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Carriage Services Announces Strong Third Quarter 2024 Results and Increases Full-Year 2024 Outlook

 Conference call on Thursday, October 31, 2024 at 9:30 a.m. central time

HOUSTON, Oct. 30, 2024 (GLOBE NEWSWIRE) — Carriage Services, Inc. (NYSE: CSV) today announced its financial results for the third quarter ended September 30, 2024.

Company Highlights:

Carlos Quezada, Vice Chairman and CEO, stated, “I am pleased to announce that our growth continues with another strong quarter of performance. Our cemetery sales team achieved a notable increase of 27.1% year-over-year in preneed sales, affirming the continued effectiveness of our cemetery sales growth strategy. Together with an increase of 3.1% in our funeral average revenue per contract, these factors significantly propelled our total revenue, which grew by 11.3% over the same period last year. This marks the third straight quarter of exceeding $100 million of revenue, a first for Carriage.

Our strategic approach to preneed funeral sales also yielded remarkable results, with preneed funeral commission income surging by an impressive 415.4% to $1.6 million from $312 thousand in the previous year’s quarter. This significant revenue boost, along with diligent cost management, contributed to our Adjusted Consolidated EBITDA of $30.7 million, growth of 26.7% or $6.5 million, and Adjusted Consolidated EBITDA Margin improvement of 373 basis points to 30.5%, up from 26.8% over the same period last year.

Additionally, our GAAP diluted earnings per share totaled $0.63, marking an increase of 110% or $0.33 over last year’s $0.30. Adjusted diluted earnings per share also increased 93.9% to $0.64, compared to $0.33 in the third quarter of last year.

We are pleased to welcome Edmondo Robinson to our Board of Directors. Edmondo brings over 25 years of executive leadership and management experience in digital health and innovation in healthcare delivery, along with public company board experience. Edmondo holds a Bachelor in Science in Animal Physiology and Neuroscience from the University of California, San Diego, a Master’s degree in Business Administration from the Wharton School at the University of Pennsylvania, a medical degree from the University of California, Los Angeles, and a Master’s Degree in Health Policy Research from the University of Pennsylvania. Edmondo’s experience and knowledge will further strengthen our commitment to driving long-term growth and shareholder value.

The third quarter delivered impressive success, and we are delighted with our progress and performance. The execution of our strategic objectives surpasses our already high expectations, and we look forward to continuing to execute our plan,” concluded Mr. Quezada.

FINANCIAL HIGHLIGHTS

    Three months ended September 30,   Nine months ended September 30,
(in millions, except volume, average, margins and EPS)     2024       2023       2024       2023  
                 
GAAP Metrics:                
Total revenue   $         100.7     $         90.5     $         306.5     $         283.7  
Operating income   $ 22.9     $ 15.7     $ 60.7     $ 57.1  
Operating income margin     22.7 %     17.3 %     19.8 %     20.1 %
Net income   $ 9.9     $ 4.6     $ 23.1     $ 21.8  
Diluted EPS   $ 0.63     $ 0.30     $ 1.48     $ 1.39  
Cash provided by operating activities   $ 20.8     $ 22.7     $ 42.7     $ 61.8  
                 
Non-GAAP Metrics(1):                
Adjusted consolidated EBITDA   $ 30.7     $ 24.3     $ 96.9     $ 80.7  
Adjusted consolidated EBITDA margin     30.5 %     26.8 %     31.6 %     28.5 %
Adjusted diluted EPS   $ 0.64     $ 0.33     $ 2.02     $ 1.42  
Adjusted free cash flow   $ 20.0     $ 21.4     $ 42.6     $ 42.3  
                 
Cemetery Operating Metrics(2):                
Preneed interment rights (property) sold     3,511       2,736       11,107       8,521  
Average price per preneed interment right sold   $ 5,360     $ 5,196     $ 5,414     $ 5,052  
                 
Funeral Operating Metrics(3):                
Funeral contracts     10,713       10,842       33,293       34,159  
Average revenue per funeral contract(4)   $ 5,540     $ 5,399     $ 5,561     $ 5,377  
Burial rate     31.6 %     32.5 %     32.4 %     33.1 %
Cremation rate     60.7 %     59.5 %     59.8 %     59.1 %
                 
(1) We present both GAAP and non-GAAP measures to provide investors with additional information and to allow for the increased comparability of our ongoing performance from period to period. The most comparable GAAP measures to the Non-GAAP measures presented in this table can be found in the Reconciliation of Non-GAAP Financial Measures section of this press release.
(2) Metrics calculated using cemetery operating results.
(3) Metrics calculated using funeral operating results.
(4) Excludes preneed interest earnings reflected in financial revenue.

