Carriage Services Q1 Earnings Call Highlights

Key Points

• Q1 revenue was essentially flat at $106.1 million, as a 5.8% drop in funeral at-need volume weighed on results and partially offset gains in cemetery operations and pre-need sales.
• Profitability improved despite lower funeral volume, with adjusted consolidated EBITDA rising 2.4% to $33.8 million and margin expanding to 31.8% thanks to stronger cemetery performance and pre-need funeral sales.
• Management kept full-year 2026 guidance unchanged and said the acquisition pipeline remains robust, with one deal expected to close soon and additional M&A activity likely later in the year.

Carriage Services NYSE: CSV reported first-quarter 2026 results that management said reflected steady execution despite a difficult year-over-year comparison, as lower funeral volumes were offset in part by gains in cemetery operations and pre-need sales.

President Steve Metzger opened the company’s earnings webcast, followed by remarks from Carlos R. Quezada, chief executive officer and vice chairman of the board, and John Enwright, senior vice president and chief financial officer. Quezada said the company was “pleased” with the quarter, particularly because the first quarter of 2025 benefited from a stronger flu season that extended into January and February.

Revenue for the quarter was $106.1 million, down 0.9% from the prior-year period. Quezada said the main driver was a 5.8% decline in funeral home at-need volume. He added that when funeral volume is normalized by combining the fourth quarter of 2025 and the first quarter of 2026, the volume decline was 2.3%.

Funeral Volume Weighs on Revenue

Comparable funeral revenue was $63.3 million, down 4.2% from a year earlier. The decline in volume was partially offset by a 1.6% increase in comparable average revenue per contract. Quezada said the company expects funeral volume in April to be “on a normal trend,” though during the question-and-answer session he said April had started “a little slow.”

Asked by Barrington Research analyst Alex Paris about the company’s confidence in revenue growth returning later in the year, Quezada said death care volumes have shown seasonality and variability since COVID-19. He said the company believes it can make up volume over the next three quarters, particularly as it moves past the impact of divestitures completed last year.

In response to a question from Raymond James analyst Parker Snurr, Quezada said January, February and March were all relatively similar in terms of volume decline. He also said Carriage’s field teams are focused on gaining market share even if death rates are compressed.

Quezada later explained that the company is using “mystery call shops” to assess how funeral homes handle initial phone inquiries from families. He said the company identified areas for improvement and has implemented training intended to improve the first-call experience and retain more families.

Cemetery and Pre-Need Sales Provide Support

Comparable cemetery revenue rose to $29.6 million, an increase of $1.7 million, or 6%, from the prior-year quarter. Quezada attributed the growth primarily to a 9% increase in comparable pre-need cemetery sales production and a 15.3% increase in average revenue per property contract.

Financial revenue was $8.5 million, up 15.7% year over year, which management said primarily reflected stronger performance in pre-need funeral sales and related commission income. Pre-need funeral commission income totaled $2.5 million, up 26% from the same period last year. Consolidated pre-need funeral insurance contracts sold increased 8%.

Snurr asked whether the cemetery performance was helped by unusually large-ticket sales. Quezada said the company had normal large-sale activity, but nothing unusually large that drove the result. He added that pre-need cemetery sales had achieved a 22.4% compound annual growth rate from the first quarter of 2019 to the first quarter of 2026.

Margins Improve Despite Lower Funeral Volume

Adjusted consolidated EBITDA was $33.8 million, up $805,000, or 2.4%, from the prior-year quarter. Adjusted consolidated EBITDA margin expanded to 31.8%, up 100 basis points from 30.8% a year earlier.

Enwright said improved cemetery operations and pre-need funeral sales added $2.5 million of EBITDA, while comparable funeral EBITDA declined by about $2.4 million because of lower volume.

Adjusted diluted earnings per share were $0.86, compared with $0.96 in the first quarter of 2025. Enwright said the decrease was primarily due to a higher effective tax rate. The effective tax rate was 26.7% in the quarter, compared with 20.3% a year earlier, with an estimated impact of $0.07 to $0.08 per share. On a GAAP basis, diluted EPS was $0.84, compared with $1.34 a year earlier, when results included a $7.9 million gain tied to a divestiture and sale of real estate assets.

Cash from operating activities increased $1.1 million, or 8%, from the prior year. Free cash flow increased $400,000, or 3.5%, while adjusted free cash flow declined by $2.2 million compared with the first quarter of 2025. Enwright said the prior-year period was affected by special payments for professional services related to a review of strategic alternatives, as well as severance payments.

Balance Sheet, Capital Spending and ATM Program

Carriage’s bank leverage ratio decreased to 4.0 times from 4.2 times at the end of the first quarter of 2025, remaining within the company’s long-term target range of 3.5 times to 4.0 times.

Capital expenditures totaled $3.9 million, compared with $3.2 million in the prior-year quarter. The increase was largely tied to maintenance capital, including spending in funeral homes and an information technology investment to improve network connectivity at field locations. Maintenance capital was $2.2 million, while growth capital was $1.7 million.

Overhead expenses were $14.8 million, or 14% of revenue, compared with $15.3 million, or 14.3% of revenue, a year earlier. Enwright cited lower variable expenses and cost management.

The company also established an at-the-market equity offering program. Quezada described the ATM program as a way to raise equity “in a measured way” when it supports shareholder returns, while Enwright said it provides incremental funding flexibility to support acquisitions while keeping leverage within the target range. Management said use of the ATM program is not included in the company’s 2026 outlook.

Guidance Maintained as M&A Pipeline Builds

Carriage maintained its full-year 2026 outlook, which includes planned acquisitions expected to close during the year. The company’s outlook calls for:

• Revenue of $440 million to $450 million.
• Adjusted consolidated EBITDA of $135 million to $140 million.
• Adjusted EBITDA margin of 30.5% to 31.5%.
• Adjusted diluted EPS of $3.35 to $3.55.
• Overhead expenses of 13.5% to 14.5% of revenue.
• Adjusted free cash flow of $40 million to $50 million.
• Year-end leverage of 3.5 times to 4.0 times.

Metzger said Carriage’s acquisition pipeline is “robust” and that the company expects to close one acquisition later this month, entering a new market with what he called a strong growth profile. He said management expects more acquisition activity in the back half of the year and potentially into early 2027.

Regarding recent acquisitions, Metzger said Faith Chapel in Pensacola, Florida, and Osceola in Kissimmee, Florida, are both trending positively and are fully integrated. He said Carriage recently broke ground on new cemetery development at Osceola to add inventory and product for the community.

Asked by Oppenheimer analyst Scott Schneeberger what Carriage looks for in acquisitions, Metzger said the company focuses on markets with favorable growth profiles, opportunities to expand the acquired business and valuation discipline. He said Carriage often passes on opportunities because of price or limited growth potential.

Quezada closed the call by saying the company’s focus remains on “disciplined execution, purposeful growth, and consistent improvement.”

About Carriage Services NYSE: CSV

Carriage Services, Inc 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.

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