Carriage Services Announces Fourth Quarter and Full Year 2023 Results

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HOUSTON, Feb. 21, 2024 (GLOBE NEWSWIRE) — Carriage Services, Inc. (NYSE:CSV) today announced results for the fourth quarter and year ended December 31, 2023.

Company Highlights:

Exceeded full year 2023 guidance ranges for total revenue, adjusted consolidated EBITDA and adjusted earnings per share, driven by strong fourth quarter performance;
5.2% growth in total revenue over the prior year quarter and 3.3% growth over the prior full year;
Preneed sales deliver 16.1% growth in cemetery operating revenue over the prior year quarter and 13.5% growth over the prior full year;
41.6% increase in GAAP net income and 41.5% increase in diluted earnings per share over the prior year quarter;
Founder and Executive Chairman, Mel Payne, to transition to special advisor to the Board of Directors;
The Board of Directors concludes the previously announced review of strategic alternatives; and
Management announces 2024 outlook.

Carlos Quezada, Vice Chairman and CEO, stated, “We are pleased to announce our strong fourth quarter and full year 2023 results. Total revenue grew by 5.2% in the fourth quarter and 3.3% for the full year, despite the COVID “pull forward” impact resulting in modest declines in funeral contract volume experienced during the year. This success in growing our top line stems from our targeted efforts to better leverage our pricing power, which drove improved average revenue per contract, in addition to our preneed cemetery sales team’s exceptional performance, which resulted in a surge in preneed cemetery sales production of 25.0% for the fourth quarter and 19.6% for the full year. This increase in revenue, coupled with disciplined cost management, resulted in a year-over-year increase in adjusted consolidated EBITDA of 3.5%, and a significant 13.2% growth over the prior year quarter, which also included margin expansion of 230 basis points. This momentum, marking four out of five consecutive quarters of solid performance, instills confidence and excitement in our core initiatives as we advance into 2024 and focus on fulfilling our new purpose statement, which is ‘Creating premier experiences through innovation, empowered partnership, and elevated service.’ For those interested in learning more, we invite you to explore our newly launched website and discover our refreshed Carriage image, which aligns with our vision of the Carriage of the future,” concluded Mr. Quezada.

FINANCIAL HIGHLIGHTS

 
 
Three Months Ended December 31,
 
Years Ended December 31,

(in millions except margins and EPS)
 
 
2022
 
 
 
2023
 
 
 
2022
 
 
 
2023
 

 
 
 
 
 
 
 
 
 

GAAP Metrics:
 
 
 
 
 
 
 
 

Total revenue
 
$
93.9
 
 
$
98.8
 
 
$
370.2
 
 
$
382.5
 

Operating income
 
$
19.6
 
 
$
23.9
 
 
$
79.7
 
 
$
81.0
 

Operating income margin
 
 
20.9
%
 
 
24.2
%
 
 
21.5
%
 
 
21.2
%

Net income
 
$
8.2
 
 
$
11.6
 
 
$
41.4
 
 
$
33.4
 

Diluted EPS
 
$
0.53
 
 
$
0.75
 
 
$
2.63
 
 
$
2.14
 

Cash provided by operating activities
 
$
11.0
 
 
$
13.7
 
 
$
61.0
 
 
$
75.6
 

 
 
 
 
 
 
 
 
 

Non-GAAP Metrics(1):
 
 
 
 
 
 
 
 

Adjusted consolidated EBITDA
 
$
28.7
 
 
$
32.4
 
 
$
109.3
 
 
$
113.2
 

Adjusted consolidated EBITDA margin
 
 
30.5
%
 
 
32.8
%
 
 
29.5
%
 
 
29.6
%

Adjusted diluted EPS
 
$
0.64
 
 
$
0.77
 
 
$
2.61
 
 
$
2.19
 

Adjusted free cash flow
 
$
8.9
 
 
$
12.8
 
 
$
49.8
 
 
$
55.1
 

 

(1
)
We present both GAAP and Non-GAAP measures to provide investors with additional information and to allow for the increased comparability of our ongoing performance from period to period. The most comparable GAAP measures to the Non-GAAP measures presented in this table can be found in the Reconciliation of Non-GAAP Financial Measures section of this earnings release.

