Carriage Services, Inc.

Good day, and thank you for standing by. Welcome to the Carriage Services Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star 1 on your telephone. 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, Executive Vice President, Chief Administrative Officer, and General Counsel. Please go ahead.

Thank you, Catherine, and good morning, everyone. Today we'll be discussing our third quarter results. Our related earnings release was made public yesterday after the market closed, and we posted the release, including supplemental financial information, on the investors' page of our website. This audio conference is being recorded, and an archive will be made available on our website later today. In addition to myself, on the call this morning from management are Mel Payne, Chairman and Chief Executive Officer, Ben Brink, Executive Vice President and Chief Financial Officer, and Carlos Quesada, Executive Vice President and Chief Operating Officer. Today's call will begin with formal remarks from Ben, Carlos, and myself, who together with Mel comprise Carriage's Strategic Vision and Principles Group, a team whose members and purpose Mel wrote about in our June 2nd press release. Formal remarks will be followed by a question and answer period during which time Mel will join us to address any questions. Before we begin, I'd like to remind everyone that during this call, we'll make some forward-looking statements. Any comments made by our management team that state our plans, beliefs, expectations, or projections for the future are forward-looking. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such statements. These risks and uncertainties include, but are not limited to, both factors identified in our earnings release and in our filings with the SEC, both of which are available on our website. During this call, we'll also discuss certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the appropriate GAAP measures can also be found in our earnings release, as well as on our website. Thank you all for joining us this morning, and now I'd like to turn the call over to Carlos.

