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
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