Carriage Services, Inc.

Thank you for holding. Your conference will begin momentarily in a few minutes. Thank you for your patience. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Good morning and welcome to the Carriage Services first quarter 2022 earnings call. My name is Zanara and I'll be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press 01 on your touchtone phone. I'll now turn the call over to Mr. Steve Metzger, Executive Vice President, Chief Administration Officer, and General Counsel. Steve, you may begin.

Thank you, Zanara, and good morning, everyone. Today we'll be discussing our first quarter results. A related earnings release was made public yesterday after the market closed. 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 for management are Mel Payne, Chairman and Chief Executive Officer, Carlos Quesada, President and Chief Operating Officer, and Ben Brink, Executive Vice President and Chief Financial Officer. Today's call will begin with formal remarks from Mel, Carlos, Ben, and myself, and will be followed by a question and answer period. 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.

Good morning, everyone. We're glad to be here this morning sharing our exciting first quarter performance of 2021. Before we get into it, I would like to express my gratitude to our Carriage family in the field and in our Houston Support Center for the passion and continued pursuit of our Being the Best mission and vision. For today's call, I will start with a summary of our financial performance, and we'll provide an update on operations, sales, marketing, and IT. Following my remarks, Steve will give an update on acquisitions, then Mel will follow with financial updates, and Mel will wrap it up for closing remarks. If you have not read our 2021 shareholder letter and proxy statement, We highly encourage that you do. It covers the entrepreneurial spirit of carriage high-performance culture framework in excellent detail. Now the highlights for our record first quarter of 2022. Funeral operating revenue of $70.2 million, an increase of $3.3 million, or 4.9%. Funeral field EBITDA of $31.3 million, an increase of $0.96 million, or 3.2%. Funeral field EBITDA margin of 44.5%, a decrease of 70 basis points. Cemetery operating revenue of $20.5 million, a decrease of $1 million or 4.9%. Cemetery field EBITDA of $8.6 million, a decrease of $1.2 million or 12.3%. Cemetery field EBITDA margin of 41.8%, a decrease of 360 basis points. For our total revenue, We ended up at 98.2 million, an increase of 1.5 million or 1.6%. Total fuel EBITDA of 45.5 million, a decrease of 0.3 million or 0.07%. And total fuel EBITDA margin of 46.3%, a decrease of 110 basis points. We believe this is standard performance when compared to the previous record in the first quarter of 2021, which was due to the spike of the COVID-19 pandemic reflects the nature of the entrepreneurial spirit of Carriage and the commitment and passion of our Managing Partners and their teams to earn their trust of their guest families and provide a solution to all their needs, which by product is increased volumes and market share gains. To achieve what they have achieved with a significant decrease in COVID-19 vets in Q1 of this year is nothing short of extraordinary. On our pre-need cemetery sales, while we have experienced a lower sales rate in the first quarter of 2022, We're confident that after my promotion to President and CEO, and since the promotion of Shane Putins to Vice President of Sales and Marketing on February 12th of this year, Shane has successfully transitioned to his new responsibilities of leading our printing cemetery sales teams across the portfolio of cemeteries. He will continue to focus on the top four drivers of the high-performance sales plan. Number one, to grow our sales force headcount at both family service and advanced planning. by selecting the right whole sales partners that can have a seat at the carriage high-performance culture bus. Number two, develop the sales skills conceptually through our Knowledge Academy learning platform and hands-on through local sales leadership. Number three, to generate engagement, which means creating opportunities to have our sales partners engage with new families and share the story of the importance and value of pre-planning. And number four, to continue to grow sales through our CRM sales edge platforms. Currently, we're 85% completion rate of implementation, and Sales Edge is becoming how we do sales moving forward, enabling us to manage, track, and close new sales opportunities. We're also very excited to welcome Elizabeth Perez-Montes, who joined Carriage as Director of Sales Support, and she's now fully integrated with her portfolio of businesses. Elizabeth comes with years of experience in the death care industry, building, developing, and growing sales. She will fill in the position left open by Shane's promotions. We welcome Elizabeth to the carriage team and wish her incredible success. We are very confident that Shane and his team of director of sales