Carriage Services Q2 2025 Earnings Report

Carriage Services EPS Results

• Actual EPS: $0.74
• Consensus EPS: $0.72
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: N/A

Carriage Services Revenue Results

• Actual Revenue: $102.15 million
• Expected Revenue: $101.36 million
• Beat/Miss: Beat by +$787.00 thousand
• YoY Revenue Growth: N/A

Carriage Services Announcement Details

• Quarter: Q2 2025
• Date: 8/6/2025
• Time: After Market Closes
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 9:00AM ET

Carriage Services (NYSE:CSV) provides funeral and cemetery services, and merchandise in the United States. It operates in two segments, Funeral Home Operations and Cemetery Operations. The Funeral Home Operations segment provides consultation services; funeral home facilities for visitation and memorial services; transportation services; removal and preparation of remains; sale of caskets and urns; cremation services; and related funeral merchandise. The Cemetery Operations segment sells interment rights for grave sites, lawn crypts, mausoleum spaces, and niches; related cemetery merchandise, including memorial markers, outer burial containers, and monuments; and interments, inurnments, and installation of cemetery merchandise services. Carriage Services, Inc. was founded in 1991 and is based in Houston, Texas.

Carriage Services Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Total funeral operating revenue rose 1.4% driven by a 0.5% increase in calls, and year-to-date funeral volume is up 1.5% with management forecasting slight organic volume growth for the remainder of 2025 and a normalized 1–2% rate in 2026.
• Neutral Sentiment: Cemetery operating revenue dipped 0.6% in Q2 and year-to-date growth of 2.2% is below its 10–20% target due to inventory delays, with most new construction projects expected to complete this quarter to support at least 10% year-over-year growth.
• Positive Sentiment: GAAP net income jumped 85.7% to $11.7 million and GAAP EPS rose 85% to $0.74, while adjusted diluted EPS increased 17.5% to $0.74, reflecting strong profitability gains.
• Negative Sentiment: Adjusted EBITDA fell 1% to $32.3 million and overall EBITDA margin compressed by 30 basis points to 31.6%, with funeral margins down 250 bps and cemetery margins down 480 bps on inflationary cost pressures and planned systems investments.
• Positive Sentiment: After reducing debt by over $100 million, Carriage is back in “growth mode” with under-contract acquisitions generating $50 million in revenue and updated full-year guidance to $410–420 million in revenue and $3.15–3.35 in adjusted EPS.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Carriage Services Second Quarter twenty twenty five Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Steve Metzger, President. Please go ahead, sir.

[Steven Metzger, President at Carriage Services]

Good morning, everyone. Thank you for joining us to discuss our second quarter results. In addition to myself, on the call this morning from management are Carlos Quixada, Chief Executive Officer and Vice Chairman of the Board of Directors and John Enright, Chief Financial Officer. On the Carriage Services website, you can find our earnings press release, which was issued yesterday after the market closed. Our press release is intended to supplement our remarks this morning and includes supplemental financial information, including the reconciliation of differences between GAAP and non GAAP financial measures.

[Steven Metzger, President at Carriage Services]

Today's call will begin with formal remarks from Carlos and John and will be followed by a question and answer period. Before we begin, I'd like to remind everyone that during this call, we'll make some forward looking statements, including comments about our business, projections and plans. Forward looking statements inherently involve risks and uncertainties and only reflect our views as of today. These risks and uncertainties include, but are not limited to, factors identified in our earnings release as well as in our SEC filings, all of which can be found on our website. Thank you all for joining us this morning.

[Steven Metzger, President at Carriage Services]

And now I'd like to turn the call over to Carlos.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Thank you, Steve, and welcome to everyone joining today's second quarter earnings call. As we move through 2025, I continue to be inspired by the dedication and purpose that drive our Carriage team. The results we're sharing today reflect that our strategy is working, but more importantly, they reflect the powers of execution across every level of our organization. To every employee who wakes up each day committed to delivering premier experiences to families in need, thank you.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Your impact is felt far and wide. Today, I will walk you through our financial performance for the quarter, followed by updates on a couple of key initiatives. John will then provide more detail around our financial drivers, cash flow and updated guidance. Let's begin with the financial results. Total revenue for the second quarter was 102,100,000.0, essentially flat compared to the same quarter last year.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Total funeral operating revenue grew 1.4%, reaching 59,600,000.0, driven by a slight increase in calls of 0.5% for the quarter. Year to date, total funeral operating revenue grew 3,900,000 or 3.1%, while year to date volume increased by 1.5%. We feel encouraged to see this volume trend, especially after accounting for the divestitures of noncore assets. We are confident in a slight organic volume growth rate of 50 to 100 basis points for the remainder of the year and returning to a normalized volume rate of one to 2% in 2026. Cemetery operating revenue was 33,500,000.0, a slight decrease of 0.6% from the same period last year.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

