Increasing funeral home numbers drives Carriage Services results

Carriage Services reported their 1st Quarter of 2022 last week and in doing so highlighted the strength of their funeral home operations.  “Same Store” service contracts increased about 3.3% and average revenue on those services increased 1.2% over the same period of last year which led to a Funeral Home Operating Revenue increase of $3.3 million  and Total System Revenue of $98.2 million (a 1.6% increase) even as the Cemetery Division revenue decreased almost 5% for the quarter.

For 1Q 2022 Carriage Services posted Total Funeral Home Revenue of $70.2 million as compared to 1Q 2021’s result of $66.9 million.  The cemetery side slipped to Total Cemetery Revenue of $20.5 million as compared to 1Q of 2021 when that revenue came in at $21.6 million.

And, it is interesting to note as we contemplate the potential of the “Covid death pull-forward” effect that “Same Store” contracts for Carriage Service increased to a 11,675 volume in 1Q 2022 over 2021’s 11,303 volume.  Time will tell if that is a market share increase over and above any possible negative pull-forward effect on the markets that Carriage serves.

Here are some other highlights that we noticed from the First Quarter 2022 Financial press release that can be accessed here:

  • “Same Store” Burial Contracts dropped 2.8%
  • “Same Store” Cremation Contracts increased 4.0%
  • “Same Store” Average Revenue Per Contract increased 1.2%
  • “Same Store” Cremation Rate has increased to 56.9% in 1Q 2022 over a 56.5% rate in 1Q 2021.

Carriage Services also noted that they had:

  1. Invested $168.5 million since May 2021 to re-purchase 3.4 million shares of stock
  2. Focused capital allocation on internal growth, mostly in cemetery property development, and are looking at “high quality” acquisitions.

Here are some comments from Steve Metzger, Executive Vice-President and Chief Administration Officer of Carriage Service as it relates to the acquisition market:  “We have written extensively about our approach to growth through acquisition and, after two years of focusing our allocation of capital on paying down debt and opportunistic share repurchases of approximately 19% of the Company, we are now well positioned and laser focused on getting back to growth through acquisition. We previously shared our expectation that our conversations and work with owners to learn more about specific candidates that fit our strategic focus would result in the announcement of new businesses joining the Carriage Family during the second half of 2022. That forecast continues to be in line with the strong activity we are currently experiencing within our pipeline, much of it in new strategic markets with significant growth potential over the next 5-10 years. . . . . . the level of activity involving high quality businesses is as strong as we have seen in more than two years. We believe our patience will begin to pay off, as we are now well positioned to partner with the best remaining independent funeral home and cemetery businesses at a time when more of the best businesses seem keenly aware of the succession plan and support benefits of Carriage’s High Performance Cultural Framework.”

Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  It is interesting to see that Carriage Services continued to move total revenue forward in the First Quarter.  It is impressive in that it was done in the wake of what many believe is a lower number of deaths and in a quarter where their  cemetery properties did not deliver better results.

And, while it is impressive that “Same Store” contracts increased 3.3% against the 1st Quarter comparable of last year, it might even be more impressive when you look at the “Same Store” contracts from the recently completed 4th quarter of 2021  (11,675 contracts in 1Q 2022 vs. 10,716 contracts in 4Q 2021). . . . .Carriage shows an impressive 8.9% increase against that comparable.

It’s hard to believe it is the death rate increasing that fast over three months.  It may be a case for supporting the fact that Carriage Services is taking market share from its competitors.  Again, as the trends can continue to be watched, time will give us a clearer picture.

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