I recently read the Carriage Services Earnings Call transcript from last week which pertained to the company’s 4th Quarter of 2024 as well as their financial year end for 2024.  It’s interesting that as I read the transcript, which you can access here from Seeking Alpha, several well-meaning cliches came to my mind. . . .

First of all the transcript brought me back to the 1960’s and the advertising campaign from Avis in battling car rental leader Hertz.  That campaign which fed on the slogan “We’re #2, we try harder” is credited with cutting the market leadership of Hertz in half.  While they don’t implicitly say anything like that in the Earnings Call, you just get the feeling that Carriage Services management, because they are smaller than industry leader Service Corporation International (SCI), is simply “trying harder” to cut the gap.  (Here’s an archived article on the Avis campaing from the Denver Post.)

Secondly, while many people try to analyze the game of golf and improve with hundreds of little tips, I’ve broke down my golf game into only two criteria — Strategy and Execution.  I build a strategy for each shot and then try to execute that shot  —  of course, the strategy has to be within one’s ability and as your ability improves your strategy can get more complex. . . . From reading the transcript I get that feeling from Carriage Services also.  They are building a strategy for each shot — supplies, payments, preneed, organic growth — and then trying to execute that strategy. . . . and, as they successfully execute on that strategy their abilities will grow and the opportunities that growth brings will then bring bigger and more complex strategies in the future.

However, the cliche that really comes to the forefront for me is “Laser focused”.  The management team of Carlos Quezada and Steve Metzger took over about two years ago and their comments indicate that they are “Laser focused” on moving Carriage Services forward.  The jury is still out on how well they will do, but there is no denying that when you read the Earnings Call transcript you will more than likely agree that they are “Laser focused” on moving their company forward.

Funeral Director Daily will supply you some of the quotes we found most interesting and informative in the transcript.

Funeral Director Daily had noticed in earlier releases Matthews International, SCI, and Carriage Services all mentioned that their volume counts for the 4th Quarter of 2024 were down. . . Carriage Services CEO Carlos Quezada made the following comments on that issue: 

“We experienced an anticipated decline in funeral volumes . . . . .  The volume decrease is primarily linked to a shift in the flu season, which usually starts late in the fall and increases through the winter months.

Our January and February volume trends are positive, indicating that a late flu season may have shifted volume from the fourth quarter of last year to the first quarter of this year. . . . 

 . . . as we look into what happened, we did some research with CDC. It seems pretty clear that there is a shift of the flu season that came late this winter season and started really more into the end of December, beginning of January and, of course, continues as we speak today. And consequence of that, it is that today, we do have greater volume for both January and February that we had in Q1 of 2024.”

In answer to a question about divestitures (the sale of funeral homes or cemetery properties) and “right-sizing” the company, when asked how many funeral homes the company would have, President Steve Metzger answered as such:

“To confirm the number, this should result in core fewer funeral homes.”

In answer to a questions about spending and where cash-flow is going, CEO Carlos Quezada made the following comments:

. . . 2023 and 2024, our focus was to drive as much as we could organic revenue. We were pretty much in the backseat of acquisitions. Our last acquisition was in March of 2023 with Greenlawn. And then we focus on paying down our debt.

So part of that effort was to allocate capital to high-growth projects, which was basically preneed cemetery. . . . . The organic growth continues to be a focus at Carriage. However, this is the year that we’re able to go back to growth mode. We have been able to get the structure that we needed over the last 2 years, get the team in place, get the systems right. . . . “

In answer to a question about the financial impacts of the company’s divestitures in 2024, President Steve Metzger answered as such:

“.So for 2024, roughly, we sold about $5.5 million worth of revenue. which represented around $1.8 million of EBITDA. Proceeds were just over $12 million for the year. . . . anticipating 2025. As we look at 2025 right now, and some of this is what we’re targeting. We have a couple of things under contract that have not closed. But we’re looking at roughly, call it, $25 million worth of proceeds.”

Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  That is only a sampling of some of the items discussed in the Earnings Call.  There’s more including potential deals with suppliers to save costs, more about Carriage Services’ “Project Trinity” which is a future consumer facing platform the company has high hopes for.

And there is always “data points” one can take from these discussions and apply to your own funeral home.  For instance, President Metzger mentioned that in 2024 they sold properties and the proceeds were “over $12 million”.  He also mentioned in the same breath that the revenues of those properties were $5.5 million and the EBITDA was about $1.8 million.  So, you can come up with simplistic data points of the aggregate which would give you the figure that the properties were sold for about 2.2 times revenue and/or about 6.7 times EBIDTA.

You have to be careful when using those multiples as an absolute because we are not given all criteria on the sales, but the comment does give a data point about sale prices.

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

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“A servant’s attitude guided by Christ leads to a significant life”

Yesterday Funeral Director Daily reported on the 4th Quarter and Year-End press release of Service Corporation International.  And, last week SCI also had it’s quarterly discussion with financial company personnel in which we peruse the transcript for more detailed information.

As has been our practice of late with this type of information we will link the transcript of the Earnings Call courtesy of Seeking Alpha as well as a new concise report by Seeking Alpha called “Earnings Call Insights”.  In addition, Funeral Director Daily will post some quotations from the Earnings Call below.