While modest, this variance is linked to timing differences in premium sales against a strong second quarter last year, which were driven by more large sales in addition to the divestiture of two non core cemeteries in the first quarter of this year. Year to date, cemetery revenue is up 2.2%, which is below our year over year growth range of 10% to 20%. As mentioned on our previous call, the main reason was the availability of high end inventory at some of our top cemeteries due to delays in new construction projects. We estimate that most projects will be completed this quarter, and we have a strategy and plan in place that we believe will help us achieve at least a 10% year over year growth rate for the remainder of the year. We continue to see strong results in our financial revenue, which rose 18.8 to 8,200,000.0.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

This growth was primarily driven by an impressive 96.2% increase in preneed funeral commission income when compared to the same period last year, showcasing the continued strength of our insurance premium strategy and the ongoing success of our sales teams in helping families plan their final wishes. Turning to profitability. GAAP net income for the quarter was 11,700,000.0, up 85.7% from 6,300,000.0 in the same quarter last year. GAAP diluted EPS came in at an impressive 74¢ compared to 40¢, an 85% increase when compared to the same period last year. Adjusted consolidated EBITDA for the second quarter was $32,300,000 down 1% from the prior year period.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

The decline was driven by last year's adjusted expense of 5,000,000 related to nonrecurring costs. However, our corporate overhead costs for the second quarter of this year came in at 12.2% of revenue, 80 basis points lower than our long term range of 13% to 1439% lower than the same quarter last year. This allows for adjusted consolidated EBITDA margin to be 31.6%, a slight decrease of 30 basis points from the prior year period. The modest decline in EBITDA margin is directly correlated to margin compression in both our funeral and cemetery segments. Funeral fuel EBITDA margin was 37%, down 250 basis points from 39.5% last year.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Cemetery field EBITDA margin was 44.9%, down 480 basis points from 49.7% last year. While our revenue performance remained solid, this margin pressure reflects the ongoing impact of inflationary costs primarily related to SMB, planned investments in our systems, including our new ERP, as well as the timing of unrecognized profits from undeveloped cemetery sales in previous months. John will share more details regarding fuel margins. On the earnings front, adjusted diluted EPS for the second quarter was $0.74 per share, an increase of 17.5% compared to $0.63 per share in the prior year quarter. Year to date, adjusted diluted EPS was $1.7 per share, a 23.2% increase over the 2024 and a reflection of our commitment to the execution of our strategic objectives.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Looking ahead, we remain confident in our strategy and execution. After two years of disciplined capital management and more than 100,000,000 paid to reduce our debt, we are pleased to share that we're back to growth mode, and we're under contract to acquire new businesses, which we anticipate will close this quarter subject to customary regulatory approvals. Combined, these premier locations serve more than 2,600 families and generated more than 50,000,000 in revenue last year. We are excited to return to our long term strategy of adding shareholder value through high quality acquisitions, and we look forward to providing more details once these transactions formally close in the coming weeks. With these new acquisitions and after accounting for the divestitures of certain noncore assets that closed in the first quarter and others expected to close in the third quarter of this year, we're updating our full year guidance.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

John will share our updated ranges later on this call. We continue to monitor broader economic trends and indicators. And as we move forward with our strategic objectives, we will continue to track them closely. At the same time, we reaffirm our commitment to being prudent stewards of our capital while leaving room for upside value creation through high quality and strategic acquisitions. As a quick update, our earned core line continues to gain traction across our businesses, and we're in the final planning stages of rolling out our casket core line.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Both initiatives are key steps in our broader strategy to streamline operations, elevate service consistency, and deliver an enhanced experience to the families we serve. As shared before, we are confident the recently negotiated pricing tied to these core line strategies will drive meaningful margin expansion. But more importantly, the curated selections offer families thoughtful, high quality options to personalize their loved ones farewell, further advancing our commitment to creating premier experiences at every touch point with every family, every time. Our passion for service program is set to become a cultural movement, igniting a passion for service delivery and wow moments across our organization. By certifying and celebrating team members who go above and beyond in elevated service delivery, we are creating a community of service champions driven by purpose and compassion.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Passion for service will transform how we connect with each other, our work, and most importantly, with the families who trust us in their most vulnerable moments. We expect the results to be a higher standard of care, deeper team engagement and a powerful competitive edge that sets Carriage apart. In closing, we're pleased with our second quarter results, which reflect the strength of our business model and the focused execution of our team. While we experienced some margin compression this quarter, our year to date results and momentum remain strong. We continue to invest in the future of Carriage with a clear focus on long term value creation, cultural alignment, and creating premier experiences for the family we serve.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