REVISED 2024 OUTLOOK

    Revised 2024 Outlook   Previous 2024 Outlook
(in millions, except per share amounts)        
         
Total revenue   $395 – $405   $390 – $400
Adjusted consolidated EBITDA   $120 – $125   $117 – $123
Adjusted diluted EPS   $2.45 – $2.55   $2.30 – $2.40
Adjusted free cash flow   $55 – $65   $55 – $65
         
The most comparable GAAP measures to the Non-GAAP measures presented in this table can be found in the Reconciliation of Non-GAAP Financial Measures section of this press release.
 

CALL AND INVESTOR RELATIONS CONTACT

Carriage Services has scheduled a conference call for tomorrow, October 31, 2024 at 9:30 a.m. central time. To participate in the call, please dial 888-224-1005 (Conference ID – 6660738) or to listen live over the Internet via webcast click link. An audio archive of the call will be available on demand via the Company’s website at www.carriageservices.com. For any investor relations questions, please email InvestorRelations@carriageservices.com.

CARRIAGE SERVICES, INC.
CONDENSED OPERATING AND FINANCIAL TREND REPORT
(in thousands – except per share amounts)
                 
    Three months ended September 30,   Nine months ended September 30,
      2024       2023       2024       2023  
Funeral operating revenue   $ 59,347     $ 58,533     $ 185,150     $ 183,673  
Cemetery operating revenue     32,988       24,315       95,339       74,465  
Financial revenue     7,306       5,247       21,362       17,407  
Ancillary revenue     1,046       1,156       3,375       3,445  
Divested revenue           1,243       1,272       4,696  
Total revenue   $ 100,687     $ 90,494     $ 306,498     $ 283,686  
                 
Funeral operating EBITDA   $ 22,384     $ 21,871     $ 73,277     $ 69,749  
Funeral operating EBITDA margin     37.7 %     37.4 %     39.6 %     38.0 %
                 
Cemetery operating EBITDA     15,883       8,980       44,900       30,163  
Cemetery operating EBITDA margin     48.1 %     36.9 %     47.1 %     40.5 %
                 
Financial EBITDA     6,681       4,849       19,732       16,223  
Financial EBITDA margin     91.4 %     92.4 %     92.4 %     93.2 %
                 
Ancillary EBITDA     156       147       522       366  
Ancillary EBITDA margin     14.9 %     12.7 %     15.5 %     10.6 %
                 
Divested EBITDA     (161 )     288       42       1,464  
Divested EBITDA margin     %     23.2 %     3.3 %     31.2 %
Total field EBITDA   $ 44,943     $ 36,135     $ 138,473     $ 117,965  
Total field EBITDA margin     44.6 %     39.9 %     45.2 %     41.6 %
                 
Total overhead   $ 14,199     $ 12,848     $ 53,980     $ 38,200  
Overhead as a percentage of revenue     14.1 %     14.2 %     17.6 %     13.5 %
                 
Consolidated EBITDA   $ 30,744     $ 23,287     $ 84,493     $ 79,765  
Consolidated EBITDA margin     30.5 %     25.7 %     27.6 %     28.1 %
                 
Other expenses and interest                
Depreciation & amortization   $ 5,610     $ 5,186     $ 17,274     $ 15,623  
Non-cash stock compensation     1,850       1,992       4,521       6,155  
Interest expense     8,035       9,278       25,071       27,213  
Other     400       55       1,597       (50 )
Pretax income   $ 14,849     $ 6,776     $ 36,030     $ 30,824  
Net tax expense     4,983       2,131       12,932       9,049  
Net income   $ 9,866     $ 4,645     $ 23,098     $ 21,775  
Special items(1)   $ 342     $ 829     $ 12,554     $ 534  
Tax on special items     114       238       4,168       154  
Adjusted net income   $ 10,094     $ 5,236     $ 31,484     $ 22,155  
Adjusted net income margin     10.0 %     5.8 %     10.3 %     7.8 %
                 
