Carriage Services ((CSV)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The latest earnings call from Carriage Services presented a mixed sentiment, highlighting both significant financial achievements and ongoing challenges. The company reported a surge in GAAP net income and a strategic return to growth mode through acquisitions. However, flat total revenue and margin compressions in both the Funeral and Cemetery segments indicate financial pressures that suggest a cautious outlook despite optimism about future growth and acquisition strategies.
Strong Financial Revenue Growth
Carriage Services reported an impressive 18.8% increase in financial revenue, reaching $8.2 million. This growth was primarily driven by a substantial 96.2% rise in preneed funeral commission income, showcasing the company’s ability to capitalize on its financial services segment.
GAAP Net Income Surge
The company achieved a remarkable 85.7% increase in GAAP net income, totaling $11.7 million for the quarter. This surge from $6.3 million in the same quarter last year underscores Carriage Services’ effective financial management and operational efficiency.
Return to Growth Mode
Carriage Services is actively pursuing growth through acquisitions, currently under contract to acquire new businesses that served over 2,600 families and generated $15 million in revenue last year. This strategic move signals the company’s commitment to expanding its market presence.
Debt Reduction Achievements
In a significant financial maneuver, Carriage Services has paid down over $100 million in debt over two years, including $24 million year-to-date. This has resulted in a reduced leverage ratio from 4.6x to 4.2x, strengthening the company’s financial position.
Flat Total Revenue
The earnings call revealed that total revenue for the second quarter remained flat at $102.1 million compared to the same period last year. This stagnation highlights the challenges Carriage Services faces in driving top-line growth.
Cemetery Revenue Decrease
Cemetery operating revenue experienced a slight decline of 0.6%, amounting to $33.5 million. This decrease, along with year-to-date revenue falling below the expected growth range, indicates challenges in the Cemetery segment.
EBITDA Margin Compression
The adjusted consolidated EBITDA margin decreased by 30 basis points to 31.6%. This margin compression, affecting both the Funeral and Cemetery segments, reflects the financial pressures the company is navigating.
Funeral and Cemetery Margin Pressures
The Funeral field EBITDA margin dropped by 250 basis points to 37%, while the Cemetery field EBITDA margin fell by 480 basis points to 44.9%. These pressures highlight the operational challenges within these segments.
Forward-Looking Guidance
Carriage Services provided an optimistic outlook for the remainder of the year, projecting a full-year revenue range of $410 million to $420 million. The company anticipates adjusted EBITDA between $129 million and $134 million, and adjusted diluted EPS of $3.15 to $3.35. With a focus on strategic acquisitions and strong sales performance, Carriage Services aims to deliver long-term value creation despite current margin challenges.
In summary, the Carriage Services earnings call reflected a mixed performance with notable financial achievements and ongoing challenges. While the company is optimistic about future growth and acquisition strategies, the current financial pressures suggest a cautious outlook. Investors and market watchers will be keen to see how Carriage Services navigates these challenges while pursuing its growth ambitions.