Carriage Services, Inc.

Dan, thank you for standing by. Welcome to the Carriage Services fourth quarter 2024 earnings conference call. 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, President. Please go ahead, sir.

Good morning, everyone, and thank you for joining us to discuss our fourth quarter and year-end results for 2024. 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 John Enright, Chief Financial Officer. On the Carriage Services 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 John 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 welcome to everyone joining today's fourth quarter and full year earnings call. I am pleased to share the outcomes of a transformative year at Carriage Services, a testament to our dedication and strategic execution. Our results reflect our financial strategy and commitment to innovation and service excellence. Before sharing the results, I want to express my deepest gratitude to every member of the Carriage team. Your unwavering dedication is the cornerstone of our success and provides needed comfort to the families we serve. We truly appreciate you and your alignment with our vision and values. I am also thrilled to welcome John Enright as Carriage's new Chief Financial Officer. In just seven weeks, John has dived deeply into our operations, embraced our culture, and provided invaluable insights and leadership as we continue to grow into a best-in-class organization. Welcome to Carriage, John. Today, I will highlight our financial performance for the fourth quarter and the full year and update you on the progress of some of our strategic objectives. John will provide additional detail focusing on overhead, cash flow, leverage ratio, and our guidance for 2025. Now, let's move on to the financial highlights. For the fourth quarter, we reported total revenue of $97.7 million, a decrease of $1.1 million or 1.1% compared to the same quarter last year. We experienced an anticipated decline in funeral volumes against a challenging prior year comparable. resulting in a 7.3% decrease, partially offset by a 1.4% increase in our average revenue per funeral contract. 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. Additionally, we experienced an 8.4% increase in pre-need internment rights sold and a 4.2% increase in the average price for pre-need internment rights sold, which helped offset total revenue to a decrease of just 1.1%. When breaking down revenue, funeral opening revenue was $58.7 million in the fourth quarter versus 61.3 million last year. A 2.6 million decrease or 4.2%. Lower funeral home volumes resulted in a reduction of 831 contracts or 7.3%. This was partially offset by a slight increase in average revenue per contract of $75 or 1.4%. Cemetery operating revenue for the fourth quarter was 29.8 million versus $26.7 million last year, resulting in a $3.1 million increase, or 11.6%, driven by an increase of pre-need internment sold of 263 contracts, or 8.4%, and an increase per pre-need cemetery contract of $937, or 9.2%, compared to the same period last year, almost upsetting the revenue loss in our funeral segment. For the full year, total revenue finished at $404.2 million, an increase of $21.7 million or 5.7%. Primarily driven by the continued growth in consolidated cemetery pre-need sales as we experienced a 22.9% increase in pre-need internment rights sold and a 7.3% increase in the average price per pre-need internment rights sold, which led to total pre-need cemetery sales of 94.3 million, an increase of 19.9 million or 26.7% when compared to the same period last year. Moving to adjusted consolidated EBITDA, for the fourth quarter, we ended at 29.3 million, a decrease of 3.1 million or 9.6%. This decrease was driven by the lower revenue in our funeral segment, combined with an expected $1.2 billion increase in our Trinity system investment, which we don't adjust for. For adjusted consolidated EBITDA margin for the fourth quarter, we finished at 30%, a decrease of 280 basis points compared to last year. For the full year, adjusted consolidated EBITDA finished at $126.2 million, an increase of 13 million or 11.5%. Adjusted consolidated EBITDA margin for the full year remained strong at 31.2%, an increase of 160 basis points compared to last year. Adjusted diluted EPS for the fourth quarter was 62 cents per share, down by 15 cents or 19.5% versus the prior year quarter. And for the full year, We ended at $2.65 per share, an increase of 46 cents per share or 21%. We are pleased with our financial performance for the full year of 2024, highlighted by a continued focus on execution while optimizing our systems and approach to support organic growth. Our strategic adjustments throughout the year paid off despite a decrease in funeral volumes in the fourth quarter. influenced by the shift in a later than normal flu season. After raising our guidance twice in 2024, we're thrilled to report that we exceeded expectations across most of our financial metrics. This achievement underscores our management capabilities and operational excellence, setting a strong precedent for continued growth. In alignment with our ongoing commitment to excellence, we're excited to announce the expansion of our supply chain strategies through the introduction of our new earned core line. This launch reinforces our national partnerships and aligns with our strategic objectives of continuous improvement and disciplined capital allocation. These efforts collectively enhance our service capabilities and create additional shareholder value. Moving into phase two of this strategy, we're focusing on leveraging our new national partnership with Express Funeral Funding for insurance assignments. This collaboration will provide added value to the families we serve by enhancing the financial flexibility of our offerings, potentially increasing sales across our operations. The full rollout of this program is anticipated in the second quarter of this year. marking a significant milestone in our strategic plan. Subsequent phases will address casket core line, fleet management, and other essential procurement needs, further optimizing our operational efficiency and service excellence. In closing, as we reflect on our accomplishments and insights gained in 2024, Carriage is at the dawn of an exciting future. With a robust foundation built over the past two years, we're ideally positioned for sustained financial growth and industry leadership. Our strategic commitments to passion for service, optimizing our supply chain, and fostering continuous improvement have sharpened our competitive edge and set the stage for groundbreaking innovations. As we move forward, our culture of excellence through our teams are more equipped than ever to deliver superior service. Driven by our unwavering commitment to creating premier experiences, we are eager to expand our horizons, deepen our connections with the community, and become a best-in-class organization. At Carriage, we don't just adapt to change, we lead it. Thank you, and I will now pass the call on to John.