Adjusted basic earnings per share   $ 0.66     $ 0.35     $ 2.08     $ 1.48  
Adjusted diluted earnings per share   $ 0.64     $ 0.33     $ 2.02     $ 1.42  
                 
GAAP basic earnings per share   $ 0.65     $ 0.31     $ 1.52     $ 1.46  
GAAP diluted earnings per share   $ 0.63     $ 0.30     $ 1.48     $ 1.39  
                 
Weighted average shares o/s – basic     15,011       14,820       14,951       14,791  
Weighted average shares o/s – diluted     15,491       15,514       15,400       15,480  
                 
Reconciliation of Consolidated EBITDA to Adjusted consolidated EBITDA                
Consolidated EBITDA   $ 30,744     $ 23,287     $ 84,493     $ 79,765  
Special items(1)           973       12,456       973  
Adjusted consolidated EBITDA   $ 30,744     $ 24,260     $ 96,949     $ 80,738  
Adjusted consolidated EBITDA margin     30.5 %     26.8 %     31.6 %     28.5 %
                 
(1) A detail of our Special items presented in this table can be found in the Reconciliation of Non-GAAP Financial Measures section of this press release.
CARRIAGE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited and in thousands)
       
  September 30, 2024   December 31, 2023
ASSETS      
Current assets:      
Cash and cash equivalents $ 1,260     $ 1,523  
Accounts receivable, net   30,913       27,060  
Inventories   8,230       8,347  
Prepaid and other current assets   3,198       4,791  
Total current assets   43,601       41,721  
Preneed cemetery trust investments   102,391       96,374  
Preneed funeral trust investments   108,956       107,842  
Preneed cemetery receivables, net   50,049       35,575  
Receivables from preneed funeral trusts, net   22,315       21,530  
Property, plant and equipment, net   279,534       287,484  
Cemetery property, net   113,091       114,580  
Goodwill   414,859       423,643  
Intangible and other non-current assets, net   39,175       37,677  
Operating lease right-of-use assets   15,522       16,295  
Cemetery perpetual care trust investments   85,925       85,331  
Total assets $ 1,275,418     $ 1,268,052  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Current portion of debt and lease obligations $ 4,015     $ 3,842  
Accounts payable   15,054       11,866  
Accrued and other liabilities   41,101       35,362  
Total current liabilities   60,170       51,070  
Acquisition debt, net of current portion   5,350       5,461  
Credit facility   138,293       177,794  
Senior notes   396,421       395,905  
Obligations under finance leases, net of current portion   6,107       5,831  
Obligations under operating leases, net of current portion   14,660       15,797  
Deferred preneed cemetery revenue   65,467       61,048  
Deferred preneed funeral revenue   40,776       39,537  
Deferred tax liability   50,289       52,127  
Other long-term liabilities   1,391       1,855  
Deferred preneed cemetery receipts held in trust   102,391       96,374  
Deferred preneed funeral receipts held in trust   108,956       107,842  
Care trusts’ corpus   87,018       84,351  
Total liabilities   1,077,289       1,094,992  
Commitments and contingencies:      
Stockholders’ equity:      
Common stock   269       266  
Additional paid-in capital   243,259       241,291  
Retained earnings   233,354       210,256  
Treasury stock   (278,753 )     (278,753 )
Total stockholders’ equity   198,129       173,060  
Total liabilities and stockholders’ equity $ 1,275,418     $ 1,268,052  
CARRIAGE SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share data)
               
  Three months ended September 30,   Nine months ended September 30,
    2024     2023       2024       2023  
               
Revenue:              
Service revenue $ 44,916   $ 43,708     $ 139,048     $ 136,437  
Property and merchandise revenue   47,419     40,287       142,511       125,928  
Other revenue   8,352     6,499       24,939       21,321  
    100,687     90,494       306,498       283,686  
Field costs and expenses:              
Cost of service   22,739     22,650       68,119       69,202  
Cost of merchandise   31,492     30,302       95,423       92,255  
Cemetery property amortization   1,957     1,318       6,273       4,411  
Field depreciation expense   3,411     3,634       10,283       10,546  
Regional and unallocated funeral and cemetery costs   4,085     3,771       12,172       13,339  
Other expenses   1,513     1,407       4,483       4,264  
    65,197     63,082       196,753       194,017  
Gross profit   35,490     27,412       109,745       89,669  
               
