Carriage Services anticipates 10%–20% annual preneed cemetery sales growth through 2026 amid technology rollout

Earnings Call Insights: Carriage Services, Inc. (CSV) Q3 2025

MANAGEMENT VIEW

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Carlos Quezada, CEO & Vice Chairman, highlighted "continued momentum and demonstrates the effectiveness of our strategic objectives, grounded in disciplined capital allocation, relentless improvement and purposeful growth, which continue to deliver meaningful and sustainable results." He welcomed several new acquisitions, including Faith Chapel Funeral Homes and Crematory, Osceola Memory Gardens Cemetery Funeral Homes and Crematory, Porta Coeli Funeral Home and Crematory, Fisk Funeral Home and Crematory, Funeraria Borinquen, and Cremation Care Providers of Central Florida.

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Quezada stated that total operating revenue for the quarter grew to $101.3 million, up 5.2% year-over-year, primarily driven by a "21.4% year-over-year increase in preneed cemetery sales" and a "61%" increase in general agency commission revenue tied to insurance-funded prearranged funeral sales.

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Funeral operating revenue was down due to a "2.1% reduction in funeral volume," but Quezada noted, "we're glad to see volume return to normal in September. And based on what we have seen in October, we expect a normalized volume trend to continue in the fourth quarter."

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The cemetery segment delivered $35.6 million in operating revenue, rising $4 million or 12.6% year-over-year. Quezada emphasized the launch of Sales Edge 2.0 and the impending introduction of Titan, an AI-powered sales agent, to further accelerate sales growth.

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Adjusted diluted earnings per share were $0.75, up from $0.64 last year, marking a 17.2% increase. Quezada described the quarter as reflecting "disciplined execution and our unwavering focus on delivering premier experiences for the families we serve."

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John Enwright, Senior VP, CFO & Treasurer: "The third quarter results are a testament to our team's commitment to excellence and strategic focus...Year-to-date, our 21% EPS growth demonstrates how our strategic objectives are driving consistent results."

OUTLOOK

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Enwright communicated that guidance is reaffirmed at the midpoint, with anticipated revenues for 2025 of $413 million to $417 million, adjusted consolidated EBITDA between $130 million and $132 million, adjusted diluted EPS of $3.25 to $3.30, overhead expenses from 13% to 13.5% of revenues, adjusted free cash flow between $44 million and $48 million, and a year-end leverage ratio between 4x to 4.1x.

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Management confirmed that achieving these results "would mark record highs for revenue, adjusted consolidated EBITDA, adjusted diluted EPS in our company's history."

FINANCIAL RESULTS

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Total operating revenue for the quarter was $101.3 million. Adjusted consolidated EBITDA grew to $33 million, up $2.2 million or 7.3% from last year, with a margin of 32.1% compared to 30.5% in the same period last year.

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Cash from operating activities increased by $3.8 million or 18.3% year-over-year. Adjusted free cash flow for the quarter increased by 7.7%.

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The leverage ratio improved to 4.1x from 4.2x the previous quarter. Debt was reduced by approximately $5.1 million, and interest expense fell by $1.1 million.

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Capital expenditures totaled $6.7 million, of which $5 million was for growth capital. Overhead expenditure was $13.7 million or 13.4% of revenues.

Q&A

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George Kelly, ROTH Capital Partners: Asked about intra-quarter funeral contract volume weakness and expectations for Q4. Quezada replied, "somewhere around middle-digit percentage of negative volume on both months of July and August, but then came back very strong in the month of September...As it relates to October, we see very positive trends...we did better than last year."

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Kelly pressed on expectations for 2026 funeral home volume growth. Quezada indicated, "What we have typically modeled or been talking about modeling for next year is a 1% to 2% growth on the funeral home side related to volume."

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Parker Snure, Raymond James, inquired about the insurance-funded preneed rollout. Quezada stated, "some businesses were able to grow significantly right off the bat and some were lacking...I do expect additional growth from our strategy...I mentioned in my remarks that we achieved for the first time in one single month, the $7 million mark. I do expect that to continue to grow throughout 2026 to maybe getting to a very low double digit."

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Alexander Paris, Barrington Research, asked about recent acquisitions and M&A pipeline. Enwright responded, "We're in active conversations with a number of premier businesses and owners...Q1 of next year, we anticipate to be busy."

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Paris also requested details on divestitures. Enwright confirmed, "they represented about $2.4 million in EBITDA, about $9 million in revenue and proceeds there were just over $19 million."

SENTIMENT ANALYSIS

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Analysts focused on volume trends, margin sustainability, and execution of growth strategies, with a generally positive but probing tone, pressing for specifics on volume, M&A pipeline, and margin drivers.

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Management maintained a confident and constructive tone in both prepared remarks and Q&A, emphasizing positive trends and technological advancements. Quezada expressed confidence in returning to normalized volumes and leveraging technology for sales growth.

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Compared to the previous quarter, analyst sentiment shifted from cautious optimism to a more constructive outlook, while management sounded more assured about volume normalization and growth trajectory.

QUARTER-OVER-QUARTER COMPARISON

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The current quarter saw a rebound in preneed cemetery sales growth to 21.4% after prior permitting delays, with management expressing greater confidence in maintaining a 10%–20% growth range.

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Guidance ranges were narrowed but midpoints reaffirmed, with management stating record results are anticipated.

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Analysts continued to focus on volume trends, margin sustainability, and M&A pipeline, but their tone was more positive than in Q2, as management provided clearer expectations for volume normalization and acquisition activity.

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Management’s confidence increased, especially regarding the impact of technology initiatives and the sustainability of operational improvements.

RISKS AND CONCERNS

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Management cited earlier funeral volume softness during the summer but noted normalization by September and into October, with positive expectations for Q4.

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Delays in cemetery permitting and the potential for future development delays were acknowledged, though learnings from previous delays were cited as mitigation.

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Analysts raised concerns about the sustainability of margin improvements and the timeline for realizing efficiencies from technology rollouts, which management addressed by clarifying implementation schedules and expected leverage realization.

FINAL TAKEAWAY

Carriage Services management outlined a quarter marked by accelerated preneed cemetery sales growth, substantial operational improvements, and the integration of new technology platforms aimed at driving future sales. The strategic focus on disciplined capital allocation, purposeful growth, and operational excellence remains unchanged, with management reaffirming guidance and signaling a robust M&A pipeline for 2026. The company projects continued momentum into the fourth quarter and beyond, underpinned by normalized funeral volume trends and expanding technology-enabled capabilities across its sales network.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/csv/earnings/transcripts]

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