Core Insights - The article discusses the investment potential of a specific company, highlighting its strong market position and growth prospects [1][2] Company Analysis - The company has demonstrated robust financial performance, with significant revenue growth reported in the latest quarter [1] - Key metrics indicate an increase in market share, suggesting competitive advantages over peers [1] - The management team has outlined strategic initiatives aimed at further enhancing operational efficiency and profitability [1] Industry Context - The industry is experiencing a favorable environment, driven by increasing demand and technological advancements [1] - Competitive dynamics within the industry are shifting, with emerging players posing new challenges [1] - Regulatory changes are anticipated, which may impact operational frameworks and market strategies [1]

Core Viewpoint - Carriage Services (CSV) shares have shown a 1.2% increase over the past four weeks, closing at $47.49, with analysts suggesting a potential upside of 27% based on a mean price target of $60.33 [1] Price Targets and Analyst Consensus - The average price target for CSV ranges from a low of $56.00 to a high of $65.00, with a standard deviation of $4.51, indicating a relatively tight clustering of estimates [2] - The lowest estimate suggests a 17.9% increase from the current price, while the highest estimate indicates a 36.9% upside [2] - A low standard deviation signifies strong agreement among analysts regarding the stock's price movement [9] Earnings Estimates and Market Sentiment - Analysts have shown strong agreement in revising earnings per share (EPS) estimates higher for CSV, which correlates with potential stock price increases [11] - The Zacks Consensus Estimate for the current year has risen by 3.3% over the past month, with two estimates increasing and no negative revisions [12] - CSV holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate factors, indicating strong potential for upside [13] Caution on Price Targets - While price targets are often sought after, they can mislead investors, and reliance solely on them may not yield favorable returns [3][10] - Analysts may set overly optimistic price targets due to business incentives, which can inflate expectations [8]

PART I [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements and notes, detailing financial position and performance [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time, reflecting changes over the period Unaudited Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | Percentage Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------------------ | | Total assets | $1,275,714 | $1,279,580 | $(3,866) | -0.30% | | Total liabilities | $1,040,294 | $1,071,030 | $(30,736) | -2.87% | | Total stockholders' equity | $235,420 | $208,550 | $26,870 | 12.88% | | Cash and cash equivalents | $1,398 | $1,165 | $233 | 20.00% | | Accounts receivable, net | $34,830 | $30,193 | $4,637 | 15.36% | | Goodwill | $410,703 | $414,859 | $(4,156) | -1.00% | | Credit facility | $111,458 | $135,382 | $(23,924) | -17.67% | - Total assets decreased slightly by **0.30%** to **$1,275,714 thousand** at June 30, 2025, from **$1,279,580 thousand** at December 31, 2024, primarily influenced by a decrease in goodwill due to divestitures[10](index=10&type=chunk)[42](index=42&type=chunk) - Total liabilities saw a notable decrease of **2.87%** to **$1,040,294 thousand**, driven by a significant reduction in the credit facility balance[10](index=10&type=chunk) - Stockholders' equity increased by **12.88%** to **$235,420 thousand**, reflecting improved financial health and retained earnings[10](index=10&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20ended%20June%2030%2C%202025%20and%202024) This statement details the company's revenues, expenses, and net income over specific periods, illustrating profitability trends Unaudited Condensed Consolidated Statements of Operations (in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $102,147 | $102,318 | $209,216 | $205,811 | | Gross profit | $35,935 | $36,993 | $73,777 | $74,255 | | Operating income | $23,998 | $18,369 | $55,562 | $37,846 | | Net income | $11,739 | $6,259 | $32,665 | $13,232 | | Basic EPS | $0.75 | $0.41 | $2.09 | $0.87 | | Diluted EPS | $0.74 | $0.40 | $2.07 | $0.85 | | Dividends per share | $0.1125 | $0.1125 | $0.2250 | $0.2250 | - Net income for the three months ended June 30, 2025, increased by **$5.5 million** to **$11,739 thousand**, compared to **$6,259 thousand** in the prior year, driven by decreased general, administrative, and other expenses and lower interest expense[13](index=13&type=chunk)[150](index=150&type=chunk) - For the six months ended June 30, 2025, net income surged by **$19.4 million** to **$32,665 thousand**, primarily due to a **$10.9 million** decrease in general, administrative, and other expenses (including one-time costs in the prior year), a **$9.4 million** increase in gain on divestitures, and a **$2.7 million** decrease in interest expense[13](index=13&type=chunk)[153](index=153&type=chunk) - Basic