Carriage Services Q2 Earnings Call Highlights

Second-quarter results improved despite lower funeral volumes: Revenue rose 0.8% to $102.9 million, while adjusted EBITDA increased 3.1% to $33.3 million and adjusted EPS climbed 5.4% to $0.78. Pricing gains, higher insurance-funded preneed sales, financial revenue and cost controls offset a 3.5% decline in comparable funeral volume. Cash flow and leverage showed mixed trends: Operating cash flow increased to $22.5 million in the first half, but adjusted free cash flow fell to $13.8 million because of higher capital spending. The bank leverage ratio improved to 4.0 times, while overhead expenses declined as a share of revenue. Carriage lowered its 2026 outlook primarily because of acquisition timing and softer mortality trends: The company now expects $435 million-$445 million of revenue, $135 million-$140 million of adjusted EBITDA and $3.35-$3.55 of adjusted EPS. Management said acquisition activity remains active, with more contribution expected later in the year, and noted that funeral volume turned positive in July.

Carriage Services NYSE: CSV reported higher second-quarter adjusted earnings and EBITDA despite lower funeral volumes, as the company cited pricing gains, growth in insurance-funded preneed contracts and cost discipline. Management also updated its 2026 outlook to reflect softer-than-expected mortality trends in the first half and later timing for anticipated acquisitions. Total revenue for the second quarter rose 0.8% from a year earlier to $102.9 million. Adjusted consolidated EBITDA increased 3.1% to $33.3 million, producing an adjusted EBITDA margin of 32.3%, up 70 basis points from the prior-year period. Adjusted diluted earnings per share rose 5.4% to $0.78.

Mortality trends weakened across much of the country beginning in January and remained below the company’s historical expectations through the first half. Comparable funeral volume declined 3.5% in the second quarter and 4.7% for the six months ended June 30, both compared with the prior-year periods. Comparable funeral revenue declined 2.4% to $55.7 million, from $57 million a year earlier. The lower volume reflected reduced mortality, a demand factor the company cannot control, but operating initiatives helped mitigate much of the pressure. Funeral home comparable average revenue per contract increased 3.7% year over year. The company’s cremation rate was 60.6% in the quarter, compared with 61.2% a year earlier, and the full-year rate was essentially flat. The higher average revenue per contract was attributed to package offerings and a program designed to present direct-cremation families with additional merchandise and service options. Florida represented the most significant state-level decline in volume. The state has a high cremation rate and a growing number of direct-cremation providers, while the company does not believe it has lost market share. Funeral volume turned positive in July, following year-over-year declines in each month from January through June. July’s volume growth was characterized as “strong low single digit,” while cautioning that one month does not establish a longer-term trend.

Comparable cemetery revenue was essentially flat at $33.2 million, compared with $33.3 million in the prior-year quarter. Consolidated preneed cemetery sales production increased 5%, helped by a 17.3% increase in the average price per preneed interment right s...