Fears of a slowing economy have been gripping markets for a while now and it is unlikely that the Federal Reserve will go for a rate cut anytime soon. In fact, concerns have grown that the Fed could go for just one rate cut this year as it struggles to bring down inflation.A sharp jump in inflation has forced the Fed to maintain a cautious approach, with consumer confidence and sentiment plummeting to new lows.Given this situation, it would be safe to invest in consumer staples stocks, which are considered ...

Financial Market Conditions - The fair market value of trust funds may decline below estimated costs, potentially leading to charges against earnings for expected losses[91]. - Earnings from trust funds are influenced by financial market conditions, with declines potentially affecting current revenue and future cash flows[92]. - The financial condition of third-party insurance companies funding preneed contracts could impact the company's ability to collect proceeds, affecting financial condition and cash flows[95]. - Changes in tax laws, such as the Inflation Reduction Act, could have material effects on the company's financial condition, though current assessments indicate minimal impact[98]. - The company faces risks from litigation and claims that could result in significant monetary damages, impacting financial position and cash flows[99]. - Declines in death rates and changing consumer preferences could lead to decreased revenue, with unpredictable fluctuations in death rates affecting operations[100]. - The increasing trend of cremations may result in revenue decline due to lower average revenue per cremation compared to traditional burials[101]. - Compliance with extensive regulations in the funeral and cemetery industry may increase costs and decrease cash flows, impacting overall financial condition[105]. Debt and Financial Obligations - As of December 31, 2024, the company had a total debt of $542.5 million, which includes $400.0 million in Senior Notes and $137.0 million in outstanding borrowings under its Credit Facility[113]. - The company has $110.8 million available under its Credit Facility after accounting for $2.2 million in outstanding letters of credit[113]. - The company may incur additional indebtedness in the future, which could exacerbate existing leverage risks[117]. - The company has outstanding borrowings under the Credit Facility of $137.0 million as of December 31, 2024[265]. - A 100 basis points change in the borrowing rate would result in a change in income before taxes of $1.4 million[265]. - The Senior Notes bear interest at a fixed annual rate of 4.25% with a carrying value of $396.6 million and a fair value of $364.4 million as of December 31, 2024[266][267]. - A 0.25% change in interest rates causes an approximate 0.37% change in the value of fixed income securities[264]. - The company has not entered into interest rate hedging arrangements in the past but continually evaluates their cost and potential benefits[265]. - The company is primarily exposed to interest rate risk and changes in the values of securities associated with preneed and perpetual care trusts[261]. Operational Risks - The company is exposed to significant risks from economic conditions, including potential adverse effects from inflation, which could increase costs and reduce consumer discretionary spending[119][120]. - The company operates over 40% of its businesses in California, Texas, and Florida, areas prone to natural disasters, which could disrupt operations and increase costs[128]. - The company has implemented enhanced cybersecurity measures following a ransomware attack in January 2021, but remains vulnerable to future cyber threats[129][130]. - The company may face challenges in accessing funding sources due to adverse developments in the financial services industry, which could impact liquidity[122][123]. - The company has incurred costs to comply with increasing data privacy regulations, which may rise significantly due to evolving requirements[131][132]. Internal Controls and Risk Management - The effectiveness of internal control over financial reporting is crucial for accurate financial reporting and investor confidence[134]. - The company may require significant capital investments to remediate any failures in its information technology systems[133]. - The company does not enter into derivative or other financial instruments for speculative or trading purposes[262]. - Management is actively involved in monitoring exposure to market risk and developing appropriate risk management techniques[261].

Carriage Services, Inc. (NYSE:CSV) Q4 2024 Results Conference Call February 27, 2025 10:30 AM ET Company Participants Steve Metzger - President Carlos Quezada - Chief Executive Officer and Vice Chairman John Enwright - Chief Financial Officer Conference Call Participants Alex Paris - Barrington Research John Franzreb - Sidoti & Company Liam Burke - B. Riley George Kelly - ROTH Capital Partners Operator Good day, and thank you for standing by. Welcome to the Carriage Services Fourth Quarter 2024 Earnings Con ...