EPS increased significantly to **$0.75** for the three months and **$2.09** for the six months ended June 30, 2025, from **$0.41** and **$0.87** respectively in the prior year, reflecting improved profitability[13](index=13&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20ended%20June%2030%2C%202025%20and%202024) This statement categorizes cash inflows and outflows from operating, investing, and financing activities, showing liquidity changes Cash Flow Activity (in thousands) | Cash Flow Activity | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Net cash provided by operating activities | $21,877 | $21,860 | $17 | | Net cash provided by investing activities | $12,813 | $4,392 | $8,421 | | Net cash used in financing activities | $(34,457) | $(26,272) | $(8,185) | | Net increase (decrease) in cash and cash equivalents | $233 | $(20) | $253 | | Cash and cash equivalents at end of period | $1,398 | $1,503 | $(105) | - Net cash provided by operating activities remained stable at approximately **$21.9 million** for both periods[16](index=16&type=chunk)[141](index=141&type=chunk) - Net cash provided by investing activities increased significantly by **$8.4 million** to **$12.8 million**, primarily due to higher proceeds from divestitures and sale of other assets[16](index=16&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) - Net cash used in financing activities increased by **$8.2 million** to **$34.5 million**, mainly due to higher net payments on employee equity plans and credit facility[16](index=16&type=chunk)[146](index=146&type=chunk) [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20for%20the%20Three%20and%20Six%20Months%20ended%20June%2030%2C%202025%20and%202024) This statement tracks changes in equity components, including net income, dividends, and stock-based compensation, over time Total Stockholders' Equity (in thousands) | Metric | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :------------------------------------ | :------------ | :---------------- | :------------ | | Total Stockholders' Equity (Six months) | $235,420 | $208,550 | $187,887 | | Net income (Six months) | $32,665 | N/A | $13,232 | | Dividends on common stock (Six months) | $(3,488) | N/A | $(3,390) | | Stock-based compensation expense (Six months) | $3,705 | N/A | $2,407 | - Total stockholders' equity increased to **$235,420 thousand** at June 30, 2025, from **$208,550 thousand** at December 31, 2024, primarily driven by net income of **$32,665 thousand**[18](index=18&type=chunk) - Stock-based compensation expense for the six months ended June 30, 2025, was **$3,705 thousand**, an increase from **$2,407 thousand** in the prior year[18](index=18

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $102.1 million, essentially flat compared to the same quarter last year [5] - GAAP net income for the quarter was $11.7 million, up 85.7% from $6.3 million in the same quarter last year [8] - GAAP diluted EPS increased to $0.74 compared to $0.40, an 85% increase year-over-year [8] - Adjusted consolidated EBITDA for Q2 was $32.3 million, down 1% from the prior year [9] - Adjusted diluted EPS for Q2 was $0.74, a 17.5% increase compared to $0.63 in the prior year quarter [10] Business Line Data and Key Metrics Changes - Total funeral operating revenue grew 1.4% to $59.6 million, driven by a 0.5% increase in calls [6] - Cemetery operating revenue was $33.5 million, a slight decrease of 0.6% from the same period last year [7] - Financial revenue rose 18.8% to $8.2 million, primarily due to a 96.2% increase in preneed funeral commission income [7] Market Data and Key Metrics Changes - Year-to-date cemetery revenue is up 2.2%, below the year-over-year growth range of 10% to 20% [7] - The company anticipates a return to a normalized volume growth rate of 1% to 2% in 2026 [6] Company Strategy and Development Direction - The company is under contract to acquire new businesses, expected to close in Q3 2025, which will add significant revenue [11] - The focus is on high-quality acquisitions to add shareholder value, with a commitment to prudent capital management [12] - The company is rolling out a casket core line and enhancing service delivery through a "passion for service" program [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy and execution, noting a return to growth mode after disciplined capital management [11] - The company is monitoring broader economic trends and reaffirming its commitment to capital stewardship while pursuing strategic acquisitions [12] - Management expects a strong second half of the year, with updated guidance reflecting the impact of acquisitions and divestitures [22] Other Important Information - Cash from operating activities for the quarter totaled $8.1 million, an increase of $2.2 million from the same period last year [19] - The leverage ratio improved to 4.2 times compared to 4.6 times at the end of 2024 [20] - Overhead spending was reduced to 12.2% of revenue, down from 20% in the prior year quarter [20] Q&A Session Summary Question: Can you provide details on the M&A transactions? - Management confirmed