made in the fourth quarter of 2019 and first quarter of 2020; and (3) the execution of our innovative cemetery sales strategy of building high performance sales teams and standardized sales systems across our portfolio of cemeteries.
We also experienced a 4.4% increase in total funeral contracts and a 4.2% increase in the average revenue per funeral contract for 2021 compared to 2020. We believe the increase in volume during 2021 is due not only to COVID-19 deaths, but also due to a result of our ability to adapt to the continued changing consumer environment with new and innovative ways to serve families. We believe the increase in the average revenue per contract is a further reflection of our ability to creatively serve our families, as the number of contracts for which we provided memorial services in 2021 began to return to pre-COVID-19 levels.
Revenue in 2020 increased $55.3 million compared to 2019, as we experienced a 21.2% increase in total funeral contracts primarily due to the funeral home acquisitions made in the fourth quarter of 2019 and first quarter of 2020, as well as increases
33

from broad market share gains and increases in the number of deaths related to the COVID-19 pandemic. Volume growth was offset by a decrease in the average revenue per funeral contract of 6.4% primarily due to the decrease in services performed as restrictions mandated by state and local governments were placed on social gatherings. In addition, we experienced an increase of 31.9% in the number of preneed interment rights (property) sold primarily due to the cemetery acquisitions made in the fourth quarter of 2019 and first quarter of 2020, as well as an increase of 10.4% in the average price per interment right sold. Further discussion of Revenue for our funeral home and cemetery segments is presented herein under “Results of Operations.”
Gross profit in 2021 increased $23.6 million compared to 2020, primarily due to the increase in revenue from both our funeral home and cemetery segments, as well as decreases in funeral home and cemetery operating expenses as a percent of operating revenue primarily in salaries and benefits expense as we increased revenue without adding extra personnel.
Gross profit in 2020 increased $26.3 million compared to 2019, primarily due to the increase in revenue from both our funeral home and cemetery segments due to the acquisitions made in the fourth quarter of 2019 and first quarter of 2020, as well as disciplined expense and cost management by leaders at each business. Further discussion of the components of Gross profit for our funeral home and cemetery segments, is presented herein under “Results of Operations.”
Net income for the 2021 increased $17.1 million compared to 2020, primarily due to (1) the increase in gross profit of $23.6 million; (2) a $20.8 million decrease in net loss on divestitures, disposals and impairments charges and (3) a $7.1 million decrease in interest expense; offset by (4) a $23.8 million loss on extinguishment of debt; (5) a $8.1 million increase in general, administrative and other expenses and (6) a $2.6 million increase in tax expense.
Net income in 2020 increased $1.6 million compared to 2019 primarily due to the increase in gross profit, offset by the $16.6 million increase in charges related to the net loss on divestitures and impairments and $7.0 million increase in interest expense related to our Senior Notes and Credit Facility.
Further discussion of General, administrative and other expenses, Home office depreciation and amortization expense, Net loss on divestitures, disposals and impairment charges, Interest expense, Income taxes and other components of income and expenses are presented herein under “Other Financial Statement Items.”
REPORTING AND NON-GAAP FINANCIAL MEASURES
We also present our financial performance in our “Operating and Financial Trend Report” (“Trend Report”) as reported in our earnings release for the year ending December 31, 2021, dated February 23, 2022 and discussed in the corresponding earnings conference call. This Trend Report is used as a supplemental financial statement by management and investors to compare our current financial performance with our previous results and with the performance of other companies. We do not intend for this information to be considered in isolation or as a substitute for other measures of performance prepared in accordance with United States generally accepted accounting principles (“GAAP”). The Trend Report is a non-GAAP statement that also provides insight into underlying trends in our business.
34

Below is a reconciliation of Net income, a GAAP measure to Adjusted net income, a non-GAAP measure, (in thousands):
Years Ended December 31,
201920202021
Net income $14,533 $16,090 $33,159 
Special items(1)
Acquisition expenses2,083 (11)— 
Severance and separation costs(2)
1,205 563 1,575 
Performance awards cancellation and exchange— 288 — 
Accretion of discount on Convertible Notes(1)
241 216 20 
Loss on early extinguishment of debt(3)
— — 23,807 
Net (gain) loss on divestitures and other costs4,217 6,864 (856)
Net impact of impairment of goodwill and other intangibles963 14,952 500 
Litigation reserve(4)
750 270 1,050 
Tax expense related to divested business(1)
911 — — 
Gain on insurance reimbursements(885)— — 
Disaster recovery and pandemic costs— 1,627 2,157 
Other special items(5)
336 410 2,354 
Tax adjustment related to certain discrete items(1)
— 400 — 
Sum of special items$9,821 $25,579 $30,607 
Tax effect on special items(1)
1,822 7,986 8,503 
Adjusted net income(6)
$22,532 $33,683 $55,263 
(1)
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. In 2019 and 2020, Special items are taxed at the federal statutory rate of 21.0%, except the Net (gain) loss on divestitures and other costs and the Net impact of impairment of goodwill and other intangibles, which are taxed at the operating tax rate for the period. In 2021, Special items are taxed at the operating tax rate for the period. The Accretion of discount on Convertible Notes, the Tax expense related to divested business and the Tax adjustment related to certain discrete items are not tax effected.
(2)Costs related to the termination or resignation of certain key members of leadership.
(3)Loss on the redemption of our Original Senior Notes during the second quarter of 2021.
(4)Costs related to litigation matters.
(5)In 2019, the amount is related to costs associated with recruitment of a former member of the senior leadership team. In 2020, this is related to the costs associated with a state audit assessment. In, 2021, this is related to (1) write-off of certain fixed assets; (2) a one-time $1.0 million payment in September 2021 for residual insurance claims; and (3) interest paid on our Original Senior Notes for the two-week period during which our Senior Notes were issued prior to the redemption of our Original Senior Notes.
(6)Adjusted net income is defined as Net income plus adjustments for Special items and other expenses or gains that we believe do not directly reflect our core operations and may not be indicative of our normal business operations.
Below is a reconciliation of Gross profit (a GAAP measure) to Operating profit (a non-GAAP measure) (in thousands):
Years Ended December 31,
201920202021
Gross profit$79,585 $105,923 $129,516 
Cemetery property amortization3,985 4,956 6,670 
Field depreciation expense12,370 13,006 12,609 
Regional and unallocated funeral and cemetery costs13,827 18,057 25,846 
Operating profit(1)
$109,767 $141,942 $174,641 
(1)Operating profit is defined as Gross profit less Cemetery property amortization, Field depreciation expense and Regional and unallocated funeral and cemetery costs.
35

Our operations are reported in two business segments: Funeral Home and Cemetery. Below is a breakdown of Operating profit (a non-GAAP measure) by Segment (in thousands):
Years Ended December 31,
201920202021
Funeral Home $85,737 $104,998 $119,007 
Cemetery24,030 36,944 55,634 
Operating profit$109,767 $141,942 $174,641 
Operating profit margin(1)
40.0%43.1%46.5%
(1)Operating profit margin is defined as Operating profit as a percentage of Revenue.
Further discussion of Operating profit for our funeral home and cemetery segments is presented herein under “Results of Operations.”
YEAR ENDED DECEMBER 31, 2021 COMPARED TO YEAR ENDED DECEMBER 31, 2020
Results of Operations
The following is a discussion of our results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020.
The term “same store” refers to funeral homes and cemeteries acquired prior to January 1, 2017 and owned and operated for the entirety of each period being presented, excluding certain funeral home and cemetery businesses that we intend to divest in the near future.
The term “acquired” refers to funeral homes and cemeteries purchased after December 31, 2016, excluding any funeral home and cemetery businesses that we intend to divest in the near future. This classification of acquisitions has been important to management and investors in monitoring the results of these businesses and to gauge the leveraging performance contribution that a selective acquisition program can have on total company performance.
The term “divested” when discussed in the Funeral Home Segment, refers to two funeral homes we sold and six funeral homes we merged with other businesses we own in existing markets during the year ended December 31, 2021 and eight funeral homes we sold during the year ended December 31, 2020. The term “divested” when discussed in the Cemetery Segment, refers to one cemetery we sold during the year ended December 31, 2021.
“Planned divested” refers to the funeral home businesses that we intend to divest.
“Ancillary” in the Funeral Home Segment represents our flower shop, pet cremation business and online cremation business.
Cemetery property amortization, Field depreciation expense and Regional and unallocated funeral and cemetery costs, are not included in Operating profit, a non-GAAP financial measure. Adding back these items will result in Gross profit, a GAAP financial measure.
36