Corporate costs and expenses:              
General, administrative and other   12,206     11,303       47,047       31,682  
Net loss on divestitures, disposals and impairments charges   387     423       1,955       929  
Operating income   22,897     15,686       60,743       57,058  
               
Interest expense   8,035     9,278       25,071       27,213  
Net gain on property damage, net of insurance claims       (379 )     (417 )     (343 )
Other, net   13     11       59       (636 )
Income before income taxes   14,849     6,776       36,030       30,824  
Expense for income taxes   4,930     2,058       11,962       8,899  
Expense related to discrete income tax items   53     73       970       150  
Total expense for income taxes   4,983     2,131       12,932       9,049  
Net income $ 9,866   $ 4,645     $ 23,098     $ 21,775  
               
Basic earnings per common share: $ 0.65   $ 0.31     $ 1.52     $ 1.46  
Diluted earnings per common share: $ 0.63   $ 0.30     $ 1.48     $ 1.39  
               
Dividends declared per common share: $ 0.1125   $ 0.1125     $ 0.3375     $ 0.3375  
               
Weighted average number of common and common equivalent shares outstanding:              
Basic   15,011     14,820       14,951       14,791  
Diluted   15,491     15,514       15,400       15,480  
CARRIAGE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
       
  Nine months ended September 30,
    2024       2023  
Cash flows from operating activities:      
Net income $ 23,098     $ 21,775  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization   17,274       15,623  
Provision for credit losses   2,303       2,314  
Stock-based compensation expense   4,521       6,155  
Deferred income tax (benefit) expense   (1,838 )     87  
Amortization of intangibles   1,012       982  
Amortization of debt issuance costs   495       524  
Amortization and accretion of debt   402       384  
Net loss on divestitures, disposals and impairment charges   1,955       929  
Net gain on property damage, net of insurance claims   (417 )     (343 )
Gain on sale of excess land         (658 )
       
Changes in operating assets and liabilities that provided (used) cash:      
Accounts and preneed receivables   (20,880 )     (4,607 )
Inventories, prepaid and other current assets   1,543       (52 )
Intangible and other non-current assets   (3,624 )     (2,285 )
Preneed funeral and cemetery trust investments   (6,367 )     990  
Accounts payable   3,189       (117 )
Accrued and other liabilities   5,909       5,297  
Incentive payment from vendor         6,000  
Deferred preneed funeral and cemetery revenue   7,546       11,110  
Deferred preneed funeral and cemetery receipts held in trust   6,595       (2,259 )
Net cash provided by operating activities   42,716       61,849  
       
Cash flows from investing activities:      
Acquisitions of businesses         (44,000 )
Proceeds from divestitures and sale of other assets   12,015       2,296  
Proceeds from insurance claims   403       1,388  
Capital expenditures   (11,710 )     (13,069 )
Net cash provided by (used in) investing activities   708       (53,385 )
       
Cash flows from financing activities:      
Borrowings from the credit facility   32,100       68,100  
Payments against the credit facility   (71,200 )     (71,500 )
Payment of debt issuance costs for the credit facility   (782 )      
Payments on acquisition debt and obligations under finance leases   (464 )     (491 )
Proceeds from the exercise of stock options and employee stock purchase plan contributions   2,181       1,207  
Taxes paid on restricted stock vestings and exercise of stock options   (424 )     (252 )
Dividends paid on common stock   (5,098 )     (5,023 )
Net cash used in financing activities   (43,687 )     (7,959 )
       
Net (decrease) increase in cash and cash equivalents   (263 )     505  
Cash and cash equivalents at beginning of period   1,523       1,170  
Cash and cash equivalents at end of period $ 1,260     $ 1,675  
 

NON-GAAP FINANCIAL MEASURES

This earnings release uses Non-GAAP financial measures to present the financial performance of the Company. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported operating results or cash flow from operations or any other measure of performance as determined in accordance with GAAP. We believe the Non-GAAP results are useful to investors to compare our results to previous periods, to provide insight into the underlying long-term performance trends in our business and to provide the opportunity to differentiate ourselves as the best consolidation platform in the industry against the performance of other funeral and cemetery companies.

