CARRIAGE SERVICES INC Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Financial Performance: Highlighted fourth quarter and full year financial results, noting funeral volume decline due to flu season shift but offset by preneed sales growth in cemeteries.
• Strategic Initiatives: Announced expansion of supply chain strategies with a new earned core line and a partnership with Express Funeral Funding for insurance assignments (rollout in Q2 2025). Focus on continuous improvement and service excellence.
• Leadership: Welcomed John Enwright as new Chief Financial Officer, who has been involved in operations and provided insights.

Segment Performance

• Fourth Quarter: Total revenue was $97.7 million, a decrease of 1.1% compared to the same quarter last year. Funeral operating revenue was $58.7 million, down 4.2% y-o-y, with a 7.3% decrease in contracts offset by a 1.4% increase in average revenue per contract. Cemetery operating revenue was $29.8 million, up 11.6% y-o-y, driven by an 8.4% increase in preneed interments sold and a 9.2% increase in average price per preneed cemetery contract.
• Full Year: Total revenue finished at $404.2 million, an increase of 5.7% y-o-y, primarily due to a 22.9% increase in preneed interment rights sold and a 7.3% increase in the average price per preneed interment rights sold for cemeteries. Adjusted consolidated EBITDA for the fourth quarter was $29.3 million (down 9.6% y-o-y), and for the full year, it was $126.2 million (up 11.5% y-o-y). Adjusted diluted EPS for the fourth quarter was $0.62 per share (down 19.5% y-o-y) and $2.65 per share for the full year (up 21% y-o-y).

Guidance

• 2025 Outlook: Revenue expected in the $400-$410 million range (excluding divestitures, low single-digit growth). Adjusted consolidated EBITDA expected $128-$133 million. Adjusted diluted EPS $3.10-$3.30, driven by lower interest expense (~$5-6 million) and lower tax rate (5-6 points). Overhead expected 13%-14% of revenue. Adjusted free cash flow $40-$50 million. Leverage ratio expected 3.7x-3.8x.

Risks

• Uncertainties: Factors include flu season impact on funeral volumes, potential delays or issues with ERP implementation (Trinity), and market conditions affecting preneed sales.

Question and Answer

Q: Clarification on funeral volumes and January/February trends A: Carlos Quezada stated January and February volumes were up vs Q1 2024 due to late flu season shift.

Q: Divestitures in 2024 and 2025 A: Steven Metzger said 2024 divestitures accounted for ~$5.5M revenue, ~$1.8M EBITDA, proceeds ~$12M. 2025 divestitures target ~$25M proceeds, ~$9.5M revenue, ~$3.3M EBITDA.

Q: Guidance on EBITDA, EPS, interest, and tax A: Steven Metzger and Carlos Quezada explained EBITDA, EPS growth driven by lower interest expense and tax rate.

Q: CapEx and Trinity rollout A: Steven Metzger said CapEx increase related to Trinity rollout and funeral property amortization.

Q: Flu season impact on volume and supply chain personnel A: Carlos Quezada said January/February volume up 1%-3% y-o-y. Steven Metzger said plans to add personnel for supply chain.

Q: Trinity implementation timing and organic growth A: Carlos Quezada outlined Trinity implementation timeline (pilot in Q2 2025, full rollout in 2025 for funeral homes, 2026 for cemeteries). John Enwright and Carlos Quezada discussed organic growth expectations (low single-digit for funeral, high single-digit for cemetery).