Carriage Services(CSV)2025-02-28 21:58Financial 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 400.0 million in Senior Notes and 110.8 million available under its Credit Facility after accounting for 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 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].