Carriage Services, Inc.

Good day, and thank you for standing by. Welcome to the Carriage Services Q1 2026 earnings webcast. 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 first quarter results. In addition to myself, on the call this morning for management are Carlos Quesada, Chief Executive Officer and Vice Chairman of the Board of Directors, and John Enright, Senior Vice President and 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 press 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 us for today's first quarter earnings call. We're pleased with our first quarter performance, especially against a strong comparison to the first quarter of 2025. Our results reflect steady execution, discipline, and continued focus on what we can control. As I step back and look at our progress, I am encouraged by the consistency we're building across the businesses. We are strengthening our foundation, improving how we operate, and positioning carriage for long-term value creation. Before turning to financials, I want to recognize our managing partners, our field teams, and our Houston Support Center. You are the heartbeat of carriage. These results are not by chance. They are built on a clear vision, high standards, and strong accountability and a deep passion for this profession. Thank you for leaving our values and for delivering premier experiences to the families every day. Today, we'll cover our first quarter performance and share three key phases of our journey. What we were, what we are today, and most importantly, where we are going. John will then walk through our financial details, including cash from operating activities, balance sheet strength, capital expenditures, overhead, and our at-the-market offering program. Now to my report. For the first quarter, we reported revenue of $106.1 million, a 0.9% decrease from the same period last year. The primary reason for this variance was a decline in funeral home admit volume of 5.8%. As you may remember, We had a strong first quarter last year due to the flu season pushing into January and February. After normalizing funeral volume by combining the fourth quarter of 2025 and the first quarter of 2026, the actual volume decline is only 2.3%. As we look at our segments, funeral comparable revenue was $63.3 million, down 4.2% from the previous year. The volume decline was partially offset by a small 1.6% increase in comparable average revenue per contract versus the prior year quarter. As we look ahead to April, we expect funeral volume to be on a normal trend. Turning to comparable cemetery revenue, we generated $29.6 million in the first quarter, an increase of 1.7 million or 6% versus the prior year quarter. This growth was primarily driven by a 9% increase in comparable pre-need cemetery self-production and a 15.3% increase in average revenue per property contract. The cemetery segment continues to benefit from our disciplined inventory development and strategic pricing and focused pre-need execution. Financial revenue for the quarter was $8.5 million, up 15.7% year-over-year. primarily reflecting a strong performance in our pre-need funeral sales strategy and the pre-need funeral commission income we generated from those sales. We ended the quarter at $2.5 million, an increase of 26% compared to the same period last year. Consolidated pre-need funeral insurance contracts sold increased 8% compared to the same quarter last year, reinforcing the strength and scalability of our funeral printing insurance platform, supported by the continued execution of our sales organization. On profitability, adjusted consolidated EBITDA for the first quarter was $33.8 million, an increase of $805,000 or 2.4%, with an adjusted consolidated EBITDA margin of 31.8%, up 100 basis points from the prior year quarter. Adjusted diluted EPS for the first quarter was 86 cents per share, compared to 96 cents per share in the prior year quarter, representing a decrease of 10 cents per share, or 10.4%. John will share more details on this variance. Overall, we are pleased with our first quarter results, which reflect a strong operating momentum and continued progress towards our strategic objectives. Now let's talk about where we were. Three years ago, the company was operating under constraints, elevated leverage, fragmented processes, and underinvestment in core systems and technology. Operational variability across locations, limited scalability, pricing discipline was inconsistent, and capital allocation lacked the rigor required to optimize returns. In short, our company had strong underlying assets, but was not positioned to fully convert that potential into durable financial performance. Today, the business reflects a fundamentally different operating profile. We have materially strengthened the balance sheet, reduced leverage, and enhanced liquidity. At the same time, we have institutionalized processes across operations, implemented more disciplined pricing frameworks, and invested in systems and data infrastructure to improve visibility, accountability, and decision-making. These changes are translating strategy into disciplined execution, driving greater sales predictability, expanding margins, and delivering consistent free cash flow. Importantly, we continue to build a culture of operational excellence that is embedded, repeatable, and scalable across our businesses. An example of this is that 2025 marked the strongest financial performance in CARES' 35-year history, surpassing even 2021 results during the peak of the pandemic. Now, where we are heading. Our focus is on compounding this progress in line with our long-term strategic objectives and 2030 vision. We are building a data-driven, high-performance platform designed to deliver sustained organic growth margin expansion, and superior capital efficiency. Our priorities include deepening pre-need penetration across both funeral cemetery segments, optimizing the service mix towards higher volume offerings, expanding pricing sophistication, and leveraging technology to enhance both the customer experience and operating leverage. In parallel, we will continue to execute a disciplined capital location framework advances high return investments, strategic acquisitions, and shareholder returns. By 2030, our vision is to position the company as a premier best-in-class operator in the debt-sharing industry, defined by consistent top-tier margins, improved free cash flow generation, and a scalable, technology-enabled operating model. We believe this strategy will drive durable long-term value creation and establish a structurally advantaged business capable of outperforming across market cycles. Finally, the at-the-market offering program is a strategic extension of the progress we have already made. With a stronger balance sheet, improved free cash flow, and a more disciplined, scalable operating platform, we believe we are now in a position to deploy capital with precision. This program gives us the flexibility to do that strategically, raising equity at market prices in a measured way, and only when it supports high returns for shareholders. Additionally, the at-the-market program allows us to accelerate strategic growth initiatives, pursue disciplined acquisitions in a highly fragmented industry, and maintain balance sheet strength. It enabled us to move faster on opportunities and convert our operational momentum into sustained shareholder value creation. We are energized by our growth plans and confidence in the long-term value we're building through disciplined capital execution, growth generated with purpose and intention, and an unwavering commitment to service excellence. Thank you. And with that, I will turn the call over to John.