Carriage Services Aims to Capitalize on Acquisition Opportunities with ATM Program

By Thomas A. Parmalee

When investors hear “ATM program,” they often think of stock dilution, and their hearts lurch – and not in a good way.

But in the case of Carriage Services, which recently reported first-quarter adjusted diluted earnings per share of 86 cents compared with 96 cents in the prior-year quarter and quarterly revenue of $106.1 million – essentially flat compared with the $107 million it earned in the year-ago period, it’s a clear signal that the company is back in growth mode.

For investors and for the company’s employees, whether the ATM pays off will depend on execution: Can Carriage acquire the best funeral homes and cemeteries on the market, incorporate them into its portfolio and have the deals be accretive to earnings?

That remains to be seen, but one thing is clear: Betting against Carlos Quezada, who took over as the company’s chief executive officer and vice chairman about three years ago, has so far been a losing proposition.

On Carriage’s recent conference call to discuss its earnings with Wall Street analysts, Quezada celebrated how far the company has come in just a few short years.

“Let’s talk about where we were,” he said. “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.”

He continued, “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, however, the picture is so different.

“We have materially strengthened the balance sheet, reduced leverage and enhanced liquidity,” Quezada said. “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.”

The hard work has shown up in the bottom line, as 2025 marked the strongest financial performance in Carriage’s 35-year history, surpassing even 2021 results during the peak of the pandemic, Quezada noted.

As far as where Carriage is headed in the future, Quezada said the focus is on compounding the progress it has seen thus far.

“We are building a data-driven, high-performance platform designed to deliver sustained organic growth, margin expansion and superior capital efficiency,” he said. “Our priorities include deepening preneed penetration across both funeral and cemetery segments, optimizing the service mix toward 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 allocation framework that balances high return investments and strategic acquisitions and shareholder returns.”

Quezada’s vision is clear … within just a few short years, he intends to position the company as a premier best-in-class operator in the death care industry, one that is “defined by consistent top-tier margins, improved free cash flow generation and a scalable technology-enabled operating model.”

To get there, the ATM offering could play a pivotal role.

On the conference call, John Enwright, the company’s chief financial officer, said leaders were excited to announce the at-the-market equity offering program, or ATM program, “as a prudent enhancement to our capital markets toolkit.”

He explained, “The ATM program is intended to provide efficient, incremental funding flexibility that enables us to continue executing our disciplined acquisition strategy while ensuring leverage remains comfortably within our targeted range. We expect to access the ATM program selectively and opportunistically, consistent with our commitment to balance sheet strength, disciplined capital allocation and shareholder value creation.”

In looking at Carriage’s quarterly results, Enwright said he was pleased — “especially considering the tough comparison to prior year, which included approximately $4.8 million in revenue from businesses that were divested during 2025.”

Steve Metzger, president and chief operating officer at Carriage, noted that Carriage does not currently have any plans to divest additional locations and that the acquisition pipeline is “robust.”

In fact, Carriage has an acquisition that is “scheduled to close later this month,” he said, one that will allow the company to enter a new market “with a pretty strong growth profile.” He added, “We’re excited to provide some more detail on that here probably in the next couple of weeks. We’re having a number of conversations with owners throughout the country. We’ve grown the corporate development team out of need, quite frankly. We’ve just had a lot of interest from owners across country. I would expect in the back half of the year, we’re going to see significant activity that we’ll be able to report on.”

The ATM offering will be “able to support what we think is going to be a pretty significant opportunity for growth through M&A,” Metzger noted.

Drilling Down into Quarterly Results

When Service Corporation International reported quarterly results a week before Carriage Services, it noted that funeral service volumes declined 6% year over year, which prevented results from being better. It wasn’t a market share issue but rather a death rate issue, SCI leaders said.

Results from Carriage seem to suggest that SCI was on the mark, as Quezada noted that Carraige saw a 5.8% decline in funeral home at-need volume for the quarter, slightly less than the 6% seen at SCI.

“As you may remember, we had a strong first quarter last year due to the flu season pushing into January and February,” Quezada said, echoing an observation that SCI executives made on their own conference call with investors.

Like SCI, Carriage Services expects funeral volumes to improve as the year goes on.

“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%,” Quezada said. “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.”

The trends that Carriage Services among its cemeteries also interestingly mimicked in large part what SCI saw, as CemeteryVision.com observed in this article.

Some other quarterly highlights from Carriage include:

Consolidated pre-need funeral insurance contracts sold increased 8% compared to the same quarter last year.
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.

In its earnings report, Carriage Services reaffirmed its full-year outlook, which anticipates certain planned acquisitions.

What is critical for investors, however, is that utilization of the just-announced ATM program has not been factors into any outlook metrics, according to Enwright.

For the year, the company expects: