Carriage Services Q1 2025 Earnings Report

Carriage Services EPS Results

• Actual EPS: $0.96
• Consensus EPS: $0.80
• Beat/Miss: Beat by +$0.16
• One Year Ago EPS: N/A

Carriage Services Revenue Results

• Actual Revenue: $8.47 million
• Expected Revenue: $104.17 million
• Beat/Miss: Missed by -$95.70 million
• YoY Revenue Growth: N/A

Carriage Services Announcement Details

• Quarter: Q1 2025
• Date: 4/30/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 9:00AM ET

Carriage Services (NYSE:CSV) provides funeral and cemetery services, and merchandise in the United States. It operates in two segments, Funeral Home Operations and Cemetery Operations. The Funeral Home Operations segment provides consultation services; funeral home facilities for visitation and memorial services; transportation services; removal and preparation of remains; sale of caskets and urns; cremation services; and related funeral merchandise. The Cemetery Operations segment sells interment rights for grave sites, lawn crypts, mausoleum spaces, and niches; related cemetery merchandise, including memorial markers, outer burial containers, and monuments; and interments, inurnments, and installation of cemetery merchandise services. Carriage Services, Inc. was founded in 1991 and is based in Houston, Texas.

Carriage Services Q1 2025 Earnings Call Transcript

Key Takeaways

• Carriage reported Q1 revenue of $107.1 million, up 3.5% year-over-year, with funeral operating revenue rising 4.6%, cemetery revenue up 5.8% and financial revenue growing 9.1%, including a 15% increase in net preneed insurance contracts.
• Adjusted consolidated EBITDA was $32.9 million with a 30.8% margin (down 170 bps), reflecting $1.6 million of strategic investments, yet adjusted diluted EPS rose 28% to $0.96 and GAAP EPS jumped nearly 198% to $1.34.
• The company has maintained its full-year 2025 guidance—including $400–410 million in revenue and $128–133 million in EBITDA—citing disciplined execution amid economic uncertainty and a potential upward revision after Q2 if momentum continues.
• Key initiatives include completing Phase 1 of the Trinity back-office system, launching a new earned core supply‐chain line and express funeral funding partnership, and pursuing fleet and procurement optimizations to drive cost efficiency.
• Balance sheet improvement is ongoing, with $17 million of debt repaid (leverage down to 4.2x), $31 million of divestiture proceeds realized over 16 months (including ~$6 million expected in Q2), and plans to reinvest in accretive M&A in H2 2025.

Presentation

[Executive]

Hello, and welcome to the event center. An event specialist will join you shortly. If you're a speaker or presenter, please notify the event specialist. You may be asked to provide a confirmation code, speaker's name, or the title of your event.

[Executive]

Please be prepared to provide that information. Once you have provided that information, you'll be placed on hold with music or placed into your event. Hello, and welcome to the event center. An event specialist will join you shortly. If you're a speaker or presenter, please notify the event specialist.

[Executive]

You may be asked to

[Operator]

Thank you for holding. May I have the passcode of the conference you would like to join? Oh, perfect. And your name, sir?

[Steven Metzger, President at Carriage Services]

And, David, what is your company name? You.

[Steven Metzger, President at Carriage Services]

Good

[Operator]

day, and thank you for standing by. Welcome to the Carriage Services first quarter twenty twenty five earnings webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Steve Messer, President. Please go ahead, sir.

[Steven Metzger, President at Carriage Services]

Good morning, everyone, and thank you for joining us to discuss our first quarter results. In addition to myself, on the call this morning from management are Carlos Castata, Chief Executive Officer and Vice Chairman of the Board of Directors and John Enright, Senior Vice President and Chief Financial Officer. On the Carriage Services website, you can find our earnings press release, which was issued yesterday after the market closed. Our press release is intended to supplement our remarks this morning and includes supplemental financial information, including the reconciliation of differences between GAAP and non GAAP financial measures. Today's call will begin with formal remarks from Carlos and John and will be followed by a question and answer period.

