Carriage Services, Inc. (NYSE:CSV) Q1 2023 Earnings Conference Call May 4, 2023 10:30 AM ET Company Participants Steve Metzger - Executive Vice President, Chief Administrative Officer & General Counsel and Secretary Mel Payne - Chairman & Chief Executive Officer Carlos Quezada - President & Chief Operating Officer Kian Granmayeh - Executive Vice President & Chief Financial Officer Conference Call Participants Alex Paris - Barrington Research Liam Burke - B. Riley Financial. JP Wollam - ROTH MKM Operator Go ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 (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) 332-8 ...

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, 2022 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 specifie ...

Financial Data and Key Metrics Changes - For Q4 2022, adjusted diluted EPS was $0.64, a decrease of $0.14 per share compared to the previous year, while full year adjusted diluted EPS was $2.61, down $0.41 per share [66] - Total revenue for Q4 2022 was $93.9 million, a decrease of 2.1% from the previous year, and for the full year, total revenue reached $370.2 million, a decrease of 1.5% [82] - Net income for the year was $41.4 million, representing a 24.8% increase over the prior year, with a compounded annual growth rate of 41.7% from the 2019 base year [83] Business Line Data and Key Metrics Changes - Funeral operating revenue for Q4 was $64 million, with a slight decrease of 1.4%, while the number of funeral contracts decreased by 5% to 11,811 contracts [66] - Cemetery operating revenue for Q4 was $23.2 million, an increase of 3.2%, with a compounded annual growth rate of 22.2% since 2019 [75] Market Data and Key Metrics Changes - The company reported a decrease in COVID-related contracts, with 1.9% in Q4 2022 compared to 13.4% in the previous year, indicating a significant normalization in the market [82] - The company expects preneed cemetery sales to grow above 2022 levels by low double digits [75] Company Strategy and Development Direction - The company is focused on digital transformation through the Trinity platform, aimed at enhancing customer engagement and operational efficiency [4][68] - The strategy includes a disciplined approach to capital allocation, prioritizing debt reduction while maintaining investment in cemetery inventory [51][67] - The company aims to integrate recent acquisitions effectively to realize their potential and drive growth [85] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving normalized performance post-COVID, with expectations for Q1 2023 to be the last challenging comparable period [67] - The company anticipates total revenue for 2023 in the range of $375 million to $385 million, projecting year-over-year growth in adjusted consolidated EBITDA [93] Other Important Information - The company plans to maintain a leverage ratio of around 4.7 times net debt-to-EBITDA by the end of 2023, focusing on debt reduction in the following year [94] - The new preneed funeral strategy aims for a 30% to 40% increase in insurance sales within the first year of launch [88] Q&A Session Summary Question: Progress on the direct cemetery sales team - Management acknowledged ongoing efforts to enhance the sales team and expressed optimism about future performance [13] Question: Changes to 2024 goals - Management confirmed commitment to 2024 goals, aligning them closely with 2023 expectations [28] Question: Specifics on tech initiatives and revenue opportunities - Management detailed the Trinity platform's potential to enhance customer experiences and drive additional revenue through improved operational efficiencies [31][33] Question: CapEx plans for the year - Management indicated a target for CapEx at $20 million, focusing on maintaining a balance between growth and maintenance investments while prioritizing debt reduction [51] Question: Same-store numbers reporting - Management explained the decision to adjust the reporting of same-store numbers to align with industry standards and provide a fair comparison [56]

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including the balance sheet, statements of operations, cash flows, and changes in stockholders' equity, along with detailed condensed notes explaining significant accounting policies, recent accounting standards, and specific financial statement line items such as acquisitions, goodwill, trust investments, debt, leases, and segment reporting [Unaudited Consolidated Balance Sheet](index=3&type=section&id=Unaudited%20Consolidated%20Balance%20Sheet) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates Balance Sheet Metrics | Metric | | :----- | | **ASSETS** | | Total current assets | | Preneed cemetery trust investments | | Preneed funeral trust investments | | Preneed cemetery receivables, net | | Receivables from preneed funeral trusts, net | | Property, plant and equipment, net | | Cemetery property, net | | Goodwill | | Intangible and other non-current assets, net | | Operating lease right-of-use assets | | Cemetery perpetual care trust investments | | **Total assets** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | Total current liabilities | | Acquisition debt, net of current portion | | Credit facility | | Senior notes | | Obligations under finance leases, net of current portion | | Obligations under operating leases, net of current portion | | Deferred preneed cemetery revenue | | Deferred preneed funeral revenue | | Deferred tax liability | | Other long-term liabilities | | Deferred preneed cemetery receipts held in trust | | Deferred preneed funeral receipts held in trust | | Care trusts' corpus | | **Total liabilities** | Key Balance Sheet Figures (in thousands) | Metric | December 31, 2021 (in thousands) | September 30, 2022 (in thousands) | | :--------------------------------------- | :------------------------------- | :-------------------------------- | | Total assets | $1,178,631 | $1,147,387 | | Total liabilities | $1,050,616 | $1,018,467 | [Unaudited Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income over specific periods, reflecting its operational performance Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Three months ended September 30, 2021 | Three months ended September 30, 2022 | Nine months ended September 30, 2021 | Nine months ended September 30, 2022 | | :------------------------------------------------- | :------------------------------------ | :------------------------------------ | :----------------------------------- | :----------------------------------- | | Revenue | $95,041 | $87,497 | $279,955 | $276,258 | | Gross profit | $33,164 | $25,598 | $97,152 | $87,788 | | Operating income | $23,265 | $15,222 | $70,435 | $60,098 | | Net income | $13,046 | $5,860 | $19,812 | $33,161 | | Basic earnings per common share | $0.74 | $0.40 | $1.11 | $2.22 | | Diluted earnings per common share | $0.71 | $0.38 | $1.08 | $2.09 | | Dividends declared per common share | $0.1000 | $0.1125 | $0.3000 | $0.3375 | [Unaudited Consolidated Statements of Cash Flows](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the cash inflows and outflows from operating, investing, and financing activities, providing insight into the company's liquidity Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Nine months ended September 30, 2021 | Nine months ended September 30, 2022 | | :------------------------------------------------- | :----------------------------------- | :----------------------------------- | | Net income | $19,812 | $33,161 | | Net cash provided by operating activities | $69,699 | $50,046 | | Net cash used in investing activities | $(11,216) | $(22,700) | | Net cash used in financing activities | $(58,284) | $(27,673) | | Net increase (decrease) in cash and cash equivalents | $199 | $(327) | | Cash and cash equivalents at end of period | $1,088 | $821 | [Unaudited Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section details the changes in the company's equity over time, including net income, stock-based compensation, dividends, and share repurchases Stockholders' Equity Changes (Three Months) (in thousands) | Metric (in thousands) | Three months ended September 30, 2021 | Three months ended September 30, 2022 | | :------------------------------------------------- | :------------------------------------ | :------------------------------------ | | Net income | $13,046 | $5,860 | | Stock-based compensation expense | $1,148 | $1,416 | | Dividends on common stock | $(1,783) | $(1,653) | | Treasury stock acquired | $(53,239) | — | | Balance – September 30 | $192,468 | $128,920 | Stockholders' Equity Changes (Nine Months) (in thousands) | Metric (in thousands) | Nine months ended September 30, 2021 | Nine months ended September 30, 2022 | | :------------------------------------------------- | :----------------------------------- | :----------------------------------- | | Net income | $19,812 | $33,161 | | Stock-based compensation expense | $3,337 | $4,255 | | Dividends on common stock | $(5,390) | $(5,108) | | Treasury stock acquired | $(65,540) | $(34,234) | | Balance – September 30 | $192,468 | $128,920 | [Condensed Notes to Consolidated Financial Statements](index=8&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the consolidated financial statements, covering accounting policies, acquisitions, debt, and other key financial items [1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the foundational principles and key accounting policies used in preparing the financial statements, including business segments and recent acquisitions - Carriage Services, Inc. operates in two business segments: Funeral Home Operations (approximately **70% of revenue**) and Cemetery Operations (approximately **30% of revenue**)[25](index=25&type=chunk) - As of September 30, 2022, the company operated **169 funeral homes** in 26 states and **31 cemeteries** in 11 states[25](index=25&type=chunk) - During the three and nine months ended September 30, 2022, the company acquired a business consisting of two funeral homes for **$6.3 million**[33](index=33&type=chunk) - The company performed its annual goodwill and intangible assets impairment tests as of August 31, 2022, and does not expect any impairment to goodwill or intangible assets[37](index=37&type=chunk)[40](index=40&type=chunk) [2. RECENTLY ISSUED ACCOUNTING STANDARDS](index=15&type=section&id=2.%20RECENTLY%20ISSUED%20ACCOUNTING%20STANDARDS) This section discusses the adoption of new accounting standards and their anticipated impact on the company's financial reporting - The company adopted Reference Rate Reform (Topic 848) in March 2020 and amended its Credit Facility in May 2022 to establish the Bloomberg Short-Term Bank Yield Index Rate (BSBY) as a benchmark rate, removing LIBOR[59](index=59&type=chunk)[61](index=61&type=chunk) - The company plans to adopt ASU Topic 805 (Business Combinations) and Topic 326 (Credit Losses - Vintage Disclosures) for its fiscal year beginning January 1, 2023, with Topic 805 impact still being evaluated and Topic 326 expected to have no impact on consolidated financial statements[62](index=62&type=chunk)[63](index=63&type=chunk) [3. ACQUISITIONS](index=16&type=section&id=3.%20ACQUISITIONS) This section details recent business acquisitions, including the purchase price and the fair values of acquired assets - On August 8, 2022, Carriage Services acquired a business consisting of two funeral homes in Kissimmee, Florida, for **$6.3 million in cash**[64](index=64&type=chunk) Acquired Assets (in thousands) | Acquired Assets (in thousands) | Estimated Fair Values | | :----------------------------- | :-------------------- | | Current assets | $28 | | Property, plant & equipment | $2,986 | | Goodwill | $2,694 | | Intangible and other non-current assets | $542 | | **Purchase price** | **$6,250** | [4. GOODWILL](index=17&type=section&id=4.%20GOODWILL) This section provides a breakdown of goodwill, including changes resulting from acquisitions and divestitures Goodwill Movement (in thousands) | Goodwill (in thousands) | December 31, 2021 | September 30, 2022 | | :---------------------- | :---------------- | :----------------- | | Goodwill at the beginning of the period | $392,978 | $391,972 | | Increase in goodwill related to acquisitions | — | $2,694 | | Decrease in goodwill related to divestitures | $(1,006) | $(901) | | Goodwill at the end of the period | $391,972 | $393,765 | [5. DIVESTED OPERATIONS](index=17&type=section&id=5.