Carriage Services, Inc. Q3 FY2025 earnings call

• Strategic objectives include disciplined capital allocation, relentless improvement, and purposeful growth. - Financial results show total operating revenue growth, with cemetery segment as a key long-term value engine. - Successfully completed sale of noncore assets, reallocating proceeds to pay down debt and invest in acquisitions. - Launched Sales Edge 2.0 and Titan AI-powered sales agent to boost preneed sales; ongoing Trinity implementation with future efficiency gains.

Total operating revenue for the quarter grew to $101.3 million, an increase of 5.2% over the same period last year. Funeral operating revenue was down $753,000 or 1.3% due to a 2.1% reduction in funeral volume, with summer months (July, August) having lower volumes but normalization in September and October. Cemetery segment operating revenue reached $35.6 million, an increase of $4 million or 12.6% year-over-year. Insurance-funded prearranged funeral sales saw September set an all-time high with preneed funeral sales surpassing $7 million, accounting for 50.5% of year-over-year growth in general agency commissions. Total field EBITDA for the quarter was $46.3 million, an increase of $1.4 million or 3.1%. Adjusted consolidated EBITDA grew to $33 million, up $2.2 million or 7.3% versus last year, and adjusted diluted earnings per share were $0.75, up from $0.64 in the same quarter last year.

Revenues expected in the range of $413 million to $417 million. Adjusted consolidated EBITDA between $130 million and $132 million. Adjusted diluted EPS of $3.25 to $3.30. Overhead expenses ranging from 13% to 13.5% of revenues. Adjusted free cash flow between $44 million and $48 million. Leverage ratio ending 2025 between 4x to 4.1x.

• Fluctuations in cemetery revenue recognition due to timing of preneed sales and inventory development. - Seasonal factors like flu season impacting funeral volume. - Competitive M&A landscape affecting acquisition opportunities and multiples.

Q: Quantify July-August funeral volume decline and October performance A: Carlos Quezada stated July and August had middle-digit percentage negative volume, but September and October showed normalization with better than last year volume.

Q: Cemetery margin fluctuations A: Carlos Quezada said fluctuations come from timing of preneed sales recognition and inventory development; if large private mausoleums take time to develop, revenue recognition is delayed.

Q: Insurance-funded preneed growth sustainability A: Carlos Quezada mentioned nearly full rollout, potential for double-digit growth in 2026; John Enwright noted ongoing implementation costs for Trinity with benefits seen in 2027.

Q: Funeral services long-term growth outlook A: Carlos Quezada cited demographic tailwinds from baby boomer deaths but noted seasonality and flu season risks.

Q: Acquisitions and divestitures A: John Enwright said active pipeline with no Q4 acquisitions expected; divested businesses contributed $9M revenue and $2.4M EBITDA