Carriage Services(CSV) - 2025 Q2 - Quarterly Results

Executive Summary & Company Highlights 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 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][5] | | GAAP Diluted EPS | $0.74 | $0.40 | 85.0% | $0.34 | [4][5] | | Adjusted Diluted EPS | $0.74 | $0.63 | 17.5% | $0.11 | [4][5] | | Total Revenue (Excluding Divestitures) | - | - | 1.7% | $1.8 | [4] | - 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] Strategic Initiatives and Outlook Update 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 $15 million in revenue last year[4][5] Revised Full-Year 2025 Guidance | Metric | Revised 2025 Outlook | Previous 2025 Outlook | | :--------------------- | :------------------- | :------------------- | | Total Revenue ($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 - $50 | - The revised outlook incorporates the anticipated revenue impact from acquisitions and divestitures of certain non-core assets[8] Financial Performance This section details the company's Q2 and H1 2025 GAAP and non-GAAP financial metrics, including operational data for funeral and cemetery businesses, and provides a revised full-year outlook Key Financial Highlights This section details the company's GAAP and non-GAAP financial metrics and key operational data for both cemetery and funeral businesses, reflecting changes in revenue, profit, and operational efficiency Three Months Ended June 30, 2025 In Q2 2025, net income significantly increased due to reduced general and administrative expenses and interest expenses, despite a slight decrease in total revenue, while average contract revenue for funeral services improved Q2 2025 Financial and Operational Metrics | Metric | Q2 2025 | Q2 2024 | Change ($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 $0.9 million increase in income tax expense[7] Six Months Ended June 30, 2025 In H1 2025, both total and net income increased, with the significant rise in net income primarily attributed to gains from divestitures and real estate sales, alongside reduced administrative expenses H1 2025 Financial and Operational Metrics | Metric | H1 2025 | H1 2024 | Change ($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 $0.5 million reduction in business gross profit contribution[13] Revised Full-Year 2025 Outlook The company has raised its full-year 2025 guidance for total revenue, adjusted consolidated EBITDA, and adjusted diluted EPS, reflecting current performance trends and the impact of acquisitions and divestitures in the second half Revised Full-Year 2025 Guidance | Metric | Revised 2025 Outlook | Previous 2025 Outlook | | :--------------------- | :------------------- | :------------------- | | Total Revenue ($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 - $50 | - Adjusted Consolidated EBITDA, Adjusted Diluted EPS, and Adjusted Free Cash Flow are non-GAAP financial measures, with their outlook excluding special items such as gains/losses on divestitures, acquisition costs, severance, and goodwill impairment[9] Condensed Financial Statements This section presents the company's condensed operating and financial trends, balance sheet, statements of operations, and cash flows for Q2 and H1 2025, highlighting key financial positions and performance Condensed Operating and Financial Trend Report This report provides detailed revenue and EBITDA data by business segment, along with trends in other expenses and net income, illustrating the profitability of each segment and overall financial performance Q2 and H1 2025 Operating and Financial Trends | Metric | Q2 2025 ($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 | $13,232 | Condensed Consolidated Balance Sheet As of June 30, 2025, the company's total assets slightly decreased, while total shareholders' equity increased, reflecting changes in its asset and liability structure Condensed Consolidated Balance Sheet (As of Date) | Metric | June 30, 2025 ($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 | $208,550 | Consolidated Statements of Operations The consolidated statements of operations show increased service revenue but decreased property and merchandise revenue in Q2 and H1 2025, with operating and net income significantly growing due to corporate cost and expense control despite a slight reduction in gross profit Consolidated Statements of Operations Key Data | Metric | Q2 2025 ($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 | $0.2250 | Consolidated Statements of Cash Flows In H1 2025, cash flow from operating activities remained stable, while cash flow from investing activities significantly increased due to proceeds from divestitures and asset sales, with increased financing outflows leading to a slight rise in period-end cash and cash equivalents Consolidated Statements of Cash Flows Key Data (Half-Year) | Metric | H1 2025 ($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 $18,822 thousand in H1 2025[22] Non-GAAP Financial Measures This section defines and reconciles the company's non-GAAP financial measures, including various EBITDA and free cash flow metrics, to provide a clearer view of core operational performance Definitions of Non-GAAP Measures This section provides detailed definitions of the non-GAAP financial measures used by the company to assess financial performance, aiming to offer investors additional information and enhance comparability with historical performance and industry peers - Non-GAAP financial measures include special items, adjusted net income, consolidated EBITDA, adjusted consolidated EBITDA, adjusted free cash flow, funeral business EBITDA, and cemetery business EBITDA, designed to exclude expenses and gains not directly reflecting core or normal business operations[23][24][33] - The company considers Adjusted Consolidated EBITDA a supplemental measure of operating performance, aiding in the analysis and comparison of continuing operations by excluding items that may not be representative of ongoing performance[30] - Funeral Business EBITDA and Cemetery Business EBITDA aim to highlight the cash profitability and controllable margins of each business segment, excluding regional and unallocated costs determined by the Houston Support Center[25][26][27] Reconciliation of Non-GAAP Financial Measures This section provides detailed tables reconciling non-GAAP financial measures to the most directly comparable GAAP measures, ensuring transparency and traceability in financial reporting Reconciliation of Operating Income to Consolidated EBITDA and Adjusted Consolidated EBITDA | Metric | Q2 2025 ($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 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 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] - 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] - Investor relations inquiries can be directed via email to InvestorRelations@carriageservices.com[12] Cautionary Statement on Forward-Looking Statements 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] - 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][43] - 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]