%20DIVESTED%20OPERATIONS) This section reports on the financial results of operations that have been divested, including revenue, operating income, and net income - During the nine months ended September 30, 2022, the company merged one funeral home and sold two others for an aggregate of **$0.9 million**[67](index=67&type=chunk) Divested Operations Financials (in thousands) | Metric (in thousands) | Nine months ended September 30, 2021 | Nine months ended September 30, 2022 | | :------------------------------------ | :----------------------------------- | :----------------------------------- | | Revenue | $338 | $296 | | Operating income (loss) | $(54) | $25 | | Net income (loss) from divested operations, after tax | $35 | $(490) | [6. RECEIVABLES](index=17&type=section&id=6.%20RECEIVABLES) This section details the company's accounts receivable and preneed cemetery receivables, along with their respective allowances for credit losses Accounts and Preneed Cemetery Receivables (in thousands) | Accounts Receivable (in thousands) | December 31, 2021 | September 30, 2022 | | :--------------------------------- | :---------------- | :----------------- | | Accounts receivable, net | $25,314 | $23,352 | | Preneed cemetery receivables, net | $23,150 | $25,873 | Allowance for Credit Losses (in thousands) | Allowance for Credit Losses (in thousands) | January 1, 2022 | September 30, 2022 | | :----------------------------------------- | :-------------- | :----------------- | | Total allowance for credit losses on Trade and financed receivables | $(990) | $(909) | | Total allowance for credit losses on Preneed cemetery receivables, net | $(1,079) | $(1,178) | [7. TRUST INVESTMENTS](index=19&type=section&id=7.%20TRUST%20INVESTMENTS) This section describes the company's diversified trust investments for preneed cemetery, preneed funeral, and perpetual care, and their impact on financial statements - Trust investments are diversified across multiple industry segments using a balanced allocation strategy to minimize long-term risk[74](index=74&type=chunk) - Changes in the fair value of trust fund assets are offset by changes in trust fund liabilities and reflected in Other, net, with no impact on earnings until services are performed or merchandise is delivered[74](index=74&type=chunk) Trust Investments Market Value (in thousands) | Trust Investments (in thousands) | December 31, 2021 (Market Value) | September 30, 2022 (Market Value) | | :------------------------------- | :------------------------------- | :-------------------------------- | | Preneed cemetery trust investments | $103,808 | $90,130 | | Preneed funeral trust investments | $116,973 | $102,028 | | Cemetery perpetual care trust investments | $72,400 | $60,569 | [8. RECEIVABLES FROM PRENEED FUNERAL TRUSTS](index=26&type=section&id=8.%20RECEIVABLES%20FROM%20PRENEED%20FUNERAL%20TRUSTS) This section details the net receivables from preneed funeral trusts, accounting for the allowance for contract cancellations Preneed Funeral Trust Receivables (in thousands) | Metric (in thousands) | December 31, 2021 | September 30, 2022 | | :------------------------------------- | :---------------- | :----------------- | | Preneed funeral trust funds, at cost | $19,597 | $20,741 | | Less: allowance for contract cancellation | $(588) | $(622) | | Receivables from preneed funeral trusts, net | $19,009 | $20,119 | [9. FAIR VALUE MEASUREMENTS](index=27&type=section&id=9.%20FAIR%20VALUE%20MEASUREMENTS) This section explains the fair value hierarchy and measurements for financial instruments, including debt obligations - The carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair values due to their short-term nature[94](index=94&type=chunk) Financial Instrument Fair Values (in millions) | Financial Instrument | Carrying Value (Sep 30, 2022, in millions) | Fair Value (Sep 30, 2022, in millions) | | :------------------- | :----------------------------------------- | :------------------------------------- | | Credit Facility | $169.0 | $169.0 | | Acquisition Debt | $4.5 | $4.5 | | Senior Notes | $395.1 | $317.2 | [10. INTANGIBLE AND OTHER NON-CURRENT ASSETS](index=28&type=section&id=10.%20INTANGIBLE%20AND%20OTHER%20NON-CURRENT%20ASSETS) This section provides a breakdown of intangible and other non-current assets, including tradenames and capitalized commissions - Tradenames increased by **$0.5 million** related to the 2022 acquisition[97](index=97&type=chunk) Intangible and Other Non-Current Assets (in thousands) | Asset (in thousands) | December 31, 2021 | September 30, 2022 | | :--------------------------------------------------------------------------------- | :---------------- | :----------------- | | Tradenames | $23,565 | $24,108 | | Prepaid agreements not-to-compete, net of accumulated amortization | $2,247 | $1,884 | | Capitalized commissions on preneed contracts, net of accumulated amortization | $3,560 | $3,963 | | Other | $6 | $496 | | **Intangible and other non-current assets, net** | **$29,378** | **$30,451** | [11. CREDIT FACILITY AND ACQUISITION DEBT](index=28&type=section&id=11.%20CREDIT%20FACILITY%20AND%20ACQUISITION%20DEBT) This section details the company's credit facility and acquisition debt, including amendments and interest rates - The Credit Facility was amended on May 27, 2022, increasing revolving credit commitments from **$200.0 million to $250.0 million** and establishing BSBY as a benchmark rate[100](index=100&type=chunk) - The weighted average interest rate on the Credit Facility increased from **2.0%** for the three months ended September 30, 2021, to **4.3%** for the same period in 2022[102](index=102&type=chunk) Credit Facility and Acquisition Debt (in thousands) | Debt (in thousands) | December 31, 2021 | September 30, 2022 | | :-------------------------------------------------------------------------------------------------------------------------- | :---------------- | :----------------- | | Credit Facility | $155,400 | $169,000 | | Acquisition debt | $4,500 | $4,460 | [12. SENIOR NOTES](index=30&type=section&id=12.%20SENIOR%20NOTES) This section provides information on the company's senior notes, including principal amount, carrying value, fair value, and interest rate - The Senior Notes bear interest at **4.25%** per year, payable semi-annually, and mature on May 15, 2029[106](index=106&type=chunk) Senior Notes Details (in thousands) | Senior Notes (in thousands) | December 31, 2021 | September 30, 2022 | | :------------------------------------------------------------------------------------------------------- | :---------------- | :----------------- | | Principal amount | $400,000 | $400,000 | | Carrying value of the Senior Notes | $394,610 | $395,082 | | Fair value of the Senior Notes (Sep 30, 2022) | N/A | $317,200 | [13. LEASES](index=31&type=section&id=13.%20LEASES) This section presents details on operating and finance lease costs, right-of-use assets, and total lease liabilities Lease Cost (in thousands) | Lease Cost (in thousands) | Three months ended September 30, 2021 | Three months ended September 30, 2022 | | :------------------------ | :------------------------------------ | :------------------------------------ | | Operating lease cost | $947 | $863 | | Finance lease cost | $228 | $221 | | **Total lease cost** | **$1,257** | **$1,203** | Lease Assets and Liabilities (in thousands) | Lease Assets/Liabilities (in thousands) | December 31, 2021 | September 30, 2022 | | :-------------------------------------- | :---------------- | :----------------- | | Operating lease right-of-use assets | $17,881 | $17,295 | | Finance lease right-of-use assets, net | $4,327 | $3,999 | | Total lease liabilities | $25,965 | $24,970 | | Weighted-average remaining lease term (Operating leases) | N/A | 9.1 years | | Weighted-average remaining lease term (Finance leases) | N/A | 11.8 years | [14. COMMITMENTS AND CONTINGENCIES](index=32&type=section&id=14.%20COMMITMENTS%20AND%20CONTINGENCIES) This section outlines the company's legal and financial commitments, including details on a class action lawsuit settlement - A class action lawsuit (Chinchilla v. Carriage Services, Inc., et al.) was settled for **$1.0 million**, with the final settlement funded at **$1.2 million** on August 8, 2022[113](index=113&type=chunk) [15. STOCKHOLDERS' EQUITY](index=33&type=section&id=15.%20STOCKHOLDERS'%20EQUITY) This section provides details on stock-based compensation, share repurchase programs, and dividends declared - The Board authorized an increase in the share repurchase program by an additional **$75.0 million** on February 23, 2022, with **$48.9 million** remaining authorized for additional repurchases at September 30, 2022[127](index=127&type=chunk)[129](index=129&type=chunk) Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | | :---------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Restricted Stock | $89 | $36 | $308 | $133 | | Stock Options | $467 | $559 | $1,507 | $1,747 | | Performance Awards | $475 | $701 | $1,064 | $1,904 | | ESPP | $117 | $120 | $458 | $471 | Dividends Declared per Common Share | Dividends Declared per Common Share | 2021 (per share) | 2022 (per share) | | :---------------------------------- | :--------------- | :--------------- | | March 1st | $0.1000 | $0.1125 | | June 1st | $0.1000 | $0.1125 | | September 1st | $0.1000 | $0.1125 | [16. EARNINGS PER SHARE](index=36&type=section&id=16.%20EARNINGS%20PER%20SHARE) This section presents basic and diluted earnings per share, along with details on stock options excluded from dilution calculations - For the three and nine months ended September 30, 2022, **363,073** and **294,310 stock options**, respectively, were excluded from the computation of diluted earnings per share due to their antidilutive effect[132](index=132&type=chunk) Earnings Per Share | EPS (per share) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | | :-------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic EPS | $0.74 | $0.40 | $1.11 | $2.22 | | Diluted EPS | $0.71 | $0.38 | $1.08 | $2.09 | [17. SEGMENT REPORTING](index=36&type=section&id=17.%20SEGMENT%20REPORTING) This section provides a breakdown of revenue and operating income by the company's Funeral Home and Cemetery segments Segment Revenue (in thousands) | Revenue (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | | :--------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Funeral Home | $68,897 | $62,780 | $200,503 | $199,073 | | Cemetery | $26,144 | $24,717 | $79,452 | $77,185 | | **Total** | **$95,041** | **$87,497** | **$279,955** | **$276,258** | Segment Operating Income (in thousands) | Operating Income (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | | :------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Funeral Home | $22,924 | $17,584 | $65,404 | $61,531 | | Cemetery | $9,471 | $8,023 | $30,462 | $26,662 | | Corporate | $(9,130) | $(10,385) | $(25,431) | $(28,095) | | **Consolidated** | **$23,265** | **$15,222** | **$70,435** | **$60,098** | [18. SUPPLEMENTARY DATA](index=38&type=section&id=18.%20SUPPLEMENTARY%20DATA) This section provides additional financial data, including details on balance sheet items and cash flow items Supplementary Balance Sheet Items (in thousands) | Balance Sheet Item (in thousands) | December 31, 2021 | September 30, 2022 | | :-------------------------------- | :---------------- | :----------------- | | Prepaid expenses | $2,215 | $3,348 | | Federal income taxes receivable | $4,064 | — | | State income taxes receivable | — | $617 | | Incentive compensation (current) | $19,121 | $8,801 | | Interest (accrued) | $2,250 | $6,473 | | Salaries and wages (accrued) | $2,193 | $3,909 | Supplementary Cash Flow Items (in thousands) | Cash Flow Item (in thousands) | Nine months ended September 30, 2021 | Nine months ended September 30, 2022 | | :---------------------------- | :----------------------------------- | :----------------------------------- | | Cash paid for interest | $14,817 | $12,900 | | Cash paid for taxes | $9,974 | $7,000 | | Unsettled share repurchases | $3,801 | — | | Fair value of donated real property | $635 | — | [19. SUBSEQUENT EVENTS](index=38&type=section&id=19.