Finance

Carriage Services reports 3Q 2022 Financial Results: Lower Numbers

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Of the seven companies that comprise the Funeral Director Daily Death Care Index (DCI) Carriage Services was the first company to report earnings for the 3rd Quarter of 2022 and did so Wednesday.

Carriage Services, based in Houston, Texas, reported lower comparable numbers in almost every category compared to the same period in 2021.

For instance:

  • Total Revenue for the 3rd Quarter was listed as $87.4 million as compared to the 3rd Quarter of 2021 when Total Revenue was reported as $95.0 million.
  • Same Store contracts for 3Q22 were reported as 9,499 as compared to 10,889 in 3Q21 — a drop of about 12.8%.
  • Same Store Funeral Revenue was down about 10.6%
  • Same Store Cemetery Revenue was down about 5.8%

In a press release about the report that you can read here, Chairman and CEO Melvin Payne said this, “Much like we experienced higher year over year volumes, revenues, earnings and margins comparisons starting in the second quarter of 2020 and continuing through the first quarter of 2022 (most revenue comparisons in the second quarter of 2022 were also higher), we are now experiencing lower volumes, revenues, earnings and margins comparisons across much of our funeral and cemetery portfolios, a downtrend that accelerated in September. . .

Company President and Chief Operating Officer Carlos Quezada added this comment, “. . .From April 2020 through June 2022, we experienced elevated volumes and excess deaths due to a once-in-a-lifetime COVID-19 pandemic. . . . .volume normalization continued in the third quarter, with additional declines in July and August and accelerating to its highest drop in September. While the decline in volume is significant in the third quarter of 2022 compared to the third quarter of 2021, our funeral same store contracts of 9,499 in the third quarter of 2022 reflect a 14.3% volume growth from the third quarter of 2019 and was relatively flat when compared to the third quarter of 2020, which included a significant volume increase due to the initial pandemic spike. . . ” 

To illustrate Quezada’s point, the following graph of company Same Store Contracts was included in the press release.

 

Funeral Director Daily take:  Numbers by themselves don’t always tell the story.  You need to put them into perspective, and in this case, that perspective is the rise and fall of Covid deaths.  Quite frankly, Carriage Services had a decrease of 12.8% in Same Store Funeral Contracts for the 3rd Quarter of 2022 as compared to the 3rd Quarter of 2021.

However, as the following chart indicates, with provisional death numbers as provided by the Center of Disease Control (CDC), the United States had a decrease in deaths of 14.1% in the same period quarter over quarter.  That would tell one that in spite of the lower numbers for the quarter at Carriage Services, they probably beat the national average (decrease in deaths) for the same time period.  According to the CDC the United States had 874,495 deaths during the 3rd Quarter of 2021 and only 751,497 deaths for the July, August, September period of 2022.  Again, that is a decrease of 14.1%.  Here are the statistics as provided by the CDC.

3Q Deaths 2020 2021 2022
July 279.012 257,929 259,125
August 277,282 304,052 255,298
September 257,190 312,514 237,074
Total 813,484 874,495 751,497

It will be interesting to see as the other companies, Service Corporation International, Park Lawn Corporation, and StoneMor report their 3rd Quarter numbers if they also have lower top-line revenue to report.  If so, much like my opinion of Carriage Services, it will be more reflective of less deaths in the country for the quarter, as compared to 2021’s 3rd Quarter,  than any company specific trends as to market share.

Finally, last quarter we saw a trend among all of the public companies that costs were rising faster than they were able to raise revenues which resulted in compressed margins. Carriage Services reports a Same Store Average Revenue per Contract/Case of $5,396 for the quarter as compared to the previous (2Q22) quarter of $5,361.  That’s only a $35 increase in revenue per case and in my opinion, may be somewhat of a sign that, in an inflationary environment for consumers, it may be difficult to increase pricing to make up those margins lost to inflation.

In addition, Carriage Services reports that their cremation rate has ticked up by 7/10’s of one percent in just the last quarter.  That also may be a sign that some families, in this inflationary environment, are opting for cremation to save money.

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