CFO Eric Tanzberger on “Growth Spending”:  “We also invested about $19 million of growth capital in the quarter towards the purchase of real estate, construction of new funeral homes and the expansion of existing funeral homes and cemeteries. For the full year, this brought the total growth capital spend to just over $100 million, which was up about $9 million from 2023 as we identified meaningful opportunities to invest in greenfield cemetery and funeral projects.

Let’s talk a little bit about acquisitions. So we invested $19 million into business acquisitions in the fourth quarter. In total, we finished the full year with an impressive $181 million of acquisition spend.”

CEO Thomas Ryan on “4th Quarter Comparable Revenue and Services”:  “Comparable core funeral revenues decreased by $9 million or about 2%, primarily due to a 4.4% decrease in core funeral services performed, which was somewhat offset by a healthy 2.7% growth in the core average revenue per service.”

“Comparable cemetery revenue increased by $20 million or about 4%. Core revenue was primarily responsible for the increase, as it grew by $21 million over the prior year quarter.”

Tom Ryan
SCI CEO

CEO Thomas Ryan on the prospects for 2025:  “Within our funeral segment, we expect flat to slightly down funeral volume compared to 2024, with the average revenue per case growing at inflationary rates, slightly negated by the effect of a modest cremation mix increase.”

“We do expect to see higher general agency revenue generated from the favorable impact of our new insurance agreement, which should drive healthy profit growth for the funeral segment, increasing the gross margin percentage by 80 to 120 basis points.

We expect preneed funeral production to be slightly lower in 2025 as we continue the transition of SCI Direct and as we focus on increasing the underwritten insurance product sales in our core channel.”

“For the cemetery segment, we anticipate that we can grow preneed cemetery sales production in the low to mid-single-digit percentage range, resulting in cemetery revenue growth of about 2% to 3%.”

“Continued focus on managing inflationary costs should result in reasonable segment profit dollar growth while maintaining our impressive gross margin percentages as compared to 2024. Below the line, we expect favorable impacts from slightly lower interest expense . . . . “

CEO Thomas Ryan in answer to a question on the lingering “Pull-Forward” death rate effects of the pandemic:  “I think there’s still some hangover pull-through because there’ll be — it’s just a diminishing amount. And I think the other factors take over market share, preneed demographics that those things will offset what little impact COVID will continue to have.”

CEO Eric Tanzberger on a question about “Acquisitions”:  “I would say the pipeline continues to be robust. And if you remember, we’ve been saying that really kind of coming out of COVID. But these deals ebb and flow.

You have to make sure that it’s a win-win situation with the independent family and organization that is ready and wants to raise their hand for a liquidity event. Sometimes you have a start and stop in those situations. Sometimes it takes a lot longer. These are sometimes second, third, fourth-generation families that need to align accordingly, and all want to create the liquidity event.

So the pipeline has been strong. And — but in terms of closing the deals, it’s going to ebb and flow based on that. But just as strong as I said last year that end up coming to fruition in terms of the timing of closing, I still am just as excited this year with the strength of the pipeline.

So we’re going to give you an initial guidance of (spending) 75 to 125 (million dollars). If it ebbs and flows in the right direction based on the strength of the pipeline, I hope we could exceed that again this year like we did last year.

But again, a little bit of this is we want a win-win situation. We’re not in a situation where we are going to force people to sell. We want to — that family and that organization to be very excited about joining us and have all their ducks in a row and ready.”

CEO Thomas Ryan in answer to a question on “Lower Service Case volumes”:  “January, on the funeral volume side is down just about 3%, which wasn’t very far off our expectation. . . . . .

. . . . I think it’s a little of a pull forward. And like I said, it’s not — I guess, it’s not technically the pull forward when I say we saw extended periods of excess deaths that had occurred maybe longer than other people anticipated. And you couldn’t explain why, right? You just had — you knew these categories of deaths are down, there could be cancer screenings, it could be overdose, all these different things, mental health issues.

And now I think categorically, all the data that we’re looking at is saying that the country is kind of healing, which is a good thing. And so maybe normalizing back. And that’s the piece that’s probably moved us a little bit is to say, hey, in a good way, those things are normalizing again.

And now the factors that we would anticipate to contribute to our growth, which would be our strong preneed backlog, our competitive position in the markets to grow market share. And then just the general aging of America, that those three things will begin to be the more dominant talking point as we go forward, and we’ll see less and less COVID impact, less and less excess deaths conversation.

So that’s kind of where we are. And again, we feel pretty good about where we are. We think it could be slightly down, it could be flat. I mean, it may surprise us to be up slightly, but it’s pretty hard to predict right now. And we haven’t seen a real impact from the flu season yet. We hear a lot about the flu, but really hadn’t seen it, I’d say, in our numbers.”

• To read the entire Earnings Call Transcript from Seeking Alpha click here.
• To read a summary of the Earnings Call Transcript from Seeking Alpha click here

Disclaimer — The author of this article for Funeral Director Daily is a shareholder of Service Corporation International.