[Steven Metzger, President at Carriage Services]

Before we begin, I'd like to remind everyone that during this call, we'll make some forward looking statements, including comments about our business, projections and plans. Forward looking statements inherently involve risks and uncertainties and only reflect our views as of today. These risks and uncertainties include, but are not limited to, factors identified in our earnings press release as well as in our SEC filings, all of which can be found on our website. Thank you all for joining us this morning. And now I'd like to turn the call over to Carlos.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Thank you, Steve, and welcome to everyone joining us for today's first quarter earnings call. It is an exciting time at Carriage. As we turn the page on a strong 2024, I am proud to share that our momentum continues. We delivered another strong performance in the first quarter of this year, which reflects the strength of our financial strategy and our focus on disciplined execution. Before diving into the numbers, recognize the incredible dedication of our Carriage team.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Their passion and purpose allow us to consistently deliver comfort and care to our clients' families, delivering premier experiences during very difficult times. They are the heartbeat of our performance and the reason why we continue to transition into value. Thank you to everyone for all that you do. Today, I will walk you through key financial highlights and the progress of some of our most important initiatives. Then John will provide additional insight into our cost structure, cash flow and GAAP numbers, focusing on this year's tax benefit and leverage ratio.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Let's begin with the financial results. For the first quarter, we reported total revenue of $107,100,000 an increase of 3,600,000 or 3.5% compared to the same quarter last year. The breakdown of total revenue is as follows. Total funeral operating revenue ended at $69,100,000 an increase of $3,000,000 or 4.6% over the same period last year. This growth was driven by an increase in funeral home average revenue per contract of 1.8% or $103 per contract and an increase in funeral home admin volume of 2.4% or two eighty two contracts.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

As previously communicated, we observed a shift in the flu season, moving some of the volume we would typically expect to see in the fourth quarter to the first quarter. If we look back on a comparable basis, the fourth quarter of twenty twenty four was down 5.3% in volume compared to 2023, effectively creating a positive variance of 7.7% compared to the first quarter of twenty twenty five. Moreover, comparing funeral home admin volumes of the fourth quarter of twenty twenty four to the first quarter of twenty twenty five on a same store basis, we saw an increase of fourteen thirty five calls or 13.5% in the first quarter of this year. We estimate that only a portion of the first quarter's volume is related to the flu season shift. Typically, the first quarter of the year represents our highest funeral home volume.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

We ended the quarter with total cemetery revenue of $27,900,000 an increase of $1,500,000 or 5.8%. While this performance represents strong growth for cemeteries, we expect our year over year preneed cemetery growth rate to be between 1020% for this segment of our business. During our last call, I mentioned that we have working through several strategic cemetery development projects involving a handful of our top performing cemeteries. We expect these projects to be fully completed shortly and return to expected growth rate range during the second quarter. We generated total financial revenue of $7,400,000 during the first quarter, an increase of $613,000 or 9.1%.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

This increase was primarily driven by our strong preneed insurance funeral sales strategy and the preneed funeral commissions income that is generated from these sales. To showcase this growth, we finished the quarter with 2,541 net preneed insurance contracts, an increase of three thirty two contracts or 15% compared to the same quarter last year. We are excited about the progress made through our insurance preneed funeral strategy, and we look forward to continued execution this year. Moving to adjusted consolidated EBITDA. We ended at $32,900,000 for the first quarter, a decrease of $653,000 or 1.9.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Adjusted consolidated EBITDA margin was 30.8%, a decrease of 170 basis points compared to last year. This decrease was primarily driven by the planned investments in our Trinity system, which for this quarter was $800,000 and an additional $800,000 from our field leadership development efforts invested in our managing partners' forum, aimed at elevating the skills and performance of these outstanding leaders. We do not adjust for either of these two expenses. However, the good news is that adjusted diluted EPS for the first quarter was $0.96 per share, an increase of $0.21 or 28% compared to the prior year quarter. We are excited about the progress made during quarter.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

And as we reflect on our strong financial results, it is natural to consider whether an update to our full year guidance is warranted. Our results certainly point in a positive direction and showcase the strength of our strategy and disciplined execution across Carriage. However, while we are encouraged by our momentum, we also recognize that the broader economic environment continues to be uncertain. Concerns. This reminds us to stay focused, disciplined and forward thinking.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