%20SUBSEQUENT%20EVENTS) This section discloses significant events that occurred after the reporting period, such as major acquisitions and their funding - On October 25, 2022, Carriage Services acquired a business consisting of three funeral homes, one cemetery, and one cremation-focused business in Charlotte, North Carolina, for **$25 million in cash**[139](index=139&type=chunk) - The acquisition was funded through a combination of cash on hand and borrowings under the Credit Facility, requiring a limited consent from lenders due to exceeding the allowed Total Leverage Ratio[139](index=139&type=chunk)[141](index=141&type=chunk) [Cautionary Statement on Forward–Looking Statements](index=39&type=section&id=Cautionary%20Statement%20on%20Forward%E2%80%93Looking%20Statements) This section warns investors about the inherent risks and uncertainties associated with forward-looking statements, which could cause actual results to differ materially - This section warns investors that forward-looking statements are subject to significant risks and uncertainties that could cause actual results to differ materially from projections[142](index=142&type=chunk) - Key risk factors include the ability to find and retain skilled personnel, effects of competition, changes in death rates and consumer preferences, investment performance of trust funds, effects of inflation, and the ability to obtain debt or equity financing[142](index=142&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, covering an overview of the business, recent developments, impacts of COVID-19 and inflation, business strategy, liquidity and capital resources, financial highlights, non-GAAP measures, and detailed segment results for both Funeral Home and Cemetery Operations [OVERVIEW](index=41&type=section&id=OVERVIEW) This section provides a general introduction to the company's business, recent developments, and the impacts of external factors like COVID-19 and inflation [General](index=41&type=section&id=General) This section provides a general overview of Carriage Services, Inc., including its operational scope and business segments - Carriage Services, Inc. is a leading U.S. provider of funeral and cemetery services, operating **169 funeral homes** in 26 states and **31 cemeteries** in 11 states as of September 30, 2022[149](index=149&type=chunk) - Funeral Home Operations account for approximately **70% of revenue**, and Cemetery Operations account for approximately **30%**[149](index=149&type=chunk) [Recent Developments](index=41&type=section&id=Recent%20Developments) This section highlights key recent events, including executive changes and business acquisitions and divestitures - C. Benjamin Brink, Executive Vice President, Chief Financial Officer, and Treasurer, announced his resignation effective January 2, 2023[150](index=150&type=chunk) - During the nine months ended September 30, 2022, the company acquired two funeral homes for **$6.3 million** and sold real property and two funeral homes for a net gain of **$0.7 million**[151](index=151&type=chunk)[152](index=152&type=chunk) [Business Impacts of COVID-19](index=41&type=section&id=Business%20Impacts%20of%20COVID-19) This section discusses the effects of the COVID-19 pandemic on the company's death rates, volumes, revenues, and supply chain - During the third quarter of 2022, the death rate normalized to pre-COVID-19 levels, resulting in lower volumes, revenues, earnings, and margins compared to the third quarter of 2021[153](index=153&type=chunk)[154](index=154&type=chunk) - The company has not experienced any material supply chain impacts or disruptions, nor any material negative impacts to its liquidity position, access to capital, or cash flows as a result of COVID-19[154](index=154&type=chunk) [Inflationary Trends](index=42&type=section&id=Inflationary%20Trends) This section addresses the impact of inflationary trends on the company's costs and its strategies to mitigate these effects - Beginning in the second quarter of 2022, the company experienced modest cost increases and surcharges from vendors due to inflation, impacting full-time hourly base rates, utilities, funeral supplies, merchandise costs, and insurance[155](index=155&type=chunk) - The company has taken steps to mitigate these cost increases and notes the industry's historical resilience to similar adverse economic and market environments[155](index=155&type=chunk) [Funeral Home Operations](index=42&type=section&id=Funeral%20Home%20Operations) This section describes the revenue sources and key factors influencing the operating results of the company's funeral home segment - Funeral homes generate revenue from sales of burial and cremation services and related merchandise[156](index=156&type=chunk) - Factors affecting operating results include demographic trends, market share, response to cremation trends, cost control, and pricing leverage[156](index=156&type=chunk) [Cemetery Operations](index=42&type=section&id=Cemetery%20Operations) This section outlines the revenue generation and influencing factors for the company's cemetery operations - Cemetery operations generate revenue primarily through sales of interment rights, related merchandise, and services[157](index=157&type=chunk) - Factors affecting operating results include the size and success of the sales organization, local perceptions, economic conditions, and fluctuations in capital markets and interest rates[157](index=157&type=chunk) [Business Strategy](index=43&type=section&id=Business%20Strategy) This section details the company's core business strategy, emphasizing local leadership, entrepreneurial principles, and growth models - The company's business strategy is based on strong, local leadership with entrepreneurial principles focused on sustainable long-term market share, revenue, and profitability growth[159](index=159&type=chunk) - The strategy is built upon three models: Standards Operating Model, 4E Leadership Model, and Strategic Acquisition Model[159](index=159&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=44&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section analyzes the company's ability to generate and manage cash, including sources of liquidity, cash flow activities, and debt obligations [Overview](index=44&type=section&id=Overview) This section provides a high-level summary of the company's primary sources of liquidity and capital, including internally generated cash and credit facility availability - The company's primary sources of liquidity and capital resources are internally generated cash flows from operating activities and availability under its Credit Facility[165](index=165&type=chunk) - At September 30, 2022, the company had **$78.7 million** of availability under the Credit Facility[165](index=165&type=chunk) [Cash Flows](index=44&type=section&id=Cash%20Flows) This section presents a summary of cash flows from operating, investing, and financing activities over specific periods Cash Flow Summary (in thousands) | Cash Flow (in thousands) | Nine months ended September 30, 2021 | Nine months ended September 30, 2022 | | :---------------------------------------------------------------------------------------------------------- | :----------------------------------- | :----------------------------------- | | Cash at beginning of the year | $889 | $1,148 | | Net cash provided by operating activities | $69,699 | $50,046 | | Net cash used in investing activities | $(11,216) | $(22,700) | | Net cash used in financing activities | $(58,284) | $(27,673) | | Cash at end of the period | $1,088 | $821 | [Operating Activities](index=45&type=section&id=Operating%20Activities) This section analyzes the changes in net cash provided by operating activities, highlighting key contributing factors - Net cash provided by operating activities decreased by **$19.7 million** to **$50.0 million** for the nine months ended September 30, 2022[169](index=169&type=chunk) - The decrease was primarily due to unfavorable working capital changes in accrued liabilities, partially offset by favorable changes in income tax receivables[169](index=169&type=chunk) [Investing Activities](index=45&type=section&id=Investing%20Activities) This section details the net cash used in investing activities, including acquisitions and capital expenditures - Net cash used in investing activities increased by **$11.5 million** to **$22.7 million** for the nine months ended September 30, 2022[170](index=170&type=chunk) Investing Activity Details (in thousands) | Investing Activity (in thousands) | Nine months ended September 30, 2021 | Nine months ended September 30, 2022 | | :-------------------------------- | :----------------------------------- | :----------------------------------- | | Acquisitions of businesses and real estate | $(3,285) | $(8,876) | | Capital expenditures | $(15,252) | $(20,346) | [Financing Activities](index=46&type=section&id=Financing%20Activities) This section examines the net cash used in financing activities, focusing on changes in treasury stock purchases and debt payments - Net cash used in financing activities decreased by **$30.6 million** to **$27.7 million** for the nine months ended September 30, 2022[175](index=175&type=chunk) - This decrease was primarily due to lower treasury stock purchases (**$36.7 million** in 2022 vs. **$61.7 million** in 2021) and the absence of significant debt redemption payments from the prior year[175](index=175&type=chunk) [Share Repurchase](index=46&type=section&id=Share%20Repurchase) This section provides details on the company's share repurchase program, including authorized amounts and actual repurchases - The Board authorized an additional **$75.0 million** for share repurchases on February 23, 2022[176](index=176&type=chunk) - No shares were repurchased during the three months ended September 30, 2022, with **$48.9 million** remaining authorized for additional repurchases at September 30, 2022[176](index=176&type=chunk) Share Repurchase Activity | Share Repurchase Activity | Nine months ended September 30, 2021 | Nine months ended September 30, 2022 | | :------------------------ | :----------------------------------- | :----------------------------------- | | Number of Shares Repurchased | 1,528,197 | 695,496 | | Dollar Value of Shares Repurchased (in thousands) | $65,540 | $34,234 | [Cash Dividends](index=47&type=section&id=Cash%20Dividends) This section reports on the cash dividends declared and paid per common share - Total dividends paid for the nine months ended September 30, 2022, were **$5.1 million**[175](index=175&type=chunk) Dividends Declared per Common Share | Dividends Declared per Common Share | 2021 (per share) | 2022 (per share) | | :---------------------------------- | :--------------- | :--------------- | | March 1st | $0.1000 | $0.1125 | | June 1st | $0.1000 | $0.1125 | | September 1st | $0.1000 | $0.1125 | [Credit Facility, Lease Obligations and Acquisition Debt](index=47&type=section&id=Credit%20Facility,%20Lease%20Obligations%20and%20Acquisition%20Debt) This section summarizes the company's total debt and lease obligations, providing an overview of its financial commitments Debt and Lease Obligations (in thousands) | Debt and Lease Obligations (in thousands) | September 30, 2022 | | :---------------------------------------- | :----------------- | | Credit Facility | $169,000 | | Finance leases | $5,258 | | Operating leases | $19,712 | | Acquisition debt | $4,460 | | **Total** | **$198,430** | [Credit Facility](index=47&type=section&id=Credit%20Facility) This section details the company's credit facility, including its size, leverage ratios, outstanding borrowings, and interest rates - The Credit Facility was amended on May 27, 2022, increasing the revolving credit facility to **$250.0 million** and raising the maximum Total Leverage Ratio to **5.25 to 1.00**[180](index=180&type=chunk) - At September 30, 2022, outstanding borrowings were **$169.0 million**, with **$78.7 million** of availability[183](index=183&type=chunk) - The weighted average interest rate on the Credit Facility increased from **2.0%** for the three months ended September 30, 2021, to **4.3%** for the same period in 2022[183](index=183&type=chunk) [Lease Obligations](index=48&type=section&id=Lease%20Obligations) This section provides an overview of the company's total lease obligations and associated costs - Total lease obligations were **$35.8 million** at September 30, 2022, with **$4.5 million** payable within 12 months[185](index=185&type=chunk) Lease Cost (in thousands) | Lease Cost (in thousands) | Three months ended September 30, 2021 | Three months ended September 30, 2022 | | :------------------------ | :------------------------------------ | :------------------------------------ | | Operating lease cost | $947 | $863 | | Finance lease cost | $228 | $221 | | **Total lease cost** | **$1,257** | **$1,203** | [Acquisition Debt](index=48&type=section&id=Acquisition%20Debt) This section details the company's acquisition debt obligations and related imputed interest expense - Acquisition debt obligations totaled **$6.3 million** at September 30, 2022, with **$0.8 million** payable within 12 months[186](index=186&type=chunk) Acquisition Debt Imputed Interest Expense (in thousands) | Imputed Interest Expense (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Acquisition debt imputed interest expense | $90 | $78 | $280 | $237 | [Senior Notes](index=49&type=section&id=Senior%20Notes) This section describes the company's 4.25% Senior Notes, including their principal amount, fair value, and future interest payments - The **4.25% Senior Notes** due May 2029 have a principal amount of **$400.0 million**[189](index=189&type=chunk) - At