Carriage Services Q4 2025 Earnings Report

Carriage Services EPS Results

• Actual EPS: $0.75
• Consensus EPS: $0.80
• Beat/Miss: Missed by -$0.05
• One Year Ago EPS: N/A

Carriage Services Revenue Results

• Actual Revenue: $105.48 million
• Expected Revenue: $103.50 million
• Beat/Miss: Beat by +$1.98 million
• YoY Revenue Growth: N/A

Carriage Services Announcement Details

• Quarter: Q4 2025
• Date: 2/25/2026
• Time: After Market Closes
• Conference Call Date: Thursday, February 26, 2026
• Conference Call Time: 9:00AM ET

Carriage Services (NYSE:CSV) operates as a leading provider of funeral, cemetery and cremation services in the United States. The company owns and operates a network of funeral homes, cemeteries, crematories and related service facilities, offering a comprehensive suite of end-of-life services. Its portfolio encompasses traditional funeral services, memorials, graveside burials, mausoleum entombment and direct cremation options, alongside personalized tributes and reception arrangements.

In addition to standard funeral and cemetery offerings, Carriage Services provides pre-arrangement planning and financing solutions designed to ease the administrative and financial burden on grieving families. The company’s affiliated staff assist clients with legal documentation, obituary coordination, veteran’s benefits processing and grief support resources. Many locations also offer grief counseling programs and community outreach to help stakeholders navigate loss with dignity and respect.

Founded in Houston, Texas, in 1991, Carriage Services has expanded organically and through strategic acquisitions to serve communities across more than 20 states. Headquartered in Houston, the company maintains a decentralized operating model, empowering local management teams to tailor services to regional preferences and customs. Under the leadership of its executive management and board of directors, Carriage Services continues to pursue growth opportunities while adhering to its founding commitment of compassionate service and operational excellence.

Carriage Services Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Carriage delivered a strong quarter and year — Q4 revenue $105.5M (+8%), adjusted EBITDA $32.5M (+11%) and adjusted diluted EPS $0.75 (+21%); full-year revenue $417.4M and adjusted EPS $3.20 (+20.8%).
• Positive Sentiment: Cemetery and pre-need sales were a major driver: Q4 cemetery revenue rose 18.4%, pre-need cemetery sales production +25.5% and pre-need insurance contracts sold +33.8%, boosting future revenue visibility.
• Positive Sentiment: 2026 guidance is growth-oriented: revenue $440M–$450M (≈5.5–8%), adjusted EBITDA $135M–$140M, adjusted EPS $3.35–$3.55, CapEx $25M–$30M and expected adjusted free cash flow $40M–$50M.
• Positive Sentiment: Management has reactivated M&A — they expect incremental 2026 revenue of roughly $5M–$10M from likely deals, plan disciplined purchases (targeting ~7–9x EBITDA multiples) and say integrations begin pre-close.
• Negative Sentiment: Near-term headwinds: an unexpected $1.2M employee benefit claim and higher incentive/IT-driven overhead weighed on Q4 results, and the delayed Trinity system rollout provides no material upside baked into the 2026 guide.

Presentation

[Operator]

Good day. Thank you for standing by. Welcome to the Carriage Services Q4 2025 Earnings Webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Steve Metzger, President. Please go ahead, sir.

[Steven Metzger, President and Secretary at Carriage Services]

Good morning, everyone, and thank you for joining us to discuss our Q4 and year-end results for 2025. In addition to myself, on the call this morning from management are Carlos Quezada, Chief Executive Officer and Vice Chairman of the Board of Directors, and John Enwright, 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, but will be followed by a question and answer period. 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.

[Steven Metzger, President and Secretary at Carriage Services]

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 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 and Vice Chairman at Carriage Services]

Thank you, Steve, and welcome to everyone joining us for today's Q4 and full year earnings call. As we close out 2025, I am incredibly proud of what our Carriage team has accomplished. This year reflects disciplined execution, cultural alignment, and a relentless commitment to creating premier experiences for the families we serve. Before discussing our financial performance, I want to recognize every managing partner, every team member in the field, and every support member across our organization. You are the heartbeat of Carriage. Our results are not accidental. They are the result of a clear vision, high expectations, accountability, and a deep passion for this noble profession. Thank you for living our values and for delivering excellence to every family, every time.

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

Today, I will highlight our financial performance for the Q4 and the full year and provide an update on the progress of some of our strategic objectives. John will then provide additional detail on our financial metrics, cash from operating activities, balance sheet strength, capital expenditures, overhead, and 2026 guidance. Now to my report. 2025 was a year of defined purpose and intentional value creation. We continued to build a more scalable operating framework, optimize our supply chain processes, enhance our passion for service mindset, and reactivated our disciplined growth strategy through high-quality acquisitions. At the same time, we further strengthened our balance sheet and reinforced our capital allocation discipline. We are no longer in the rebuilding phase. We are now firmly in the compounding phase. Let's begin with the numbers.