Reconciliations of the Non-GAAP financial measures to GAAP measures are also provided in this earnings release.

The Non-GAAP financial measures used in this earnings release and the definitions of them used by the Company for our internal management purposes in this earnings release are described below.

Funeral Operating EBITDA and Cemetery Operating EBITDA

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

Funeral operating EBITDA and cemetery operating EBITDA are defined above. Funeral and cemetery gross profit is defined as revenue less “field costs and expenses” — a line item encompassing these areas of costs: i) funeral and cemetery field costs, ii) field depreciation and amortization expense, and iii) regional and unallocated funeral and cemetery costs. Funeral and cemetery field costs include cost of service, funeral and cemetery merchandise costs, operating expenses, labor and other related expenses incurred at the business level.

Regional and unallocated funeral and cemetery costs presented in our GAAP statement consist primarily of salaries and benefits of our regional leadership, incentive compensation opportunity to our field employees and other related costs for field infrastructure. These costs, while necessary to operate our businesses as currently operated within our unique, decentralized platform, are not controllable operating expenses at the field level as the composition, structure and function of these costs are determined by executive leadership in the Houston Support Center. These costs are components of our overall overhead platform presented within consolidated EBITDA and adjusted consolidated EBITDA. We do not directly or indirectly “push down” any of these expenses to the individual business’ field level margins.

We believe that our “regional and unallocated funeral and cemetery costs” are necessary to support our decentralized, high performance culture operating framework, and as such, are included in consolidated EBITDA and adjusted consolidated EBITDA, which more accurately reflects the cash earning power of the Company as an operating and consolidation platform.

Usefulness and Limitations of These Measures

When used in conjunction with GAAP financial measures, our total EBITDA, consolidated EBITDA and adjusted consolidated EBITDA are supplemental measures of operating performance that we believe are useful measures to facilitate comparisons to our historical consolidated and business level performance and operating results.

We believe our presentation of adjusted consolidated EBITDA, a key metric used internally by our management, provides investors with a supplemental view of our operating performance that facilitates analysis and comparisons of our ongoing business operations because it excludes items that may not be indicative of our ongoing operating performance.

Our total field EBITDA, consolidated EBITDA and adjusted consolidated EBITDA are not necessarily comparable to similarly titled measures used by other companies due to different methods of calculation. Our presentation is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Funeral operating EBITDA, cemetery operating EBITDA, financial EBITDA, ancillary EBITDA and divested EBITDA are not consolidated measures of profitability.

Our total field EBITDA excludes certain costs presented in our GAAP statement that we do not allocate to the individual business’ field level margins, as noted above.

Consolidated EBITDA excludes certain items that we believe do not directly reflect our core operations and may not be indicative of our normal business operations. A reconciliation to operating income, the most directly comparable GAAP measure, is set forth below.

Therefore, these measures may not provide a complete understanding of our performance and should be reviewed in conjunction with our GAAP financial measures. We strongly encourage investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety and not rely on any single financial measure.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

The Non-GAAP financial measures are presented for additional information and are reconciled to their most comparable GAAP measures, all of which are reflected in the tables below.

Reconciliation of Operating income to Consolidated EBITDA and Adjusted consolidated EBITDA (in thousands) and Operating income margin to Adjusted consolidated EBITDA margin for the three and nine months ended September 30, 2024 and 2023:

    Three months ended September 30,   Nine months ended September 30,
      2024       2023       2024       2023  
Operating income   $ 22,897     $ 15,686     $ 60,743     $ 57,058  
Depreciation & amortization     5,610       5,186       17,274       15,623  
Non-cash stock compensation     1,850       1,992       4,521       6,155  
Net loss on divestitures, disposals and impairment charges     387       423       1,955       929  
Consolidated EBITDA   $ 30,744     $ 23,287     $ 84,493     $ 79,765  
Adjusted for:                
Severance and separation costs(1)   $     $     $ 6,228     $  
Other special items(2)           973       6,228       973  
Adjusted consolidated EBITDA   $ 30,744     $ 24,260     $ 96,949     $ 80,738  
                 