The last few years, we're focused on paying down our debt while laying the groundwork for exponential growth. Now our systems, processes, and people are in place. And with our precision strategy back in place, Carriage is positioned well for the future and continue to create value for our employees, the family we serve, and our shareholders. Thank you again for your continued trust and belief in Carriage. With that, I will now turn the call over to John.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Thank you, Carlos, and good morning. The company reported strong second quarter results and a solid first half performance. The organization maintained a disciplined approach, resulting in a 17.5% increase in adjusted EPS for the 2025. These results would not be possible if it weren't for the collective efforts of the field and support teams and their dedicated service to our families. As Carlos mentioned, EBITDA margins in the field faced some pressure in the 2025 compared to 2024.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Funeral margins decreased by two fifty basis points year over year. Approximately half of the decline was due to expenses unlikely to recur, while the remaining half was attributed to inflationary increases, primarily salary expenses. Cemetery margins declined by 480 basis points compared to the prior year with the erosion being more broad based. Salary and benefit expenses increased due to market adjustments for maintenance teams as well as recently filled positions. Burial expenses tied to revenues were higher in the 2025 compared to 2024.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

General liability expenses increased year over year and unrecognized revenue and profit for land under development also contributed to the variance. If those revenues had been fully recognized during the quarter, cemetery margins would have improved by approximately 180 basis points. Cash from operating activities for the quarter totaled $8,100,000 an increase of $2,200,000 in the same period last year. The $5,900,000 increase was mainly attributable to operational results. Adjusted free cash flow for the second quarter was $6,900,000 compared to a cash outflow of $300,000 expenditures in 2025.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Our leverage ratio was 4.2 times compared to 4.6 times at the end of the 2024. The company paid $7,000,000 towards outstanding debt during the quarter, bringing the year to date total to $24,000,000 As a result of our ongoing debt reduction, interest expense for the quarter was $1,300,000 lower than the previous year with a year to date decrease of $2,700,000 At quarter end, dollars 113,000,000 was drawn on the credit facility. Capital expenditures for the quarter totaled $2,800,000 compared to $3,500,000 in the same period last year. Of the $2,800,000 $1,100,000 was allocated to maintenance capital and $1,700,000 to growth capital. Overhead spending was $12,500,000 or 12.2% compared to $20,400,000 or 20% in the prior year quarter.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

The previous year's figures included $5,100,000 in non recurring expenses related to the strategic review and $800,000 in separation expenses. Excluding these onetime expenses, prior year overhead was 14.2% or 200 basis points higher than the 2025. The main factors for the improvement in 2025 were reduced incentive compensation and the consolidation and management of award trips, which led to lower expenses than initially expected. Moving on to our updated outlook. For the remainder of 2025, the outlook includes the impact of acquisitions and additional divestitures expected to close in the third quarter, which are not part of our initial guidance.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Additionally, small adjustments in the back half of the year have been made to our original expectations to the cemetery segment to reflect current trends, which should result in full year margins in this segment between 44.745%. Nevertheless, measures are being taken to address the shortfall of the first two quarters, and we expect to have a strong second half of the year. The current outlook anticipates revenues in the range of $410,000,000 to $420,000,000 adjusted consolidated EBITDA between 129,000,000 to $134,000,000 adjusted diluted EPS of $3.15 to $3.35 overhead expenses ranging from 13 to 13.5%, adjusted free cash flow between 40,000,000 and $50,000,000, leverage ratio ending between four point one and four point two times. This concludes the prepared remarks. I will now turn it over to the operator to open it up for questions.

[Operator]

Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make We will take our first question from Alex Paris with Barrington Research.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

Hi, guys. Thanks for taking my question. Congratulations on the quarter. I have a few questions for you. I I guess I'll start with the exciting news on M and A.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

The businesses are under contract. Just the way the press release was written, is this more than one entity you're acquiring? Or is it an entity with multiple locations?

[Steven Metzger, President at Carriage Services]

Morning, Alex. This is Steve. So yes, just the bold. So it's multiple transactions, and each one has multiple businesses.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

Okay. And then you expect it to close in q three. Again, that will be the first closed acquisitions in Greenlawn in the 2023. The you you say it had more than 15 I I guess you're gonna probably talk more about it after you close it, but it has more than 15,000,000 in revenue. I'm curious as to pricing.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

What what is what is pricing look like relative to recent acquisitions in the market?