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

For the Q4, we reported total revenue of $105.5 million, representing a solid 8% increase compared to the same period last year. When we look at each segment, total funeral operating revenue was $61.1 million, reflecting a 9.6% growth year-over-year. Funeral home operating volume was 10,571, an increase of 6.8% over the same period last year, while average revenue per contract was $5,777, an increase of 2.6% over the previous year's quarter. This performance reflects our continued focus on strategic pricing, new burial information offerings, service mix optimization, and steady execution in our businesses. As you may recall, December 2024 had lower than expected volumes due to a shift in the flu season that pushed volume to January.

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

This December, we experienced a more typical flu season. Moving to total cemetery operating revenue, we finished the Q4 at $33.8 million, an increase of $5.3 million, or 18.4%, compared to the same quarter last year. This performance was primarily driven by a 25.5% increase in pre-need cemetery sales production, a 15.6% increase in pre-need interment rights sold, and a 5.3% increase in the average sales per property contract. Our cemetery performance continues to highlight the power of diverse inventory development and strategic pricing and focused pre-need execution. Moving to total financial revenue, the company ended the quarter at $9.3 million, an increase of 15.3% compared to the same period last year, primarily driven by the strong performance of our trust fund investments.

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

Pre-need insurance contracts sold increased by 33.8% compared with the same quarter last year, reinforcing the continued strength of our funeral pre-need insurance sales strategy and the outstanding work of our sales teams, who continue to focus on the education of our families on the value of pre-planning. Turning to profitability, adjusted consolidated EBITDA for the Q4 was $32.5 million, an increase of $3.2 million or 11%, and adjusted consolidated EBITDA margin was 30.8%, an increase of 80 basis points when compared to the same quarter the previous year. This margin expansion reflects the combined impact of our supply chain initiatives, the strategic pricing, and capital allocation discipline.

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

Adjusted diluted EPS for the Q4 was $0.75 per share, compared to $0.62 during the same quarter the previous year, an increase of $0.13 per share or 21%. Our Q4 of 2025 delivered strong performance, and we're pleased with the progress made. Now let's move to our full year performance. Total revenue was $417.4 million, up from $404.2 million in 2024, representing a 3.3% growth. While reported revenue growth of 3.3% may appear modest at first glance, it significantly understates the company's underlying performance in the context of our portfolio repositioning. In 2025, the divestiture of non-core businesses negatively impacted revenue by approximately $9 million, and we acquired strategically selected high-quality assets in September, which contributed about $4 million in revenue.

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

We expect these new businesses to reach $16 million in revenue in 2026. While we felt the top line impact of the divestitures of non-core businesses in 2025, this portfolio optimization will enhance our ability to grow revenue and margins in the future and showcase our commitment to disciplined capital allocation and return of invested capital. Moving to adjusted consolidated EBITDA, we ended the year at $130.7 million, an increase of $4.4 million, or 3.5%, while adjusted consolidated EBITDA margin finished at 31.3%, an increase of 10 basis points, both compared to the prior year. Adjusted diluted EPS was $3.20 per share, compared to $2.65 per share, an increase of $0.55 or 20.8% compared to the prior year.

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

These results demonstrate the execution discipline of our operations and validate the effectiveness of our strategy to turn around the company. Over the past three years, we have rebuilt Carriage with intention, purpose, and discipline execution. Not simply to improve performance and build credibility, to create a more sustainable, profitable, and predictable company. We have reshaped our revenue mix for higher quality earnings, institutionalized rigor with our operating system to reduce volatility, and improve our margin profile through disciplined pricing, supply chain optimization, and a strategic capital allocation. These actions are designed to generate consistent cash flow, expand profitability over time, and enhance earnings visibility. Most importantly, our leadership teams are fully aligned and executing with accountability to deliver performance that we believe is repeatable and scalable. Moving to updates on our strategic initiatives.

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

We continue to invest in systems and infrastructure to support disciplined growth, advancing continuous improvement initiatives, modernize technology platforms, and enhance reporting capabilities. These investments improve our reliability, visibility, and decision-making quality, converting effort into behaviors and repeatable outcomes. For example, we upgraded our sales infrastructure by deploying Sales Edge 2.0, our CRM, achieving approximately 80% adoption by year-end. The platform enhanced funnel visibility, campaign targeting, and reporting precision, contributing $2.6 million in Q4 pre-need production. In parallel, we fully integrated our pre-need funeral sales strategy across the sales organization. We expect Sales Edge 2.0 to become our pre-need sales engine in 2026. At the same time, we develop our leadership capability and reinforce a meritocratic culture aligned with performance expectations. Culture at Carriage is a measurable economic asset that makes execution stronger, reduces risk, and supports sustainable profitability.

