CARRIAGE SERVICES INC Q2 FY2024 earnings call

• Total revenue reached $102.3 million, a 4.8% increase, with preneed cemetery sales up 31.1% and funeral average revenue per contract up $212 (4%). - Funeral home revenue decreased due to volume pull-forward but was offset by higher average revenue per contract, increasing total funeral field EBITDA. - Cemetery revenue increased significantly due to preneed sales, boosting cemetery field EBITDA. - Adjusted consolidated EBITDA was $32.6 million, up 13.6%, and adjusted diluted EPS was $0.63 per share, up $0.10. - Reengineering supply chain strategy with phase 1 expected to have savings this year and full impact in 2025. - Searching for a new CFO while Kathy Shanley covers overhead, cash flow, and leverage ratio.

Total revenue for the second quarter was $102.3 million, a 4.8% increase ($4.6 million). Funeral home operating revenue decreased by $508,000 or 90 basis points to $59.2 million, but total funeral field EBITDA increased by $1.8 million or 8.4% with a margin of 39.5% (up 340 basis points). Cemetery operating revenue increased by $5.9 million or 20.6% to $34.8 million, with total cemetery field EBITDA up $4.2 million or 32.6% and a margin of 49.1% (up 450 basis points). Financial revenue increased by $1 million or 16.9% to $7.1 million, driven by preneed funeral sales strategy.

• Increased 2024 guidance to: Total revenue $390 million to $400 million, adjusted consolidated EBITDA $117 million to $123 million, adjusted diluted EPS $2.30 to $2.40, and adjusted free cash flow $55 million to $65 million.

• Factors identified in earnings press release and SEC filings, including uncertainties related to business projections, plans, and potential operational risks.

Q: How should we think about funeral volumes in the second half?

A: Carlos Quezada said third and fourth quarters will show slight volume decrease from prior year but should wash out by Q1 2025, with revenue increase from average sales making up for volume loss.

Q: What created the high cremation margins?

A: Carlos Quezada said a strategy to educate families on cremation options and upgrade them to more comprehensive services, along with pricing review, contributed to higher cremation margins.

Q: Are there more noncore assets under consideration for sale?

A: Steve Metzger said they've closed a couple of deals earlier this year and are looking at other opportunities, with potential for $20 million to $30 million in proceeds from excess real estate.