Carriage Services: Executing on Plan?

March 3, 2025/Finance/

Last week public funeral home and cemetery consolidator and operator Carriage Services released their 4th Quarter 2024 and Year End 2024 financial results. One of the items that the company mentioned in the press release which you can read here is “lower volumes we began experiencing in October”.

I mention that simply because quarterly reports from the October thru November 2024 periods for Matthews International and Service Corporation International mention the same phenomena. I find that interesting and while it could be the end legs of a pandemic induced pull-forward effect on deaths, there has also been a great build up for almost two decades about the potenial rise in death numbers because of the demographics of the Baby Boomer generation.

As I said with the Service Corporation International 4Q24 report, this decline bears watching into the future to try to figure out if it represents deaths in general or possible market share shifts. Carriage Services’ 4Q24 report gives this possible explanation for this decline, “The decline in volume appears to be linked to a delayed flu season, which impacted the number of at-need funeral services”.

As to the raw numbers for Carriage Services, their 4th Quarter Funeral Contracts were listed at 10,620 as compared to the 4th Quarter of 2023 where the company listed 11,211 funeral contracts — a decline of about 5.3%. For the fiscal year of 2024 Carriage Services reported 43,881 funeral contracts as compared to 2023’s number of 45,340 — a decline of about 3.3%.

For the year Carriage Services reported Total Revenue of $404.2 million as compared to 2023’s Total Revenue of $382.5 million. That’s an increase of about 5.6% built most probably on the Cemetery side of the business with almost 3,000 more preneed interment rights sold and an increasing dollar value of those interment rights.

Here’s what Carriage Services said about the annual revenue increase in a prepared highlight of the press release:

Total revenue for the year ended December 31, 2024 increased $21.7 million compared to the year ended December 31, 2023. We achieved continued growth in consolidated cemetery preneed sales as we experienced a 22.9% increase in preneed interment rights (property) sold and a 7.3% increase in the average price per preneed interment right sold. Additionally, we experienced a 3.1% increase in the average revenue per funeral contract which was offset by a 4.9% decrease in funeral contract volume.

Operating margins dropped slightly for the year for Carriage Serives, but the increased revenue allowed Operating Income and Net Income to stay virtually even with the year prior. Here’s what the company said about those numbers:

Net income for the year ended December 31, 2024 decreased $0.5 million compared to the year ended December 31, 2023. We experienced a $19.1 million increase in gross profit contribution from our businesses and a $4.2 million decrease in interest expense, which was offset by a $16.9 million increase in general, administrative and other expenses, primarily comprised of one-time costs related to executive severance payments and the Company’s review of strategic alternatives, a $4.1 million increase in income tax expense and a $1.4 million increase in loss on divestitures, disposals and impairment charges.

Tom Anderson
Funeral Director Daily

Funeral Director Daily take: Seeing these results by Carriage Services is one thing, but looking at them with the mindset that the company has a plan for the future of Carriage Services is another. While I have no inside information, it certainly appears that since Melvin Payne retired and CEO Carlos Quezada has been in charge for about two years the company has a plan for the future and appear to be executing on that plan.

For instance, Net Income, according to the statement above was affected by one time expenses and a loss due to divestitures (possible funeral home or cemetery sales). In addition, the company tells us in its 2025 Outlook that “in the first half of 2025, the Company expects to divest certain non-core assets”.

They also tell us in their 2025 Outlook that “The Company’s 2025 outlook incorporates previously stated organic growth initiatives around preneed sales, both in the cemetery and funeral businesses, and expected cost discipline . . . ”

Finally, the company seems to be serious about lowering their debt levels before they go on any acquisition spree for growth. In the press release they tell us this, “(Our) leverage ratio (was lowered to 4.3x from 5.1x at the same period last year, as the Company paid down $42.1 million of debt on its credit facility during the year. . . .”

So, you have to take a 4Q24 reduction of revenue and services with a grain of salt. If they have less facilities that would make sense. And, if the facilities that they are divesting are not profitable then it is in the best interests of the company moving forward.

I like companies that have plans and are willing to take the effort to follow them to completion. I’m watching Carriage Services at this time like they are a “company with a plan” and watching their results in that context.

Finally, we will also read the company’s Earnings Call transcript and do another article on the company with what we learn from that.

Disclaimer— The author of this article for Funeral Director Daily is a shareholder of Carriage Services.

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