that multiple transactions are involved, each with multiple businesses [24] Question: What is the pricing outlook for the acquisitions? - Pricing is in line with the company's valuation philosophy, generally in high single digits on multiples for premium businesses [25] Question: Can you break down the revenue guidance changes? - The increase in revenue guidance is attributed to acquisitions, divestitures, and organic business performance [52] Question: What are the expectations for cemetery growth in the back half of the year? - Management expects to return to over 10% growth, contingent on resolving inventory delays [55] Question: What is the outlook for future M&A activity? - The pipeline for acquisitions is strong, with ongoing conversations with owners of premium businesses [58]

Group 1: Earnings Performance - Carriage Services reported quarterly earnings of $0.74 per share, exceeding the Zacks Consensus Estimate of $0.72 per share, and up from $0.63 per share a year ago [1] - The earnings surprise for this quarter was +2.78%, following a previous quarter where the company had a surprise of +20% [2] - Over the last four quarters, Carriage Services has consistently surpassed consensus EPS estimates [2] Group 2: Revenue Performance - The company posted revenues of $102.15 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.67%, but slightly down from $102.32 million year-over-year [3] - Carriage Services has also topped consensus revenue estimates in four consecutive quarters [3] Group 3: Stock Performance and Outlook - Carriage Services shares have increased approximately 14.2% since the beginning of the year, outperforming the S&P 500's gain of 7.1% [4] - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.73 for the coming quarter and $3.16 for the current fiscal year [5][8] - The Zacks Rank for Carriage Services is currently 3 (Hold), indicating expected performance in line with the market in the near future [7] Group 4: Industry Context - The Funeral Services industry, to which Carriage Services belongs, is currently ranked in the top 16% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9]

[Executive Summary & Company Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Company%20Highlights) Carriage Services achieved significant Q2 2025 financial growth, driven by strong net income and EPS, strategic acquisitions, and reduced leverage, leading to an upward revision of its full-year outlook [Second Quarter 2025 Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Overview) Carriage Services achieved significant financial growth in Q2 2025, with GAAP net income and diluted EPS increasing substantially, while total revenue remained stable through organic growth and reduced leverage Key Financial Metrics for Q2 2025 (Year-over-Year) | Metric | Q2 2025 | Q2 2024 | Growth Rate | Change ($M) | Notes | | :--------------------- | :------- | :------- | :---------- | :---------- | :---- | | GAAP Net Income | - | - | 85.7% | $5.5 | [4](index=4&type=chunk)[5](index=5&type=chunk) | | GAAP Diluted EPS | $0.74 | $0.40 | 85.0% | $0.34 | [4](index=4&type=chunk)[5](index=5&type=chunk) | | Adjusted Diluted EPS | $0.74 | $0.63 | 17.5% | $0.11 | [4](index=4&type=chunk)[5](index=5&type=chunk) | | Total Revenue (Excluding Divestitures) | - | - | 1.7% | $1.8 | [4](index=4&type=chunk) | - The company's leverage ratio decreased from 4.6x in the prior year to **4.2x**, with **$7.1 million** in credit facility debt repaid during the second quarter[5](index=5&type=chunk) [Strategic Initiatives and Outlook Update](index=1&type=section&id=Strategic%20Initiatives%20and%20Outlook%20Update) After two years of debt reduction, the company is resuming its long-term strategy of increasing shareholder value through high-quality acquisitions and has updated its full-year 2025 guidance - The company has signed contracts to acquire new businesses, expected to close this quarter, which collectively served over **2,600 families** and generated over **$15 million** in revenue last year[4](index=4&type=chunk)[5](index=5&type=chunk) Revised Full-Year 2025 Guidance | Metric | Revised 2025 Outlook | Previous 2025 Outlook | | :--------------------- | :------------------- | :------------------- | | Total Revenue ($M) | $410 - $420 | $400 - $410 | | Adjusted Consolidated EBITDA ($M) | $129 - $134 | $128 - $133 | | Adjusted Diluted EPS | $3.15 - $3.35 | $3.10 - $3.30 | | Adjusted Free Cash Flow ($M) | $40 - $50 | $40 - $50 | - The revised outlook incorporates the anticipated revenue impact from acquisitions and divestitures of certain non-core assets[8](index=8&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) This section details the company's Q2 and H1 2025 GAAP and non-GAAP financial metrics, including operational data for funeral and cemetery businesses, and provides a revised full-year outlook [Key Financial Highlights](index=2&type=section&id=Key%20Financial%20Highlights) This section details the company's GAAP and non-GAAP financial metrics and key operational data for both cemetery and funeral businesses, reflecting changes in revenue, profit, and