10-Q: Carriage Services Net Income Rises $5.5M in Q2 2025

Carriage Services reports a $5.5 million increase in net income for Q2 2025, driven by cost management and strategic divestitures.

Summary

• Carriage Services reports total revenue of $102.147 million for the three months ended June 30, 2025, a slight decrease from $102.318 million in the same period of 2024.
• Net income for Q2 2025 increased to $11.739 million, compared to $6.259 million for Q2 2024.
• Basic earnings per common share increased to $0.75 from $0.41 year-over-year.
• The company operated 159 funeral homes and 28 cemeteries as of June 30, 2025.
• For the six months ended June 30, 2025, total revenue was $209.216 million, up from $205.811 million in 2024.
• Net income for the first six months of 2025 was $32.665 million, compared to $13.232 million in the first half of 2024.
• The company sold two funeral homes and three cemeteries for $15.8 million during the first six months of 2025, resulting in a gain of $5.9 million.
• The company also sold real property for $3.0 million resulting in a gain of $2.0 million.
• The company paid down $24 million on its revolving credit facility during the first half of 2025.

Sentiment

Score: 7

Explanation: The filing indicates positive financial performance with increased net income and decreased expenses, but also acknowledges potential risks and challenges.

Positives

• Net income increased by $5.5 million in Q2 2025 compared to Q2 2024, and $19.4 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.
• General, administrative and other expenses decreased by $6.7 million for the three months ended June 30, 2025, and $10.9 million for the six months ended June 30, 2025.
• Interest expense decreased by $1.3 million for the three months ended June 30, 2025, and $2.7 million for the six months ended June 30, 2025.
• The company experienced a $6.7 million decrease in general, administrative and other expenses, a $1.3 million decrease in interest expense; partially offset by a $1.1 million decrease in gross profit and a $0.9 million increase in income tax expense.
• The company experienced a $10.9 million decrease in general, administrative and other expenses, as the prior year included one-time costs related to executive severance payments and our agreement to pay our financial advisor in connection with the Company's previously concluded review of strategic alternatives, a $9.4 million increase in (gain)/loss on sale of divestitures and real property and a $2.7 million decrease in interest expense; partially offset by a $2.5 million increase in income tax expense and a $0.5 million decrease in gross profit.
• The company experienced a 1.9% increase in the average revenue per funeral contract.
• The company experienced a 4.4% increase in the average price per interment right sold.

Negatives

• Revenue for the three months ended June 30, 2025, decreased $0.2 million compared to the three months ended June 30, 2024.
• Gross profit for the three months ended June 30, 2025, decreased $1.1 million compared to the three months ended June 30, 2024.
• Gross profit for the six months ended June 30, 2025, decreased $0.5 million compared to the six months ended June 30, 2024.
• The company experienced a 0.6% decrease in the average price per interment right sold and a 3.9% decrease in the number of preneed interment rights (property) sold and a 0.8% decrease in funeral contract volume.
• The company experienced a 4.8% decrease in the number of preneed interment rights (property) sold.

Risks

• The company's ability to find and retain skilled personnel.
• The effects of competition.
• Changes in the number of deaths in the company's markets, which are not predictable from market to market or over the short term.
• Changes in consumer preferences and the company's ability to adapt to or meet those changes.
• The company's ability to generate preneed sales, including implementing its cemetery portfolio sales strategy, product development and optimization plans.
• Fluctuations in interest rates, including the effects of increased borrowing costs under the company's Credit Facility.
• The effects of inflation on the company's operational and financial performance.
• The company's ability to obtain debt or equity financing on satisfactory terms.
• The timely and full payment of death benefits related to preneed funeral contracts funded through life insurance contracts.
• The financial condition of third-party insurance companies that fund the company's preneed funeral contracts.
• Increased or unanticipated costs, such as merchandise, goods, insurance or taxes.
• The company's level of indebtedness and the cash required to service its indebtedness.
• Changes in federal income tax laws and regulations, including changes resulting from the One Big Beautiful Bill Act.
• The potential impact of epidemics and pandemics on customer preferences and the company's business.
• The effects and expense of litigation.
• Consolidation in the funeral and cemetery industry.
• The company's ability to identify and consummate strategic acquisitions on commercially reasonable terms and successfully integrate acquired businesses.
• The company's ability to successfully complete any non-core asset divestitures on commercially reasonable terms.
• The effects of any additional imposition or changes in tariffs or trade agreements.
• Economic, financial and stock market fluctuations.
• Interruptions or security lapses of the company's information technology, including any cybersecurity or ransomware incidents.
• Adverse developments affecting the financial services industry.
• Acts of war or terrorists acts and the governmental or military response to such acts.
• The company's failure to maintain effective control over financial reporting.
• Changes in U.S. foreign trade policies, including the imposition of additional tariffs and other trade barriers, and efforts to withdraw from or materially modify international trade agreements, may materially and adversely affect our business, operations and financial condition.

Future Outlook

The company plans to remain focused on executing its strategic objectives and growth strategy, prioritizing capital allocation for debt repayments, dividends, internal growth capital expenditures, and potential strategic growth acquisitions.

Industry Context

The filing notes that the U.S. economy continues to experience the impact of several years of higher rates of inflation, which has impacted a wide variety of industries and sectors, with consumers facing rising prices. Such inflation may negatively impact consumer discretionary spending, including the amount that consumers are able to spend on our services, although we have not experienced any material impacts to date and our industry has been largely resilient to similar adverse economic and market environments in the past.

Legal Proceedings

• Denning v. Carriage Services, Inc., et al., a wage and hour class action filed on July 29, 2024, seeks monetary damages for alleged failure to pay legally mandated compensation and reimbursement expenses. The company intends to vigorously defend itself.
• Frost v. Rolling Hills Memorial Park, a consumer class action filed on October 4, 2024, alleges failure to properly set cemetery merchandise and maintain the perpetual care cemetery. The company intends to vigorously defend itself.

Stakeholder Impact

• Shareholders: Positive impact due to increased net income and earnings per share.
• Employees: Potential impact from talent recruitment efforts and incentive compensation plans.
• Customers: Potential impact from changes in consumer preferences and pricing strategies.
• Creditors: Positive impact from debt repayments and compliance with financial covenants.

Next Steps

• The company will continue to assess the impacts of macroeconomic trends and take appropriate steps to mitigate any changes in consumer preferences or additional cost increases.
• The company will prioritize capital allocation for debt repayments, the payment of dividends and debt obligations, internal growth capital expenditures, general corporate purposes and potential strategic growth acquisitions, as allowed under our Credit Facility.

Key Dates

Recommendation

The company shows improved net income and expense management, but revenue growth is slow and there are ongoing legal challenges. A hold recommendation reflects a neutral stance, awaiting further evidence of sustained growth and resolution of legal uncertainties.

Keywords

funeral services, cemetery services, preneed sales, financial results, Carriage Services, SEC filing, quarterly report