By Thomas A. Parmalee
Better-than-expected mortality trends weighed heavily on funeral call volume during the first half of 2026, but executives at Carriage Services say they are already seeing signs that the business is returning to more typical patterns as the company enters the second half of the year.
The Houston-based death-care company reported second-quarter revenue of $102.9 million, up 0.8% from the prior-year period, while adjusted consolidated EBITDA increased 3.1% to $33.3 million. Adjusted diluted earnings per share climbed 5.4% to $0.78, even as funeral volume declined because fewer people died than expected during the first six months of the year.
Executives repeatedly emphasized during the company’s earnings conference call that the decline in funeral volume was driven by lower mortality rather than competitive pressures, and they expressed confidence that demand will normalize during the remainder of 2026.
Better Mortality Meant Fewer Funeral Calls
Carlos Quezada, CEO and vice chair of the board, said mortality trends began softening in January and remained below historical expectations throughout the first half of the year.
Comparable funeral volume fell 3.5% during the second quarter and 4.7% during the first six months of 2026 compared with the same periods last year.
“As everyone on this call understands, mortality is the primary demand driver for our funeral business, and it is also one of the few variables we simply cannot control,” Quezada said. “What we can control is how we operate our business.”
Rather than simply accepting weaker results, he said field leadership focused on operational discipline, pricing and service quality.
That strategy helped cushion the impact of fewer services.
Comparable funeral revenue declined 2.4% to $55.7 million, but average revenue per funeral contract increased 3.7%, demonstrating the company’s continued pricing strength despite lower call volume.
Company Expects Volume to Rebound
Perhaps the biggest takeaway from the earnings call was management’s confidence that the mortality slowdown is temporary.
Quezada noted that funeral volume was negative every month from January through June, although the year-over-year declines steadily narrowed as the months progressed.
“We were negative on volume every month from January through June,” he said. “It started from the high single digits and really came down through the end of June.”
That trend changed in July.
“As we came into July, it really flipped now into growth on a year-over-year basis on volume,” Quezada said, calling the improvement “encouraging” after the unusually soft first half.
He added that management expects the second half of the year to be considerably stronger.
“We believe that the second half should be much better than the first half has been, and that’s how we’re planning,” he said.
Strong Operations Offset Lower Volume
Despite serving fewer families, Carriage continued improving profitability.
Adjusted EBITDA margin expanded 70 basis points to 32.3%, reflecting ongoing operational improvements throughout the company.
Quezada said the quarter demonstrated the operating leverage Carriage has been building.
“Perhaps more important than the absolute numbers, the quarter demonstrated the operating leverage we have been building into the business,” he said.
He added that if funeral volume returns to normal growth, those operational improvements should allow the company to generate even stronger earnings.
Preneed Sales Continue Growing
The company’s cemetery business remained steady despite timing differences in revenue recognition.
Comparable cemetery revenue was essentially unchanged at $33.2 million, but underlying sales activity remained healthy.
Consolidated preneed cemetery sales production increased 5%, fueled by a 17.3% increase in the average interment right sold.
Insurance-funded preneed funeral contracts sold rose 21.1% during the quarter, another bright spot that executives highlighted.
Chief Financial Officer John Enwright said the stronger cemetery sales production has not yet fully translated into reported revenue because of the accounting timing associated with recognizing cemetery revenue.
Cremation Rate Holds Steady
Carriage’s cremation rate remained remarkably stable.
The company reported a cremation rate of 60.6% during the second quarter, compared with 61.2% a year earlier. For the first six months of 2026, the cremation rate was 60.5%, essentially unchanged from 60.6% during the same period last year.
Outlook Adjusted
Carriage modestly lowered portions of its 2026 financial guidance, although executives said the revisions were driven more by acquisition timing than by underlying business fundamentals.
The company now expects:
- Revenue between $435 million and $445 million
- Adjusted consolidated EBITDA between $135 million and $140 million
- Adjusted EBITDA margin between 31% and 31.5%
- Adjusted diluted EPS between $3.35 and $3.55
- Adjusted free cash flow between $40 million and $50 million
Enwright said the updated outlook reflects the weaker-than-expected mortality experienced during the first half of the year, as well as delays in the timing of anticipated acquisitions.
Acquisition Pipeline Remains Active
Although acquisition activity has been slower than management anticipated earlier this year, executives said they remain optimistic.
Chief Operating Officer Steve Metzger said discussions with prospective sellers continue progressing and that the company expects to provide more details over the next several months.
“We’re very bullish and excited about the opportunity,” Metzger said.
The company completed the acquisition of McCammon-Ammons-Click Funeral Home in the greater Knoxville, Tennessee, market during late May. The business currently handles just under 300 calls annually, and Metzger said Carriage believes it can significantly increase that volume while continuing to expand throughout Tennessee, where it already has an established presence in Chattanooga.
Florida Saw Largest Volume Decline
While the mortality slowdown affected much of the country, Quezada said Florida experienced the most significant decline in funeral volume among Carriage’s operating states.
He emphasized, however, that the company has not lost market share, reinforcing management’s position that lower mortality — not competitive pressures — was responsible for the weaker funeral call volume.
With July already showing positive year-over-year funeral volume growth and management expecting mortality trends to normalize during the second half of the year, company leaders expressed confidence that 2026’s unusually soft first half will prove to be an anomaly rather than the beginning of a longer-term trend.
Read the full earnings release.
