Carriage Services, Inc.

What they do

Carriage provides funeral and cemetery services and merchandise on both an atneed (time of death) and preneed (planned prior to death) basis. Funeral homes offer consultation, removal and preparation of remains, casket and merchandise sales, facilities for visitation and memorial services, and transportation. Cemeteries sell interment rights (grave sites, lawn crypts, mausoleum spaces, niches), related merchandise such as memorial markers and monuments, and services including interments and inurnments.

Revenue drivers

• Funeral Home Operations — About 65-66% of total revenue. Generates revenue from burial and cremation services and related merchandise such as caskets and urns, sold atneed and preneed; second quarter 2026 funeral contracts were 10,169 at $6,048 average revenue per contract.
• Cemetery Operations — About 34-35% of total revenue. Revenue comes primarily from sales of interment rights plus cemetery merchandise (markers, outer burial containers, monuments) and services (interments, inurnments, installation).
• Preneed Programs — Approximately 16% of funeral services performed are funded through preneed contracts, typically secured by trust deposits or life insurance policies. Insurance-funded contracts generate commission income that improves near-term cash flow; in 2023 the company received a $6.0 million incentive payment under an exclusive partnership with a national insurance provider, subject to partial claw-back if preneed sales volumes are not met over the ten-year term.

Recent performance

Second quarter 2026 revenue was $102.9 million, up 0.8% year over year, with GAAP net income of $12.3 million and diluted EPS of $0.77 versus $0.74 a year earlier. At-need volume declined 3.5%, but comparable average revenue per contract rose 3.7% in funeral homes and 17.9% in preneed cemetery average revenue per interment. Adjusted consolidated EBITDA was $33.3 million, up 3.1%, with margin expanding 70 basis points to 32.3%. For the six months ended June 30, 2026, revenue was $209.1 million and diluted EPS was $1.61 versus $2.07 in the prior-year period; cash from operations was $22.5 million. Full-year 2025 revenue was $417.4 million with net income of $51.5 million and diluted EPS of $3.25.

Strategy

Management is focused on executing its Standards Operating Model and growth strategy toward a stated 2030 Vision, prioritizing capital allocation for strategic growth acquisitions, capital expenditures, debt repayment and dividends. The company completed the acquisition of one funeral home in the second quarter of 2026 and says it is in advanced conversations with owners of premier businesses, expecting more closings over the next two quarters and into 2027. In 2025 it acquired eight funeral homes, one cemetery and one cremation-focused business in Florida for $56.5 million, and divested thirteen funeral homes and four cemetery and real property for $40.4 million. On May 6, 2026, it entered an at-the-market equity program allowing up to $100.0 million of common stock sales, though no shares have been sold to date. It also uses the Good to Great incentive program, which pays Managing Partners a one-time cash-and-stock bonus for achieving at least 1% average net revenue compounded annual growth over a five-year period.

Risks

• Key employee dependence — Businesses tend to serve small local markets and usually have one or a few key employees driving customer relationships, so failure to attract and retain Managing Partners and sales staff could materially hurt results.
• Unpredictable death volume — Changes in the number of deaths in the company's markets are not predictable market-to-market or over the short term; second quarter 2026 at-need volume fell 3.5% versus the prior year.
• Good to Great payout obligations — The Good to Great incentive program could result in significant future payments to Managing Partners if they achieve the 1% minimum growth rate over five-year performance periods.
• Macroeconomic and consumer spending pressure — Moderating but still elevated inflation, tariff and trade policy changes, geopolitical developments and energy price volatility could reduce consumer discretionary spending on the company's services.

Outlook

Management confirmed 2026 earnings per share midpoint guidance and said July funeral volume trends are encouraging. It expects more acquisition closings over the next two quarters and into 2027, describing advanced conversations with owners of premier businesses. The company believes existing and anticipated cash resources, plus Credit Facility borrowings as needed, will be sufficient to meet working capital, capital expenditures, scheduled debt payments, commitments, potential growth acquisitions and dividends for the next 12 months.