[Steven Metzger, President at Carriage Services]

Yeah. So I'd say pricing is in line with kinda our philosophy on valuation. So generally speaking, you know, without going into specifics, you know, for a premium business where it's a competitive landscape, which is generally the type of business we're looking at, you know, high single digits on the multiples is is, you know, a fair estimate. And then, you know, there's specifics around the actual What's the potential for value creation? Does it have a cemetery retorts?

[Steven Metzger, President at Carriage Services]

Those type of details that will help you kinda fine tune what that multiple will look like.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

Gotcha. And then just first, you're not gonna talk about the properties acquired. You'll do it after you close. Is that it?

[Steven Metzger, President at Carriage Services]

Correct. Yeah. More details will come. We'll put a press release out once they close and share more about the markets and details of this.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

Great. And then on the subject of M and A divestitures, in the first quarter, you received proceeds of close to $19,000,000. I think you still had a $6,000,000 property left to sell. Did you sell that in q two? I don't think so. Do you expect to sell it in q three?

[Steven Metzger, President at Carriage Services]

Yes. We have closed one divestiture divestiture in in q Q3. We have a couple others pending, so more details to come there. I would say, in terms of thinking about divestitures for us moving forward, they should tail off this year. The reality is we're not shopping businesses, but every now and then we'll have some inbound interest.

[Steven Metzger, President at Carriage Services]

But I expect that to really tail off as we get back to focusing on acquisitions.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

So you didn't close one you didn't close the divestiture of q two, but you closed one in early q three. Is that what I'm hearing?

[Steven Metzger, President at Carriage Services]

Correct.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

Gotcha. And then did the press release suggest that there have been some other properties added to the target list for divestitures from the from the last time you got it?

[Steven Metzger, President at Carriage Services]

Yeah. We do have a couple of other properties under contract right now. So more details to come in the back half of the year. But I think we're, again, kind of wrapping up the focus on divestitures and pivoting back over to acquisitions now.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Fantastic. To other things for couple of that, those business that make it to the divestiture list are businesses that are located in in areas where the demographics are declining, where where the trends are not in the right direction, where the business, you know, it's it's really not feeding of a of a business that carries portfolio is made up today. And and and then we're reusing that or deploying the capital for for different type of business that is more feeding over current portfolio.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

No. I mean, that that makes sense. And it it has a magnification on the portfolio effect. If you're acquiring premium properties and you're divesting properties that might be profitable that are profitable generally, but just not in growth markets, It kind of turbocharged the contribution from the portfolio in my opinion.

[Steven Metzger, President at Carriage Services]

Yes, sir.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

And then last thing about for now, last thing on guidance. I'm just wondering if we can get a little bit more color and what assumptions are embedded in the guidance. You obviously raised guidance for revenue, adjusted EBITDA and adjusted EPS. If you look at the midpoint of the new revenue guide, it suggests an acceleration in the second half versus the first half. First of all, is that true?

[Alexander Paris, President & Senior MD at Barrington Research Associates]

I'm gonna make sure my math is correct. And then where would you think the greatest growth would be? Q3 or Q4? I would think Q4 because the comp is a little easier year over year.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Alex, this is John. I would say when we look at guide, took into consideration the acquisitions that are going to close in the third quarter as well as the divestitures that we didn't initially anticipate in our original guidance as well as incremental kind of performance in the back half of the year. To the question in regards to kind of where you would see kind of the benefit, the fourth quarter is likely where we see kind of the more impact to performance as compared to last year.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

Great. And then similarly, adjusted EBITDA at the midpoint of new guidance will be up 4% year over year. It was up it was actually down in the first half year over year. So it does suggest even more significant adjusted EBITDA growth in the in the second half of the years. And and where is that leverage coming from? Funeral, cemetery?

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Yeah. So it's it's gonna be broad based. Right? At the end of the day, we're gonna expect with incremental sales, right, we're gonna see some additional EBITDA just generally speaking associated with that. The cemetery margins also were a little bit challenged in the first half of year, and we've taken that into consideration as we look at the back half.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

But from a plan perspective and a guidance perspective, we've taken we see some opportunities in the back half of year with cemetery margins as compared to last year.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

Great. And then let me get can I ask this for you? Simple questions. You had given sort of a D and A target, a stock based compensation target in the in the first quarter press release. I didn't see it in the second quarter press release.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

Shall I assume they're the same d and a of approximately 25,000,000 and stock based compensation of around 8 and a half million?

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Yes. Those haven't changed.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

Alright. And then last question, I'll let somebody else ask. Cash rate for the full year, what's a good number to use? I think the last time you you talked about 28 to 30%.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Yeah. So it's it's come down. So if you think about the full year, probably between '27, 27.5% is a good number to you.