Total revenue   $ 100,687     $ 90,494     $ 306,498     $ 283,686  
                 
Operating income margin     22.7 %     17.3 %     19.8 %     20.1 %
                 
Adjusted consolidated EBITDA margin     30.5 %     26.8 %     31.6 %     28.5 %
                 
(1) Primarily represents the severance and performance award settlement expense recognized during the first quarter of 2024 for our former Executive Chairman of the Board per his Transition Agreement which was effective February 22, 2024 and severance expense recognized during the second quarter of 2024 for our former Chief Financial Officer per his Release and Separation Agreement which was effective July 1, 2024.
(2) Represents expenses related to the review of strategic alternatives.


Special items affecting Adjusted net income (in thousands) for the three and nine months ended September 30, 2024 and 2023:

    Three months ended September 30,   Nine months ended September 30,
      2024       2023       2024       2023  
Severance and separation costs(1)   $     $     $ 6,228     $  
Equity award cancellation(2)                 (1,336 )      
Net (gain) loss on divestitures and sale of real estate(3)     (295 )     24       1,214       (550 )
Impairment of goodwill, intangibles and PPE(4)     637       211       637       454  
Net gain on property damage, net of insurance claims(5)           (379 )     (417 )     (343 )
Other special items(6)           973       6,228       973  
Total   $ 342     $ 829     $ 12,554     $ 534  
                 
(1) Primarily represents the severance and performance award settlement expense recognized during the first quarter of 2024 for our former Executive Chairman of the Board per his Transition Agreement which was effective February 22, 2024 and severance expense recognized during the second quarter of 2024 for our former Chief Financial Officer per his Release and Separation Agreement which was effective July 1, 2024.
(2) Primarily represents the stock compensation benefit recognized during the first quarter of 2024 for equity awards cancelled for our former Executive Chairman of the Board per his Transition Agreement, which was effective February 22, 2024.
(3) Represents the net gain or loss recognized for the sale of businesses and real estate during the periods presented.
(4) Represents tradename and property, plant and equipment impairments related to certain funeral homes recognized during the periods presented.
(5) Represents the loss on property damage, net of insurance claims for property damaged by Hurricane Ian during the third quarter of 2022 and a fire that occurred during first quarter of 2023.
(6) Represents expenses related to the review of strategic alternatives.


Reconciliation of GAAP basic earnings per share to Adjusted basic earnings per share for the three and nine months ended September 30, 2024 and 2023:

    Three months ended September 30,   Nine months ended September 30,
      2024     2023     2024     2023
GAAP basic earnings per share   $ 0.65   $ 0.31   $ 1.52   $ 1.46
Special items     0.01     0.04     0.56     0.02
Adjusted basic earnings per share   $ 0.66   $ 0.35   $ 2.08   $ 1.48


Reconciliation of GAAP diluted earnings per share to Adjusted diluted earnings per share for the three and nine months ended September 30, 2024 and 2023:

    Three months ended September 30,   Nine months ended September 30,
      2024     2023     2024     2023
GAAP diluted earnings per share   $ 0.63   $ 0.30   $ 1.48   $ 1.39
Special items     0.01     0.03     0.54     0.03
Adjusted diluted earnings per share   $ 0.64   $ 0.33   $ 2.02   $ 1.42


Reconciliation of Cash provided by operating activities to Adjusted free cash flow (in thousands) for the three and nine months ended September 30, 2024 and 2023:

    Three months ended September 30,   Nine months ended September 30,
      2024       2023       2024       2023  
Cash provided by operating activities   $ 20,856     $ 22,662     $ 42,716     $ 61,849  
Cash used for maintenance capital expenditures     (2,349 )     (2,203 )     (5,013 )     (5,926 )
Free cash flow   $ 18,507     $ 20,459     $ 37,703     $ 55,923  
                 
Plus: incremental special items:                
Withdrawal from preneed funeral and cemetery trust investments(1)   $     $     $     $ (8,599 )
Vendor incentive payment(2)                       (6,000 )
Severance and separation costs(3)     606             2,866        
Other special items(4)     833       973       2,006       973  
Adjusted free cash flow   $ 19,946     $ 21,432     $ 42,575     $ 42,297  
                 
