Press release·02/28/2025 23:39:58

Financial Performance Overview

Carriage Services, a leading provider of funeral and cemetery services, has reported its financial results for the year ended December 31, 2024. The company operates in two main business segments: Funeral Home Operations and Cemetery Operations, which account for approximately 65% and 35% of total revenue respectively.

Funeral Home Operations

Carriage’s funeral home operations generate revenue primarily from sales of burial and cremation services, as well as related merchandise like caskets and urns. Key factors affecting the funeral home business include demographic trends, market share, response to cremation trends, cost control, and pricing. Volume and price are the two main variables that impact funeral revenue. The company’s funeral homes have a relatively fixed cost structure.

Cemetery Operations

Carriage’s cemetery operations generate revenue mainly through sales of cemetery interment rights, related merchandise, and services. Key factors include the size and success of the sales team, local perceptions of the cemeteries, economic conditions, and the company’s response to capital market fluctuations.

Inflationary and Macroeconomic Trends

During 2024, Carriage experienced a stabilization of inflationary costs from vendors and suppliers, particularly for utilities, funeral supplies, and merchandise. The company also benefited from lower variable interest rates on its credit facility, resulting in reduced borrowing costs.

While encouraged by the moderation of inflationary pressures, Carriage remains cautious about the potential for future cost increases, as the ultimate scope and duration of these impacts are unknown. The broader U.S. economy continues to experience the effects of higher inflation, which could negatively impact consumer discretionary spending, including on the company’s services. However, Carriage’s industry has historically been resilient to adverse economic conditions.

Carriage continued to experience lower death rates and volumes compared to prior years, although overall financial performance remained at or above prior reporting periods. The company focuses on expanding market share, cost management, and executing its strategic plans to mitigate the impact of fluctuations in the death rate.

Liquidity and Capital Resources

Carriage’s primary sources of liquidity and capital are internally generated cash flows from operating activities and availability under its credit facility. The company generates cash primarily from atneed sales, delivery of preneed sales, and earnings on its cemetery perpetual care trusts.

Based on recent operating results, cash position, and anticipated future cash flows, Carriage does not foresee any significant liquidity constraints in the foreseeable future. The company has the ability to draw on its credit facility as needed, subject to customary terms and conditions.

For 2025, Carriage plans to focus on executing its strategic objectives and growth strategy, prioritizing capital allocation for debt repayments, dividend payments, internal growth capital expenditures, and general corporate purposes. The company believes its existing and anticipated cash resources, including additional borrowings if necessary, will be sufficient to meet its anticipated obligations for the next 12 months and its long-term financial commitments.

Cash Flows

Carriage began 2024 with $1.5 million in cash and ended the year with $1.2 million. The company had $137.0 million in outstanding borrowings on its credit facility at the end of 2024, down from $179.1 million at the end of 2023.

Net cash provided by operating activities was $52.0 million in 2024, compared to $75.6 million in 2023. The decrease was primarily due to non-recurring events in 2023, including an $8.6 million withdrawal of trust investment gains and a $6.0 million vendor incentive payment, as well as one-time costs in 2024 related to executive severance and the company’s strategic review.

Net cash used in investing activities was $3.6 million in 2024, compared to $57.0 million in 2023. The decrease was mainly due to lower acquisition and capital expenditure activity in 2024.

Net cash used in financing activities was $48.7 million in 2024, compared to $18.2 million in 2023. The increase was primarily due to higher net payments on the credit facility and debt obligations.

Carriage paid quarterly dividends of $0.1125 per share throughout 2024, totaling $6.8 million for the year. The company did not repurchase any shares in 2024.

Debt and Lease Obligations

At the end of 2024, Carriage had $165.9 million in total debt and lease obligations, including $137.0 million outstanding on its credit facility, $16.8 million in operating leases, $6.6 million in finance leases, and $5.5 million in acquisition debt.

In July 2024, the company amended its credit facility to extend the maturity date to 2029, establish a new benchmark interest rate, and make other modifications. Carriage was in compliance with all credit facility covenants at the end of 2024.

The company also has $400.0 million in outstanding 4.25% Senior Notes due 2029. Total interest expense on the debt and lease obligations was $32.1 million in 2024, down from $36.3 million in 2023.

Segment Performance

Funeral Home Operations

• Funeral home operating revenue decreased 0.5% in 2024 due to a 4.9% decline in contract volume, partially offset by a 3.1% increase in average revenue per contract.
• Funeral home adjusted operating profit increased 1.2% in 2024, with the adjusted operating margin improving to 39.0% from 38.3% in 2023. This was driven by a 0.8% reduction in operating expenses as a percentage of revenue.
• Ancillary revenue (from flower shops, monuments, etc.) decreased 5.8%, while ancillary adjusted operating profit increased 47.9%.
• Other revenue (from preneed commissions and trust earnings) increased 30.2%, and other adjusted operating profit increased 26.6%.

Cemetery Operations

• Cemetery operating revenue increased 23.6% in 2024, driven by a 22.9% increase in preneed interment rights sold and a 7.3% increase in the average price per preneed interment right.
• Cemetery adjusted operating profit increased 29.5%, with the adjusted operating margin improving to 45.8% from 40.3% in 2023. This was due to the higher revenue and improved operational efficiencies.
• Other revenue (from preneed trust earnings and finance charges) increased 2.3%, and other adjusted operating profit increased 3.3%.

Other Financial Items

• General, administrative, and other expenses increased $16.9 million (40.1%) in 2024, primarily due to executive severance costs, professional fees for a strategic review, and increased IT expenses.
• Net loss on divestitures, disposals, and impairment charges was $2.6 million in 2024, up from $1.2 million in 2023, mainly from losses on the sale of funeral homes and cemeteries.
• Interest expense decreased $4.2 million (11.5%) in 2024 due to lower borrowing costs.
• Income tax expense increased $4.1 million (31.6%) in 2024, with the effective tax rate rising to 34.2% from 28.0% in 2023.

Outlook

Carriage remains focused on executing its strategic objectives and growth strategy in 2025. The company plans to prioritize capital allocation for debt repayment, dividend payments, internal growth investments, and general corporate purposes.

While the company cannot predict future fluctuations in the death rate with certainty, Carriage believes its existing and anticipated cash resources, including access to financing, will be sufficient to meet its obligations and support its long-term financial commitments.

Overall, Carriage delivered a solid financial performance in 2024, with growth in its cemetery operations and improved profitability in its funeral home segment. The company continues to navigate inflationary pressures and macroeconomic uncertainties, while focusing on cost management, market share expansion, and strategic execution to drive future success.