Finance

Payne, Brink comment on Carriage Services going forward

On February 22 Carriage Services executives including CEO Mel Payne and Chief Financial Officer Ben Brink held a call with investment advisors relating to the Full Year 2018 results of Carriage Services.  You can read a full transcript of that call here.

A few days ago we reported on the earnings report in this column so we will not go over that again.  Instead, we will just pick up a couple of items that investment people asked about Carriage Services going forward.

Analyst Chris Howe of Barrington Research asked about sales teams at Carriage Services and wondered if there was anything that analysts should be aware of as far as market positioning and the pricing environement.  Comments are as follows:

Ben Brink:  From Brink’s answer we get the impression that Carriage Services is looking to raise their sales standards in the cemetery side of the business.  Here’s what Brink said, “Yes, we did the same thing in the cemetery that we did on the funeral home. . . .And if you can’t grow your revenue, compounded revenue, preneed property sales, your going to fall beneath our minimum standards and you probably won’t be here.  But, the incentives are very high.  So we think this will lead to better talent, better sales managers, and ultimately sustained performance over the next five year.  But we have a lot of work to do in this area.. . . . Yes, this is probably where we have the greatest upside.”

Mel Payne:  “Lot of work to do, but a lot of opportunity.”

Another analyst asked, “What kind of thoughts do you have around the best use of capital between acquisitions, debt repayment, dividends, buybacks and internal projects?”

Ben Brink:  “In general, our capital allocation will be focused around acquisition activity.. .  we’ll continue to be selective and our selectivity may even become sharper over these next couple of quarters. . . and we’ve looked at capital expenditures to be a little bit higher than they were last years.  That’s really around opportunities that we find to invest particularly within our large cemeteries.”

Mel Payne:  “I think we are done on share repurchases.. . . So I think now it’s really looking at high return internal investments, primarily cemetery inventory in some of our bigger places and that we will do a lot of new builds on the funeral home side this year.”

Finally, Mel Payne was asked directly about the acquisition pipeline and he responded, “It’s been active.  There is competition and we’re not pulling out of the market and we are talking to a number of people.  But we are selective and we turned down a lot more than we actually vet thouroughly.  But we have a pipeline.”

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