Core Insights - Carriage Services (CSV) reported quarterly earnings of $0.62 per share, exceeding the Zacks Consensus Estimate of $0.51 per share, but down from $0.77 per share a year ago [1] - The earnings surprise for this quarter was 21.57%, following a previous quarter where the company reported earnings of $0.64 per share against an expectation of $0.45, resulting in a surprise of 42.22% [2] - The company generated revenues of $97.7 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.91%, although this is a decrease from $98.83 million in the same quarter last year [3] Financial Performance - Over the last four quarters, Carriage Services has consistently surpassed consensus EPS estimates [2][3] - The current consensus EPS estimate for the upcoming quarter is $0.81, with expected revenues of $106.9 million, and for the current fiscal year, the estimate is $2.82 on revenues of $415.26 million [8] Market Position - Carriage Services shares have increased approximately 2.7% since the beginning of the year, outperforming the S&P 500's gain of 1.3% [4] - The Zacks Rank for Carriage Services is currently 3 (Hold), indicating that the stock is expected to perform in line with the market in the near future [7] Industry Context - The Funeral Services industry, to which Carriage Services belongs, is currently ranked in the bottom 10% of over 250 Zacks industries, suggesting potential challenges ahead [9]

Financial Performance - Total revenue for the year ended December 31, 2024, was $404.2 million, representing a growth of 5.7% compared to the prior year[6] - Adjusted consolidated EBITDA for the year increased by 11.5% to $126.2 million, while GAAP net income declined by 1.4% to $33.0 million[6] - The company achieved adjusted diluted EPS of $2.65, an increase of 21.0% over the prior year, despite a GAAP diluted EPS decline of 1.9% to $2.10[6] - Total revenue for 2023 was $382,520, a slight increase from $370,174 in 2022, representing a growth of 3.6%[14] - Total EBITDA for 2023 was $161,076, with an EBITDA margin of 42.1%, compared to $161,361 and 43.6% in 2022[14] - Adjusted net income for 2023 was $34,131, down from $41,086 in 2022, reflecting a decrease of 16.9%[14] - The company reported a GAAP diluted earnings per share of $2.14 for 2023, compared to $2.63 in 2022, a decline of 18.6%[14] - Operating income for the year ended December 31, 2024, was $81,799 million, slightly up from $80,979 million in 2023, representing a 1.0% increase[19] - Net income for the year ended December 31, 2024, was $32,953 million, a decrease of 1.4% from $33,413 million in 2023[19] Revenue and Sales - Preneed cemetery sales increased by 26.7%, contributing to a 3.1% rise in average revenue per funeral contract[6] - The average price per preneed interment right sold increased by 4.2% to $5,379[9] - The company experienced a 7.3% decrease in funeral contract volume for the year, offset by a 3.1% increase in average revenue per contract[9] - Cemetery operating revenue increased significantly to $101,150 in 2023, up 13.6% from $89,045 in 2022[14] - Total revenue for the year ended December 31, 2024, was $404,198 million, an increase of 5.7% compared to $382,520 million in 2023[19] Cash Flow and Liquidity - Cash provided by operating activities for the year was $52.0 million, down from $75.6 million in the prior year[7] - Cash flows from operating activities for the year ended December 31, 2024, were $51,996 million, a decrease of 31.2% compared to $75,590 million in 2023[22] - Cash provided by operating activities for Q4 2024 was $9,280,000, down from $13,741,000 in Q4 2023, leading to free cash flow of $6,981,000 compared to $11,591,000[48] - Adjusted free cash flow for the year 2024 was $51,471,000, compared to $55,107,000 in 2023[48] - Cash provided by operating activities for 2025 is estimated at $61,500,000, with cash used for capital expenditures at $21,000,000, resulting in a free cash flow of $40,500,000[54] Guidance and Projections - The 2025 guidance includes total revenue of $400-$410 million and adjusted consolidated EBITDA of $128-$133 million[6] - Expected divestitures of non-core assets are projected to reduce 2025 revenue and EBITDA by approximately $7.9 million and $2.3 million, respectively[10] - For the estimated year ended December 31, 2025, total revenue is expected to reach $405,000,000, with an adjusted consolidated EBITDA margin of 32.3%[53] - The estimated adjusted diluted earnings per share for 2025 is projected at $3.20, down from $3.50 in GAAP diluted earnings per share[53] - Adjusted free cash flow for 2025 is projected to be $45,000,000 after accounting for special items of $4,500,000[54] Assets and Liabilities - Total assets increased to $1,279,580 in December 2023, up from $1,268,052 in December 2022[17] - Total liabilities decreased to $1,071,030 in December 2023, down from $1,094,992 in December 2022[17] - The company’s cash and cash equivalents decreased to $1,165 in December 2023 from $1,523 in December 2022[17] Operational Metrics - Service revenue for Q4 2024 was $44,003 million, a decrease of 3.8% from $45,729 million in Q4 2023[19] - Gross profit for Q4 2024 was $33,645 million, down from $34,626 million in Q4 2023, reflecting a decrease of 2.8%[19] - Operating income for Q4 2024 was $21,056,000, a decrease from $23,921,000 in Q4 2023, while total revenue decreased to $97,700,000 from $98,834,000[37] - Consolidated EBITDA for Q4 2024 was $29,296,000, down from $31,225,000 in Q4 2023, with an adjusted consolidated EBITDA of $29,296,000 compared to $32,444,000 in the same period[37] - The operating income margin for Q4 2024 was 21.6%, down from 24.2% in Q4 2023, while the adjusted consolidated EBITDA margin decreased to 30.0% from 32.8%[37] Strategic Initiatives - The company plans to focus on market expansion and new product development in the upcoming year[14] - The company plans to continue reviewing strategic alternatives, which may impact future financial performance[45] - The company recognized a vendor incentive payment of $6,000,000 in 2023 for entering into a strategic partnership agreement[49] Risks and Uncertainties - The company acknowledges significant risks and uncertainties that could affect future results, including competition, economic conditions, and changes in consumer preferences[55] - Forward-looking statements include expectations regarding earnings, revenue, and capital allocation, with no assurance that future developments will align with current projections[55]

