Carriage Services’ lack of acquisitions disappoints Seeking Alpha researcher

About ten days ago this article appeared on investor site Seeking Alpha authored by Caffital Research.  The article was about funeral home/crematory/cemetery operator Carriage Services.  The title of the article was “Carriage Services:  Further upside requires further M&A.”

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In that article the author(s) stated “Carriage Services, Inc. has still been quiet on the M&A front. The funeral home and cemetery operator has moderated its debt through non-core asset divestments and by using internal cash flow on debt payments, creating a better financial position for further acquisitions. Yet, such transactions haven’t been announced so far. Carriage Services’ own operations remain stable.”

The writer(s) did make this statement about Carriage Services operation without comment to the M&A levels, “As can be expected, Carriage Services’ own performance has stayed quite stable. The first quarter showed total revenues of $107.1 million, up by 3.5% year-on-year. Consolidated adjusted EBITDA came in at $32.9 million, showing strong leverage from $27.0 million a year ago. Both revenues and the adjusted EPS beat Wall Street’s consensus.”

Finally, the article made this comment, “The Q1 earnings call still reiterated the point that Carriage Services is looking at acquisition candidates, and noted that the company is already in discussions with a number of owners. The notations suggest that Carriage Services may finally return to acquisitions in the latter parts of 2025. The lack of transactions in 2025 so far has still been disappointing and somewhat lowers my expectations of Carriage Services’ future M&A pace, though.”

Tom Anderson
Funeral Director Daily

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Funeral Director Daily:  As is my general position, I’m not going to comment on the researcher’s opinions.  I’ll leave that up to each of you.  However, I did want to look back on the company’s 1st Quarter Earnings Call, which you can access here, to see what exactly was said about acquisitions.

Here’s the comment I believe Caffital Research is alluding to about “looking at acquisitions”.  It comes from Carriage Services’ Chief Financial Officer John Enwright in an answer to an analyst’s question:

“Yes. So we are talking to a number of owners right now. And again, just kind of going back, when you think about those 16 months and $38 million 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 will be more to report there, but excited to be able to add acquisitions back to the value creation story for Carriage.” 

Disclosure — The author of this article for Funeral Director Daily is a shareholder of Carriage Services.

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