September 30, 2022, the fair value of the Senior Notes was **$317.2 million**, and future interest payments totaled **$112.5 million**, with **$17.0 million** payable within 12 months[189](index=189&type=chunk)[190](index=190&type=chunk) Senior Notes Interest Expense (in thousands) | Senior Notes Interest Expense (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | | :------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Senior Notes interest expense | $4,250 | $4,250 | $17,517 | $12,730 | [FINANCIAL HIGHLIGHTS](index=50&type=section&id=FINANCIAL%20HIGHLIGHTS) This section summarizes key financial performance indicators, including revenue, funeral contracts, average revenue per contract, and net income - Revenue decreased by **$7.5 million (7.9%)** for the three months ended September 30, 2022, primarily due to an **11.6% decrease** in funeral contract volume as the death rate normalized[191](index=191&type=chunk) - Net income for the nine months ended September 30, 2022, increased by **$13.3 million (67.1%)**, driven by the absence of a **$23.8 million loss** on extinguishment of debt in 2021 and a **$3.3 million gain** on insurance reimbursements in 2022[191](index=191&type=chunk) Financial Highlights (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | | :------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $95,041 | $87,497 | $279,955 | $276,258 | | Funeral contracts | 12,566 | 11,109 | 36,704 | 35,630 | | Average revenue per funeral contract | $5,358 | $5,516 | $5,336 | $5,463 | | Net income | $13,046 | $5,860 | $19,812 | $33,161 | [REPORTING AND NON-GAAP FINANCIAL MEASURES](index=50&type=section&id=REPORTING%20AND%20NON-GAAP%20FINANCIAL%20MEASURES) This section explains the company's use of non-GAAP financial measures like Adjusted Net Income and Operating Profit to provide additional insights into business trends - The company uses non-GAAP financial measures such as **Adjusted Net Income** and **Operating Profit** to provide insight into underlying trends in its business[192](index=192&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) Non-GAAP Financial Measures (in thousands) | Non-GAAP Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | | :----------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Adjusted Net Income | $15,112 | $6,935 | $41,669 | $31,147 | | Operating Profit | $44,651 | $35,253 | $130,452 | $119,342 | | Operating Profit Margin | 47.0% | 40.3% | 46.6% | 43.2% | [RESULTS OF OPERATIONS](index=52&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed analysis of the company's financial performance, broken down by its Funeral Home and Cemetery segments [Funeral Home Segment](index=53&type=section&id=Funeral%20Home%20Segment) This section analyzes the financial performance of the Funeral Home segment, including revenue, operating profit, and contract volume changes - Same store contract volume decreased by **12.8%** for the three months and **2.6%** for the nine months ended September 30, 2022, primarily due to the normalization of death rates to pre-COVID-19 levels[202](index=202&type=chunk)[205](index=205&type=chunk) Funeral Home Revenue (in thousands) | Funeral Home Revenue (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | | :---------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Same store operating revenue | $57,321 | $51,258 | $165,481 | $163,776 | | Acquired operating revenue | $7,651 | $7,813 | $22,575 | $24,064 | | Total Funeral Home Revenue | $68,897 | $62,780 | $200,503 | $199,073 | Funeral Home Operating Profit (in thousands) | Funeral Home Operating Profit (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | | :------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Same store operating profit | $25,644 | $18,717 | $71,520 | $65,313 | | Acquired operating profit | $3,371 | $3,036 | $9,784 | $9,845 | | Total Funeral Home Operating Profit | $31,355 | $24,173 | $88,445 | $82,060 | [Cemetery Segment](index=56&type=section&id=Cemetery%20Segment) This section analyzes the financial performance of the Cemetery segment, including revenue, operating profit, and interment rights sales - Decreases in the number of interment rights sold for both same store and acquired businesses were primarily a result of the decline in COVID-19 related cases and the normalization of the death rate[209](index=209&type=chunk)[212](index=212&type=chunk) Cemetery Revenue (in thousands) | Cemetery Revenue (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | | :------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Same store operating revenue | $16,342 | $15,396 | $47,883 | $46,616 | | Acquired operating revenue | $6,362 | $5,947 | $21,517 | $20,437 | | Total Cemetery Revenue | $26,144 | $24,717 | $79,452 | $77,185 | Cemetery Operating Profit (in thousands) | Cemetery Operating Profit (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | | :------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Same store operating profit | $6,465 | $5,020 | $20,076 | $16,799 | | Acquired operating profit | $3,547 | $2,827 | $12,386 | $10,766 | | Total Cemetery Operating Profit | $13,296 | $11,080 | $42,007 | $37,282 | [Other Financial Statement Items](index=59&type=section&id=Other%20Financial%20Statement%20Items) This section discusses changes in various financial statement items, including amortization, regional costs, general and administrative expenses, and interest expense - Cemetery property amortization decreased by **$0.2 million** (3 months) and **$0.9 million** (9 months) due to fewer property sales[215](index=215&type=chunk) - Regional and unallocated funeral and cemetery costs decreased by **$1.7 million** (3 months) and **$1.2 million** (9 months), primarily due to lower cash incentives, equity compensation, and COVID-19 related health and safety expenses[215](index=215&type=chunk) - General, administrative and other expenses increased by **$1.3 million** (3 months) and **$2.8 million** (9 months), driven by separation expenses, talent additions, and higher marketing costs, partially offset by lower insurance claims[216](index=216&type=chunk) Total Interest Expense (in thousands) | Interest Expense (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | | :------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Interest Expense | $5,076 | $6,678 | $20,137 | $18,208 | [OVERVIEW OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=60&type=section&id=OVERVIEW%20OF%20CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section identifies and explains the critical accounting policies and estimates that require significant judgment and can materially impact financial results - The company identifies **Business Combinations** and **Goodwill** as critical accounting policies that require significant judgments, assumptions, and estimates[219](index=219&type=chunk) - These policies are considered critical due to their potential to cause fluctuations in reported results and materially impact financial condition or results of operations[219](index=219&type=chunk) [SEASONALITY](index=60&type=section&id=SEASONALITY) This section discusses how seasonal fluctuations in the death rate, particularly during winter months, can affect the company's business operations - The company's business can be affected by seasonal fluctuations in the death rate, which is generally higher during the winter months due to increased incidences of influenza and pneumonia[220](index=220&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are related to interest rate fluctuations and changes in the values of securities held in preneed and perpetual care trusts. A hypothetical 0.25% change in interest rates would cause an approximate 1.19% change in the value of fixed income securities, and a 100 basis point change in the Credit Facility borrowing rate would result in a $1.7 million change in income before taxes - The company is primarily exposed to **interest rate risk** and changes in the values of securities associated with preneed and perpetual care trusts[222](index=222&type=chunk) - A **0.25% change in interest rates** causes an approximate **1.19% change** in the value of fixed income securities[222](index=222&type=chunk) - A change of **100 basis points** in the Credit Facility borrowing rate would result in a change in income before taxes of **$1.7 million**[222](index=222&type=chunk) [Item 4. Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2022. There were no material changes in internal control over financial reporting during the fiscal quarter - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[224](index=224&type=chunk) - There was no change in the system of internal control over financial reporting during the fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting[225](index=225&type=chunk) [PART II – OTHER INFORMATION](index=63&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings that arise in the ordinary course of business, but does not expect these matters to have a material adverse effect on its financial statements. The company self-insures against certain risks and maintains insurance coverage for risks exceeding self-insurance amounts - The company is party to a number of legal proceedings but does not expect them to have a material adverse effect on its financial statements[228](index=228&type=chunk) - The company self-insures against certain risks and carries insurance with coverage for risk in excess of self-insurance amounts[228](index=228&type=chunk) [Item 1A. Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) This section supplements the risk factors from the Annual Report on Form 10-K, specifically highlighting the potential adverse effects of inflation on the company's liquidity, business, financial condition, and results of operations due to increased costs and reduced consumer discretionary spending - The company is supplementing its risk factors with a new risk factor on the adverse effects of inflation[229](index=229&type=chunk) - Inflation has the potential to adversely affect liquidity, business, financial condition, and results of operations by increasing costs or reducing consumer discretionary income[230](index=230&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased under the publicly announced share repurchase program during the quarter ended September 30, 2022. At the end of the quarter, $48.9 million remained authorized for repurchases - No shares were repurchased under the publicly announced share repurchase program during the quarter ended September 30, 2022[232](index=232&type=chunk) - At September 30, 2022, **$48.9 million** remained authorized for repurchases under the program[232](index=232&type=chunk) [Item 3. Defaults Upon Senior Securities](index=64&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period - Not applicable[233](index=233&type=chunk) [Item 4. Mine Safety Disclosures](index=64&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period - Not applicable[234](index=234&type=chunk) [Item 5. Other Information](index=64&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the company for the reporting period - Not applicable[235](index=235&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This section lists the exhibits required to be filed with the Quarterly Report on Form 10-Q, which are incorporated by reference - The exhibits required to be filed pursuant to the requirements of Item 601 of Regulation S-K are set forth in the Exhibit Index and incorporated herein by reference[236](index=236&type=chunk) [SIGNATURE](index=65&type=section&id=SIGNATURE) This section confirms the official signing of the report by the company's Executive Vice President, Chief Financial Officer, and Treasurer - The report was signed by C. Benjamin Brink, Executive Vice President, Chief Financial Officer and Treasurer, on November 2, 2022[239](index=239&type=chunk) [INDEX OF EXHIBITS](index=66&type=section&id=INDEX%20OF%20EXHIBITS) This section provides a comprehensive list of all exhibits accompanying the report, including employment agreements and regulatory certifications - The index lists various exhibits, including employment agreements, Sarbanes-Oxley Act certifications (Sections 302 and 906), and XBRL documents[240](index=240&type=chunk)[241](index=241&type=chunk)

Carriage Services, Inc. (NYSE:CSV) Q3 2022 Earnings Conference Call October 27, 2022 10:30 AM ET Company Participants Steven Metzger - Executive Vice President, Secretary, Chief Administrative Officer and General Counsel Mel Payne - Chairman of the Board and Chief Executive Officer Carlos Quezada - President and Chief Operating Officer Ben Brink - Executive Vice President, Chief Financial Officer and Treasurer Conference Call Participants Alex Paris - Barrington Research Liam Burke - B. Riley George Kelly - ...