Company Highlights - Carriage Services, Inc. reported strong financial results for the full year 2024, exceeding expectations for adjusted EBITDA and EPS despite a decline in funeral home revenue in the fourth quarter [3][4] - The company raised its full-year guidance and achieved total revenue of $404.2 million, representing a growth of 5.7% over the prior year [7] - The decline in funeral service volume was attributed to a delayed flu season, impacting at-need funeral services [4][9] Financial Highlights - Total revenue for Q4 2024 was $97.7 million, a decrease from $98.8 million in Q4 2023, while total revenue for the year increased to $404.2 million from $382.5 million in 2023 [6][7] - Operating income for Q4 2024 was $21.1 million, down from $23.9 million in Q4 2023, with a net income of $9.9 million compared to $11.6 million in the same period last year [6][7] - Adjusted consolidated EBITDA for the year was $126.2 million, an increase of 11.5% from $113.2 million in 2023 [7][8] Operational Metrics - The company experienced a 26.7% increase in consolidated cemetery preneed sales and a 3.1% increase in average revenue per funeral contract [7] - The number of funeral contracts decreased to 10,620 in Q4 2024 from 11,211 in Q4 2023, while the average revenue per funeral contract increased to $5,524 from $5,471 [8][9] - The leverage ratio improved to 4.3x from 5.1x year-over-year, as the company paid down $42.1 million of debt [7] 2025 Outlook - The company anticipates total revenue for 2025 to be between $400 million and $410 million, with adjusted consolidated EBITDA expected to be between $128 million and $133 million [10] - The guidance reflects expected divestitures of non-core assets, which are projected to reduce revenue and EBITDA by approximately $7.9 million and $2.3 million, respectively [9][10] - The company aims to continue its organic growth initiatives in preneed sales while maintaining cost discipline [9]