With that in mind, we believe the most responsible course of action is to maintain our current guidance for now. This does not reflect any lack of confidence in our performance. It is quite the opposite. It demonstrates our commitment to being thoughtful and prudent stewards of the company, ensuring we remain agile and prepared in this dynamic economic environment. While April trends have remained strong, we continue to closely monitor our performance.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

If our current momentum holds throughout second quarter, we expect to raise guidance accordingly. As always, our commitment remains to execute with the same strategic discipline and operational excellence that drove our strong first quarter results. We will continue to build on this foundation and create lasting value for our shareholders. Moving to updates on our strategic objectives. Our Trinity system is in Phase one of implementation, which is primarily related to back office systems.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Phase two should begin in the third quarter. We're in the final stages of testing and are excited about the benefits and synergies Trinity will deliver. We will report more on our progress throughout the year. On the supply chain front, we have successfully launched our new earned core line, a key step in optimizing procurement, improving margins and strengthening our national partnerships while delivering a better experience for our families through better offerings and a more thoughtful presentation of options. As we enter the next phase, we are excited about the rollout of our express funeral funding partnership, which will simplify insurance assignment processes, improve family financial flexibility, and unlock new sales potential across all funeral homes.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Future supply chain phases will focus on our casket core line, fleet management, and other essential procurement categories, which will help us reduce complexity, drive cost efficiency, and elevate service delivery across all businesses. These initiatives are part of our broader continuous improvement strategy, which is now embedded into our daily operations. If you have not had the chance yet, I strongly encourage you to read our 2024 shareholder letter. It captures the foundation we have built over the past two years, outlines our current strategic focus, and most importantly, charts a clear path forward to our ambitious 02/1930 vision. It positions Carriage for sustainable growth and long term value creation.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

You can find our shareholder letter on the Carriage website. In closing, we are proud of our strong first quarter results. They reflect the strength of our strategy, the power of our culture, and the relentless execution of our high performance teams. This momentum results from a clear vision, disciplined leadership, and an unwavering commitment to excellence. We are redefining how value is created in our profession.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Operational excellence, innovation, and a deep passion for service are not aspirations. They are the actions that consistently deliver premier experiences to the families we serve and unlock sustainable value for our shareholders. As we move forward, we do so with confidence, focus, and a bold vision of the future. Thank you for your continued trust and belief in Carriage. I will now turn the call over to John.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Thanks, Carlos, and good morning, everyone. We're glad to have you with us today. After just over three months at Carriage, I feel incredibly fortunate to be part of such a talented team. It's meaningful to work for a company so focused on providing the very best experience to families who trust us in their most personal and challenging moments. As Carlos mentioned, we're very pleased with our first quarter performance.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

It's a strong start, and we're energized by momentum heading into the rest of the year. While the macro environment may be a bit unpredictable, we're staying laser focused on what we can control and pushing forward with our key initiatives. So let's dive into the first quarter results. First quarter GAAP net income was $20,900,000 an increase of $13,900,000 or 200.1%. The variance is primarily driven by nonrecurring expense that occurred in 2020 specifically professional service expense related to the review of strategic alternatives as well as severance and separation expense, coupled with discrete benefit in the first quarter of twenty twenty five associated with a tax rainfall for shares vesting at a higher price than their grant value.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

The effective tax rate in the first quarter of twenty twenty five compared to the first quarter of twenty twenty four is close to a 15 benefit in the range, which also benefited diluted EPS ending the first quarter at 1.34 an increase of $0.89 per share or 197.8%. Moving on to cash flow statement. Cash provided by operating activities for the quarter was $13,800,000 which was down $5,900,000 from the prior year quarter of $19,700,000 The change in value year over year is primarily driven by changes in working capital adjustments, specifically reductions in accounts payable and accrued liabilities. Turning to capital expenditures for the first quarter. We had total capital expenditures of $3,200,000 compared to $3,600,000 in the prior year first quarter.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