operational efficiency [Three Months Ended June 30, 2025](index=2&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025) In Q2 2025, net income significantly increased due to reduced general and administrative expenses and interest expenses, despite a slight decrease in total revenue, while average contract revenue for funeral services improved Q2 2025 Financial and Operational Metrics | Metric | Q2 2025 | Q2 2024 | Change ($M) | Change Rate | | :---------------------------------- | :------- | :------- | :---------- | :---------- | | Total Revenue ($M) | $102.1 | $102.3 | -$0.2 | -0.2% | | Operating Income ($M) | $24.0 | $18.4 | $5.6 | 30.4% | | Net Income ($M) | $11.7 | $6.3 | $5.4 | 85.7% | | Diluted EPS | $0.74 | $0.40 | $0.34 | 85.0% | | Pre-Need Cemetery Property Sales Volume | 4,016 | 4,179 | -163 | -3.9% | | Average Price Per Pre-Need Cemetery Property | $5,871 | $5,908 | -$37 | -0.6% | | Funeral Contract Volume | 10,589 | 10,679 | -90 | -0.8% | | Average Revenue Per Funeral Contract | $5,626 | $5,549 | $77 | 1.4% | - Net income growth was primarily driven by a **$6.7 million** reduction in general, administrative, and other expenses and a **$1.3 million** decrease in interest expense, partially offset by a **$1.1 million** reduction in business gross profit contribution and a **$0.9 million** increase in income tax expense[7](index=7&type=chunk) [Six Months Ended June 30, 2025](index=2&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025) In H1 2025, both total and net income increased, with the significant rise in net income primarily attributed to gains from divestitures and real estate sales, alongside reduced administrative expenses H1 2025 Financial and Operational Metrics | Metric | H1 2025 | H1 2024 | Change ($M) | Change Rate | | :---------------------------------- | :------------- | :------------- | :---------- | :---------- | | Total Revenue ($M) | $209.2 | $205.8 | $3.4 | 1.7% | | Operating Income ($M) | $55.6 | $37.8 | $17.8 | 47.1% | | Net Income ($M) | $32.7 | $13.2 | $19.5 | 147.7% | | Diluted EPS | $2.07 | $0.85 | $1.22 | 143.5% | | Pre-Need Cemetery Property Sales Volume | 7,252 | 7,616 | -364 | -4.8% | | Average Price Per Pre-Need Cemetery Property | $5,669 | $5,430 | $239 | 4.4% | | Funeral Contract Volume | 22,761 | 22,770 | -9 | 0.0% | | Average Revenue Per Funeral Contract | $5,671 | $5,565 | $106 | 1.9% | - Net income growth was primarily driven by a **$9.3 million** increase in gains from divestitures and real estate sales, a **$10.9 million** reduction in general, administrative, and other expenses, and a **$2.7 million** decrease in interest expense, partially offset by a **$2.5 million** increase in income tax expense and a **$0.5 million** reduction in business gross profit contribution[13](index=13&type=chunk) [Revised Full-Year 2025 Outlook](index=3&type=section&id=Revised%20Full-Year%202025%20Outlook) The company has raised its full-year 2025 guidance for total revenue, adjusted consolidated EBITDA, and adjusted diluted EPS, reflecting current performance trends and the impact of acquisitions and divestitures in the second half Revised Full-Year 2025 Guidance | Metric | Revised 2025 Outlook | Previous 2025 Outlook | | :--------------------- | :------------------- | :------------------- | | Total Revenue ($M) | $410 - $420 | $400 - $410 | | Adjusted Consolidated EBITDA ($M) | $129 - $134 | $128 - $133 | | Adjusted Diluted EPS | $3.15 - $3.35 | $3.10 - $3.30 | | Adjusted Free Cash Flow ($M) | $40 - $50 | $40 - $50 | - Adjusted Consolidated EBITDA, Adjusted Diluted EPS, and Adjusted Free Cash Flow are non-GAAP financial measures, with their outlook excluding special items such as gains/losses on divestitures, acquisition costs, severance, and goodwill impairment[9](index=9&type=chunk) [Condensed Financial Statements](index=5&type=section&id=Condensed%20Financial%20Statements) This section presents the company's condensed operating and financial trends, balance sheet, statements of operations, and cash flows for Q2 and H1 2025, highlighting key financial positions and performance [Condensed Operating and Financial Trend Report](index=5&type=section&id=Condensed%20Operating%20and%20Financial%20Trend%20Report) This report provides detailed revenue and EBITDA data by business segment, along with trends in other expenses and net income, illustrating the profitability of each segment and overall financial performance Q2 and H1 2025 Operating and Financial Trends | Metric | Q2 2025 ($K) | Q2 2024 ($K) | H1 2025 ($K) | H1 2024 ($K) | | :----------------------- | :----------- | :----------- | :----------- | :----------- | | Funeral Business Revenue | $59,572 | $58,753 | $128,662 | $124,801 | | Cemetery Business Revenue | $33,450 | $33,644 | $61,388 | $60,049 | | Financial Revenue | $8,224 | $6,921 | $15,580 | $13,664 | | Total Revenue | $102,147 | $102,318 | $209,216 | $205,811 | | Funeral Business EBITDA | $22,030 | $23,220 | $51,570 | $50,569 | | Cemetery Business EBITDA | $15,003 | $16,712 | $26,368 | $28,247 | | Consolidated EBITDA | $32,262 | $26,778 | $65,210 | $53,749 | | Net Income | $11,739 | $6,259 | $32,665 | $13,232 | [Condensed Consolidated Balance Sheet](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) As of June 30, 2025, the company's total assets slightly decreased, while total shareholders' equity increased, reflecting changes in its asset and liability structure Condensed Consolidated Balance Sheet (As of Date) | Metric | June 30, 2025 ($K) | December 31, 2024 ($K) | | :--------------------- | :----------------- | :--------------------- | | Total Assets | $1,275,714 | $1,279,580 | | Total Liabilities | $1,040,294 | $1,071,030 | | Total Shareholders' Equity | $235,420 | $208,550 | [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show increased service revenue but decreased property and merchandise revenue in Q2 and H1 2025, with operating and net income significantly growing due to corporate cost and expense control despite a slight reduction in gross profit Consolidated Statements of Operations Key Data | Metric | Q2 2025 ($K) | Q2 2024 ($K) | H1 2025 ($K) | H1 2024 ($K) | | :--------------------- | :----------- | :----------- | :----------- | :----------- | | Service Revenue | $46,510 | $44,433 | $99,520 | $94,132 | | Property and Merchandise Revenue | $46,513 | $49,590 | $92,099 | $95,092 | | Total Revenue | $102,147 | $102,318 | $209,216 | $205,811 | | Gross Profit | $35,935 | $36,993 | $73,777 | $74,255 | | Operating Income | $23,998 | $18,369 | $55,562 | $37,846 | | Net Income | $11,739 | $6,259 | $32,665 | $13,232 | | Diluted EPS | $0.74 | $0.40 | $2.07 | $0.85 | | Dividends Per Share | $0.1125 | $0.1125 | $0.2250 | $0.2250 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In H1 2025, cash flow from operating activities remained stable, while cash flow from investing activities significantly increased due to proceeds from divestitures and asset sales, with increased financing outflows leading to a slight rise in period-end cash and cash equivalents Consolidated Statements of Cash Flows Key Data (Half-Year) | Metric | H1 2025 ($K) | H1 2024 ($K) | | :------------------------- | :----------- | :----------- | | Net Cash Provided by Operating Activities | $21,877 | $21,860 | | Net Cash Provided by Investing Activities | $12,813 | $4,392 | | Net Cash Used in Financing Activities | -$34,457 | -$26,272 | | Net Increase (Decrease) in Cash and Cash Equivalents | $233 | -$20 | | Cash and Cash Equivalents at End of Period | $1,398 | $1,503 | - The increase in cash flow from investing activities was primarily due to proceeds from divestitures and sales of other assets, which rose from **$11,174 thousand** in H1 2024 to **$18,822 thousand** in H1 2025[22](index=22&type=chunk) [Non-GAAP Financial Measures](index=11&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles the company's non-GAAP financial measures, including various EBITDA and free cash flow metrics, to provide a clearer view of core operational performance [Definitions of Non-GAAP Measures](index=11&type=section&id=Definitions%20of%20Non-GAAP%20Measures) This section provides detailed definitions of the non-GAAP financial measures used by the company to assess financial performance, aiming to offer investors additional information and enhance comparability with historical performance and industry peers - Non-GAAP financial measures include special items, adjusted net income, consolidated EBITDA, adjusted consolidated EBITDA, adjusted free cash flow, funeral business EBITDA, and cemetery business EBITDA, designed to exclude expenses and gains not directly reflecting core or normal business operations[23](index=23&type=chunk)[24](index=24&type=chunk)[33](index=33&type=chunk) - The company considers Adjusted Consolidated EBITDA a supplemental measure of operating performance, aiding in the analysis and comparison of continuing operations by excluding items that may not be representative of ongoing performance[30](index=30&type=chunk) - Funeral Business EBITDA and Cemetery Business EBITDA aim to highlight the cash profitability and controllable margins of each business segment, excluding regional and unallocated costs determined by the Houston Support Center[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) [Reconciliation of Non-GAAP Financial Measures](index=13&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section provides detailed tables reconciling non-GAAP financial measures to the most directly comparable GAAP measures, ensuring transparency and traceability in financial reporting Reconciliation of Operating Income to Consolidated EBITDA and Adjusted Consolidated EBITDA | Metric | Q2 2025 ($K) | Q2 2024 ($K) | H1 2025 ($K) | H1 2024 ($K) | | :------------------------- | :----------- | :----------- | :----------- | :----------- | | Operating Income | $23,998 | $18,369 | $55,562 | $37,846 | | Depreciation and Amortization | $6,173 | $6,204 | $11,574 | $11,664 | | Non-Cash Share-Based Compensation | $2,092 | $2,182 | $3,845 | $2,671 | | Consolidated EBITDA | $32,262 | $26,778 | $65,210 | $53,749 | | Adjusted Consolidated EBITDA | $32,262 | $32,604 | $65,210 | $66,205 | Special Items Affecting Adjusted Net Income | Special