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

Our supply chain optimization strategy continues, with our urn and casket core line initiatives now fully embedded across our organization. These strategies are driving purchasing consistency, margin improvement, and a more curated presentation for families. We expect future optimization opportunities and additional national partnerships will allow us to further reduce complexity and enhance our operating leverage. In closing, we're building a best-in-class death care company defined by premier experiences, a high-performance culture, meritocracy, and accountability, all aligned with our three strategic objectives: disciplined capital allocation, purposeful growth, and relentless improvement. Our performance in 2025 reflects disciplined execution, guided by a clear, consistent framework rooted in our purpose to create premier experiences through innovation, empowered partnerships, and elevated service. These are not aspirations. They are operating standards that guide capital deployment, operational decisions, and long-term value creation.

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

Our balance sheet is stronger, our systems are more robust, our acquisition engine is active and disciplined, and our culture is aligned with our 2030 vision. We're not chasing growth. We're building durable, predictable, and compounding long-term shareholder value. As we enter 2026, we do so with confidence, clarity, and intention. Thank you for your continued trust and belief in Carriage. I will now turn the call over to John.

[John Enwright, SVP and CFO at Carriage Services]

Thank you, Carlos, and thanks, everyone, for joining us today. Before I start, I'd like to look back on my first year at Carriage Services. I knew stepping into a new industry would bring professional growth, but what stood out most was the dedication and commitment throughout the organization. Our teams are truly unmatched in their focus on enhancing the care and service we provide for the families who choose us. I appreciate both our field and support center teams for everything you do each day. My comments today will primarily focus on performance in the Q4 of 2025 compared to the Q4 of 2024. After that, I will share our outlook for 2026.

[John Enwright, SVP and CFO at Carriage Services]

We reported consolidated adjusted EBITDA of $32.5 million, representing 30.8% of revenue, an increase from $29.3 million or 30% of revenue in the Q4 of last year. The increase, both in absolute terms and percentage, were driven by improved performance across our field operations, resulting in a $5.5 million increase in field EBITDA. This progress was partially offset by an unanticipated employee benefit expense of approximately $1.2 million, which stemmed from a few high-cost claimants during the quarter, as well as higher volume of medical insurance claims filed in December of this year compared to previous year. Overhead expenses rose, which I'll discuss further shortly. For the Q4 of 2025, our adjusted diluted EPS rose to $0.75, representing a 21% increase from $0.62 in the prior year.

[John Enwright, SVP and CFO at Carriage Services]

The previously mentioned unanticipated employee benefit expense in the Q4 of 2025 impacted diluted EPS by approximately $0.05-0.06. On a GAAP basis, diluted EPS for the Q4 was $0.77, compared to $0.62 in the same period last year. For the full year, GAAP diluted EPS increased by $1.15 or 54.8%, while adjusted diluted EPS grew by $0.55 or 20.8%. Moving to cash from operating activities, we saw an increase of $4.8 million over the prior year quarter or a 52.2% increase, primarily a result of year-over-year improvement in operating results. Adjusted free cash flow in the quarter was down $400,000 or 5.4% from the prior year Q4, primarily due to higher capital expenditures.

[John Enwright, SVP and CFO at Carriage Services]

Due to our ongoing commitment to disciplined capital allocation, our bank leverage ratio decreased to 4x from 4.3x at the close of the Q4 of 2024. In recent years, we've concentrated on enhancing operations and deploying capital efficiently. We're pleased to finish the year within our long-term leverage ratio target of 3.5-4x. Capital expenditures for the quarter totaled $7.9 million in the Q4 of 2025, compared to $4.4 million in the prior year's Q4. The $3.5 million increase was predominantly associated with growth capital, specifically investment in cemetery development, which allows us to continue to drive strong pre-need cemetery sales structure. For the quarter, we spent $5.2 million on growth capital and $2.7 million on maintenance capital.

[John Enwright, SVP and CFO at Carriage Services]

Overhead expenditures for the quarter totaled $15.2 million or 14.4% of revenues, compared to $12.9 million or 13.2% of revenues in the Q4 of 2024. The increase was predominantly associated with higher incentive pay for the field based on performance for the year. On a full year basis, overhead expenses totaled $56.6 million or 13.6% of revenues, which aligns with our long-term target. Moving on to our 2026 outlook. In forming an outlook for the upcoming year, we have shifted toward a growth-oriented approach, along with incorporating the projected full year benefits from our 2025 acquisitions. Additionally, we have factored in the expectation of certain potential acquisitions that we believe may be completed in 2026.

[John Enwright, SVP and CFO at Carriage Services]

Revenues are planning to be in the $440 million-$450 million range, compared to $417.4 million in 2025, which represents a growth rate of approximately 5.5-8%. We expect same-store funeral growth in the low single digits and cemetery growth in the high single digits. Pre-need cemetery sales production should remain within our 10-20% target range. Adjusted consolidated EBITDA is forecasted at $135 million-$140 million for 2026, up from $130.7 million in 2025. Margins are expected to range between 30.5-31.5%, compared to 2025's margin of 31.3%.