(1) During the nine months ended September 30, 2023, we withdrew $8.6 million of realized capital gains and earnings from our preneed funeral and cemetery trust investments. In certain states, we are allowed to withdraw these funds prior to the delivery of preneed merchandise and service contracts. While the realized capital gains and earnings are not recognized as revenue, they increase our cash flow from operations.
(2) During the nine months ended September 30, 2023, we received a $6.0 million incentive payment from a vendor for entering into a strategic partnership agreement to market and sell prearranged funeral services in the future. While the incentive payment was not recognized as revenue, it increased our cash flow from operations.
(3) Primarily represents the cash paid to our former Executive Chairman of the Board per his Transition Agreement which was effective February 22, 2024 and cash paid to our former Chief Financial Officer per his Release and Separation Agreement which was effective July 1, 2024.
(4) Represents cash paid for professional services related to the review of strategic alternatives.


Reconciliation of Cash provided by operating activities to Adjusted free cash flow (in thousands) for the nine months ended September 30, 2024 and 2023:

    Current(1)   Adjustments(1)   Revised(1)
    Nine months ended September 30,
      2024       2023       2024       2023       2024       2023  
Cash provided by operating activities   $ 42,716     $ 61,849     $     $     $ 42,716     $ 61,849  
Cash used for capital expenditures     (5,013 )     (5,926 )     (6,697 )     (7,143 )     (11,710 )     (13,069 )
Free cash flow   $ 37,703     $ 55,923     $ (6,697 )   $ (7,143 )   $ 31,006     $ 48,780  
                         
Plus: incremental special items:                        
Withdrawal from preneed funeral and cemetery trust investments   $     $ (8,599 )   $     $     $     $ (8,599 )
Vendor incentive payment           (6,000 )                       (6,000 )
Severance and separation costs     2,866                         2,866        
Other special items     2,006       973                   2,006       973  
Adjusted free cash flow   $ 42,575     $ 42,297     $ (6,697 )   $ (7,143 )   $ 35,878     $ 35,154  
                         
(1) We have provided full year 2024 guidance for adjusted free cash flow based on the calculation in the current column above, which includes cash used for maintenance expenditures. However, in years subsequent to 2024, we plan to provide adjusted free cash flow guidance based on a revised adjusted free cash flow calculation, which includes cash used for total capital expenditures. The adjustments column above reflects the cash used for growth capital expenditures. The revised column above reflects adjusted free cash flow based on a calculation which includes cash used for total capital expenditures.


Revised 2024 Outlook for the estimated year ended December 31, 2024:

Reconciliation of Operating income to Consolidated EBITDA, Adjusted consolidated EBITDA (in thousands) and Adjusted consolidated EBITDA margin for the estimated year ended December 31, 2024:

    2024E
Operating income   $ 80,500  
Depreciation & amortization     23,000  
Non-cash stock compensation     6,500  
Other      
Consolidated EBITDA   $ 110,000  
Adjusted for:    
Special items     12,500  
Adjusted consolidated EBITDA   $ 122,500  
     
Total revenue   $ 400,000  
     
Adjusted consolidated EBITDA margin     30.6 %


Reconciliation of GAAP diluted earnings per share to Adjusted diluted earnings per share for the estimated year ended December 31, 2024:

    2024E
GAAP diluted earnings per share   $ 1.96
Special items     0.54
Adjusted diluted earnings per share   $ 2.50


Reconciliation of Cash provided by operating activities to Adjusted free cash flow (in thousands) for the estimated year ended December 31, 2024:

    2024E
Cash provided by operating activities   $ 61,300  
Cash used for maintenance capital expenditures     (8,000 )
Free cash flow   $ 53,300  
Special items     6,700  
Adjusted free cash flow   $ 60,000  
 