We invested $1,800,000 in gross CapEx and 1,400,000 in maintenance CapEx. We also spent $1,900,000 for Project Train in the first quarter. Based on CapEx spend, our adjusted free cash flow for the first quarter was $13,400,000 which was down $5,100,000 from the prior year quarter of $18,500,000 We paid $17,000,000 towards our outstanding debt this quarter, ending with a maintained leverage ratio of 4.2 times from five times at the end of the February. We experienced a reduction in interest expense for the quarter of 1,400,000.0 due to the amendment in our credit facility in 02/2024 as well as lower outstanding balance on that facility. At quarter end, our credit facility had $120,000,000 drawn.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Now shifting to overhead. Overhead was $15,300,000 for the first quarter compared to $19,400,000 in the prior year first quarter, resulting in a $4,100,000 decrease in our overhead expenses. Prior year first quarter had $6,600,000 in special items, primarily associated with professional service expense related to the review of strategic alternatives as well as severance and separation expense. If we are to remove those expenses, adjusted overhead in the prior year first quarter was $12,700,000 or $2,600,000 lower than the current year. The $2,600,000 overhead variance was primarily driven by $800,000 related to project training, $800,000 related to the managing partner forum, six hundred thousand dollars related to payroll tax expense primarily associated with vesting of prior year grants, and 530,000 related to onetime nonrecurring miscellaneous expenses.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Of these expenses, we anticipate approximately $1,900,000 to be nonrecurring and $800,000, specifically the managing partner form, to be an expense that happens annually. Overhead as a percentage of revenue was 14.3% for the first quarter of twenty twenty five, which is 200 basis points higher than our adjusted overhead percentage of 12.3% in the first quarter of twenty twenty four. If we exclude costs associated with expected nonrecurring expenses, overhead as a percentage of revenue would be 12.5%, which is in line with our prior year in our communicated range. Now let's shift to the outlook for 2025. As Carlos indicated, we are maintaining our previously disclosed outlook as we continue to navigate the macro environment and fully expect to increase our outlook after our second quarter results provided current momentum continues.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

As a reminder, our outlook includes the impact of planned divestitures, but does not take into consideration any impact associated with acquisitions. As a reminder, our outlook for the following metrics were: revenues are expected to be in the 400,000,000 to $410,000,000 range adjusted consolidated EBITDA is expected to be in the range of $128,000,000 to $133,000,000 adjusted diluted EPS of $3.1 to $3.3 overhead expense to be in the 13% to 14% of revenue range adjusted free cash flow in the range of 40,000,000 to $50,000,000 That concludes our prepared remarks, and I turn it back over to the operator to open it up for questions.

[Operator]

And we can take our first question from Alex Paris with Barrington Research.

[Alexander Paris, President & SMD at Barrington Research Associates]

So I'll start with the funeral segment, which was up as expected, particularly given your comments on the last call that January and February were up. Question. How was March and April? I think you kind of implied in your overview comments that April continues strong as well.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Yeah.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

The momentum has continued same from January all the way through April. Pretty strong on the funeral home side, mainly related to volume increase on a year over year basis and and some, you know, a 50 to 200 basis points related to out of training per contract.

[Alexander Paris, President & SMD at Barrington Research Associates]

Gotcha. And the strength year over year, does this suggest that the COVID hangover is behind us?

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

That's a good question, Alex.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

It's a little challenging to to forecast that. We have two questions. One is the one you just asked, and the second one is with the flu season shift we have experienced this year will continue to to be the the new seasonality on on flu season moving forward. That answer, we don't really know. But it relates to to COVID.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

We have been, you know, speaking about it for quite a long time. If if you take up the number of of deaths coming from COVID nineteen, and then you account for reduction and or negative volume over the last two years, it should pretty much call for a wash off moving forward for this year, which we believe this is a year that it levels up, that there should be a wash up and potentially increase of volume moving forward. And that's really what we have forecasted in our in our guidance.

[Alexander Paris, President & SMD at Barrington Research Associates]

Great. And then on the cemetery side, preneed and terming rates sold were were down in the quarter year over year.