[John Enwright, SVP and CFO at Carriage Services]

Overhead is projected to be 13.5-14.5%, a bit higher than our long-term goal of 13-14%, mainly due to expected increases in IT investments, ongoing project training rollout expenses, and continued investment in talent. Based on these targets, we anticipate adjusted diluted EPS of $3.35-$3.55, compared to $3.20 in 2025. Our adjusted diluted EPS will be somewhat impacted by our expected full year effective tax rate, moving to a range of 28.5-29%, compared to 26.7% in 2025.

[John Enwright, SVP and CFO at Carriage Services]

Finally, we anticipate our adjusted free cash flow to be in the range of $40 million-50 million, which assumes total capital expenditures in 2026 of $25 million-30 million, reflective of the continued investment in our core business. That concludes our prepared remarks. I will turn it over to the operator to open it up for questions.

[Operator]

Thank you. We will now conduct a question-and-answer session. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Again, you may press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal. We'll take our first question from Alex Paris with Barrington Research.

[Alexander Paris, President and Senior Managing Director at Barrington Research]

Hi, guys. Thanks for taking my question, and congrats on the strong finish to the year and the guide. My questions are in three parts. First, on the quarter, you beat on revenue pretty handily. I think you said the acquisitions of the Q3 added around $4 million for the year. How much for the Q4 did they add?

[John Enwright, SVP and CFO at Carriage Services]

They added about $3 million, generally speaking.

[Alexander Paris, President and Senior Managing Director at Barrington Research]

Okay. adjusted EBITDA was in line despite that increase in overhead that you mentioned, and that unanticipated, insurance cost. Are those insurance costs included in overhead or no?

[John Enwright, SVP and CFO at Carriage Services]

They're spread between overhead as well as field margin. Predominantly they're in field margin, but yes, there's an impact to overhead as well as we allocate.

[Alexander Paris, President and Senior Managing Director at Barrington Research]

Okay. Adjusted EPS was a little bit lower than our expectations, versus my model, you had higher interest expense and a higher tax rate than I had modeled. Anything else in there?

[John Enwright, SVP and CFO at Carriage Services]

No, no. That's, I mean, if you think about our expectations and how we guided to, really, if we didn't have that unanticipated employee benefit expense, we would have fallen right within where we expected.

[Alexander Paris, President and Senior Managing Director at Barrington Research]

Sure. Okay, thank you on that. moving to guidance, revenue growth 5-8%, adjusted EBITDA 3-7%, adjusted EPS growth 5-11%. My question is: What are the underlying assumptions for the low end and the high end? You know, in other words, what would it take to get to the high end of guidance?

[John Enwright, SVP and CFO at Carriage Services]

From a, from a high end of guidance, you would need to, you know, the impact of the new acquisitions would have to be at our high end. We're estimating the acquisitions to be between $5 million and $10 million of impact to performance in 2026. We would be at the high end of that. We would be at a little bit higher end of the our impact. If you think about our funeral business, you know, we expect low single digit growth. That could be between 1-3%, would be at the high end of that. In cemetery, really between 6% and 8%, we'd be the high end of that.

[Alexander Paris, President and Senior Managing Director at Barrington Research]

Gotcha. That's helpful. You, you said that that guidance included an assumption for acquisitions that have not yet been announced. Can you quantify it? Perhaps you did in the prepared comments, but I missed it. What's the methodology for including or not including, you know, for example, are you at LO, you know, letter of intent stage by the time you increase it? What's the methodology for factoring in future acquisitions?

[John Enwright, SVP and CFO at Carriage Services]

Yeah. The acquisitions, you know, the impact to the guide is about $5 million-10 million. We expect it to range within that. You know, I can let Steve speak to kind of the perspective. Both Carlos and I spoke in our prepared remarks, be more focused on growth and being growth oriented, and ultimately based on that, as we are more proactive in our M&A program, we felt it appropriate to apply something this year.

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

Yeah.

[Alexander Paris, President and Senior Managing Director at Barrington Research]

Just-

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

This is Carlos. I just wanna, you know, reinforce. As you remember, we spent, you know, the most part of the last three years trying to get all the systems, you know, updated, the foundation for growth for the company, and really focusing on paying down our debt well to a range that we feel comfortable, which is that 3.5-4x. We achieved the 4x as we closed 2025, and we truly believe now as, you know, Carriage at its core, is a consolidation company. Really trying to advance and make some rapid moves on growth from an M&A perspective, and organically speaking.

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

I truly believe this is why we want to signal to our investors that within the guidance, that we're ready for that.

[Alexander Paris, President and Senior Managing Director at Barrington Research]

That's great. The point of clarification, though, the high end of guidance includes a $5 million-10 million impact year-over-year from, I assume, the Q3, acquisitions. Then you're saying there's potentially another $5 million-10 million in acquisitions that you expect to make in 2026?