Thank you, Steve, and good morning, everyone. Thank you for joining our call as we share our excitement and amazing news on our record third quarter performance with all of you. What a spectacular time to be with Carriage. But before I start, I'd like to recognize all of the Carriage Services team for continuing helping families day in and day out with compassion, determination, and commitment to excellence under such difficult conditions, consequence of this pandemic. On behalf of our executive team and board of directors, we thank you as you demonstrate our being the best mission and vision and our five guiding principles in all that you do and is a consistent driver for this record high performance. To have the honor of representing all of you on this call is a privilege that we take with humility and gratitude. Over the past 12 months, I have been visiting many funeral homes and cemeteries, spending quality time building relationships with our amazing managing partners and their phenomenal teams, while getting to know their communities and unique opportunities for each business. During these visits, I've witnessed the Carriage high-performance culture framework in full force, and the reason why we're gaining market share over many independent firms, as well as some consolidators, regardless of COVID-19 restrictions. At Carriage, it's about people. And it starts with what we call the right who. Let me share some examples. Courtney Chervais, managing partner at North Vivard Funeral Home in Titusville, Florida, continues to be a shining star, having his competitors shut their doors permanently. For September year to date, 2021, Courtney is up 40% in funeral volume compared against pre-COVID-19 volumes over the same period in 2019. And 20.5% of that growth is beyond COVID-19 cases. Tripp Carter, Managing partner of Russia Carter Memorial and Funeral Services in Houston, Texas. After partnering with Carriage and getting the support he needed by eliminating his time on back office items, he has now redirected his focus to what he loves, growing his business. For September year to date, 2021, trip is up 52% compared to the same period in 2019, and 37.9% of that growth is beyond COVID-19 cases. Geneva Chidi. managing partner of Dallin Fisher Garden Chapel in San Jose, California. Geneva became the new leader at the end of 2019. She's a highly driven managing partner who has grown her business by 59% September year to date when compared against the same period in 2019. And 45% of that growth is beyond COVID-19 cases. The correlated characteristics in all of these managing partners is that they are hungry, competitive, and they want to win. And this is just a very small sample of the right who high-performance managing partners that are gaining market share across our portfolio of businesses and evident by the following results. Our fuel segment third quarter 2021 fuel operations results are as follows. Total fuel contracts of 12,403, an increase of 1,342 contracts or 12.1%. Fuel average revenue per contract of 5,372, an increase of 129 or 2.5%. Total funeral operating revenue of 64.9 million, an increase of 8.8 million or 15.7%. Total funeral EBITDA of 28.9 million, an increase of 6.1 million or 26%. And total funeral field EBITDA margin of 44.6%, an increase of 390 basis points. These outstanding results reflect the operating leverage in each business in alignment with our annual VIN DeVest high-performance standards, which were updated in November 2018 by our Standards Council members made of high-performance managing partners. The changes made to the fuel standards, which are fully explained in our 2018 shareholder letter, were the catalyst of this high performance. Since by the time of COVID-19 pandemic hit the nation in February 2020, the team was well-prepared and ready to maximize every opportunity and have continued to do so, driven by the passion of our teams and the nature of our managing partner being the best one year and good or great five-year incentive programs, which Steve will speak to in more detail today. Now let's go over our high-performance cemetery third quarter 2021 results. We continue to deploy capital in growth cemetery development projects with creative and innovative products as our supercharged high-performance cemetery sales teams Keep accelerating sales velocity with our pre-need property program. Since the inception of the plan for the creation of sustainable high-performance streams across the portfolio of cemeteries, our sales growth has been exponential. Our third quarter 2021 total pre-need cemetery sales performance was 16.5 million, an increase of 4.1 million, or 33.3% higher than last year, and an increase of 7.4 million, or 81.4%, higher than the first quarter of 2020, which was the preceding quarter to the beginning of our cemetery transformational high-performance journey. The intrinsic nature of cemeteries allow for significant growth opportunities, starting with our ad need sales professionals who attend to those families with immediate needs while presenting them with all of their options of products and services they can choose from, regardless of burial or cremation as their final disposition. However, The big opportunity is with advanced planning teams, which were just in the early stages of development. Since we revamped this program in August 2020 and through 2021, we have been able to find the RideWho high-performance 4E leaders at Rolling Hills in Richmond, California, where Naidoo Stackhouse is having tremendous success at a rate of 213.4% to her target for the nine months ending September 2021. We have also created advanced planning teams at Oakmont Memorial Park in Lafayette, California, Reds Haven Cemetery in Oklahoma City, Oklahoma, Kent Forest Lawn Cemetery in Panama City, Florida, and Bunker Cemetery in Las Vegas, Nevada. These newer teams are building up their self-force and teaching the skills and are using all of the tools that generate high-performance sales. Moreover, we have other cemeteries where we will be adding advanced planning teams like Fairfax Memorial Park in Fairfax, Virginia, and Rest Haven Rockwell in Rockwell, Texas, just to name a few. As you hear the following cemetery third quarter 2021 field operation amazing high performance, you will know that the best is still yet to come. Total cemetery operating revenue of $22.7 million, an increase of $3.1 million or 15.8%. Total cemetery field EBITDA of $10 million, an increase of $1.5 million or 17.8%. And total cemetery field EBITDA margin of 44.1%, an increase of 80 basis points. And for the nine months ending September 2021, total cemetery operating revenue of $69.4 million, an increase of $20.4 million, or 41.6%. Total cemetery field EBITDA of $32.5 million, an increase of $14.9 million, or 84.5%. and total cemetery fill-in margin of 46.8%, an increase of 1,090 basis points. We have completed the implementation process of Microsoft Dynamics 365 CRM, and the results is a robust and dynamic sales and marketing system, which we have named Sales Edge, and will accelerate high-performance sales even further than ever before. We have launched the program at five pilot cemeteries with more to join in early 2022. This new system will give the edge to our four e-sales leaders to communicate, interact, and stay connected with families while growing our teams of right-who sales managers and sales professionals to educate the community in the value of pre-planning their final goodbyes. We expect Sales Edge, our new high-performance sales tool, to be fueled by savvy investments in lead generation programs and deliver significant organic growth and continue sales trends over the foreseeable future. Our seminars program test during the second quarter of 2021 was extremely successful, and is now in full force, and we have conducted seminars in Oklahoma, California, and Texas, and some already scheduled in Florida, Virginia, and Louisiana before the end of this year. These programs have resulted in a number of attendees above our own expectations, and the new generated leads are now part of our pre-need sales funnel, which will start to reflect in our fourth quarter pre-need cemetery sales performance. Our third quarter was an amazing quarter in both funeral and cemetery segments, and it's truly a great time to be with Carriage, and the best is yet to come as we continue to grow organically while looking for those right acquisition partners that meet our highly selective strategic criteria to which Steve will speak to in more detail today. In closing, I can say that we have entered a per-ownership share value creation sweet spot, and in addition to our savvy but flexible capital allocation discipline, We will continue to close the gap between our current stock price and our intrinsic value per share, while accelerating momentum on our carriage services high-performance flywheel. Thank you, and I will turn it over to Steve.