Funeral Home Segment
The following table sets forth certain information regarding our Revenue and Operating profit from our funeral home operations (in thousands):
 Years Ended December 31,
 20202021
Revenue:
Same store operating revenue$191,757 $215,039 
Acquired operating revenue35,461 38,031 
Divested/planned divested revenue8,082 3,174 
Ancillary revenue4,661 4,437 
Preneed funeral insurance commissions1,349 1,262 
Preneed funeral trust and insurance7,828 8,144 
Total $249,138 $270,087 
Operating profit:
Same store operating profit$79,850 $93,025 
Acquired operating profit13,628 16,017 
Divested/planned divested operating profit2,067 605 
Ancillary operating profit1,186 1,006 
Preneed funeral insurance commissions564 359 
Preneed funeral trust and insurance7,703 7,995 
Total$104,998 $119,007 
The following measures reflect the significant metrics over this comparative period:
  Years Ended December 31,
 20202021
Same store:
Contract volume37,802 41,307 
Average revenue per contract, excluding preneed funeral trust earnings$5,073 $5,206 
Average revenue per contract, including preneed funeral trust earnings$5,258 $5,382 
Burial rate36.6%35.2%
Cremation rate56.3%57.1%
Acquired:
Contract volume7,218 7,243 
Average revenue per contract, excluding preneed funeral trust earnings$4,913 $5,251 
Average revenue per contract, including preneed funeral trust earnings$4,980 $5,317 
Burial rate40.4%39.9%
Cremation rate55.4%54.3%
Funeral home same store operating revenue increased $23.3 million for the year ended December 31, 2021 compared to the year ended December 31, 2020. The increase in operating revenue is primarily driven by a 9.3% increase in same store contract volume, as well as a 2.6% increase in the average revenue per contract excluding preneed interest. The increase in volume is not only due to COVID-19 deaths during 2021, but also a result of our ability to adapt to the continued changing environment with new and innovative ways to serve families. We believe the increase in the average revenue per contract is a further reflection of our ability to creatively serve our families, as the number of contracts for which we provided memorial services in 2021 began to return to pre-COVID-19 levels.
Funeral home same store operating profit for the year ended December 31, 2021 increased $13.2 million when compared to the year ended December 31, 2020. The comparable operating profit margin increased 170 basis points to 43.3%. The
37

increase in operating profit is primarily due to the increase in same store operating revenue along with disciplined expense and cost management by leaders at each business. Overall same store operating expenses as a percent of operating revenue decreased 1.7% with the largest decrease in salaries and benefits expense of 1.2% as a percent of operating revenue, as we focused on optimizing the inherent operating leverage in each business by increasing revenue without adding extra personnel.
Funeral home acquired operating revenue for the year ended December 31, 2021 increased $2.6 million compared to the year ended December 31, 2020. The increase in operating revenue is primarily driven by a 6.9% increase in the average revenue per contract excluding preneed interest, while the acquired contract volume was relatively flat. We believe the increase in the average revenue per contract is a further reflection of our ability to creatively serve our families, as the number of contracts for which we provided memorial services in 2021 began to return to pre-COVID-19 levels.
Acquired operating profit for the year ended December 31, 2021, increased $2.4 million when compared to the year ended December 31, 2020. The comparable operating profit margin increased 370 basis points to 42.1%. The increase in operating profit is primarily due to the increase in acquired operating revenue along with disciplined expense and cost management by leaders at each business. Overall acquired operating expenses as a percent of operating revenue decreased 3.7% with the largest decrease in salaries and benefits expense of 3.2% as a percent of operating revenue, as we focused on optimizing the inherent operating leverage in each business by increasing revenue without adding extra personnel.
Ancillary revenue, which is recorded in Other revenue, represents revenue from our flower shop, pet cremation and online cremation businesses and Ancillary operating profit both decreased $0.2 million for the year ended December 31, 2021 compared to the year ended December 31, 2020.
Preneed funeral insurance commissions and preneed funeral trust and insurance (recorded in Other revenue) on a combined basis, increased $0.2 million for the year ended December 31, 2021 compared to the year ended December 31, 2020. The increase is primarily from trust and insurance earnings on preneed contracts. Recognition of trust and insurance earnings is triggered at the time a preneed contract matures to atneed. For the year ended December 31, 2021, the average trust and insurance earnings per preneed contract increased 7.8% compared to the year ended December 31, 2020. Operating profit for preneed funeral insurance commissions and preneed trust and insurance, on a combined basis, increased $0.1 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily due to the increase in revenue.
Cemetery Segment
The following table sets forth certain information regarding our Revenue and Operating profit from our cemetery operations (in thousands): 
 Years Ended December 31,
 20202021
Revenue:
Same store operating revenue$51,767 $64,171 
Acquired operating revenue17,584 27,829 
Divested revenue246 288 
Preneed cemetery trust earnings9,797 12,487 
Preneed cemetery finance charges916 1,024 
Total$80,310 $105,799