On Feb. 21, Carriage Services reported fourth-quarter adjusted diluted earnings per share of 77 cents compared with 64 cents in the year-ago period. It also announced that co-founder Mel Payne would transition to special advisor to the board of directors.
Company highlights included:
- Exceeded full year 2023 guidance ranges for total revenue, adjusted consolidated EBITDA and adjusted earnings per share, driven by strong fourth quarter performance.
- 5.2% growth in total revenue over the prior year quarter and 3.3% growth over the prior full year.
- Preneed sales deliver 16.1% growth in cemetery operating revenue over the prior year quarter and 13.5% growth over the prior full year.
- 41.6% increase in GAAP net income and 41.5% increase in diluted earnings per share over the prior year quarter.
Carlos Quezada, vice chairman and CEO (pictured at top), said, “We are pleased to announce our strong fourth quarter and full year 2023 results. Total revenue grew by 5.2% in the fourth quarter and 3.3% for the full year, despite the COVID ‘pull forward’ impact resulting in modest declines in funeral contract volume experienced during the year. This success in growing our top line stems from our targeted efforts to better leverage our pricing power, which drove improved average revenue per contract, in addition to our preneed cemetery sales team’s exceptional performance, which resulted in a surge in preneed cemetery sales production of 25.0% for the fourth quarter and 19.6% for the full year. This increase in revenue, coupled with disciplined cost management, resulted in a year-over-year increase in adjusted consolidated EBITDA of 3.5%, and a significant 13.2% growth over the prior year quarter, which also included margin expansion of 230 basis points. This momentum, marking four out of five consecutive quarters of solid performance, instills confidence and excitement in our core initiatives as we advance into 2024 and focus on fulfilling our new purpose statement, which is ‘Creating premier experiences through innovation, empowered partnership, and elevated service.’ For those interested in learning more, we invite you to explore our newly launched website and discover our refreshed Carriage image, which aligns with our vision of the Carriage of the future.”
Additional financial highlights include:
- Revenue for the three months ended Dec. 31, 2023 increased $4.9 million compared to the three months ended Dec. 31, 2022, primarily as a result of a 23.6% increase in the number of preneed interment rights (property) sold, a 1.2% increase in the average price per interment right sold and a 0.7% increase in the average revenue per funeral contract, offset by a 3.3% decrease in the funeral contract volume.
- Revenue for the year ended Dec. 31, 2023 increased $12.3 million compared to the year ended Dec. 31, 2022, primarily as a result of a 9.4% increase in the average price per preneed interment right sold, an 8.6% increase in the number of preneed interment rights (property) sold and a 0.9% increase in the average revenue per funeral contract, offset by a 2.4% decrease in the funeral contract volume.
- Net income for the three months ended Dec. 31, 2023 increased $3.4 million compared to the three months ended Dec. 31, 2022, primarily due to a $3.2 million increase in profit contribution from our businesses and a $2.9 million decrease in loss on divestitures, disposals and impairment charges, offset by a $1.4 million increase in interest expense and a $1.1 million increase in general, administrative and other expenses.
- Net income for the year ended Dec. 31, 2023 decreased $8.0 million compared to the year ended Dec. 31, 2022, as the $5.1 million increase in profit contribution from our businesses was offset by a $10.4 million increase in interest expense and a $4.7 million increase in general, administrative and other expenses.
Mel Payne Transitions to Advisory Role
Payne, has chosen to step down from his role as executive chairman of the board and transition to a new role as special adviser to the board of directors, which will allow him to be available and share his wealth of knowledge and insights with the board and the senior leadership team. He will continue as a member of the board until his current term expires at the May 2024 annual meeting of stockholders.
Payne, who served as Carriage’s only CEO and chairman of the board for the company’s first 32 years, started with a vision in 1991 that was born out of a very personal and impactful experience he had following the loss of a loved one. He turned that experience and vision into a team of more than 2,700 employees and 200 businesses, all driven by a collective mission of serving families during the most challenging time of their lives.
“Next to my family, Carriage has been and continues to be, the greatest love of my life,” he said. “The friendships I have made over the years are priceless, and watching the growth and development of so many wonderful leaders throughout the organization has been a true highlight of my career. I have complete confidence in Carlos’ vision and ability to lead Carriage into its next chapter of growth, and, as still a large shareholder, I will be cheering on the team and offering support.” Payne.
“Mel has built a special company and is one of the true pioneers in this profession. He has handpicked an incredibly talented senior leadership team, and the board is excited for the future of Carriage and our stockholders,” stated lead independent director, Don Patteson Jr.
Conclusion of Review of Strategic Alternatives
The board of directors has concluded the company’s strategic review process, first announced on June 29, 2023, which was overseen by the board with assistance from experienced financial and legal advisers. The board has unanimously determined that continuing to execute on the Company’s strategic plan as an independent, public company is in the best interests of the company and its stockholders at this time. In this regard, the board’s determination took into account positive trends described above in the company’s financial and operating results toward the end of 2023. The board remains committed to maximizing stockholder value.
While the company received a number of proposals for transactions involving the company in the course of the strategic review process, following a thorough review and evaluation of the proposals and alternatives available to the company, the board concluded that none of those proposals would be in the best interests of the company’s stockholders. The board endorsed the company’s continued execution of its standalone business plans as an independent publicly held company under the leadership of Carlos Quezada as CEO, Steve Metzger as president and Kian Granmayeh as CFO, as well as leadership from the company’s board, which added three talented new directors during the summer of 2023.
Outlook for 2024
The company’s 2024 outlook incorporates previously stated organic growth initiatives around preneed sales, both in the cemetery and funeral businesses, and expected cost discipline while the company continues to deleverage the balance sheet. Additionally, in the first quarter of 2024, the company expects to close two transactions to divest certain non-core businesses, reducing 2024 revenue and field EBITDA by $5.5 million and $1.5 million, respectively – the 2024 outlook reflects the expected impact of these two divestitures.
The company expects 2024 revenue to be in the range of $389 to $390 million and adjusted diluted earnings per share to be in the range of $2.20 to $2.30.
Read the full earnings release here.
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