Investor Presentation Honesty | Integrity | Quality in All That We Do September 2022 Cautionary Statement on Forward Looking Statements and Disclosure of Non-GAAP Performance Measures Certain statements made here in or else whereby, or on behalf of, the Company that are not historical facts are intended to be forward‐looking statements within the meaning of Section 27-A of the Securities Act of 1933, as amended, and Section 21-E of the Securities Exchange Act of 1934, as amended. These statements are based ...

PART I – FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents the unaudited consolidated balance sheet, statements of operations, cash flows, and changes in stockholders' equity [Unaudited Consolidated Balance Sheet](index=3&type=section&id=Unaudited%20Consolidated%20Balance%20Sheet) Total assets decreased to $1.15 billion, driven by lower trust investment values and reduced liabilities Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2021 | June 30, 2022 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$1,178,631** | **$1,151,423** | **($27,208)** | | Total Current Assets | $40,212 | $36,962 | ($3,250) | | Goodwill | $391,972 | $391,071 | ($901) | | **Total Liabilities** | **$1,050,616** | **$1,028,579** | **($22,037)** | | Total Current Liabilities | $60,787 | $42,831 | ($17,956) | | Credit Facility | $153,857 | $173,501 | $19,644 | | **Total Stockholders' Equity** | **$128,015** | **$122,844** | **($5,171)** | [Unaudited Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) Net income improved to $10.9 million in Q2 2022 from a prior-year loss, despite a modest revenue increase Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2021 | Q2 2022 | YTD 2021 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$88,277** | **$90,600** | **$184,914** | **$188,761** | | Gross Profit | $28,927 | $27,712 | $63,988 | $62,190 | | Operating Income | $20,924 | $19,725 | $47,170 | $44,876 | | **Net Income (Loss)** | **($6,167)** | **$10,899** | **$6,766** | **$27,301** | | Diluted EPS | ($0.33) | $0.69 | $0.37 | $1.70 | [Unaudited Consolidated Statements of Cash Flows](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased to $30.2 million YTD, with significant cash used for share repurchases Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2021 | 2022 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $41,441 | $30,177 | | Net Cash Used in Investing Activities | ($7,944) | ($10,182) | | Net Cash Used in Financing Activities | ($32,893) | ($20,085) | | **Net (Decrease) in Cash** | **$604** | **($90)** | [Unaudited Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity declined by $5.2 million YTD, primarily due to treasury stock purchases - For the six months ended June 30, 2022, total stockholders' equity decreased by **$5.2 million**, with key drivers including net income of **$27.3 million** offset by **$34.2 million** in treasury stock acquisitions and **$3.5 million** in dividend payments[27](index=27&type=chunk) [Condensed Notes to Consolidated Financial Statements](index=8&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) Provides details on accounting policies, segment reporting, debt, leases, and equity transactions - The company operates in two segments: Funeral Home Operations (**approx. 70% of revenue**) and Cemetery Operations (**approx. 30% of revenue**), operating 167 funeral homes and 31 cemeteries[30](index=30&type=chunk) - On May 27, 2022, the company amended its Credit Facility, increasing the revolving credit commitment from **$200 million to $250 million** and replacing LIBOR with BSBY as a benchmark rate[99](index=99&type=chunk) - The company settled the Chinchilla v. Carriage Services, Inc. class action lawsuit and accrued **$1.3 million** for the final settlement and associated legal fees as of June 30, 2022[112](index=112&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=39&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes financial performance, segment results, liquidity, and capital allocation strategies - The company's business strategy is built on three core models: the Standards Operating Model, the 4E Leadership Model, and the Strategic Acquisition Model, which guide operations, leadership, and growth[153](index=153&type=chunk) - Funeral contract volumes are normalizing to pre-COVID-19 levels at **higher average revenues**, while modest cost increases from inflation are noted[148](index=148&type=chunk)[149](index=149&type=chunk) Financial Highlights (Three Months Ended June 30) | Metric | 2021 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $88,277 | $90,600 | 2.6% | | Funeral contracts | 10,842 | 11,006 | 1.5% | | Avg. revenue per funeral contract | $5,385 | $5,493 | 2.0% | | Gross profit | $28,927 | $27,712 | -4.2% | | Net income (loss) | ($6,167) | $10,899 | N/A | [Liquidity and Capital Resources](index=42&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Primary liquidity sources are cash from operations and a $250 million credit facility - Primary sources of liquidity are cash from operations and the Credit Facility, with **$72.5 million** available as of June 30, 2022[158](index=158&type=chunk) - The Board authorized an additional **$75.0 million** for the share repurchase program; in the first six months of 2022, the company repurchased 695,496 shares for **$34.2 million**[125](index=125&type=chunk)[126](index=126&type=chunk) Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2021 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $41,441 | $30,177 | | Net cash used in investing activities | ($7,944) | ($10,182) | | Net cash used in financing activities | ($32,893) | ($20,085) | [Results of Operations](index=50&type=section&id=RESULTS%20OF%20OPERATIONS) Funeral Home segment profit grew while Cemetery segment profit declined due to higher expenses Funeral Home Segment Performance (Six Months Ended June 30, in thousands) | Metric | 2021 | 2022 | | :--- | :--- | :--- | | Total Revenue | $131,606 | $136,293 | | Operating Profit | $57,090 | $57,887 | | Same Store Contract Volume | 20,516 | 21,068 | Cemetery Segment Performance (Six Months Ended June 30, in thousands) | Metric | 2021 | 2022 | | :--- | :--- | :--- | | Total Revenue | $53,308 | $52,468 | | Operating Profit | $28,711 | $26,202 | | Same Store Preneed Revenue | $19,134 | $19,201 | - General and administrative expenses increased by **$1.4 million** for the six months ended June 30, 2022, due to investments in marketing, a new CIO, and technology costs[205](index=205&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks include interest rate changes on its credit facility and trust fund investment values - The company is primarily exposed to interest rate risk on its Credit Facility and market risk on the investments held in its funeral and cemetery trust funds[210](index=210&type=chunk) - A hypothetical **100 basis point** change in the borrowing rate on the Credit Facility would result in a **$1.7 million** change in income before taxes[212](index=212&type=chunk) - The **$400 million** Senior Notes have a fixed rate of **4.25%**, with a fair value of **$327.7 million** at June 30, 2022, below its carrying value of $394.9 million[212](index=212&type=chunk) [Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2022 - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures were **effective** as of June 30, 2022[213](index=213&type=chunk) - There were **no material changes** to the company's internal control over financial reporting during the second quarter of 2022[214](index=214&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) Reports the settlement of the Chinchilla v. Carriage Services, Inc. class action lawsuit - The company is party to various legal proceedings that arise in the ordinary course of business, which are not expected to have a **material adverse effect** on its financial statements[217](index=217&type=chunk) - The Chinchilla v. Carriage Services, Inc. class action was settled, and the company accrued **$1.3 million** for the settlement and legal fees[112](index=112&type=chunk) [Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor was added to address the potential adverse effects of inflation on costs and revenue - A new risk factor was added to address the potential adverse effects of **inflation** on the business[218](index=218&type=chunk) - Inflation may **increase the company's cost structure** and **reduce consumer discretionary spending**, potentially affecting liquidity, financial condition, and results of operations[219](index=219&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=61&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the repurchase of 205,496 shares in Q2 2022, with $48.9 million remaining authorized Share Repurchases (Q2 2022) | Period | Total Shares Purchased | | :--- | :--- | | April 2022 | 0 | | May 2022 | 127,639 | | June 2022 | 77,857 | | **Total** | **205,496** | - As of June 30, 2022, **$48.9 million** remained authorized for purchase under the company's share repurchase program[221](index=221&type=chunk) [Other Items (3-6)](index=61&type=section&id=Other%20Items) Confirms no defaults, mine safety disclosures, or other information to report for Items 3-5 - Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information) are all reported as **'Not applicable'**[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) - Item 6 (Exhibits) refers to the list of exhibits filed with the Form 10-Q, including certifications and XBRL data[225](index=225&type=chunk)

Carriage Services, Inc. (NYSE:CSV) Q2 2021 Earnings Conference Call July 28, 2022 10:30 AM ET Company Participants Steven Metzger - Executive Vice President, Secretary, Chief Administrative Officer and General Counsel Mel Payne - Chairman of the Board and Chief Executive Officer Carl Brink - Executive Vice President, Chief Financial Officer and Treasurer Carlos Quezada - President and Chief Operating Officer Conference Call Participants Alex Paris - Barrington Research Liam Burke - B. Riley George Kelly - ...