[John Enwright, SVP and CFO at Carriage Services]

That's great clarification. For 2026 results, we expect the acquisitions that happened in 2025 to generate about $16 million worth of revenue. you'd have to net that against, you know, the $4 million that they had in 2025, as well as the divested revenue that we had in 2025 of about $9.7 million. The impact of just that program is probably an increment of about $4 million, right? Roughly. In 2026, we're estimating new acquisitions that we believe will have $5 million-10 million of impact to the revenue.

[Alexander Paris, President and Senior Managing Director at Barrington Research]

Okay, good. Thank you for that. In terms of new acquisitions, I don't know if I fully heard the answer. Are these specific acquisitions that you're talking about, or just a methodology to include some sort of number for acquisitions since you're a consolidator?

[Steven Metzger, President and Secretary at Carriage Services]

Good morning, Alex, it's Steve. It's a combination of both. At this point, we last year, we talked a little bit about investing in more resources internally to make sure we could be more proactive on sourcing deals, we are talking to more owners, quite frankly, than at any time during my eight years at Carriage. We still balance that with looking for a very particular type of business. At this point, you know, we've got more that we will be able to report next quarter on some ongoing discussions with owners who are ready. So we're excited to talk about that when the time is appropriate. Parallel to that, we're talking with a number of owners who are getting comfortable, and we're getting comfortable with them, for some potential opportunities this year.

[Steven Metzger, President and Secretary at Carriage Services]

It's a little bit of both. We've got some that are closer to, you know, call it seventh or eighth inning, and then some that are, you know, earlier innings.

[Alexander Paris, President and Senior Managing Director at Barrington Research]

Gotcha. Okay.

[Steven Metzger, President and Secretary at Carriage Services]

Okay.

[Alexander Paris, President and Senior Managing Director at Barrington Research]

The last question is, I wonder if we can get an update on the Q3 acquisitions. They had roughly $15 million in revenue in 2024. That's what you had announced at the time of the acquisition. You're saying that they're gonna be $16 million in 2026 after having contributed a partial year of $4 million in 2025. So now that we're back in the M&A business after the hiatus, what is the integration process for acquisitions once closed? You know, what is step one, step two, step three, and where are we on the integration process for those Orlando-based acquisitions?

[Steven Metzger, President and Secretary at Carriage Services]

Just a great question, I'd reframe it a little bit. The integration process really for us begins before close. you know, we've dialed in with our continuous improvement team, a more structured management approach to systems, employment, onboarding, policies, and procedures. We begin all of that before close, obviously in partnership with the sellers, so we can hit the ground running on day one. As it relates to these two acquisitions, very different acquisitions, although both in really strong markets. Starting with Osceola, as we talked about before, Osceola is unique in that it allows for a holistic operation in the Kissimmee market. Between the cemetery and the opportunities on cemetery development, I think we're really excited there.

[Steven Metzger, President and Secretary at Carriage Services]

We will have some new development, significant development available for the folks in Kissimmee here in just a few months. We've been working on that development before close. The pre-need opportunity for both Kissimmee and Faith Chapel in Pensacola is significant. We've got our pre-need teams ramped up there to try and take advantage of that as well. I would say, you know, both businesses are pretty mature, but both have a lot of opportunity. We're seeing steady progress from, call it day 1 back in late September to where we are now. January was the strongest month by far for both businesses. We're seeing kind of that pre-planning on the integration side paying off for us based on kind of historical approach, and look forward to seeing what they'll do this year.

[Alexander Paris, President and Senior Managing Director at Barrington Research]

Thank you. That'll do it for me. I'll go back into the queue.

[Steven Metzger, President and Secretary at Carriage Services]

Thank you, Alex.

[Operator]

We'll take our next question from John Franzreb with Sidoti & Company.

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

Good morning, everyone, and congratulations on the good year, and thanks for taking the questions. I'd actually like to start with the Q4. Carlos, you mentioned that flu activity returned to normalcy, if you will, in the December period. Specifically in December, you know, itself was very active. I'm curious what you saw in January. We're seeing a secondary resurgence of the flu. I'm curious about the comps on a year-over-year basis and how they could play out, considering last year was so particularly strong.

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

That's a great question, John. Thank you for the question, and good morning. As you know, and I mentioned on my prepared remarks, December 2024 came, you know, pretty light, as a consequence, we believe to the push of the flu season into January of 2025. This last year, 2025, December came as a normal flu season, so we saw that activity volume increase on a comparable basis, December 25-24. January, it came out, you know, quite light on a comparable basis on volume.

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

You know, I still feel pretty strong about our performance because we're able to make up that loss of volume on a comparable basis because the flu season came earlier, and we still ended up, you know, having a pretty decent. I don't wanna disclose too much. January looks good even after the, let's call it the alignment of the flu season between December and January over the, you know, past year.

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

What are the prospects for growth in the Q1 versus last year's Q1, given the tough comp?

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

The question was to Bobby?