Item | Q2 2025 ($K) | Q2 2024 ($K) | H1 2025 ($K) | H1 2024 ($K) | | :--------------------------------- | :----------- | :----------- | :----------- | :----------- | | Severance and Termination Costs | $0 | $771 | $0 | $6,228 | | Net (Gain) Loss on Divestitures and Real Estate Sales | $12 | $8 | -$7,913 | $1,509 | | Other Special Items | $0 | $5,055 | $0 | $6,228 | | Total | $12 | $5,417 | -$8,217 | $12,212 | Reconciliation of Operating Cash Flow to Adjusted Free Cash Flow | Metric | Q2 2025 ($K) | Q2 2024 ($K) | H1 2025 ($K) | H1 2024 ($K) | | :------------------------- | :----------- | :----------- | :----------- | :----------- | | Cash Flow from Operating Activities | $8,085 | $2,157 | $21,877 | $21,860 | | Capital Expenditures | -$2,846 | -$3,545 | -$6,009 | -$7,096 | | Free Cash Flow | $5,239 | -$1,388 | $15,868 | $14,764 | | Adjusted Free Cash Flow | $6,900 | -$339 | $20,253 | $18,197 | [Additional Information](index=3&type=section&id=Additional%20Information) This section provides details on the upcoming conference call, investor relations contact, and a cautionary statement regarding forward-looking statements and associated risks [Conference Call and Investor Relations Contact](index=3&type=section&id=Conference%20Call%20and%20Investor%20Relations%20Contact) The company has scheduled a conference call for August 7, 2025, to discuss Q2 results and outlook, and has provided investor relations contact information - A conference call is scheduled for **Thursday, August 7, 2025, at 8:00 AM Central Time**, accessible by dialing **888-254-3590** (Conference ID - **6237081**)[11](index=11&type=chunk) - Carriage Services is a leading provider of funeral and cemetery services and merchandise in the United States, operating **159 funeral homes** and **28 cemeteries** as of June 30, 2025[12](index=12&type=chunk) - Investor relations inquiries can be directed via email to **InvestorRelations@carriageservices.com**[12](index=12&type=chunk) [Cautionary Statement on Forward-Looking Statements](index=16&type=section&id=Cautionary%20Statement%20on%20Forward-Looking%20Statements) This press release contains forward-looking statements regarding future performance, strategy, economic conditions, and market performance, cautioning investors about significant risks and uncertainties that could cause actual results to differ materially from expectations - Forward-looking statements include, but are not limited to, projections for financial items such as earnings, revenue, cash flow, return on invested capital, capital allocation, debt levels, market share growth, and cost inflation[42](index=42&type=chunk) - Key risk factors include the ability to retain skilled personnel, competitive impacts, changes in market death rates, shifts in consumer preferences, pre-need sales capabilities, trust fund investment performance, interest rate fluctuations, inflationary effects, financing capabilities, debt levels, tax law changes, litigation, industry consolidation, successful integration of acquisitions and divestitures, information technology disruptions, and acts of war or terrorism[42](index=42&type=chunk)[43](index=43&type=chunk) - Investors should review the 'Risk Factors' disclosed in the company's Form 10-K annual report and other SEC filings, and should not place undue reliance on forward-looking statements[44](index=44&type=chunk)

Core Viewpoint - Carriage Services, Inc. reported strong financial performance for the second quarter of 2025, with significant growth in net income and earnings per share, despite challenges from divestitures. The company is poised to return to a growth trajectory through strategic acquisitions [3][10]. Financial Highlights - GAAP net income increased by $5.5 million, or 85.7%, compared to the same quarter last year, reaching $11.7 million [4][6]. - GAAP diluted EPS was $0.74, reflecting an 85.0% increase from $0.40 in the prior year quarter [4][6]. - Total revenue for the second quarter was $102.1 million, slightly down from $102.3 million in the previous year, but flat due to organic growth strategies [4][10]. - Operating income rose to $24.0 million, up from $18.4 million in the prior year, with an operating income margin of 23.5% [4][6]. - Cash provided by operating activities was $8.1 million, compared to $2.2 million in the prior year [4][6]. Operational Metrics - Total funeral consolidated revenue increased by $1.7 million, or 2.6%, driven by a 1.4% increase in average revenue per funeral contract [6][10]. - The company sold 4,016 preneed interment rights in the quarter, with an average price of $5,871 per right [4][7]. - The leverage ratio improved to 4.2x from 4.6x year-over-year, as the company paid down $7.1 million of debt during the quarter [6][10]. Revised Outlook - The company updated its full-year guidance to reflect current performance trends and the anticipated impact of acquisitions and divestitures [3][10]. - Total revenue for the full year is projected to be between $410 million and $420 million, with adjusted consolidated EBITDA expected to be between $129 million and $134 million [11][10].