[Alexander Paris, President & SMD at Barrington Research Associates]

It it was a similar situation over at your largest competitor, Service Corp. I saw their press release last night that they also had a decline in preneed property rights sold. What do you what do you first of all, it looks like q one is usually a smaller quarter seasonally for preneed and term in rates selling, looking back over the last couple of years. Do you so seasonality could be one explanation for that decline. A tough comp as well since that business has really ramped up over the last few years.

[Alexander Paris, President & SMD at Barrington Research Associates]

But also something you referred to in your preferred prepared comments, the economic uncertainty, you know, to what do you attribute the decline in preneed and term in rates sold?

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

So we we have not seen a decline of being in cemetery revenue coming from from being in cemetery sales related to discretionary spending. We have not seen that. As a matter of fact, we have seen an expansion in our our revenue per contract even on the cemetery side. What we attribute the decline or or this acceleration, because it's still a pretty significant growth.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

We had a pretty decent growth on bringing cemetery sales on a year over year basis. But what we have seen is the delay of available inventory in two of our premier cemeteries that we have, and particularly one which is in California. And during the changing season, our Asian community really goes and buys tremendous amounts of property out of this cemetery. And we took a little bit of time. You know, I mentioned the last call that we had a team call out of that one cemetery.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

So it took us a little longer to get the permit, to get the cemetery development, you know, aligned. But now we're back on track with that, and we believe we will return for a normal, you know, 10% to 20% cleaning cemetery growth on a year over year basis starting in in the second quarter of this year.

[Alexander Paris, President & SMD at Barrington Research Associates]

Great. That was helpful. Then I had a question about the divestitures in the quarter.

[Alexander Paris, President & SMD at Barrington Research Associates]

Right? In the press release, you talked about proceeds of 18,700,000.0 and a gain of 5,800,000.0 on those sales. The question is, is this the 7,900,000.0 in revenue and the 2,300,000.0 in EBITDA that you talked about in your guidance, revenue revenue and EBITDA associated with the property held for sale, Or are there other things left to sell in that that bundle?

[Steven Metzger, President at Carriage Services]

Yeah. I'll just handle the the question in regards to the guidance.

[Steven Metzger, President at Carriage Services]

This is a portion of that guidance. We still have another property that we look like to do that in the second quarter, but we're aligned with kind of the $7,900,000 where we expect that to be a good number of what we will miss. And then I'll just follow-up on John's point. There there are some additional opportunities we're looking at that are stock core assets that we feel good about in terms of having the opportunity to divest later this year. I think the thing that we're really excited about and wanna highlight is when you look at the last sixteen months, we have we've essentially sold about, let's call it, you know, several million dollars of EBITDA.

[Steven Metzger, President at Carriage Services]

We've raised about 31,000,000 of proceeds. During that time, we've increased top and bottom line. So as we return to acquisitions, you know, the the organic growth engine of Carriage is very strong right now, and it's been able to make up for the fact that we've actually had fewer businesses in the past year despite growing the company as we are able to add some more premier businesses through acquisition, which we intend to do this year. And we can combine those two things together. That's where we think we accelerate growth for the shareholders going forward.

[Steven Metzger, President at Carriage Services]

So it's a big part of our story.

[Alexander Paris, President & SMD at Barrington Research Associates]

That's a great segue for my final question. You you you know, with the significant improvement in your balance sheet and your targets for year end net leverage, When do you expect and it sounds like, and I think you even said it in the last call, you expect to do some m and a this year. Scale and timing, I'm curious about. Should we expect to see it in the third quarter or the fourth quarter?

[Steven Metzger, President at Carriage Services]

Yes. So we're talking to a number of owners right now. And again, just kind of going back when you you think about those sixteen months and $38,000,000 of proceeds, we do intend to reinvest some of those in higher quality EBITDA producing businesses and expect to be able to share more about that in Q3 and then again in Q4 as well. So back half of this year, there'll be more to report there, but excited to be able to add acquisitions back to the value creation story for Carriage.

[Alexander Paris, President & SMD at Barrington Research Associates]

Great.

[Alexander Paris, President & SMD at Barrington Research Associates]

Thanks for the additional color, and I'll get back into the queue. Thank you.