[Steven Metzger, President and Secretary at Carriage Services]

Yeah. I think the Q1 will be a little bit tougher this year from a comparable perspective, because the Q1 was strong throughout the whole quarter.

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

Right.

[Steven Metzger, President and Secretary at Carriage Services]

flu season moved January, February, and a little bit into March. To Carlos's earlier point, you know, we're not gonna disclose exactly how we're performing, but we're happy with the performance, but it'll be a tougher comp.

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

Got it. Got it. Got it. Where do you stand in the supply chain optimization process at this point? You know, can you give us an update there?

[John Enwright, SVP and CFO at Carriage Services]

Yeah, I would say, Steve, please jump in, if you have anything different to say. I would say we're still in the early innings of that program. We really started in 2024 with one individual kind of running that program. In 2025, we got the program up to a little bit more, speed. I would say we still have opportunity there, and we'll see some more opportunity as we see 2026 results and into 2027 results.

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

John, it's also a great question. I want to give you a little more context to that. You know, it's a new department we started, probably about two years ago, at the beginning of two years ago. A slow start, just to be honest with you, we were able to deliver the caskets, the urns, a couple of other things, but there's so much opportunity. Part of the challenge was that we're trying to change a lot of things operationally and system-wide at Carriage. At the time, as you may remember, it was really just from a senior leadership perspective, Steve and me driving those initiatives. This year, we have realigned with the changes we made and the promotions we made to allow for more focused work.

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

Now supply chain actually reports to John, and John can place a more, you know, specific emphasis to supply chain and accelerate the journey on that side. At the same time, Steve can put more focus on the operational side moving forward and continue to grow our organic strategy through M&A activity.

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

Got it. Makes sense. One last question on the M&A. It seemed like last conference call that the expectation was there was gonna be a lot of closure activity in the Q1. Reading between the lines, it sounds like now that that's been extended maybe a little bit. Is that a function of multiples have gone up, or is there something else that, you know, we should be aware of?

[John Enwright, SVP and CFO at Carriage Services]

Yeah, John, I don't think it's a product of multiples going up. Yeah, I think we're seeing those remain pretty steady, and obviously we remain disciplined in how we approach it. It really is a matter of sellers, you know, being ready and, you know, us respecting their timelines, but also us being pretty selective. You know, again, the type of business we're looking for, it's a smaller group of businesses that are gonna fit that profile. There's a number of folks out there, but their timeline is just as important as ours.

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

Got it. Understood. Thanks for taking the questions. I'll get back to the queue.

[John Enwright, SVP and CFO at Carriage Services]

Thanks, John.

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

Thanks, John.

[Operator]

We'll take our next question from George Kelly with Roth Capital Partners.

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

Hey, everyone. Thanks for taking my questions. First one on your guide for 2026. There's a CapEx step up versus what you've been doing in recent years. I was wondering if that's related to a specific project or more maintenance related, or just any kind of context around your CapEx guide.

[John Enwright, SVP and CFO at Carriage Services]

Yeah. Over the last couple years, as we've been very disciplined in our capital allocation, we've pulled back on a little bit of maintenance. There's gonna be more maintenance in 2026 than there was in 25 and 24. We're thoughtful on what we're gonna do, but we there's some just needed to be done. Also, there is still some additional growth capital, right? For us to continue to deliver 10-20% in pre-need cemetery sales, we have to develop some cemeteries, and there's also some incremental capital associated with that.

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

Is that 25-30? I'm hearing feedback. Is that a good sort of go-forward number to use on 26, or is it kind of a one-year maintenance catch-up?

[John Enwright, SVP and CFO at Carriage Services]

Yeah, I always use I would use, yeah, 25 to 30 is probably a good going forward number.

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

Yeah, George, if you remember, even you go back to 2020, 2021, 2022, we're doing $22 million, $24 million, $26 million on just maintenance and growth CapEx at the time. We did ask our managing partners to give us an opportunity to use some of that to so we can, you know, pay down our debt. They did. They were very patient for a little bit over 3 years. Now it is really time to give back to them so some of that, and I think the $25 million-30 million is really the right range going forward.

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

Okay. Sounds good. Just a quick, couple other notes for you. On Trinity, can you walk through the expectations for the year, the rollout testing, what you're most excited about? Just an update on that front would be helpful.

[John Enwright, SVP and CFO at Carriage Services]

Yeah. From a rollout perspective, you know, we still anticipate a rollout in the, call it, Q2. Right now, we're still in pilot phase. We have a location in pilot phase. We're looking to move through a pilot phase for a second location shortly. If successful, we expect to roll out our funeral homes into basically the beginning of the Q3, ultimately, maybe the, at the end of the Q4. What would we do after that is the center locations or the combos is really where we think the rollout. There will be some rollout into 2027.

