I’m one that believes you can learn something from seeing what the public companies in funeral service are doing.  When I was active with my funeral home in the business I would read their quarterly reports and look at whatever comments were made during the companies quarterly earnings call transcripts. . . . .Even if I didn’t adopt what those companies were saying in their respective statements, there was always good fodder for thought.

 

About ten days ago funeral home and cemetery operator Carriage Services had their 2nd Quarter 2024 Earnings Call with stock analysts.  You can read that transcript here.

 

Over the last 18 months to 2 years there is a new leadership group at Carriage Services replacing long-time founder, Chairman, and CEO Melvin Payne.  The new team is led by CEO Carlos Quezada who came to Carriage Services after being employed by Service Corporation International (SCI).

 

Anytime a new leadership group comes into any company there is generally a continuation of what is happening period while the new leadership takes stock of “what they have” and then there is some directions taken once that leadership group decides on moving in a certain direction.  Not only the direction taken, but the timing of any changes can be tricky and consequential because getting those moves wrong can upset or alienate customers, team members, or shareholders.

 

As I read the recent earnings call transcript from Carriage Services I started to comprehend the changes and direction this new management group is moving towards as they are working to improve results at Carriage Services.  In addition to their stated goal of reducing debt service I see two areas, that I deduced from the earnings call, where strategic choices are picking up steam.

 

Preneed — Just over a year ago Carriage Services embarked on a monumental decision on how they would handle their preneed business moving forward.  As you can see from this press release of May 2023, the company chose a path where they alinged in a national partnership with National Guardian Life Insurance Company (NGL) and preneed marketing and sales company, Preccoa.

 

Here’s what CEO Quezada said about preneed in prepared remarks at the beginning of the recent earnings call, “This growth (preneed cemetery) was driven by the continued execution of our preneed funeral sales strategy, which delivered an increase in general agent commissions ending the quarter at $1.4 million, an increase of $1 million or 251% compared to the $406,000 during the same quarter last year.

Our preneed funeral strategy continues to yield positive results, and we’re excited about our future performance as we continue to build upon our sales strategy.”

 

Re-Cremation —  I’m a big proponent of believing that when families say they want “cremation” that they really don’t know what they want.  I say that because I believe that they want “cremation” as a final disposition but they don’t really know all the options that may be available with that choice of final disposition.

 

When I operated my funeral home I found that most cremation families did not want the $1,995 Direct Cremation with No Services where the remains were returned to them in a plastic or cardboard container.  However, they didn’t really know what options they had. . . . and when you explained that you could embalm the body and have a funeral and then cremation instead of burial, that wasn’t what they were thinking either. . . . mainly because of the cost involved.

 

We somewhat solved our dilemma by offering “Packages”.  The most popular proved to be a direct cremation with visitation without the body present and memorial service.  Over the years I found it interesting in talking with families that it wasn’t so much the visitation and services that sold this package as it was that we offered a free “vase style” urn with the package.  The package was priced at $4,449 with a wholesale cost urn of about $50-60 included.  So, it brought in about $2400 more margin to the funeral home simply for using a visitation room and operating a memorial service.

 

My experience tells me that the visitation and memorial service were good sales points, but at the end of the day the families were interested in the urn because they did not want a plastic or cardboard box sitting on their mantle or in their closet.  It was kind of a unique “sales learning” experience for me.

 

So, I was not surprised when I learned through the recent earnings report sales call that Carriage Services is embarking on a concept they evidently call “Re-cremation”.  It appears that “Re-cremation” is simply the thought process of getting families to spend marginally more on the growing cremation disposition segment.

 

Here’s what CEO Quezada says about “Re-cremation” in answer to a question during the earnings call, “Well, we have launched a strategy for our cremation families. And basically, it has 2 fronts. One is an educational component to show all options to all families that are choosing cremation. This is related to, let’s call them packages, but it is really a walk-through of what’s truly possible in cremation. So as somebody walks in with a direct cremation idea, they may walk out with a recremation with service, recremation with increased merchandise, recremation with a life celebration or some sort of gathering.

And that, of course, is increasing our sales average per contract on the cremation side. Our goal is to decrease the direct cremation impact from last year between 3% to 5%, so we’ll have less recremation and more recremation with service, an ultimate goal. That has been a strategy rolled out pretty much throughout Q1 and really executed formally in Q2 across the funeral home portfolio and is making some significant impact. That’s the biggest piece.”

 

Funeral Director Daily take:  While the visitation and memorial service experience is important to some, I still think the biggest opportunity for increased sales is in the “cremation aftermarket”, if you will,  because families don’t want to take home a plastic or cardboard container of remains.

 

Over the past five years there has become so many opportunities for funeral homes to present options in this space that can bring in considerable margins to funeral homes.  It’s no longer just urns and memorial cemetery monuments that hold cremated remains.  There are items such as cremation jewelry (Eterneva) and products such as the Eternal Niche that offer margin opportunities and there are other options such as solidified remains (Parting Stone) and natural memorialization placement (Better Place Forests) that offer very good commissionable sales or margin options for funeral homes to increase their cremation sales revenue.

 

With the cremation aftermarket options growing and excellent margins available on some of those options, I’m of the opinion that direct cremation should not be seen as a threat to funeral homes but as a great opportunity for increased sales. . . . It looks like Carriage Services agrees with me. . .

 

More news from the world of Death Care:

• AI technology helps residents honor departed heroes.  Shine (China)
• Marlboro Department of PublicWorks seeks to expand Evergreen Cemetery.  Community Advocate (MA)
• This new Las Vegas facility will let you turn your body into dirt.  Video News story and print article.  Las Vegas Review-Journal  (NV)
• Council’s visits to funeral homes provide reassurance.  North Somerset Council (Great Britain)
• Rhode Island Veterans Memorial Cemetery gets $3.8 million for upgrades.  WPRI.com (RI)

 

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