[Operator]

Thank Our next question comes from John Franzreb with Sidoti and Company.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Morning, everyone, and thanks for taking the questions. Carlos, I'm I'm curious about your opinion. I I know in the first quarter, we had quite dynamic conditions. But I'm I'm curious about your opinion about vaccine fatigue and how you think that's playing out and impacting your business.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Honestly, I don't I don't think I don't hear managing partners, funeral directors, nobody of our team speaking, you know, around vaccine fatigue or or any of of pandemic related issues.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

I truly believe it's just a function of our strategy or plan, the changes we have made to our to our core line, the changes we have made to our pricing structure, the changes we have made to the corporate model we have, our operating model as well. And we've been executing on those now for probably about two years, and it seems like the momentum is is continue to to pick up and to continue to execute at a better pace. So I I don't think it's related to to those items at all.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Okay. Fair enough.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

And can you just remind me what cost saving measures you are currently engaged in, if any, the timing of completion, and and would that be completed in this year or not?

[Steven Metzger, President at Carriage Services]

Yes. So, John, I can cover a few things just on the supply chain focus front. So right now, know, we completed last year moving into this year RFP processes around insurance assignments, earns, caskets. So really the big ticket items for us.

[Steven Metzger, President at Carriage Services]

We're working on a few things right now with websites and surveys that we think will result meaningful savings. We'll have, you know, better insight to what those dollars will look like next quarter. And as Carlos mentioned in his remarks, you know, fleet fleet is a big area for us. And so we've already seen material savings with new approach to fleet. We have, you know, around 800 vehicles.

[Steven Metzger, President at Carriage Services]

So for us, that's an opportunity we continue to to focus on. So that's over the next quarter to two quarters, that's where our focus remains, and we'll continue to grow on that as the year concludes.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

And and just to add a little bit more to that, John, what's what's really exciting is that we are in the on the early stages of recognizing some of those savings. You know, our core line is being rolled out across the board of carriage. It doesn't mean that it is fully executed in every single business.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

And it takes time for film directors to adopt the change, and meaningful savings will continue to be realized quarter to quarter through the end of this year. So we're really excited about those savings.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Got it. And Carlos, you know, I I can appreciate the measure of caution giving consumer sentiment. I guess two questions.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Can you kind of kind of remind us of how Carriage reacted in previous recessions, and what kind of levers you anticipate pulling should should we go into a recessionary environment?

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Yes. So as as you know, John, you've been following this this industry for quite a while. It's quite a resilient industry, and and it's, you know, years of existence have shown through recession and depression times that continues to be pretty strong. This is a good place to invest during these times because, of course, debt continues to occur and doesn't stop.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

People would think that most likely, then families will stop spending money on on celebration supplies and gaskets and things like that. But, you know, through rotation, whether it was 02/2008 or, you know, any recession we experienced lately, we have not seen that decline. The only thing that becomes perhaps a bit more difficult is the printing side. However, in my experience on sales over the the many years I've been in this industry now, it's it's pretty clear to me that it's just a numbers game. So for example, before you had to talk to, let's just say, 10 families to sell one green cemetery contract, all it means is now maybe you need to talk to 15 families to sell one green e cemetery contract.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

And so all we do is just accelerate and plan for lead generation programs that deliver those numbers to to continue to, you know, fulfill our goal to 10 to 20% growth on a year over year basis of preneed property. And so that that's really all I have seen and and I haven't seen and have been in this industry now over two recessions. So I I feel pretty sure about it.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

Great. Thanks for the color, Carl.

[John Franzreb, Senior Equity Analyst at Sidoti & Company]

I appreciate it.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Yeah. Thank you, Carl.

[Operator]

Thank you. And our next question comes from George Kelly with Roth Capital Partners.

[George Kelly, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Congrats on a strong quarter. First, just a follow-up to one of the prior questions. How big is the property you're contemplating monetizing in 2Q? And can you just sort of ballpark, like, what what could the proceeds be from that?

[Steven Metzger, President at Carriage Services]

Yes.