 
 
 

Revenue for the three months ended December 31, 2023 increased $4.9 million compared to the three months ended December 31, 2022, primarily as a result of a 23.6% increase in the number of preneed interment rights (property) sold, a 1.2% increase in the average price per interment right sold and a 0.7% increase in the average revenue per funeral contract, offset by a 3.3% decrease in the funeral contract volume.
Revenue for the year ended December 31, 2023 increased $12.3 million compared to the year ended December 31, 2022, primarily as a result of a 9.4% increase in the average price per preneed interment right sold, an 8.6% increase in the number of preneed interment rights (property) sold and a 0.9% increase in the average revenue per funeral contract, offset by a 2.4% decrease in the funeral contract volume.
Net income for the three months ended December 31, 2023 increased $3.4 million compared to the three months ended December 31, 2022, primarily due to a $3.2 million increase in profit contribution from our businesses and a $2.9 million decrease in loss on divestitures, disposals and impairment charges, offset by a $1.4 million increase in interest expense and a $1.1 million increase in general, administrative and other expenses.
Net income for the year ended December 31, 2023 decreased $8.0 million compared to the year ended December 31, 2022, as the $5.1 million increase in profit contribution from our businesses was offset by a $10.4 million increase in interest expense and a $4.7 million increase in general, administrative and other expenses.

MEL PAYNE TRANSITIONS TO ADVISORY ROLE

After 32 years of founding and building Carriage, Mel Payne, has chosen to step down from his role as Executive Chairman of the Board and transition to a new role as special advisor to the Board of Directors, which will allow him to be available and share his wealth of knowledge and insights with the Board of Directors and the senior leadership team. Mel will continue as a member of the Board until his current term expires at the May 2024 annual meeting of stockholders.

Mel, who served as Carriage’s only CEO and Chairman of the Board for the Company’s first 32 years, started with a vision in 1991 that was born out of a very personal and impactful experience he had following the loss of a loved one. He turned that experience and vision into a team of more than 2,700 employees and 200 businesses, all driven by a collective mission of serving families during the most challenging time of their lives.

“Next to my family, Carriage has been and continues to be, the greatest love of my life. The friendships I have made over the years are priceless, and watching the growth and development of so many wonderful leaders throughout the organization has been a true highlight of my career. I have complete confidence in Carlos’ vision and ability to lead Carriage into its next chapter of growth, and, as still a large shareholder, I will be cheering on the team and offering support,” stated Mr. Payne.

“Mel has built a special company and is one of the true pioneers in this profession. He has handpicked an incredibly talented senior leadership team, and the Board is excited for the future of Carriage and our stockholders,” stated Lead Independent Director, Don Patteson.

CONCLUSION OF REVIEW OF STRATEGIC ALTERNATIVES

The Board of Directors (the “Board”) has concluded the Company’s strategic review process, first announced on June 29, 2023, which was overseen by the Board with assistance from experienced financial and legal advisors. The Board has unanimously determined that continuing to execute on the Company’s strategic plan as an independent, public company is in the best interests of the Company and its stockholders at this time. In this regard, the Board’s determination took into account positive trends described above in the Company’s financial and operating results toward the end of 2023. The Board remains committed to maximizing stockholder value.

While the Company received a number of proposals for transactions involving the Company in the course of the strategic review process, following a thorough review and evaluation of the proposals and alternatives available to the Company, the Board concluded that none of those proposals would be in the best interests of the Company’s stockholders. The Board endorsed the Company’s continued execution of its standalone business plans as an independent publicly held company under the leadership of Carlos Quezada as CEO, Steve Metzger as President and Kian Granmayeh as CFO, as well as leadership from the Company’s Board, which added three talented new directors during the summer of 2023.

OUTLOOK FOR 2024

The Company’s 2024 outlook incorporates previously stated organic growth initiatives around preneed sales, both in the cemetery and funeral businesses, and expected cost discipline while the Company continues to deleverage the balance sheet. Additionally, in the first quarter of 2024, the Company expects to close two transactions to divest certain non-core businesses, reducing 2024 revenue and field EBITDA by ~$5.5 million and $1.5 million, respectively – the 2024 Outlook reflects the expected impact of these two divestitures.