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

This earnings release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and contains certain statements and information that may constitute forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements made herein or elsewhere by us, or on our behalf, other than statements of historical information, should be deemed to be forward-looking statements, which include, but are not limited to, statements regarding any projections of earnings, revenue, cash flow, investment returns, capital allocation, debt levels, equity performance, death rates, market share growth, cost inflation, overhead, preneed sales or other financial items; any statements of the plans, strategies, objectives and timing of management for future operations or financing activities, including, but not limited to, technology improvements, product development, capital allocation, organizational performance, execution of our strategic objectives and growth plan, planned divestitures, the ability to obtain credit or financing, anticipated integration, performance and other benefits of recently completed and anticipated acquisitions, and cost management and debt reductions; any statements of the plans, timing and objectives of management for acquisition and divestiture activities; any statements regarding future economic conditions and market conditions or performance; any projections or expectations related to the conclusion of the Board’s strategic review; any statements of belief; and any statements of assumptions underlying any of the foregoing and are based on our current expectations and beliefs concerning future developments and their potential effect on us. Words such as “may”, “will”, “estimate”, “intend”, “believe”, “expect”, “seek”, “project”, “forecast”, “foresee”, “should”, “would”, “could”, “plan”, “anticipate” and other similar words may be used to identify forward-looking statements; however, the absence of these words does not mean that the statements are not forward-looking. While we believe these assumptions concerning future events are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenue and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions, except where specifically noted. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include but are not limited to: our ability to find and retain skilled personnel; the effects of our talent recruitment efforts, incentive and compensation plans and programs, including such effects on our Standards Operating Model and the Company’s operational and financial performance; our ability to execute our strategic objectives and growth strategy, if at all; the potential adverse effects on the Company’s business, financial and equity performance if management fails to meet the expectations of its strategic objectives and growth plan; our ability to execute and meet the objectives of our High Performance and Credit Profile Restoration Plan, if at all; the execution of our Standards Operating and Strategic Acquisition Models; the effects of competition; changes in the number of deaths in our markets, which are not predictable from market to market or over the short term; changes in consumer preferences and our ability to adapt to or meet those changes; our ability to generate preneed sales, including implementing our cemetery portfolio sales strategy, product development and optimization plans; the investment performance of our funeral and cemetery trust funds; fluctuations in interest rates, including, but not limited to, the effects of increased borrowing costs under our Credit Facility and our ability to minimize such costs, if at all; the effects of inflation on our operational and financial performance, including the increased overall costs for our goods and services, the impact on customer preferences as a result of changes in discretionary income, and our ability, if at all, to mitigate such effects; our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness; our ability to meet the timing, objectives and expectations related to our capital allocation framework, including our forecasted rates of return, planned uses of free cash flow and future capital allocation, including share repurchases, potential strategic acquisitions, internal growth projects, dividend increases, or debt repayment plans; our ability to meet the projected financial and equity performance goals to our full year outlook, if at all; the timely and full payment of death benefits related to preneed funeral contracts funded through life insurance contracts; the financial condition of third-party insurance companies that fund our preneed funeral contracts; increased or unanticipated costs, such as merchandise, goods, insurance or taxes, and our ability to mitigate or minimize such costs, if at all; our level of indebtedness and the cash required to service our indebtedness; changes in federal income tax laws and regulations and the implementation and interpretation of these laws and regulations by the Internal Revenue Service; effects of the application of other applicable laws and regulations, including changes in such regulations or the interpretation thereof; the potential impact of epidemics and pandemics, such as the COVID-19 coronavirus, including any new or emerging public health threats, on customer preferences and on our business; government, social, business and other actions that have been and will be taken in response to pandemics and epidemics, such as those that were taken with the COVID-19 coronavirus, including potential responses to any new or emerging public health threats; effects and expense of litigation; consolidation in the funeral and cemetery industry; our ability to identify and consummate strategic acquisitions, if at all, and successfully integrate acquired businesses with our existing businesses, including expected performance and financial improvements related thereto; potential adverse impacts resulting from shareholder or market perceptions of our recent announcement regarding the conclusion of our Board’s review of potential strategic alternatives; economic, financial and stock market fluctuations; interruptions or security lapses of our information technology, including any cybersecurity or ransomware incidents; adverse developments affecting the financial services industry; acts of war or terrorists acts and the governmental or military response to such acts; our failure to maintain effective control over financial reporting; and other factors and uncertainties inherent in the funeral and cemetery industry.

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, and in other filings with the SEC, available at www.carriageservices.com. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of the applicable communication and we undertake no obligation to publicly update or revise any forward-looking statements except to the extent required by applicable law.


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