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“A servant’s attitude guided by Christ leads to a significant life”

Yesterday Funeral Director Daily’s feature article was about Matthews International and its 1st Quarter 2025 Fiscal Year results press release.  As we digested that report, which like many public company reports, is big on numbers and sometimes small on the underlying issues and causes, we were informed that Matthews International had suffered a 10.7% loss in total sales and a 8.5% percent loss in sales of their Memorialization segment.

Many of those underlying causes that might cause the declines are left to speculation.  After reading the company’s Earnings Call transcript with those that follow the company in the securities business, more information becomes available and a better total picture of what is happening within the company comes to light.

Here’s what we learned about the Memorialization segment when we read Chief Financial Officer Steve Nicola’s statements from the Earnings Call:

” . . .sales for the Memorialization segment declined for the current quarter compared to a year ago, primarily due to lower unit volumes.”

“Estimated US casketed deaths declined from the same quarter a year ago.”

“The (Memorialization segment) decrease primarily reflected lower granite memorial sales and a decline in casket unit volumes.”

” Granite sales were higher last year as, in addition to regular volume, the business was working down backlogs, which had built up during the pandemic. “

“Bronze memorial sales were also lower for the quarter.”  

“Memorialization (segment) sales for the current quarter were unfavorably impacted by the disposal of the company’s unprofitable European cremation and incineration equipment operations.”

“. . . decreases were partially offset by higher price realization and incremental sales from the acquisition of a casket distributor in January 2024.”

In order to bring the sales decline into more focus, CEO Nicola made this comment in the Q & A portion of the Earnings Call transcript, “So the decline in (Memorialization) revenues was actually more weighted to the granite. . . . . .But again, the European cremation and incineration business, which was an unprofitable business for us, also was a significant contributor to that decline. So those two were the more significant pieces.”

You can read the entire Earnings Call transcript here.

You can read a summery of the Earnings Call here.

Funeral Director Daily take:  According to the latest Quarterly results for Matthews International the Memorialization segment contributed 47.4% of the total 1st Quarter revenue to the company.  ($190.5 million of revenue out of a total of $401.8 million total revenue).

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“A servant’s attitude guided by Christ leads to a significant life”

Funeral Director Daily published an article on Security National Financial Corporation’s 3rd Quarter 2024 results on Monday using the company’s November 14, 2024, Form 10-Q as our guidance as no press release had been issued from SNFC at that time.

Later on November 18, a press release on the earnings from SNFC was released and, as promised, we publish that information today.  You can access that press release here.

The company reported that 3rd Quarter Revenues were at $88.2 million, up from $80.2 million for the same time period of 2023 and “Earnings Before Taxes” for the 9-month period ended September 30, 2024 were $15.2 million as compared to $5.1 million for the first 9-months of 2023.

Here’s what Scott M. Quist, President of the company, said in prepared remarks in that press release, “It should be noted that for the 9 months our Mortgage Segment has improved its profitability by $9.4 million dollars, reflecting significant expense-reduction work along with the improved revenues. Our Life Insurance Segment revenues are arguably flat, being up only 3.8%, but the Life Insurance Segment’s profitability improved over 40% to $28 million dollars. Driving that profitability increase were decreasing death claims, including a return to more normal age distributions following COVID, and a decrease in the amortization of deferred acquisition costs which is related to the improved profit margins on our products.”

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“A servant’s attitude guided by Christ leads to a significant life”

It was a fairly uncommon occurence on October 30 when the two largest public funeral home and cemetery operating companies reported their 3rd Quarter results on the same day.  Both companies, Service Corporation International (SCI) and Carriage Services, reported “after the financial markets closed’ that day.  So, the first trading that could be done post-reports was Thursday, October 31.

It was obvious that shareholders and market watchers liked what they heard from SCI and Carriage Services because both companies stock price began increasing.  It was also interesting that after the Presidential election on Tuesday stocks, in general, had an advance through Friday’s closing.

Funeral Director Daily will not give any commentary on this issue but will provide some links where you may find more information on these companies at the bottom of this article for your use.

Here is how the stock price performed during those eight days between October 30 and November 8 for both SCI and Carriage Services:

Service Corporation International

• Stock Price as of closing on October 30:  $78.50 / share
• Stock Price as of closing on November 8:  $86.99 / share
• Percentage Increase:  +10.8%

Carriage Services

• Stock Price as of closing on October 30:  $32.65
• Stock Price as of closing on November 8:  $39.39
• Percentage Increase:  +20.6%

For comparison purposes, here are the closing prices of the Dow Jones 30 and the NASDAQ 100 for the period since the Presidential election:

Dow Jones 30:

• Stock Index as of closing on Monday, November 4:  41,794
• Stock Index as of closing on Friday, November 8:  43,988
• Stock Index Percentage Increase:  +5.2%

NASDAQ 100

• Stock Index as of closing on Monday, November 4:  19,963
• Stock Index as of closing on Friday, November 8:  21,117
• Stock Index Percentage Increase:  +8.8%

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Disclaimer:  The author of this article for Funeral Director Daily holds stock positions in both Service Corporation International and Carriage Services.

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“A servant’s attitude guided by Christ leads to a significant life”