• Total Revenue: $100.7 million, an increase of $10.2 million or 11.3%.
• Printed Cemetery Sales: $22.9 million, a 27.1% increase.
• Funeral Home Operating Revenue: $59.3 million, a growth of $814,000 or 1.4%.
• Funeral Average Revenue Per Contract: Increased by $142 or 2.6%.
• General Aging Commissions: $1.6 million, a 415.4% increase.
• Cemetery Operating Revenue: $33 million, up by $8.7 million or 35.7%.
• Total Cemetery Field EBITDA: $15.9 million, an increase of $6.9 million or 76.9%.
• Total Cemetery Field EBITDA Margin: 48.1%, up 11.2 percentage points.
• Adjusted Consolidated EBITDA: $30.7 million, an increase of $6.5 million or 26.7%.
• Adjusted Consolidated EBITDA Margin: 30.5%, an increase of 370 basis points.
• Net Income (GAAP): $9.9 million, a $5.2 million increase.
• GAAP Diluted EPS: 63 per share, up by 33 or 110%.
• Adjusted Diluted EPS: 64 per share, up by 31 or 93.9%.
• Year-to-Date Total Revenue: $306.5 million, an increase of $22.8 million or 8%.
• Year-to-Date Adjusted Consolidated EBITDA: $96.9 million, an increase of $16.2 million or 20.1%.
• Year-to-Date Adjusted Consolidated EBITDA Margin: 31.6%, an increase of 310 basis points.
• Year-to-Date Adjusted Diluted EPS: $2.02, an increase of 60 or 42.3%.
• Year-to-Date Net Income (GAAP): $23.1 million, an increase of $1.3 million or 6.1%.
• Year-to-Date GAAP Diluted EPS: $1.48 per share, an increase of 9 or 6.5%.
• Cash Provided by Operating Activities: $20.8 million, down $1.9 million.
• Adjusted Free Cash Flow: $20 million, down $1.4 million.
• Debt Reduction: Paid $15 million towards outstanding debt, leverage ratio reduced to 4.3 times.
• Interest Expense Reduction: $1.2 million decrease.
• Overhead: $14.2 million, a $1.3 million increase.
• Overhead as a Percentage of Revenue: 14.1%, down 10 basis points.

• Warning! GuruFocus has detected 10 Warning Signs with CSV.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Carriage Services Inc (NYSE:CSV) reported a significant increase in total revenue for the third quarter, reaching $100.7 million, marking an 11.3% growth compared to the previous year.
• The company achieved a remarkable 27.1% increase in cemetery sales, contributing significantly to the overall revenue growth.
• Adjusted consolidated EBITDA increased by 26.7% to $30.7 million, reflecting effective cost management and higher average revenue per contract.
• Carriage Services Inc (NYSE:CSV) successfully reduced its leverage ratio from 5.3 times to 4.3 times, demonstrating disciplined capital allocation and debt reduction.
• The company raised its full-year guidance, expecting total revenue between $395 million to $405 million and adjusted consolidated EBITDA of $120 million to $125 million, indicating confidence in continued strong performance.

Negative Points

• Cash provided by operating activities decreased by $1.9 million compared to the prior year, primarily due to a shift in revenue mix towards preneed cemetery sales with a slower cash conversion cycle.
• Total funeral home contracts experienced a slight decrease of 1.2%, indicating a potential challenge in maintaining volume growth.
• Overhead costs increased by $1.3 million, driven by expenses related to Project Trinity and leadership development, impacting overall profitability.
• The company is still in the process of searching for a Chief Financial Officer, which could delay strategic financial initiatives.
• Despite strong performance, the company remains cautious about potential economic uncertainties and their impact on future revenue and growth.

Q & A Highlights

Q: Why would revenue be down sequentially in the fourth quarter, and what are the underlying assumptions for the balance of the year? A: Carlos Quezada, CEO, explained that the third quarter had unexpected strong sales, particularly in pre-need cemetery, which may not repeat in Q4. The company is cautious due to upcoming elections and economic factors. They expect to be at the higher end of their guidance range, but are keeping the range consistent to manage expectations.

Q: What were the monthly trends in Q3, particularly on the funeral side, and what does October look like? A: Carlos Quezada noted a slight decline in funeral contract volumes in Q3, with October showing a bit more decline. This was partly due to the closure of two businesses, which affected volume comparisons. However, they remain optimistic about normalizing trends in 2025.

Q: Did you close any other divestitures in the third quarter, and what are your expectations for the balance of the year? A: Steven Metzger, President, confirmed a real estate-focused transaction closed in Q3, with more opportunities in Q4. They expect proceeds to be on the high end of the $20 million to $30 million range, with minimal EBITDA impact.

Q: Are the changes in pre-need cemetery sales sustainable, or are they an anomaly? A: Carlos Quezada stated that the growth is sustainable due to improved CRM, marketing, and recruitment strategies. They expect continued growth, albeit at a slower rate, projecting low double-digit growth annually over the next 4 to 5 years.

Q: What are the expectations for funeral home margins, and can they improve from the current level? A: Carlos Quezada mentioned that while they are not committing to expanding margins, the current margins are sustainable. They are focusing on agreements with vendors to improve pricing and volume, which could potentially enhance margins.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.