Carriage Services ((CSV)) has held its Q4 earnings call. Read on for the main highlights of the call.
Carriage Services’ recent earnings call painted a picture of robust financial health for the full year, marked by significant growth in cemetery revenue and adjusted EBITDA, alongside a commendable reduction in debt. However, the fourth quarter presented some hurdles, with a dip in total revenue and EBITDA, primarily attributed to decreased funeral volumes and rising overhead costs. Despite these setbacks, the company remains optimistic about its strategic initiatives and future growth prospects.
Cemetery Operating Revenue Increase
The fourth quarter saw Carriage Services’ cemetery operating revenue climb to $29.8 million, marking an 11.6% increase from the previous year. This growth was fueled by an 8.4% rise in preneed interments sold and a 9.2% increase per preneed cemetery contract, highlighting the company’s successful strategies in this segment.
Full Year Total Revenue Growth
For the full year, Carriage Services reported total revenue of $404.2 million, an increase of 5.7%. This was primarily driven by a substantial 22.9% increase in preneed interment rights sold and a 7.3% rise in the average price per preneed interment rights sold, underscoring the company’s strong performance in this area.
Adjusted Consolidated EBITDA Growth
The company’s adjusted consolidated EBITDA for the full year reached $126.2 million, reflecting an 11.5% increase. The EBITDA margin also improved by 160 basis points to 31.2%, showcasing the company’s efficient operational management.
Debt Reduction
Carriage Services made significant strides in reducing its debt, paying down its credit facility by $42.1 million. This effort lowered the leverage ratio from 5.1x to 4.3x by the end of 2024, demonstrating the company’s commitment to strengthening its financial position.
EPS Increase
The full year saw an increase in adjusted diluted EPS to $2.65 per share, up by 21% from the previous year. This improvement reflects the company’s successful financial strategies and operational efficiencies.
Fourth Quarter Revenue Decline
Despite the year’s successes, the fourth quarter experienced a slight revenue decline to $97.7 million, down 1.1% from the same period last year. This was mainly due to a 7.3% decrease in funeral volumes, indicating challenges in this segment.
Decrease in Adjusted Consolidated EBITDA for Q4
The fourth quarter’s adjusted consolidated EBITDA fell to $29.3 million, a 9.6% decrease, driven by lower revenue in the funeral segment. This highlights the challenges faced in maintaining profitability amid declining volumes.
Cash Flow Decline
Operating activities generated $9.3 million in cash flow during the fourth quarter, a decrease of $4.4 million from the prior year. Adjusted free cash flow also dropped by $3.9 million, reflecting the impact of reduced revenue and increased expenses.
Increase in Overhead Expenses
Overhead expenses rose to $12.9 million in the fourth quarter, up by $1 million from the previous year. This increase was primarily due to costs associated with Project Trinity, highlighting the company’s investment in strategic initiatives.
Forward-Looking Guidance
Looking ahead to 2025, Carriage Services projects revenues between $400 million and $410 million, indicating modest organic growth. The company anticipates adjusted consolidated EBITDA of $128 million to $133 million, with adjusted diluted EPS expected to range from $3.10 to $3.30. These forecasts are supported by expectations of lower interest rates and a reduced effective tax rate. Additionally, planned divestitures are expected to generate approximately $25 million, which will be used to reduce debt and potentially fund acquisitions. Capital expenditures are forecasted between $19 million and $21 million, focusing on growth opportunities, particularly in cemetery operations.
In summary, Carriage Services’ earnings call highlighted a year of strong financial performance, with notable growth in cemetery revenue and adjusted EBITDA, alongside effective debt reduction. While the fourth quarter presented challenges, the company’s strategic initiatives and forward-looking guidance suggest a positive outlook for future growth.