Core Points - Carriage Services, Inc. plans to release its 2024 annual results on February 26, 2025, after market close [1] - A conference call to discuss the results is scheduled for February 27, 2025, at 9:30 a.m. Central Time, available via phone and webcast [2] - Carriage Services operates 162 funeral homes across 26 states and 31 cemeteries in 11 states, focusing on delivering premier experiences through innovation and elevated service [3]

Investment Philosophy - The investment philosophy focuses on identifying mispriced securities by understanding the drivers behind a company's financials, often revealed through a DCF model valuation [1] - This approach does not limit the investor to traditional value, dividend, or growth investing but considers all prospects of a stock to determine the risk-to-reward ratio [1] Market Focus - The investor has experience in US, Canadian, and European markets with a major focus on small-cap companies [1] Methodology - The methodology involves a comprehensive analysis of a company's financials and prospects to identify mispriced securities [1] - The DCF model valuation is a key tool in this investment strategy [1]

Market Overview - U.S. stock markets have experienced a significant rally in 2023, with the Dow, S&P 500, and Nasdaq Composite increasing by 13.8%, 26%, and 33.9% respectively [1] Stock Screening Criteria - Stocks with a percentage change in price over the last 12 weeks greater than 10% indicate momentum and reduce the risk of selecting stocks that may have gained attention due to overall market performance [4] - An average broker rating of 1 suggests strong optimism regarding the stock's future performance [5] - Stocks trading at more than 85% of their 52-week high indicate strong price resilience [6] - A percentage change in price over the last 4 weeks greater than zero shows recent upward movement [16] - Stocks must have a Zacks Rank of 1 (Strong Buy) to demonstrate a history of outperformance [17] - Stocks must be trading at a minimum price of $5 [18] Selected Stocks - **Private Bancorp of America Inc. (PBAM)**: Offers a range of banking products and services in California, including checking and savings accounts, loans, and online banking services. The stock price surged by 15% in the past four weeks, with expected earnings growth of 5.6% for next year [7][25] - **DXP Enterprises Inc. (DXPE)**: Provides innovative pumping solutions and supply-chain services. The stock price appreciated by 12% in the past four weeks, with expected earnings growth of 5.9% for next year [8][26] - **Qifu Technology Inc. (QFIN)**: Operates as a credit-tech platform in China, providing credit-driven services. The stock price advanced by 10.6% in the past four weeks, with expected earnings growth of 12% for next year [9][20] - **Carriage Services Inc. (CSV)**: A leading provider of death care services in the U.S., offering a range of funeral and burial services. The stock price gained 2.3% in the past four weeks, with expected earnings growth of 12.9% for next year [21][27] - **Universal Technical Institute Inc. (UTI)**: Provides education programs in transportation, skilled trades, and healthcare. The stock price was up 0.2% in the past four weeks, with an expected earnings growth rate of 29.3% for the current year [10][22]

Core Viewpoint - The article emphasizes the importance of identifying and sustaining trends in short-term investing, highlighting that successful trades require confirmation of strong fundamentals and positive earnings estimates to maintain momentum [1]. Group 1: Investment Strategy - Investors can utilize the "Recent Price Strength" screen to identify stocks that are trending upwards, supported by strong fundamentals and trading near their 52-week high-low range, indicating bullish sentiment [2]. - Carriage Services (CSV) is identified as a strong candidate for trend investors, having experienced a price increase of 23.3% over the past 12 weeks, reflecting investor confidence in its potential upside [3]. - A recent price increase of 3.2% over the last four weeks suggests that the upward trend for CSV is still intact, which is crucial for potential winners [4]. Group 2: Company Fundamentals - CSV is currently trading at 91.5% of its 52-week high-low range, indicating it may be on the verge of a breakout [5]. - The stock holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, which are key indicators of near-term price movements [5][6]. - An Average Broker Recommendation of 1 (Strong Buy) further confirms the stock's fundamental strength, reflecting high optimism from the brokerage community regarding its near-term performance [6]. Group 3: Market Performance - Historically, Zacks Rank 1 stocks have generated an average annual return of +25% since 1988, showcasing the effectiveness of the ranking system in identifying profitable investment opportunities [6]. - The article suggests that the price trend for CSV is unlikely to reverse soon, indicating a favorable outlook for investors [7].