Group 1 - Carriage Services, Inc. plans to release its second quarter 2025 results on August 6, 2025, after market close [1] - A conference call to discuss the earnings will be held on August 7, 2025, at 8:00 a.m. Central Time [2] - The company operates 159 funeral homes across 25 states and 28 cemeteries in 10 states as of June 30, 2025 [3] Group 2 - The conference call will be accessible via phone or live webcast [2] - An audio archive of the call will be available on the company's website after the event [3] - Carriage Services is recognized as a leading provider of funeral and cemetery services and merchandise in the United States [3]

Core Viewpoint - Carriage Services (CSV) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook driven by rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system emphasizes the importance of earnings estimate revisions, which are strongly correlated with near-term stock price movements [4][6]. - For the fiscal year ending December 2025, Carriage Services is projected to earn $3.21 per share, reflecting a 21.1% increase from the previous year, with a 13.8% rise in the Zacks Consensus Estimate over the past three months [8]. Institutional Investor Influence - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [4][5]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - Carriage Services' upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited Consolidated Financial Statements for the quarter ended March 31, 2025, covering Balance Sheets, Statements of Operations, Cash Flows, and Stockholders' Equity, with accompanying notes Consolidated Statement of Operations Highlights (Q1 2025 vs Q1 2024) | Financial Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $107,069 | $103,493 | +3.4% | | **Gross Profit** | $37,842 | $37,262 | +1.6% | | **Operating Income** | $31,564 | $19,477 | +62.1% | | **Net Income** | $20,926 | $6,973 | +200.1% | | **Diluted EPS** | $1.34 | $0.45 | +197.8% | Consolidated Balance Sheet Highlights | Balance Sheet Item | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $49,900 | $44,536 | | **Total Assets** | **$1,275,229** | **$1,279,580** | | Total Current Liabilities | $52,511 | $58,041 | | **Total Liabilities** | **$1,052,167** | **$1,071,030** | | **Total Stockholders' Equity** | **$223,062** | **$208,550** | Consolidated Statement of Cash Flows Highlights (Q1 2025 vs Q1 2024) | Cash Flow Activity | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $13,792 | $19,703 | | Net Cash from Investing Activities | $15,497 | $7,372 | | Net Cash from Financing Activities | ($25,811) | ($26,909) | [Condensed Notes to Consolidated Financial Statements](index=8&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) These notes detail accounting policies and financial statement line items, covering business structure, divestitures, goodwill, debt, lease obligations, and segment reporting - The company operates **160 funeral homes** and **28 cemeteries**, with Funeral Home Operations accounting for approximately **70% of total revenue** and Cemetery Operations for about **30%**[20](index=20&type=chunk) - In Q1 2025, the company sold two funeral homes and three cemeteries for an aggregate of **$15.8 million**, resulting in a net gain of **$5.9 million**[46](index=46&type=chunk) - Goodwill decreased from **$414.9 million** at year-end 2024 to **$410.7 million** at March 31, 2025, primarily due to a **$4.2 million** allocation of goodwill to divested businesses[44](index=44&type=chunk) Debt and Lease Obligations (March 31, 2025) | Obligation Type | Carrying Value (in thousands) | | :--- | :--- | | Credit Facility | $118,470 | | Senior Notes | $396,774 | | Operating Lease Liabilities | $16,275 | | Finance Lease Liabilities | $9,942 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial performance, highlighting revenue and net income growth, key company developments, liquidity, capital resources, and segment operational results, attributing success to pricing strategy and cost management [Overview & Company Developments](index=37&type=section&id=Overview%20%26%20Company%20Developments) This section outlines significant corporate events in early 2025, including new executive appointments and the continuation of the company's divestiture program - Effective January 2, 2025, **John Enwright** was appointed as the company's new **Senior Vice President, Chief Financial Officer, and Treasurer**[153](index=153&type=chunk) - On February 24, 2025, **Donald D. Patteson, Jr.** was elected **Non-Executive Chair of the Board**, and **Dr. Edmondo Robinson** was elected **Chair of the Audit Committee**[154](index=154&type=chunk)[155](index=155&type=chunk) - During Q1 2025, the company sold two funeral homes and three cemeteries for **$15.8 million**, resulting in a **$5.9 million gain**, and sold additional real property for **$2.9 million**, resulting in a **$2.0 million gain**[156](index=156&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily from operations and its credit facility, with Q1 2025 cash from operations decreasing due to working capital changes, and capital priorities focused on debt repayment, dividends, and internal growth - Cash provided by operating activities decreased to **$13.8 million** in Q1 2025 from **$19.7 million** in Q1 2024, mainly due to unfavorable working capital changes[169](index=169&type=chunk) - Net cash provided by investing activities was **$15.5 million**, driven by **$18.7 million** in proceeds from