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements and management's discussion and analysis for the quarter ended March 31, 2022, along with market risk and control disclosures [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Carriage Services, Inc. for the quarter ended March 31, 2022, including the balance sheet, statements of operations, cash flows, changes in stockholders' equity, and detailed condensed notes explaining significant accounting policies, recent accounting standards, and specific financial line items [Unaudited Consolidated Balance Sheet](index=3&type=section&id=Unaudited%20Consolidated%20Balance%20Sheet) The consolidated balance sheet shows the company's financial position as of December 31, 2021, and March 31, 2022, detailing assets, liabilities, and stockholders' equity. Total assets slightly increased, while total liabilities also rose, leading to a decrease in total stockholders' equity | Metric | Dec 31, 2021 (in thousands) | Mar 31, 2022 (in thousands) | Change (in thousands) | | :----- | :-------------------------- | :-------------------------- | :-------------------- | | Total Assets | $1,178,631 | $1,180,349 | +$1,718 | | Total Liabilities | $1,050,616 | $1,060,328 | +$9,712 | | Total Stockholders' Equity | $128,015 (derived) | $120,021 | -$7,994 | [Unaudited Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2022, the company reported an increase in net income to $16.402 million, up from $12.933 million in the prior year, driven by higher revenue and a significant decrease in interest expense, despite a slight dip in gross profit. Basic EPS increased to $1.07 from $0.72 | Metric | 3 Months Ended Mar 31, 2021 (in thousands) | 3 Months Ended Mar 31, 2022 (in thousands) | YoY Change (in thousands) | | :----- | :----------------------------------------- | :----------------------------------------- | :------------------------ | | Revenue | $96,637 | $98,161 | +$1,524 | | Gross Profit | $35,061 | $34,478 | -$583 | | Operating Income | $26,246 | $25,151 | -$1,095 | | Interest Expense | $(7,584) | $(5,542) | +$2,042 | | Net Income | $12,933 | $16,402 | +$3,469 | | Basic EPS | $0.72 | $1.07 | +$0.35 | | Diluted EPS | $0.71 | $1.00 | +$0.29 | | Dividends Declared per Common Share | $0.100 | $0.1125 | +$0.0125 | [Unaudited Consolidated Statements of Cash Flows](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased significantly to $15.801 million in Q1 2022 from $26.811 million in Q1 2021, primarily due to unfavorable working capital changes. Investing activities saw a larger net cash outflow, while financing activities also resulted in a net outflow, albeit smaller than the prior year, largely due to treasury stock purchases | Cash Flow Activity | 3 Months Ended Mar 31, 2021 (in thousands) | 3 Months Ended Mar 31, 2022 (in thousands) | YoY Change (in thousands) | | :----------------- | :----------------------------------------- | :----------------------------------------- | :------------------------ | | Net cash provided by operating activities | $26,811 | $15,801 | -$11,010 | | Net cash used in investing activities | $(1,897) | $(7,756) | -$5,859 | | Net cash used in financing activities | $(25,397) | $(8,306) | +$17,091 | | Net decrease in cash and cash equivalents | $(483) | $(261) | +$222 | | Cash and cash equivalents at end of period | $406 | $887 | +$481 | [Unaudited Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity decreased from $128.015 million at December 31, 2021, to $120.021 million at March 31, 2022, primarily due to significant treasury stock acquisitions totaling $26.010 million, partially offset by net income and stock-based compensation | Metric | Dec 31, 2021 (in thousands) | Mar 31, 2022 (in thousands) | Change (in thousands) | | :----- | :-------------------------- | :-------------------------- | :-------------------- | | Total Stockholders' Equity | $128,015 | $120,021 | -$7,994 | | Net Income | N/A | $16,402 | N/A | | Treasury Stock Acquired | N/A | $(26,010) | N/A | | Dividends on Common Stock | N/A | $(1,725) | N/A | | Stock-based Compensation Expense | N/A | $1,460 | N/A | [Condensed Notes to Consolidated Financial Statements](index=7&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the unaudited consolidated financial statements, covering significant accounting policies, recent accounting pronouncements, and specific financial line items such as goodwill, divestitures, receivables, trust investments, debt, leases, equity, and segment reporting [1. Basis of Presentation and Summary of Significant Accounting Policies](index=8&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the company's business segments (Funeral Home Operations ~70% revenue, Cemetery Operations ~30% revenue), principles of consolidation, use of estimates, and key accounting policies for cash, receivables, inventory, business combinations, divestitures, goodwill, intangible assets, trust funds, fair value measurements, capitalized commissions, property, leases, equity plans, revenue recognition, income taxes, and EPS computation - Carriage Services, Inc. operates in two segments: **Funeral Home Operations (approx. 70% of revenue)** and **Cemetery Operations (approx. 30% of revenue)**. As of March 31, 2022, the company operated **168 funeral homes in 26 states** and **31 cemeteries in 11 states**[25](index=25&type=chunk) - The company did not acquire any businesses in the three months ended March 31, 2021 and 2022[33](index=33&type=chunk) - During the three months ended March 31, 2022, the company sold two funeral homes for an aggregate of **$0.9 million**[34](index=34&type=chunk) [2. Recently Issued Accounting Standards](index=15&type=section&id=2.%20RECENTLY%20ISSUED%20ACCOUNTING%20STANDARDS) The company discusses three recently issued accounting standards: Reference Rate Reform (Topic 848), Business Combinations (Topic 805), and Credit Losses (Topic 326). It adopted Topic 848 in March 2020 and plans to adopt Topic 805 and Topic 326 for the fiscal year beginning January 1, 2023, with no expected impact on consolidated financial statements for Topic 326 - The company adopted ASU Topic 848 (Reference Rate Reform) in March 2020 and plans to apply amendments as agreements are modified or LIBOR is no longer used[59](index=59&type=chunk) - The company plans to adopt ASU Topic 805 (Business Combinations - Accounting for Contract Assets and Liabilities) for its fiscal year beginning January 1, 2023, and is still evaluating its impact[60](index=60&type=chunk) - The company plans to adopt ASU Topic 326 (Credit Losses - Vintage Disclosures) for its fiscal year beginning January 1, 2023, expecting no impact on consolidated financial statements[61](index=61&type=chunk) [3. Goodwill](index=16&type=section&id=3.%20GOODWILL) Goodwill decreased by $0.901 million from December 31, 2021, to March 31, 2022, primarily due to the allocation of goodwill to the sale of two funeral homes | Metric | Dec 31, 2021 (in thousands) | Mar 31, 2022 (in thousands) | Change (in thousands) | | :----- | :-------------------------- | :-------------------------- | :-------------------- | | Goodwill at period end | $391,972 | $391,071 | -$901 | | Decrease in goodwill related to divestitures | $(1,006) (Q1 2021) | $(901) (Q1 2022) | N/A | - During the three months ended March 31, 2022, **$0.9 million of goodwill** was allocated to the sale of two funeral homes, resulting in a loss recorded in Net (gain) loss on divestitures, disposals and impairments charges[63](index=63&type=chunk) [4. Divested Operations](index=16&type=section&id=4.%20DIVESTED%20OPERATIONS) In Q1 2022, the company sold two funeral homes for $0.9 million, resulting in a net loss of $0.515 million from divested operations after tax. This contrasts with Q1 2021, where the sale of one funeral home and merger of another yielded a net income of $0.254 million | Metric | 3 Months Ended Mar 31, 2021 (in thousands) | 3 Months Ended Mar 31, 2022 (in thousands) | | :----- | :----------------------------------------- | :----------------------------------------- | | Revenue from divested operations | $282 | $137 | | Operating income from divested operations | $60 | $2 | | Net income (loss) from divested operations, after tax | $254 | $(515) | - During the three months ended March 31, 2022, the company sold two funeral homes for an aggregate of **$0.9 million**[64](index=64&type=chunk) [5. Receivables](index=16&type=section&id=5.%20RECEIVABLES) Accounts receivable, net, slightly increased from $25.314 million at December 31, 2021, to $25.570 million at March 31, 2022. Preneed cemetery receivables, net, decreased from $23.150 million to $22.561 million over the same period. The allowance for credit losses for trade and financed receivables increased from $(990) thousand to $(978) thousand | Metric | Dec 31, 2021 (in thousands) | Mar 31, 2022 (in thousands) | | :----- | :-------------------------- | :-------------------------- | | Accounts receivable, net | $25,314 | $25,570 | | Preneed cemetery receivables, net | $23,150 | $22,561 | | Total allowance for credit losses on Trade and financed receivables (Jan 1, 2022) | $(990) | N/A | | Total allowance for credit losses on Trade and financed receivables (Mar 31, 2022) | N/A | $(978) | [6. Trust Investments](index=18&type=section&id=6.%20TRUST%20INVESTMENTS) The company manages Preneed Cemetery, Preneed Funeral, and Cemetery Perpetual Care Trust Investments. These trusts hold diversified portfolios of fixed income securities, common stock, and mutual funds, measured at fair value. Changes in fair value are offset by changes in trust fund liabilities, with no immediate impact on earnings until services are performed or merchandise delivered - Trust investments are diversified across multiple industry segments using a balanced allocation strategy to minimize long-term risk[70](index=70&type=chunk) - Changes in the fair value of trust fund assets are offset by changes in trust fund liabilities, with no impact on earnings until services are performed or merchandise delivered[70](index=70&type=chunk) | Trust Type | Dec 31, 2021 (in thousands) | Mar 31, 2022 (in thousands) | | :--------- | :-------------------------- | :-------------------------- | | Preneed Cemetery Trust Investments | $100,903 | $102,533 | | Preneed Funeral Trust Investments | $113,658 | $113,332 | | Cemetery Perpetual Care Trust Investments | $72,400 | $73,525 | [7. Receivables from Preneed Funeral Trusts](index=26&type=section&id=7.%20RECEIVABLES%20FROM%20PRENEED%20FUNERAL%20TRUSTS) Receivables from preneed funeral trusts, which are managed by third parties where the company does not have a controlling interest, increased slightly to $19.160 million at March 31, 2022, from $19.009 million at December 31, 2021. These investments are accounted for at cost | Metric | Dec 31, 2021 (in thousands) | Mar 31, 2022 (in thousands) | | :----- | :-------------------------- | :-------------------------- | | Preneed funeral trust funds, at cost | $19,597 | $19,752 | | Less: allowance for contract cancellation | $(588) | $(592) | | Receivables from preneed funeral trusts, net | $19,009 | $19,160 | - These receivables represent assets in trusts controlled by third parties where the company does not have a controlling financial interest, and are accounted for at cost[87](index=87&type=chunk) [8. Fair Value Measurements](index=26&type=section&id=8.%20FAIR%20VALUE%20MEASUREMENTS) The company measures certain financial assets, primarily trust investments, at fair value using a three-level hierarchy. As of March 31, 2022, the fair value of the Credit Facility approximated its carrying value of $174.2 million, and Senior Notes had a fair value of $373.4 million against a carrying value of $394.765 million. No assets had fair values determined by Level 3 inputs, and no liabilities were measured at fair value - The company's Credit Facility and Senior Notes are classified within **Level 2** of the Fair Value Measurements hierarchy[88](index=88&type=chunk) | Metric | Carrying Value (Mar 31, 2022, in thousands) | Fair Value (Mar 31, 2022, in thousands) | | :----- | :------------------------------------------ | :-------------------------------------- | | Credit Facility | $174,200 | $174,200 (approx.) | | Acquisition Debt | $4,500 (approx.) | $4,500 (approx.) | | Senior Notes | $394,765 | $373,400 | - At March 31, 2022, the company did not have any assets with fair values determined by Level 3 inputs and no liabilities measured at fair value[88](index=88&type=chunk) [9. Intangible and Other Non-Current Assets](index=27&type=section&id=9.