support, Elizabeth, Julio, and Greg, will continue executing the high-performance sales plan while instilling the sales behaviors that will lead to sustainable and consistent cemetery pre-need sales over time. Moreover, ramping up our marketing strategy efforts or generating new leads, which have delivered very positive results. Now moving on to marketing. Alfred White joined Carriage on January 2nd of this year. Within four months, he has built a complete marketing department that is now collaborating with managing partners as they work on brand positioning, online presence, social media, content creation, advertisement, and much more. Due to the decentralized nature, we know that no one knows better than the local managing partner who knows the community and the families they serve. Alfred's focus will be on creating the tools and making them available on our new contact management system so that managing partners can choose which tools will work best for them. Since then, the organic growth of marketing requests Alfred has received from the field is nothing above we expected. He and his team can definitely support managing partners and do an incredible support on developing marketing campaigns programs that are already delivering increased volume due to customized marketing strategies. We are very excited for Alfred and all of his team, and we know that this journey is just the beginning for this marketing high-performance team. We're also very excited to share that on April 1st, Rob French joined Carriage as Chief Information Officer. As a group of great companies, we know that technology is an accelerator of high performance. And Rob is now leading a complete digital transformation that will indeed accelerate a high-performance flywheel. Rob has hit the floor running and is now on a discovery and learning journey. The detail of the digital transformation plan is shown on page 220 for 2021 shareholder letter. We wish Rob fantastic success in his new role at Carriage. As most of you know, I have a background in hospitality. and I am very passionate about service excellence and the experience delivered through high-quality services that leave a lasting, memorable impression. With this in mind, the last topic that I'd like to share with you this morning is related to the enormous opportunity to capture additional market share through the transformation of our service and guest experience standard, which when combined with our revenue and volume standards, all related to service and guest experience, make up for up to 60% out of 100% of our standards operating model. With this goal in mind, we had our first ever Carriage Forum, where we had over 150 of our managing partners and Houston Support Center influencers learn and experience service excellence through their five senses. We designed and curated an experience that would inspire in our teams the ideas of excellence in service and become creative and innovative in a way that will wow the guest families moving forward. To kick off the forum, we partnered with John Guccifolli, a former solo pilot for the Blue Angels and top-rated keynote speaker. John's message on living a life of gratitude through his Glad to Be Here attitude presentation captured the attention of everyone, and it has become how every meeting starts in many of our businesses. Additionally, he shared the structure of high-performance model used by the Blue Angels, which inspired the whole audience to create a culture of commitment, dedication, the pursuit of excellence, and high trust. We also collaborated with the Reed-Scalton Leadership Center to learn about creating a culture of excellence, the art of service, branding creating service, and leadership now, all of which align perfectly with Carriage high-performance culture, are being the best mission and vision in our unique, unbreakable union of belief, which was evident with everyone and in every moment. The forum was in complete alignment with our 2022 theme of high-performance value creation culture, and based on the number of handwritten cards, emails, and general comments we received about our Carriage Forum, it was a tremendous success. Our managing partners went back very inspired, highly motivated, and thoroughly engaged in delivering a service and guest experience second to none in each of their businesses. The Carriage Forum was not an event, but a transformational experience and a pivotal moment towards the vision of the future of funeral and cemetery services at Carriage. Stay tuned as we work with the Standards Council on our follow-through program on service and guest experience that will create memorable moments with all of our guest families. These are some of the reasons why we're so excited about the future of Carriage, and there is much more to come for both Greenwich Cemetery and funeral homes. But when you combine Carriage's solid financial profile and our acquisition prospects, it is easy for us to say it is a great time to be at Carriage and the best future to come. Thank you, and I will now pass it on to Steve. Thank you, Carlos.