Carriage Services, Inc.

Good day, and thank you for standing by. Welcome to the Carriage Services Third Quarter 2024 Earnings Conference Call. Please be advised that today's conference is being recorded. I would like now to hand the conference over to your speaker today, Steve Metzger, President. Please go ahead, sir.

Good morning, everyone, and thank you for joining us to discuss our third quarter results. In addition to myself, on the call this morning from management are Carlos Quesada, Chief Executive Officer and Vice Chairman of the Board of Directors, and Kathy Shanley, Chief Accounting Officer. On the Carriage's website, you can find our earnings press release, which was issued yesterday after the market closed. Our press release is intended to supplement our remarks this morning and include supplemental financial information, including the reconciliation of differences between GAAP and non-GAAP financial measures. Today's call will begin with formal remarks from Carlos and Kathy 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. including comments about our business, projections, and plans. Forward-looking statements inherently involve risks and uncertainties and only reflect our views as of today. These risks and uncertainties include, but are not limited to, factors identified in our earnings release, as well as in our SEC filings, all of which can be found 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 thank you, everyone, for joining our third quarter earnings call. We're excited to share our continued progress driven by our three strategic objectives, which have led to another strong financial performance this quarter. But first, I want to take a moment to express my sincere appreciation to every Carriage employee for their unwavering commitment to excellence. Your dedication truly impacts the families we serve and drives our company forward. We deeply value your support and alignment with our shared vision, values, and purpose. In today's call, I will highlight some of our key financial metrics and provide updates on some of our key initiatives. Kathy will then cover topics such as overhead, cash flow, and the progress we have made to pay down our debt and lower our leverage ratio. For the third quarter, we reported total revenue of $100.7 million. a significant increase of $10.2 million or 11.3%. This marks the third consecutive time we have surpassed the $100 million revenue mark in a single quarter, driven by organic revenue growth despite the disposition of several debasagers of non-core assets to accelerate paying down our debt. Our most notable growth was in pre-need cemetery sales, which increased by 4.9 million to 22.9 million, a remarkable 27.1% increase compared to the same quarter last year. This robust performance is a testament to our strategic initiatives and the dedication and focus of our team, setting a promising tone for our future. When breaking down revenue, we observe that while total funeral home contracts experienced an expected slight decrease of only 1.2%, total funeral home operating revenue saw a positive growth of $814,000, or 1.4%, to $59.3 million. This growth is primarily due to our funeral home pricing strategy, which continues to boost our funeral average revenue per contract. contributing to these results on a per-contract basis by $142 or 2.6%. This strategy has proven effective in enhancing our financial performance and reflects our sound financial analysis, planning, and execution. Our pre-need funeral cell strategy boosted general aging commissions, which ended at an impressive 1.6 million or 415.4% compared to 312,000 for the same quarter last year. We continue to be excited by the ongoing success of our prearranged fuel cell strategy and its positive impact on our performance. Turning to cemetery operating revenue, our pre-need cemetery sales strategy continues to deliver outstanding performance. We closed the quarter at $33 million, up by $8.7 million or 35.7% compared to the same quarter last year. Total cemetery field EBITDA came in at $15.9 million, an increase of $6.9 million or 76.9%, with total cemetery field EBITDA margin of 48.1%, an increase of 11.2 percentage points from 36.9% during the same quarter last year. These results highlight the dedication to excellence and commitment that drive our pre-need cemetery sales teams to protect families through education and advanced planning. Moving on to adjusted consolidated EBITDA, we finished the third quarter at $30.7 million, an increase of $6.5 million or 26.7% over the prior year quarter. The higher average revenue per contract and our cost management initiatives contributed to this success. as reflected in our adjusted consolidated EBITDA margin of 30.5%, an increase of 370 basis points compared to the same quarter last year. From a GAAP perspective, net income was $9.9 million, a $5.2 million increase from the prior year. Kathy will share more details related to overhead later in the call. Our GAAP diluted EPS for the third quarter was $0.63 per share. up by $0.33, or 110%, and adjusted delivery DPS for the third quarter was $0.64 per share, up by $0.31, or 93.9% versus the prior year quarter. With the recent amendment to our credit agreement, we're all well positioned to reduce near-term interest expense and unlock additional value for our shareholders. This marks the seventh time in the last eight quarters that we have outperformed expectations, demonstrating the long-term commitment to our focus on disciplined capital allocation, purposeful growth, and relentless improvement. As we look at the year through the third quarter, total revenue ended at $306.5 million, an increase of $22.8 million, or 8%, over the same period last year, while adjusted consolidated EBITDA ended at $96.9 million, an increase of 16.2 million or 20.1 percent, an adjusted consolidated EBITDA margin of 31.6 percent compared to 28.5 percent last year, an increase of 310 basis points, an adjusted diluted EPS of $2.02, an increase of 60 cents or 42.3 percent when compared to $1.42 during the same period last year. As it relates to GAAP, net income was $23.1 million, an increase of $1.3 million or 6.1%. And GAAP diluted EPS was $1.48 per share, an increase of $0.09 or 6.5%. We are proud of these results, and after reviewing our key operational metrics and forecasts, we are raising our 2024 guidance. We now expect to finish the year with total revenue in the range of $395 to $405 million, adjusted consolidated EBITDA of $120 to $125 million, and adjusted diluted EPS of $2.45 to $2.55. Adjusted free cash flow guidance will remain at $55 to $65 million. Kathy will provide more details related to our revised guidance. We are fully steam ahead and fully committed to our strategic objectives while we continue to identify new ways to enhance our performance, creating long-term value for our shareholders. As part of this commitment, our competitive request for proposal process for urns and caskets is currently underway, marking an important milestone in our broader supply chain strategy. Our recent meetings with partner vendors were highly productive as we focus on refining our merchandise options and selling strategy to serve our clients better and enhance their experience. These initiatives are prime examples of our ongoing commitment to continuous improvement. They are designed to leverage our scale, leading to greater financial benefits that we expect to materialize in 2025. There's more to come from our supply chain strategy as we continue to identify both near-term and long-term opportunities. Lastly, the search for our chief financial officer continues with deliberate care. This continues to be a thoughtful and detailed process during which we have seen several talented candidates. However, the search remains ongoing. We're committed to finding the ideal strategic partner with the right skills and experience that aligns with our values, culture, and long-term vision. This is a critical role for Carriage's future growth, and we are determined to make the right choice to ensure we have a leader who can help drive our financial success forward. We look forward to providing additional updates as we identify the best person for this critical position. Over the past two years, we have focused on building a strong foundation at Carriage, grounded in our values and centered around our three core strategic objectives. disciplined capital allocation, relentless improvement, and purposeful growth. These efforts align closely with our purpose of creating premier experiences through innovation, empowered partnerships, and elevated service. We are very proud of our significant progress. Our strong third quarter and year-to-date financial performance represents the hard work of many talented individuals driving these efforts. And while we still have many opportunities in front of us, there is a clear sense of excitement across the CARES organization regarding what is to come on this journey. Thank you, and with that, I will hand it over to Kathy.