Carriage Services sees Revenue increase, Net Income decrease for 3rd Quarter comparables




Carriage Services reported 3rd Quarter 2023 financial numbers last week in their 3Q 2023 Report that you can access here, and in that report they showed Total Revenue growing to $90.5 million for the quarter and Net Income dropping to $4.6 million for the same period.


That compares to 3Q 2022 results of $87.5 million in Total Revenue and $5.9 million in Net Income.  Percentage wise, that correlates with a 3.4% increase in Revenues and an approximately 20% drop in Net Income.  Carriage Services CEO Carlos Quezada made this comment in his statements about the financial performance, “. . .we remain focused on navigating the current macroeconomic environment, which includes continued cost inflation and higher variable interest rates, along with death rate normalization, as the pull-forward effect of COVID continues to impact volume.”


While it is not mentioned in this 3rd Quarter report CEO Quezada makes the statement in the company’s Earnings Call, which you can access here, that the company has seen a 5% decline in at-need volume in their funeral home business “as a consequence of the expected COVID-19 pull-forward effect on our (their) same-store portfolio”.  With that statement he joins Service Corporation International CEO Thomas Ryan who made similar comments about his company’s 3Q report.


Quezada also makes this comment as it pertains to that pull-forward effect and Carriage’s results, “our acquisition portfolio and increase in sales average more than made up for it, resulting in total funeral operating revenue of $59.4 million which is $478,000 more than the same period last year.”


A highlight for Carriage Services in the 3rd Quarter of 2023 was that they were able to have cash-flow that enabled them to pay off $16.7 million of debt on their credit facility.  Those pay-downs become very important when you look at the interest payments being made. . . .. Here’s what company CFO Kian Granmayah said about Carriage Service’s interest rates in the Earnings Call, “Despite the pay down, interest rates continued to increase in the quarter, with a weighted average interest rate of 9% for the quarter on our credit facility as compared to 4.3% in the same quarter last year.”


Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  There’s a lot to digest about a funeral home and cemetery operating company when you read both the 3rd quarter 2023 report and the Earnings Call transcript.  There is no doubt that Carriage Services is working with a lot of moving pieces as they try to fine-tune their operations and move forward into the future.  Anyone who owns and operates a funeral home and/or cemetery can understand all of the isues at hand in today’s current death care and macro-economic environment.


I found it interesting that at the same time they are fine-tuning their operations they are foward-looking and advancing into what their death care company will become in the future.  In their Earnings Call CEO Quezada tells us of three areas of focus that they are working on right now:


  • Their revamped Preneed that includes a recent partnership with Preccoa and NGL Insurance
  • Their “Trinity” project that they believe will “digitally transform” their efficiency and insights into many functions of their operations
  • Their review of Strategic Alternatives for the company.  A question was asked about possible divestitures of company assets and here is how Carriage Services President Steven Metzger answered that in the Earnings Call:


“So when we look at potential divestitures, we’re really focused on those assets that we don’t really consider core when we look at our strategy moving forward. So if you look at the acquisitions that we’ve completed over the past 4 years, it’s a pretty specific profile, bigger businesses, larger markets, growing markets, more cemeteries. And that’s where our focus is as we look at growth in the future.

So the assets that don’t really fit that vision moving forward, they’re smaller assets. They’re in what we think are either low growth or no growth markets. . . . . . So with all of that said, we’ve identified some businesses that fit that profile, but we’re also reviewing some others that might help us to key on point, accelerate our deleveraging focus over the next 12 months.”


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