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

Yeah. Just to give you more context, George, you know, the truth is that we are behind with Trinity. That's the bad news. The good news is Trinity became so much more robust in terms of system integrations, you know, API connectivity, reporting capability, our ability to track, you know, loved ones and chain of custody, our ability to increase our sales average per contract based on inventory and correlates and things of that nature. The excitement is very, very high. The frustration is that we're a little behind in terms of time, you know, time frames, but the solution has become a lot more robust with automation, AI, and other components that initially were not part of the scope.

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

There is a lot of excitement, there is a lot of good energy going into 2026 because of all that Trinity means, so Trinity means all of the systems that basically tap into our ERP system.

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

Okay, maybe just one more on Trinity. Is there much of an uplift to the contract, the average price per contract that's baked into your guide? If not, Carlos, are you still maybe on what you're seeing in the pilot or just generally, are you still optimistic that it can really drive a lot of pricing growth per contract?

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

I'm still very optimistic that we can continue to grow our sales average revenue per contract. We have been able to achieve that and absorb the cost and then pass on the cost into the consumer. However, you know, it's a phased approach, and what I mean by that is, right now we have, think it of more in manual presentation. We have offerings, we have materials that we present to the families that they can see. As Trinity rolls out, it will still be a combination of a manual process with the system process. The phase that follows to that is integrating to a full digital experience to Trinity that embeds the presentation and the contract, you know, in the same moment.

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

It will be a phased approach. Now, that phased approach will not slow us down from the point of view of still presenting the full story with all of the options to all families, regardless whether they choose burial or cremation.

[John Enwright, SVP and CFO at Carriage Services]

To answer the question on whether or not we factored in any increases in sales performance into the guide, we did not. Right? There's no expected impact of Trinity in 2026 ahead.

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

Yeah. Okay, thank you. Last one for me is just about the M&A that's contemplated in your guide. How much do you factor in, or how much do you expect to pay for those transactions? What's like the value, and where do you expect to end the year on a net leverage basis? That's all I have. Thank you.

[John Enwright, SVP and CFO at Carriage Services]

Again, from a multiple perspective, we are gonna be disciplined. It depends on the asset that we get, because they're not all identified assets. You can think about, from an EBITDA multiple perspective, between 7x and 9x is probably a fair way to think about that. From a debt leverage perspective, we expect to end the year based on hitting performance between 3.9x and 4x.

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

Thank you. Thank you.

[Operator]

We'll take our next question from Parker Snurre with Raymond James.

[Parker Snurre, Senior Equity Research Associate and Analyst at Raymond James]

Hey, good morning, and thanks for bringing me on to ask a question. Just kind of drilling down on the Q1, I know you mentioned it's a tough comp. Are you seeing any impacts from the Q1, the winter storms, or just generally the poor weather that we're seeing across the country? I guess more so on the pre-need side, is that affecting any sales activity, and also just more broadly on the entire business?

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

Well, first, good morning, Parker, thanks for the question. If I give you a little bit of an insight on January 2026, going into our full Q1 for the year. you know, from a comp perspective on volume, we do see a decline because January of 2025 was so strong because of that pushback of the flu season from December. We're very pleased, as John mentioned on our performance because our continuous cemetery performance, you know, made up and then some of that loss. Our sales average per contract continues to remain very strong. Our ability to convert pre-need into cremation, it's an area of focus for us.

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

Cremation mix continued to be within our range and is not growing at any fast rate as we have seen in some other, you know, consolidators out there. It's really exciting that even with a, with a bad comp from a volume perspective, we still have very positive results as a financial, you know, from a financial perspective overall, in January of 2026.

[Parker Snurre, Senior Equity Research Associate and Analyst at Raymond James]

Okay. Okay. Then I guess just more of a bigger picture question. I like the comments you said you're moving out of the rebuilding phase into the compounding phase. Carlos, you've undertaken a fair amount of strategic changes since taking the seat. I guess, what is the next strategic frontier in your view for the business? What's the next initiative? Maybe there isn't one, maybe it's just executing on kind of the good work that you guys have done so far, but maybe just kind of speak high level on, just kind of your views on the forward-looking kind of strategic initiatives for the business.

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

That's a great question. Not wrong. There's been a lot of work, whether it is continuous improvement strategies and departments that are now leading and guiding our decisions with Carriage, our framework for decision making within our three strategic objectives, all the focus on margin expansion to our supply chain strategy, and of course, all the different changes we have made over the last probably three years with leadership. We have now a new structure within executive rank. For us right now is really to capitalize, maximize, and really optimize all those changes we have made.

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

I don't really have more changes that I have in my head other than deliver Trinity and really maximize and optimize the field engagement and opportunity to increase our opportunity with families through that solution. To help and support Steve on the operational side and continue to grow sales that are 10-20% year-over-year, you know, premium production rates. But most and most important, our main focus now, other than optimizing what we have done over the last few years, is really our focus on our focus on M&A.