[Steven Metzger, President at Carriage Services]

So I would say in q two, George, probably around 6,000,000 in proceeds at this at this point. Just some of that is is contingent on closing conditions and timing, but I think 6,000,000 is a is a good number for q two. And that sale is already factored into your guidance? Yes. Yes.

[George Kelly, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Okay. Understood. And then second question for you on the cemetery business. Appreciate all the detail on the various CapEx projects that has been underway. It sounds to me like you're already seeing a return to that 10 to 20% growth.

[George Kelly, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Is that a fair statement? I just it it's a big uptick sequentially, and you had such a great q two last year. So just wanting to make sure, like, what what is your visibility on that 10 to 20% as soon as q two? And then maybe secondarily, there my understanding is there's another big project underway at a different property on the East Coast. And what stage of of completion is is that project?

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

So we we feel pretty strong about being able to come back to that 10 to 20% on the second quarter. You know, we we ended up at 5.2% bringing property sales over the previous quarter and the first quarter of this year, which is actually for for most cemeteries, a pretty decent amount of of growth, all the also that I know for sure. However, because of the early stages of cemetery, you know, sales strategy, a carriage coming in, you know, within five years. We believe we have a a little a little bit of a longer, you know, runway than than most companies. And so that that's where my confidence comes from and from knowing the amazing job our sales teams led by Shane Pudence are doing in creating strategy that creates the lead generation programs and and the training and the recruiting and everything that's related to to a successful sales team in this industry.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

And so those properties, the one you referred to in the East, have actually started to, you know, complete their their development. And so I have no concerns over that. As a matter of fact, you know, I would share that good news we have from from that specific business in terms of being cemetery sales in the month of April already. And on the the one in the West Coast, you know, what what really slowed us down was not being able to sell free cemetery or doing in in this community where last year, they they had a very big month. And so this year, we couldn't do that because the Asian community don't don't buy pre developed know, property for the most part.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

They they they like to see it. They go, you know, to celebrate and mourn their their their death, and and they and they go and and and purchase property that they see. And so since now that passed and it's under, you know, q one for the most part, there'll be a little of that in April, but we feel pretty strong about repo performance. I have no concerns on being able to sell redevelop in in those two properties moving forward and for the remainder of this year. So that's where the confidence comes from, George.

[George Kelly, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Okay. That's very helpful. And then maybe just one last one. On the other side of the business, on the funeral side of the business, just wanted to make sure I understood your comment. So what you've seen in April is a continuation of kind of, call it, low single digit pricing and low single digit volume growth.

[George Kelly, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Is that right?

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

That is correct. Yes. It's it's positive. Certainly different than than we have seen over the last almost three years since COVID nineteen.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

And so it it looks it looks pretty strong, very positive, and and and excited about that.

[George Kelly, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Okay. I and I lied. I have one more quick one. And apologies if I missed it.

[George Kelly, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Any kind of expected tariff impact?

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Thanks, George. From a significance perspective, no. We don't really we don't think that tariffs are gonna impact us significantly this year. You know, if you look at our merchandise cost, it's a small percentage or an immaterial percentage is gonna be associated with stuff that we import.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

So when we look and did an analysis, the maximum impact would be less than 10 basis points, and that's on a full year basis, so not significant.

[George Kelly, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Okay. Excellent. Thank you very much.

[Steven Metzger, President at Carriage Services]

Thank you, George.

[Operator]

Thank you. And

[Operator]

it does appear that we have no further questions at this time. Mr. Quezada, I will turn the call back to you for any additional or closing remarks.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Thank you, everybody. And as we look at it, we remain confident in our momentum and focus on driving continued growth, innovation and a long term value creation. We appreciate your continued support and look forward to sharing our progress in our next call. Thank you, everybody.

[Operator]

This concludes today's call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Steven Metzger, President
• Carlos Quezada, CEO & Vice Chairman
• John Enwright, SVP, CFO & Treasurer

Analysts

• Executive
• Alexander Paris, President & SMD at Barrington Research Associates
• John Franzreb, Senior Equity Analyst at Sidoti & Company
• George Kelly, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC