On Tuesday, April 24, publicly owned death care industry company, Carriage Services, announced its 1st Quarter 2018 results.  You can read their press release with financials included here.  The company announced record revenues of $73.4 million for the quarter.  That is a 7.7% increase over the same period of a year ago.

Funeral Director Daily take:  I’ve always found it important to not only look at the headlines but read through the report and look at the financials to get an overall picture of where a company is at and where they seem to be going.  I think that is certainly true of Carriage Services and while I’ll add my opinions in this section. . .take them for what they are . . . .my opinions and impressions.

To me, Carriage Services has always been that “Little train that could”.  There is nothing flashy about them and they have grown slow and sure for their 25+ year existence.  They move slowly which, in my opinion, allows them to make very few acquisition mistakes.  They are methodical, like most funeral directors, and grow like most independent funeral homes grow. . . slow and sure.

We all know that funeral service is changing – and has been changing – from casketed services to cremation services.  One of the things that I have started to believe is that there is much more growth potential on the cemetery side of the business in memorializing our loved ones than there is on the funeral home side.  I say that, by anecdotally watching cemeteries offer all kinds of options – with solid margins – to cremation families.  niches, monument urns, cremation vaults, earth burial of urns with beautiful individual monuments then erected.  To that end, here are a couple of things I noticed on the Carriage Services financials:

• Same store revenue for funeral services was up 4.0%, but Same store revenue for cemetery operations was up 8.1%.
• Field EDITDA margin for Same store funeral service operations moved higher by 2.9%, while Field EBITDA for Same store cemetery services increased by 14.1%
• Another plus side for Carriage Services was that I saw Same store funeral service contracts (death calls) increase by 3.4% meaning that they are gaining market share in the communities that they serve.
• However, Same store funeral revenue per contract increased only 0.5%.   I come up with this number from their financial statement by dividing the Same Store Revenue by the Same Store Funeral Contracts.  My guess is that this is indicative of the continued movement from earth burial to cremation.  This revenue per service number is a metric that all funeral homes need to be watching closely.  I also believe that for all funeral homes the number will stop rising and start trending downward as your direct cremation numbers creep up.

One final point on funeral home potential versus cemetery potential going forward.  A positive for funeral homes or crematories is that 100% of the deceased will have to go through those channels while with cemeteries, because of the amount of cremated remains that are scattered or brought home, cemeteries may have to expend larger marketing dollars just to get client families to think about using them.

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