 
2024 Outlook(1)

(in millions – except per share amounts)
 

 
 

Total revenue
$380 – $390

Adjusted consolidated EBITDA
$112 – $118

Adjusted diluted EPS
$2.20 – $2.30

Adjusted free cash flow
$55 – $65

 

(1
)
Includes two transactions to divest certain non-core businesses.

CALL AND INVESTOR RELATIONS CONTACT

Carriage Services has scheduled a conference call for tomorrow, February 22, 2024 at 9:30 a.m. central time. To participate in the call, please dial 888-208-1711 (Conference ID – 1315299) or live over the Internet via webcast click link. An audio archive of the call will be available on demand via the Company’s website at www.carriageservices.com. For any investor relations questions, please email InvestorRelations@carriageservices.com.

CARRIAGE SERVICES, INC.

CONDENSED OPERATING AND FINANCIAL TREND REPORT

(in thousands – except per share amounts)

 
 
 
 
 
 
 
 
 
 
 

 
 
 
2019
 
 
 
2020
 
 
 
2021
 
 
 
2022
 
 
 
2023
 

Funeral operating revenue
 
$
196,475
 
 
$
226,819
 
 
$
252,926
 
 
$
251,396
 
 
$
249,180
 

Cemetery operating revenue
 
 
49,317
 
 
 
69,083
 
 
 
91,330
 
 
 
90,033
 
 
 
102,216
 

Financial revenue
 
 
15,878
 
 
 
19,689
 
 
 
22,708
 
 
 
22,452
 
 
 
26,259
 

Ancillary revenue
 
 
748
 
 
 
4,661
 
 
 
4,437
 
 
 
4,193
 
 
 
4,588
 

Divested revenue
 
 
11,689
 
 
 
9,196
 
 
 
4,485
 
 
 
2,100
 
 
 
277
 

Total revenue
 
$
274,107
 
 
$
329,448
 
 
$
375,886
 
 
$
370,174
 
 
$
382,520
 

 
 
 
 
 
 
 
 
 
 
 

Funeral operating EBITDA
 
$
75,553
 
 
$
93,480
 
 
$
109,204
 
 
$
101,951
 
 
$
94,949
 

Funeral operating EBITDA margin
 
 
38.5
%
 
 
41.2
%
 
 
43.2
%
 
 
40.6
%
 
 
38.1
%

 
 
 
 
 
 
 
 
 
 
 

Cemetery operating EBITDA
 
 
17,164
 
 
 
26,627
 
 
 
42,158
 
 
 
37,509
 
 
 
41,096
 

Cemetery operating EBITDA margin
 
 
34.8
%
 
 
38.5
%
 
 
46.2
%
 
 
41.7
%
 
 
40.2
%

 
 
 
 
 
 
 
 
 
 
 

Financial EBITDA
 
 
14,272
 
 
 
18,357
 
 
 
21,156
 
 
 
20,767
 
 
 
24,561
 

Financial EBITDA margin
 
 
89.9
%
 
 
93.2
%
 
 
93.2
%
 
 
92.5
%
 
 
93.5
%

 
 
 
 
 
 
 
 
 
 
 

Ancillary EBITDA
 
 
298
 
 
 
1,186
 
 
 
1,006
 
 
 
841
 
 
 
455
 

Ancillary EBITDA margin
 
 
39.8
%
 
 
25.4
%
 
 
22.7
%
 
 
20.1
%
 
 
9.9
%

 
 
 
 
 
 
 
 
 
 
 

Divested EBITDA
 
 
2,480
 
 
 
2,292
 
 
 
1,117
 
 
 
293
 
 
 
15
 

Divested EBITDA margin
 
 
21.2
%
 
 
24.9
%
 
 
24.9
%
 
 
14.0
%
 
 
5.4
%

Total EBITDA
 
$
109,767
 
 
$
141,942
 
 
$
174,641
 
 
$
161,361
 
 
$
161,076
 

Total EBITDA margin
 
 
40.0
%
 
 
43.1
%
 
 
46.5
%
 
 
43.6
%
 
 
42.1
%

 
 