[Parker Snurre, Senior Equity Research Associate and Analyst at Raymond James]

Okay. Yeah, just, maybe just, I know this question's been asked kind of a few times in a different way, but, just broadly on capital allocation priorities, you know, you expect to do $40 million-50 million of free cash flow this year. You know, there's some deals that are built into the 2026 guidance, more focused on growth. Your leverage is around four. I think you kind of wanna keep it in that range. Just how should we think more broadly about the split of how you're gonna spend your free cash flow going forward? Are we kind of, you know, is it gonna be kind of 50/50, more levered towards, M&A? Just how do you think broadly about that whole kind of dynamic moving forward?

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

You know, we wanna take an opportunistic view of the deals as they come, right? We have our plan, we have an idea of how that could be structured from a guidance perspective, and John did mention some of the ranges there. They have flexibility, right? For example, if you have a deal, let's just say, another Fairfax comes through and we may be willing to pay a little more multiple for something like that. We will have to move some of the flexibility we have within our balance sheet to decide if that's the right deal to do or not.

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

If, you know, the stock were to, you know, for some black swan event, you know, we would consider that and put our numbers and make the best decision on behalf of shareholders. We will look all of the opportunities as they come from a very opportunistic point of view within our discipline capital allocation framework. Does it make sense?

[Parker Snurre, Senior Equity Research Associate and Analyst at Raymond James]

I absolutely understand. Okay. Thank you.

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

Thank you, Parker.

[Operator]

For our next question, we'll return to John Franzreb with Sidoti & Company.

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

Yeah. I'm actually a little curious about the $1.2 million of medical insurance costs that you incurred in the quarter. How unusual is that on a year-to-year basis? I mean, was the full year number much bigger than that? You know, just contextualize, of course, maybe.

[John Enwright, SVP and CFO at Carriage Services]

I can speak to the actual activity, and I, you know, I've only been here a year. We've done a really nice job from an employee benefits perspective over the last few years. You know, being a smaller company, there's a large claim that happened. When you have large claims that happen, ultimately, that can impact results. We haven't had a significant claim over the last two years, I would say that was a, call it one-off in the last couple of years. The activity associated with December results versus the December of the last two years, I can't really speak to why that happened, but it was just, I mean, it, it can happen, so.

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

Sure.

[John Enwright, SVP and CFO at Carriage Services]

I would say, you know, we have planned for it in the guide. We have planned for what we believe is the appropriate expense associated with employee benefits, taking into consideration what happened in 2025.

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

Yeah. You know, we typically look at three years to figure it out, what the right reserve should be for claims and things like that. We are a self-insured company, so I'll point of view, right? We also have a tremendous focus on health benefits for the employees. We have a tremendous focus on making sure that all of our employees are active, are keeping their numbers within the range and helping in any way we can to drive that health performance of the company overall. Sometimes, you know, even we haven't seen it in a long time, you get an event, in this case, it was one major event and then maybe a couple of other events that add up to that number, that you cannot really expect.

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

It just happened. These are major things, right? I can't really disclose much, but, you know, you have when, heart events, brain situation events, and we just have to be responsive to the employee when those happen.

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

Got it. I just appreciate the clarity and how and the frequency of it all, That's what I was kind of looking for. Thank you, gentlemen. I appreciate it.

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

Thank you.

[Operator]

For our next question, we'll return to George Kelly with Roth Capital Partners.

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

Hey, everyone. Thanks for taking the follow-up. Just a quick one. How much EBITDA contributions from your, the 2026 M&A is baked into your guide?

[John Enwright, SVP and CFO at Carriage Services]

we basically... In the 2026 guide, so are you asking about the new acquisition, the 5-10?

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

Correct.

[John Enwright, SVP and CFO at Carriage Services]

Okay.

[John Enwright, SVP and CFO at Carriage Services]

Yeah. We, we basically have M&A, the average margin, roughly call it 30%.

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

Okay.

[John Enwright, SVP and CFO at Carriage Services]

Cool.

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

Good. Thank you. That's good. Thank you.

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

Thank you, George.

[Operator]

It appears there are no further questions at this time. I'd like to turn the conference back over to Carlos for any additional or closing remarks.

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

Thank you, operator. Thank you for your trust, your partnership, and your continued belief in Carriage. We are building a disciplined, high-performance company with a clear purpose, a focused strategy, and the intention to execute with excellence. We look forward to updating you next quarter as we continue creating long-term value for our shareholders, our teams, and the families we serve. Have a great day.

[Operator]

This concludes today's call. Thank you again for your participation. You may now disconnect and have a great day.

Participants

Executives

• Carlos Quezada, CEO and Vice Chairman
• John Enwright, SVP and CFO
• Steven Metzger, President and Secretary

Analysts

• Alexander Paris, President and Senior Managing Director at Barrington Research
• George Kelly, Managing Director and Senior Research Analyst at Roth Capital Partners
• John Franzreb, Senior Equity Research Analyst at Sidoti & Company
• Parker Snurre, Senior Equity Research Associate and Analyst at Raymond James