Carriages Services 2Q 2023: Revenues increase but Interest expense holds back profits
Houston based funeral home and cemetery operator Carriage Services reported their 2nd Quarter 2023 financial report last week one day after Service Corporation International. What may become a common theme is that the companies have been able to increase revenue quarter over quarter during the past year but those gains run into strong headwinds fueled by expense inflation and interest rate hikes.
Here’s what Carriage Services CEO and President Carlos Quezada said in prepared remarks for his company’s press release which you can access here: “We are excited to announce our robust second quarter results, which reflect the successful implementation of our strategic plan. This quarter’s 7.8% growth in total revenue is predominantly attributed to increased preneed cemetery sales, which led to a significant 16.1% growth in our total cemetery operating revenue. This outcome is a direct consequence of our concerted efforts in enhancing our sales teams and leveraging advanced technology, enabling us to cultivate a substantial pipeline of sales opportunities. “
At Funeral Director Daily we noticed that sales success, especially in the cemetery side of the business. Carriage Services’ financial statements show that the funeral side of the business had a little less success, but still increased their revenue for the quarter 4.6% from $58.1 million in 2Q2022 to $60.8 million in 2Q2023.
What we also noticed however, was the “PreTax Income” dropped 22.7% to $11.7 million for the quarter as compared to $15.1 million of PreTax Income in 2Q2022. That’s a drop of about $3.4 million which can almost all be accounted for in the company’s growth of “Interest Expense” for the quarter.
Interest Expense for 2Q2023 is listed at $9.3 million as compared to the same item in 2Q2022 where it is listed at $5.98 million. . . a difference of $3.32 million. At Funeral Director Daily we don’t know if that amount represents interest for additional debt of if it represents higher interest rates (possibly on adjustable rate debt). Or, it may be a combination of both.
However, it does appear to be the difference in the final numbers of “PreTax” profits for the 2nd Quarters of the respective years.
Funeral Director Daily take: With the SCI report we saw higher revenues and then compressed margins. With Carriage Services we are seeing higher revenues but then higher interest payments.
As individual funeral home and cemetery operators who read Funeral Director Daily I think it is just a good reminder that there are a lot of items you need to keep on top of to generate maximum profits. And, that takes time, effort, study, and an understanding of all of financial barometers to hit profitability on all cylinders.
Over my years in business I’ve found great funeral directors who served families with incredible skill and passion and yet didn’t reap the rewards of ownership simply because they didn’t understand all the financial underpinnings that were necessary to do so.
Make sure that you have knowledge and data to help you understand those financial underpinnings. And, if you don’t want to learn it all and just keep serving families, make sure you get a financial expert, such as Johnson Consulting Group, in your corner who can help you with it. That could make a huge difference in your profitability and eventual exit and retirement.
More news from the world of Death Care:
- How one casket company is disrupting the funeral industry. Video story – CBS News
- AFRO to host event honoring funeral professionals as “Unsung heroes”. AFRO – The Black Media Authority
- Savvy Senior: How to plan a “Green Funeral”. ETV News. (UT)
- Scientists in breakthrough towards secret of eternal youth. Video story and print article. The Independent
- Trees at Fort Atkinson Cemetery flattened in storm. Video story and print article. WMTV NBC – Madison (WI)
- From death to burial: A Jewish ceremonial primer. San Diego Jewish World (CA)
Enter your e-mail below to join the 3,318 others who receive Funeral Director Daily articles daily:
“A servant’s attitude guided by Christ leads to a significant life”