 
 
 
 
 
 
 
 
 

Total overhead
 
$
37,554
 
 
$
40,514
 
 
$
54,282
 
 
$
53,848
 
 
$
50,086
 

Overhead as a percentage of revenue
 
 
13.7
%
 
 
12.3
%
 
 
14.4
%
 
 
14.5
%
 
 
13.1
%

 
 
 
 
 
 
 
 
 
 
 

Consolidated EBITDA
 
$
72,213
 
 
$
101,428
 
 
$
120,359
 
 
$
107,513
 
 
$
110,990
 

Consolidated EBITDA margin
 
 
26.3
%
 
 
30.8
%
 
 
32.0
%
 
 
29.0
%
 
 
29.0
%

 
 
 
 
 
 
 
 
 
 
 

Other expenses and interest
 
 
 
 
 
 
 
 
 
 

Depreciation & amortization
 
$
17,771
 
 
$
19,389
 
 
$
20,520
 
 
$
19,799
 
 
$
21,117
 

Non-cash stock compensation
 
 
2,153
 
 
 
3,370
 
 
 
5,513
 
 
 
5,959
 
 
 
7,703
 

Interest expense
 
 
25,522
 
 
 
32,515
 
 
 
25,445
 
 
 
25,895
 
 
 
36,266
 

Loss on extinguishment of debt
 
 

 
 
 
6
 
 
 
23,807
 
 
 
190
 
 
 

 

Other
 
 
4,351
 
 
 
21,506
 
 
 
770
 
 
 
(1,524
)
 
 
(525
)

Pretax income
 
$
22,416
 
 
$
24,642
 
 
$
44,304
 
 
$
57,194
 
 
$
46,429
 

Net tax expense
 
 
7,883
 
 
 
8,552
 
 
 
11,145
 
 
 
15,813
 
 
 
13,016
 

Net income
 
$
14,533
 
 
$
16,090
 
 
$
33,159
 
 
$
41,381
 
 
$
33,413
 

Special items(1)
 
$
9,821
 
 
$
25,579
 
 
$
30,607
 
 
$
(200
)
 
$
1,003
 

Tax effect on special items
 
 
1,822
 
 
 
7,986
 
 
 
8,503
 
 
 
95
 
 
 
285
 

Adjusted net income
 
$
22,532
 
 
$
33,683
 
 
$
55,263
 
 
$
41,086
 
 
$
34,131
 

Adjusted net income margin
 
 
8.2
%
 
 
10.2
%
 
 
14.7
%
 
 
11.1
%
 
 
8.9
%

 
 
 
 
 
 
 
 
 
 
 

Adjusted basic earnings per share
 
$
1.26
 
 
$
1.88
 
 
$
3.17
 
 
$
2.76
 
 
$
2.29
 

Adjusted diluted earnings per share
 
$
1.25
 
 
$
1.86
 
 
$
3.02
 
 
$
2.61
 
 
$
2.19
 

 
 
 
 
 
 
 
 
 
 
 

GAAP basic earnings per share
 
$
0.81
 
 
$
0.90
 
 
$
1.90
 
 
$
2.78
 
 
$
2.24
 

GAAP diluted earnings per share
 
$
0.80
 
 
$
0.89
 
 
$
1.81
 
 
$
2.63
 
 
$
2.14
 

 
 
 
 
 
 
 
 
 
 
 

Weighted average shares o/s – basic
 
 
17,877
 
 
 
17,872
 
 
 
17,409
 
 
 
14,857
 
 
 
14,803
 

Weighted average shares o/s – diluted
 
 
18,005
 
 
 
18,077
 
 
 
18,266
 
 
 
15,710
 
 
 
15,455
 

 
 
 
 
 
 
 
 
 
 
 

Reconciliation of Consolidated EBITDA to Adjusted consolidated EBITDA
 
 
 
 
 
 
 
 
 
 

Consolidated EBITDA
 
$
72,213
 
 
$
101,428
 
 
$
120,359
 
 
$
107,513
 
 
$
110,990
 

Special items(1)
 
 
4,374
 
 
 
2,822
 
 
 
5,802
 
 
 
1,799