divestitures and asset sales[168](index=168&type=chunk)[170](index=170&type=chunk) - The company made net payments of **$17.1 million** on its Credit Facility, acquisition debt, and finance leases during Q1 2025[173](index=173&type=chunk) - As of March 31, 2025, the company had **$120.0 million** in outstanding borrowings and **$127.8 million** of availability under its Credit Facility[183](index=183&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) This section analyzes Q1 2025 segment performance, detailing revenue growth in Funeral Home and Cemetery segments, and attributing overall net income increase to divestiture gains and reduced G&A expenses Financial Highlights (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Total Revenue | $107,069 | $103,493 | | Funeral Contracts | 12,172 | 12,091 | | Avg. Revenue per Funeral Contract | $5,710 | $5,580 | | Preneed Interment Rights Sold | 3,236 | 3,437 | | Avg. Price per Preneed Interment Right | $5,419 | $4,849 | - Funeral Home operating revenue increased by **$3.0 million**, driven by a **2.3%** increase in average revenue per contract and a **0.7%** increase in volume[204](index=204&type=chunk) - Cemetery operating revenue increased by **$1.5 million**, driven by an **11.8%** increase in the average price per interment right sold, which offset a **5.8%** decrease in sales volume[208](index=208&type=chunk) - General, administrative and other expenses decreased by **$4.2 million**, primarily due to a **$4.3 million** decrease in salary and incentive costs related to a former executive's termination agreement in Q1 2024[215](index=215&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate fluctuations on variable-rate debt and market value changes in trust securities, with a 100 basis point rate change impacting income by $1.2 million, while fixed-rate Senior Notes mitigate some exposure - The company is primarily exposed to **interest rate risk** on its **Credit Facility** and **market value risk** on securities in its **trust funds**[221](index=221&type=chunk) - Assuming the outstanding balance on the Credit Facility remains unchanged, a **100 basis point (1%)** change in the borrowing rate would result in a **$1.2 million** change in income before taxes[225](index=225&type=chunk) - The **$400 million** Senior Notes bear a fixed interest rate of **4.25%**, so changes in market interest rates do not affect interest costs but do affect the notes' fair value, which was **$364.4 million** at March 31, 2025[226](index=226&type=chunk)[227](index=227&type=chunk) [Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of the end of the reporting period, the company's principal executive and financial officers concluded that disclosure controls and procedures were **effective**[229](index=229&type=chunk) - There were **no changes** in the company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[230](index=230&type=chunk) [PART II – OTHER INFORMATION](index=49&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various ordinary course legal proceedings, including two class action lawsuits, which are not expected to have a material adverse effect - The company is party to a number of legal proceedings from the ordinary course of business, which are **not expected to have a material adverse effect** on its financial statements[233](index=233&type=chunk) - **Two class action lawsuits** have been filed against the company and its subsidiaries in California: a wage and hour case (Denning v. Carriage) and a consumer case related to cemetery maintenance (Frost v. Rolling Hills)[235](index=235&type=chunk)[236](index=236&type=chunk) [Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) This section supplements existing risk factors by adding a specific risk concerning U.S. foreign trade policies, highlighting potential adverse effects from tariffs and trade barriers on costs and supply chain - A **supplemental risk factor** was added regarding changes in **U.S. foreign trade policies**, including **tariffs and trade barriers**[237](index=237&type=chunk)[238](index=238&type=chunk) - The company warns that such policies could lead to **inflationary pressures**, **increase the costs of goods** offered to customers, and **negatively impact the supply chain** for merchandise[238](index=238&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's Q1 2025 share repurchase activity, noting no repurchases under the public program and **$48.9 million** remaining authorized for future repurchases Share Repurchase Activity (Q1 2025) | Period | Total Shares Purchased | Average Price Paid ($) | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | Jan 2025 | 0 | $0.00 | 0 | | Feb 2025 | 170,726 | $40.00 | 0 | | Mar 2025 | 0 | $0.00 | 0 | - As of March 31, 2025, the company had **$48,898,769** remaining under its authorized share repurchase program[239](index=239&type=chunk) [Other Disclosures and Exhibits](index=50&type=section&id=Other%20Disclosures%20and%20Exhibits) This section confirms no defaults on senior securities, no mine safety disclosures, no Rule 10b5-1 trading arrangement changes by directors or officers, and refers to the Index of Exhibits - Item 3 (Defaults Upon Senior Securities) and Item 4 (Mine Safety Disclosures) are **not applicable**[240](index=240&type=chunk)[241](index=241&type=chunk) - During the fiscal quarter ended March 31, 2025, **no director or officer adopted or terminated any Rule 10b5-1 trading arrangements**[242](index=242&type=chunk)