%20INTANGIBLE%20AND%20OTHER%20NON-CURRENT%20ASSETS) Intangible and other non-current assets increased slightly to $29.617 million at March 31, 2022. This category includes tradenames (indefinite life, not amortized), prepaid agreements not-to-compete, and capitalized commissions on preneed contracts, both of which are amortized over their respective terms | Metric | Dec 31, 2021 (in thousands) | Mar 31, 2022 (in thousands) | | :----- | :-------------------------- | :-------------------------- | | Tradenames | $23,565 | $23,565 | | Prepaid agreements not-to-compete, net | $2,247 | $2,156 | | Capitalized commissions on preneed contracts, net | $3,560 | $3,665 | | Intangible and other non-current assets, net | $29,378 | $29,617 | - Tradenames have indefinite lives and are not amortized[92](index=92&type=chunk) - Amortization expense for prepaid agreements not-to-compete was **$148,000 in Q1 2022**[93](index=93&type=chunk) - Amortization expense for capitalized commissions was **$170,000 in Q1 2022**[94](index=94&type=chunk) [10. Credit Facility and Acquisition Debt](index=27&type=section&id=10.%20CREDIT%20FACILITY%20AND%20ACQUISITION%20DEBT) The company's Credit Facility increased to $172.746 million at March 31, 2022, with $23.5 million of availability. Acquisition debt remained stable at $3.935 million. The company was in compliance with all Credit Facility covenants | Metric | Dec 31, 2021 (in thousands) | Mar 31, 2022 (in thousands) | | :----- | :-------------------------- | :-------------------------- | | Total Credit Facility | $153,857 | $172,746 | | Total acquisition debt, net of current portion | $3,979 | $3,935 | - At March 31, 2022, the company had **$23.5 million of availability** under the Credit Facility[98](index=98&type=chunk) - The weighted average interest rate on the Credit Facility decreased to **2.1% for Q1 2022** from 3.3% for Q1 2021[98](index=98&type=chunk) [11. Senior Notes](index=29&type=section&id=11.%20SENIOR%20NOTES) The company's 4.25% Senior Notes due May 2029 had a carrying value of $394.765 million and a fair value of $373.4 million at March 31, 2022. Interest expense for these notes decreased to $4.250 million in Q1 2022 from $6.625 million in Q1 2021 | Metric | Dec 31, 2021 (in thousands) | Mar 31, 2022 (in thousands) | | :----- | :-------------------------- | :-------------------------- | | Carrying value of the Senior Notes | $394,610 | $394,765 | | Fair value of the Senior Notes | N/A | $373,400 | | Metric | 3 Months Ended Mar 31, 2021 (in thousands) | 3 Months Ended Mar 31, 2022 (in thousands) | | :----- | :----------------------------------------- | :----------------------------------------- | | Senior Notes interest expense | $6,625 | $4,250 | - The Senior Notes bear interest at **4.25% per year**, payable semi-annually, and mature on May 15, 2029[103](index=103&type=chunk) [12. Leases](index=30&type=section&id=12.%20LEASES) Total lease cost decreased to $1.178 million in Q1 2022 from $1.278 million in Q1 2021. Operating lease right-of-use assets slightly decreased, while total lease liabilities also saw a minor reduction. The weighted-average remaining lease term for operating leases is 9.5 years with an 8.1% discount rate | Metric | 3 Months Ended Mar 31, 2021 (in thousands) | 3 Months Ended Mar 31, 2022 (in thousands) | | :----- | :----------------------------------------- | :----------------------------------------- | | Total lease cost | $1,278 | $1,178 | | Metric | Dec 31, 2021 (in thousands) | Mar 31, 2022 (in thousands) | | :----- | :-------------------------- | :-------------------------- | | Operating lease right-of-use assets | $17,881 | $17,622 | | Total lease liabilities | $25,965 | $25,576 | | Lease Type | Weighted-average remaining lease term (years) | Weighted-average discount rate | | :--------- | :-------------------------------------------- | :----------------------------- | | Operating leases | 9.5 | 8.1% | | Finance leases | 12.1 | 8.2% | [13. Commitments and Contingencies](index=31&type=section&id=13.%20COMMITMENTS%20AND%20CONTINGENCIES) The company is involved in various legal proceedings, including a putative class action lawsuit (Chinchilla v. Carriage Services, Inc., et al.) regarding alleged wage and labor violations. A class settlement agreement for $1.0 million was preliminarily approved on March 29, 2022, with $1.1 million accrued for the expected settlement and legal fees at March 31, 2022 - A putative class action lawsuit (Chinchilla v. Carriage Services, Inc., et al.) was filed on May 19, 2021, alleging various wage and labor violations[110](index=110&type=chunk) - A class settlement agreement for **$1.0 million** was preliminarily approved on March 29, 2022[110](index=110&type=chunk) - At March 31, 2022, the company accrued **$1.1 million** for the expected settlement amount and associated legal fees related to the class action lawsuit[110](index=110&type=chunk) [14. Stockholders' Equity](index=32&type=section&id=14.%20STOCKHOLDERS'%20EQUITY) This section details activity in restricted stock, stock options, performance awards, the Employee Stock Purchase Plan (ESPP), and non-employee director compensation. Stock-based compensation expense for Q1 2022 totaled $1.460 million across these plans. The Board authorized an additional $75.0 million for the share repurchase program on February 23, 2022, with $57.1 million remaining available at March 31, 2022 | Equity Plan | Stock-based Compensation Expense (3 Months Ended Mar 31, 2021, in thousands) | Stock-based Compensation Expense (3 Months Ended Mar 31, 2022, in thousands) | | :---------- | :--------------------------------------------------------------------------- | :--------------------------------------------------------------------------- | | Restricted Stock | $121 | $57 | | Stock Options | $560 | $638 | | Performance Awards | $237 | $566 | | ESPP | $206 | $199 | | Non-Employee Director and Board Advisor Compensation | $236 | $201 | | **Total** | **$1,360** | **$1,661** | - On February 23, 2022, the Board authorized an additional **$75.0 million** for the share repurchase program[124](index=124&type=chunk) - At March 31, 2022, **$57.1 million** remained authorized for repurchases under the share repurchase program[124](index=124&type=chunk) | Metric | 3 Months Ended Mar 31, 2021 | 3 Months Ended Mar 31, 2022 | | :----- | :-------------------------- | :-------------------------- | | Dividends Declared per Common Share | $0.1000 | $0.1125 | | Dollar Value of Dividends | $1,799 (in thousands) | $1,725 (in thousands) | [15. Earnings Per Share](index=35&type=section&id=15.%20EARNINGS%20PER%20SHARE) Basic earnings per common share increased to $1.07 in Q1 2022 from $0.72 in Q1 2021, and diluted EPS increased to $1.00 from $0.71. This improvement is primarily due to higher net income and a lower weighted average number of common shares outstanding | Metric | 3 Months Ended Mar 31, 2021 | 3 Months Ended Mar 31, 2022 | | :----- | :-------------------------- | :-------------------------- | | Net income attributable to common stockholders | $12,906 (in thousands) | $16,387 (in thousands) | | Basic earnings per common share | $0.72 | $1.07 | | Diluted earnings per common share | $0.71 | $1.00 | | Weighted average basic shares outstanding | 17,965 (in thousands) | 15,244 (in thousands) | | Weighted average diluted shares outstanding | 18,199 (in thousands) | 16,369 (in thousands) | - Performance awards were included in the computation of diluted earnings per share as certain performance criteria were satisfied[127](index=127&type=chunk) [16. Segment Reporting](index=35&type=section&id=16.%20SEGMENT%20REPORTING) The company reports revenue and operating profit for its Funeral Home and Cemetery segments. In Q1 2022, Funeral Home revenue increased to $74.355 million, while Cemetery revenue decreased to $23.806 million. Consolidated operating income decreased slightly to $25.151 million | Segment | 3 Months Ended Mar 31, 2021 (in thousands) | 3 Months Ended Mar 31, 2022 (in thousands) | YoY Change (in thousands) | | :------ | :----------------------------------------- | :----------------------------------------- | :------------------------ | | Funeral Home Revenue | $71,774 | $74,355 | +$2,581 | | Cemetery Revenue | $24,863 | $23,806 | -$1,057 | | Total Revenue | $96,637 | $98,161 | +$1,524 | | Segment | 3 Months Ended Mar 31, 2021 (in thousands) | 3 Months Ended Mar 31, 2022 (in thousands) | YoY Change (in thousands) | | :------ | :----------------------------------------- | :----------------------------------------- | :------------------------ | | Funeral Operating Income | $25,876 | $25,463 | -$413 | | Cemetery Operating Income | $9,493 | $8,218 | -$1,275 | | Corporate Operating Loss | $(9,123) | $(8,530) | +$593 | | Consolidated Operating Income | $26,246 | $25,151 | -$1,095 | [17. Supplementary Data](index=37&type=section&id=17.%20SUPPLEMENTARY%20DATA) This note provides supplementary balance sheet details, including a breakdown of prepaid and other current assets, current portion of debt and lease obligations, accrued and other liabilities, and other long-term liabilities. It also includes supplemental cash flow information for interest and taxes paid | Balance Sheet Item | Dec 31, 2021 (in thousands) | Mar 31, 2022 (in thousands) | | :----------------- | :-------------------------- | :-------------------------- | | Prepaid and other current assets | $6,404 | $4,005 | | Current portion of debt and lease obligations | $2,809 | $2,895 | | Accrued and other liabilities | $43,773 | $31,345 | | Other long-term liabilities | $1,419 | $1,309 | | Cash Flow Item | 3 Months Ended Mar 31, 2021 (in thousands) | 3 Months Ended Mar 31, 2022 (in thousands) | | :------------- | :----------------------------------------- | :----------------------------------------- | | Cash paid for interest | $616 | $9 | | Cash paid for taxes | $532 | $1,5 | [Cautionary Statement on Forward–Looking Statements](index=38&type=section&id=Cautionary%20Statement%20on%20Forward%E2%80%93Looking%20Statements) This section warns investors that the report contains forward-looking statements subject to significant risks and uncertainties that could cause actual results to differ materially from projections. Key risk factors include the ability to retain skilled personnel, execute growth strategy, competition, changes in death rates and consumer preferences, investment performance of trust funds, interest rate fluctuations, and impacts of epidemics like COVID-19 - The report contains forward-looking statements identified by words like "may," "will," "estimate," and "intend," which are subject to significant risks and uncertainties[136](index=136&type=chunk) - Important factors that could cause actual results to differ include the ability to find and retain skilled personnel, execution of growth strategy, effects of competition, changes in death rates and consumer preferences, investment performance of trust funds, fluctuations in interest rates, and the impact of epidemics and pandemics like COVID-19[136](index=136&type=chunk) - Investors are cautioned not to place undue reliance on forward-looking statements, and the company undertakes no obligation to publicly update or revise them[138](index=138&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2022, discussing revenue drivers, segment performance, liquidity, capital resources, and critical accounting policies [Overview](index=40&type=section&id=OVERVIEW) Carriage Services, Inc. is a leading U.S. provider of funeral (70% revenue) and cemetery (30% revenue) services. The company's strategy focuses on local leadership, entrepreneurial principles, and three models: Standards Operating, 4E Leadership, and Strategic Acquisition, aiming for sustainable market share, revenue, and profitability growth. The company also discusses recent developments like share repurchases and divestitures, and the ongoing impact of COVID-19, noting a normalization of funeral contracts to pre-pandemic levels in Q1 2022 - Carriage Services operates **168 funeral homes in 26 states** and **31 cemeteries in 11 states** as of March 31, 2022[140](index=140&type=chunk) - The company's business strategy is built on three models: Standards Operating Model, 4E Leadership Model, and Strategic Acquisition Model, focused on local market share growth and sustainable profitability[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - In Q1 2022, the company observed a decrease in COVID-19-related deaths and a normalization of funeral contracts to pre-COVID-19 levels, with broadly higher funeral contract revenue averages[145](index=145&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's primary liquidity sources are internally generated cash flows and its Credit Facility. Cash provided by operating activities decreased by $11.0 million in Q1 2022 due to unfavorable working capital changes. Net cash used in investing activities increased by $5.9 million, while net cash used in financing activities decreased by $17.1 million, despite significant share repurchases. The company expects sufficient cash resources for the next 12 months - Primary sources of liquidity are internally generated cash flows from operating activities and availability under the Credit Facility[155](index=155&type=chunk) | Cash Flow Activity | 3 Months Ended Mar 31, 2021 (in thousands) | 3 Months Ended Mar 31, 2022 (in thousands) | YoY Change (in thousands) | | :----------------- | :----------------------------------------- | :----------------------------------------- | :------------------------ | | Net cash provided by operating activities | $26,811 | $15,801 | -$11,010 | | Net cash used in investing activities | $(1,897) | $(7,756) | -$5,859 | | Net cash used in financing activities | $(25,390) | $(8,306) | +$17,084 | - The Board authorized an additional **$75.0 million** for the share repurchase program on February 23, 2022, with **$57.1 million** remaining available at March 31, 2022[163](index=163&type=chunk)[165](index=165&type=chunk) [Financial Highlights](index=48&type=section&id=FINANCIAL%20HIGHLIGHTS) Revenue increased by $1.5 million (1.6%) in Q1 2022, driven by a 1.6% increase in funeral contract volume and a 2.3% increase in average revenue per funeral contract. Net income rose by $3.5 million, primarily due to decreased interest expense and an insurance reimbursement gain, despite a $0.6 million decrease in gross profit | Metric | 3 Months Ended Mar 31, 2021 (in thousands) | 3 Months Ended Mar 31, 2022 (in thousands) | YoY Change (in thousands) | | :----- | :----------------------------------------- | :----------------------------------------- | :------------------------ | | Revenue | $96,637 | $98,161 | +$1,524 | | Gross Profit | $35,061 | $34,478 | -$583 | | Net Income | $12,933 | $16,402 | +$3,469 | - Revenue increase was driven by a **1.6% increase in funeral contract volume** and a **2.3% increase in average revenue per funeral contract**[176](index=176&type=chunk) - Net income increased primarily due to a **$2.0 million decrease in interest expense**, a **$1.9 million gain on insurance reimbursements**, and a **$0.6 million decrease in income tax expense**[176](index=176&type=chunk) [Reporting and Non-GAAP Financial Measures](index=48&type=section&id=REPORTING%20AND%20NON-GAAP%20FINANCIAL%20MEASURES) This section presents non-GAAP financial measures, including Adjusted Net Income and Operating Profit, which management uses to assess performance. Adjusted Net Income increased to $15.114 million in Q1 2022 from $14.690 million in Q1 2021, after accounting for special items. Operating profit margin slightly decreased to 46.3% from 47.4% - The company uses non-GAAP measures like "Operating and Financial Trend Report" and Adjusted Net Income to supplement GAAP financial statements for management and investor comparison[177](index=177&type=chunk) | Metric | 3 Months Ended Mar 31, 2021 (in thousands) | 3 Months Ended Mar 31, 2022 (in thousands) | | :----- | :----------------------------------------- | :----------------------------------------- | | Net income (GAAP) | $12,933 | $16,402 | | Sum of special items | $2,181 | $(1,561) | | Tax effect on special items | $424 | $(273) | | Adjusted net income (non-GAAP) | $14,690 | $15,114 | | Metric | 3 Months Ended Mar 31, 2021 | 3 Months Ended Mar 31, 2022 | | :----- | :-------------------------- | :-------------------------- | | Operating profit margin (non-GAAP) | 47.4% | 46.3% | [Results of Operations](index=50&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed discussion of the company's operating results for its Funeral Home and Cemetery segments, highlighting revenue and operating profit changes, contract volumes, average revenue per contract, and cremation rates [Funeral Home Segment](index=50&type=section&id=Funeral%20Home%20Segment) Funeral Home segment revenue increased to $74.355 million in Q1 2022, driven by a 3.3% increase in same-store contract volume and a 1.2% increase in average revenue per contract, despite a decrease in COVID-19 related contracts. Operating profit for the segment increased by $0.9 million for same-store operations but decreased in margin due to higher operating expenses | Metric | 3 Months Ended Mar 31, 2021 (in thousands) | 3 Months Ended Mar 31, 2022 (in thousands) | YoY Change (in thousands) | | :----- | :----------------------------------------- | :----------------------------------------- | :------------------------ | | Total Funeral Home Revenue | $71,774 | $74,355 | +$2,581 | | Same store operating revenue | $58,983 | $61,632 | +$2,649 | | Acquired operating revenue | $7,985 | $8,610 | +$625 | - Same-store contract volume increased by **3.3%**, and average revenue per contract (excluding preneed funeral trust earnings) increased by **1.2%** for same-store operations[189](index=189&type=chunk) - The percentage of cremation contracts with memorial service increased by **3.4%** for same-store operations and **4.1%** for acquired operations, reflecting a focus on educating families on cremation options[189](index=189&type=chunk) [Cemetery Segment](index=52&type=section&id=Cemetery%20Segment) Cemetery segment revenue decreased to $23.806 million in Q1 2022, primarily due to a $0.4 million decrease in same-store preneed revenue and a $0.5 million decrease in acquired preneed revenue. Operating profit for the segment decreased by $0.4 million for same-store and $0.8 million for acquired businesses, with margins declining due to lower revenue and increased operating expenses | Metric | 3 Months Ended Mar 31, 2021 (in thousands) | 3 Months Ended Mar 31, 2022 (in thousands) | YoY Change (in thousands) | | :----- | :----------------------------------------- | :----------------------------------------- | :------------------------ | | Total Cemetery Revenue | $24,863 | $23,806 | -$1,057 | | Same store operating revenue | $14,635 | $14,251 | -$384 | | Acquired operating revenue | $6,980 | $6,297 | -$683 | - Same-store preneed revenue decreased by **$0.4 million**, driven by a **6.2% decrease in interment rights sold** and a **2.0% decrease in average price per interment right**[191](index=191&type=chunk) - Acquired businesses experienced a **$0.5 million decrease in preneed revenue** and a **$0.2 million decrease in atneed revenue**, with a **20.4% decrease in interment rights sold**[193](index=193&type=chunk) - Cemetery property amortization decreased by **$0.2 million to $1.3 million in Q1 2022**, primarily due to decreased property sales[193](index=193&type=chunk) [Other Financial Statement Items](index=53&type=section&id=Other%20Financial%20Statement%20Items) General, administrative, and other expenses decreased by $0.6 million in Q1 2022, mainly due to lower separation expenses from prior year, partially offset by increased cash incentives, equity compensation, and marketing costs. The company recorded a net loss on divestitures, disposals, and impairment charges of $0.767 million and a $1.899 million gain on insurance reimbursements in Q1 2022. Income tax expense decreased to $5.1 million, with the operating tax rate before discrete items at 26.5% - General, administrative and other expenses decreased by **$0.6 million in Q1 2022**, primarily due to a **$1.6 million decrease in separation expense** from Q1 2021[194](index=194&type=chunk) | Metric | 3 Months Ended Mar 31, 2021 (in thousands) | 3 Months Ended Mar 31, 2022 (in thousands) | | :----- | :----------------------------------------- | :----------------------------------------- | | Net (gain) loss on divestitures and real property | $(308) | $703 | | Net loss on disposals of fixed assets | — | $64 | | Total Net (gain) loss on divestitures, disposals and impairment charges | $(308) | $767 | - A **$1.899 million gain on insurance reimbursements** was recorded in Q1 2022 for property damaged by Hurricane Ida[14](index=14&type=chunk)[196](index=196&type=chunk) - Income tax expense decreased to **$5.1 million in Q1 2022**, with the operating tax rate before discrete items at **26.5%** (down from 31.0% in Q1 2021)[196](index=196&type=chunk) [Overview of Critical Accounting Policies and Estimates](index=54&type=section&id=OVERVIEW%20OF%20CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) The company identifies Business Combinations and Goodwill as critical accounting policies requiring significant judgments, assumptions, and estimates due to their potential impact on financial condition and results of operations. These estimates are continuously evaluated and updated - Business Combinations and Goodwill are identified as critical accounting policies requiring significant judgments, assumptions, and estimates[197](index=197&type=chunk) - These policies are critical because they can cause fluctuations in reported results due to complex and uncertain matters, and different judgments could materially impact financial condition or operations[197](index=197&type=chunk) [Seasonality](index=54&type=section&id=SEASONALITY) The company's business can be affected by seasonal fluctuations in the death rate, which is generally higher during winter months due to increased incidences of influenza and pneumonia - The death rate is generally higher during winter months due to increased incidences of influenza and pneumonia, which can affect the company's business[198](index=198&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate risk and changes in the values of securities held in preneed and perpetual care trusts. Management actively monitors these risks. A hypothetical 0.25% change in interest rates could cause an approximate 1.37% change in the value of fixed income securities, and a 100 basis point change in borrowing rates could impact income before taxes by $1.7 million - The company is primarily exposed to interest rate risk and changes in the values of securities associated with preneed and perpetual care trusts[200](index=200&type=chunk) - A **0.25% change in interest rates** could cause an approximate **1.37% change in the value of fixed income securities**[200](index=200&type=chunk) - A **100 basis point change** in the Credit Facility's borrowing rate would result in a **$1.7 million change in income before taxes**, assuming the outstanding balance remains unchanged[200](index=200&type=chunk) [Item 4. Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2022, concluding they are effective. There were no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of March 31, 2022[202](index=202&type=chunk) - No material changes occurred in internal control over financial reporting during the fiscal quarter[203](index=203&type=chunk) [PART II – OTHER INFORMATION](index=57&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and exhibits, providing additional disclosures beyond the financial statements [Item 1. Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, which are not expected to have a material adverse effect on its financial statements. The company self-insures against certain risks and maintains insurance coverage, believing its reserves and insurance provide reasonable coverage for known claims - The company is party to various legal proceedings arising in the ordinary course of business, which are not expected to materially affect financial statements[206](index=206&type=chunk) - The company self-insures against certain risks and carries insurance, believing its reserves and insurance provide reasonable coverage for claims[206](index=206&type=chunk) [Item 1A. Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021. Investors are advised to carefully consider those factors, as well as any additional unknown or immaterial risks, which could adversely affect the business - No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021[207](index=207&type=chunk) - Investors should carefully consider the factors discussed in the Annual Report on Form 10-K, as well as additional unknown or immaterial risks[207](index=207&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2022, the company repurchased 490,000 shares of common stock in March at an average price of $53.08, totaling $26.010 million. Additionally, 4,185 shares were surrendered by employees to pay taxes on restricted stock awards | Metric | Q1 2022 (Shares) | Average Price Paid Per Share | Dollar Value (in thousands) | | :----- | :--------------- | :--------------------------- | :-------------------------- | | Shares repurchased (March 2022) | 490,000 | $53.08 | $26,010 | | Shares surrendered by employees (Feb 2022) | 4,185 | $49.46 | N/A | - At March 31, 2022, **$57.1 million** remained authorized for repurchases under the share repurchase program[124](index=124&type=chunk)[165](index=165&type=chunk) [Item 3. Defaults Upon Senior Securities](index=57&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reported period [Item 4. Mine Safety Disclosures](index=57&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reported period [Item 5. Other Information](index=57&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the company for the reported period [Item 6. Exhibits](index=57&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications of periodic financial reports (Sarbanes-Oxley Act Sections 302 and 906) and XBRL-related documents - Exhibits include certifications of periodic financial reports by Melvin C. Payne and C. Benjamin Brink in satisfaction of Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[218](index=218&type=chunk) - XBRL Instance Document and Taxonomy Extension Schema, Calculation, Label, Presentation, and Definition Linkbase Documents are filed[218](index=218&type=chunk)