[Alexander Paris, President & Senior MD at Barrington Research Associates]

Super helpful. Thank you. I'll I'll pass to Mike.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Thank you, Alex. You're welcome.

[Operator]

Thank you. We will take our next question from Liam Burke with B. Riley Securities.

[Liam Burke, MD - Research Analyst at B. Riley Securities]

Carlos, you highlighted the overhead coming down and significantly down year over year. But how low can that go? I mean, it's sort of an impress it is a very impressive drop.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

You know, Liam, over the last couple of years, we have worked really hard in creating a foundation for growth. Right?

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

We couldn't really go back to acquisitions after Greenland. We focus on paying down our debt. But part of that was really to working hard in systems, process, and people, especially here at the at the Houston support center. And we have been able to to add positions we never had before with new departments and and also reengineer and restructure some of what we have from a from a, you know, service and billing perspective and and financial analysis perspective as well. I think we're we're pretty much where we should be.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

I think the overhead right now is quite stable. We might add, you know, one more position, you know, probably before the end of the year, potentially two, but I don't they're they're they're not high highly paid positions. And I do think that along with the with the revenue growth we're projecting, we we should be, you know, right under the 13%. We you have us a long range long term range of or number or percentage to revenue on our record cost here at the office. We do feel though that as we continue to grow through acquisitions starting with this, you know, acquisitions in in the third quarter, that we will not need to add cost to the overhead for the for the, you know, short term future.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Yeah. The only thing I would add to that would be when you look at your model, we guided towards 13% to 13.5% from an overhead range perspective. So we did bring that down from 13% to 14%. And as you think about, and as Carlos just said, as you think about long term, roughly, that's probably the right range for us to see.

[Liam Burke, MD - Research Analyst at B. Riley Securities]

John, you mentioned that on the funeral home, looking at year over year profitability, that half the additional the incremental expense that held back margins was nonrecurring. Is that the

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

There were some benefits that we received last year in our numbers that ultimately didn't recur. So that impact as well as we had a catch up entry for a certain expense that was kind of multiyear. So as you take those two expenses out, we don't expect that to happen again. So ultimately, impact was really more associated with just a inflationary expense, salary and benefits within that channel or within that segment of business, which is really the driver of margin compression there.

[Liam Burke, MD - Research Analyst at B. Riley Securities]

Great. Cool. Thank you.

[Operator]

Thank you. Will take our next question.

[Steven Metzger, President at Carriage Services]

Yeah. Sorry about that.

[Operator]

Will take our next question from George Kelly with Roth Capital Partners.

[George Kelly, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Hey, Carlos.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Hey, George. How are doing?

[George Kelly, MD & Senior Research Analyst at Roth Capital Partners, LLC]

I thought that you I thought that was maybe you. I'm doing well. How are you guys doing?

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Doing fantastic. Thank you for asking.

[George Kelly, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Great. I appreciate you taking my questions.

[George Kelly, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Maybe to start, I'll just follow-up on one of the the previous questions. Just trying to better understand your revenue guide and the change versus prior. Could you break so if the midpoint of your revenue guide grew $10,000,000 could you just break down between sort of what changed on the organic business and then divestitures, the newly added divestitures and acquisitions. Can you just give us a more detailed breakdown of how that $10,000,000 breaks out?

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Yes. So if you think about and again, these are going to be broad numbers. If you think about just the acquisitions and, you know, the comments around $50,000,000 of acquisition revenue, if you just take think about the last third of the year, that would equate to roughly about $5,000,000 Obviously, it might be a little bit more weighted than that. So call that five call that about half the increase associated with the big guide increase, and then which is offset a little bit by the divestitures, but not not terribly significantly. And the rest would be associated with the core business or the organic business.

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

The fourth quarter was a tough quarter for us last year as compared to kind of a normal quarter. So we've taken that back into consideration and looking at a normal fourth quarter as we look at the businesses. So that's both in funeral as well as cemetery.

[George Kelly, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Okay. Okay.

[George Kelly, MD & Senior Research Analyst at Roth Capital Partners, LLC]

That's helpful. Thanks. And then second question for me on your cemetery expectations for the back half. I think in your prepared remarks, you said you expect to get back to 10 plus percent growth. Maybe that was just preneed, but what is what's the plan to get back there?

[George Kelly, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Is it really just all about inventory, or is is there anything else that's worth fighting?

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

So, you know, George, what has happened is we got some delays on permits in in some very high end, you know, high volume businesses that we own, cemetery specifically. And when you look at our year to date in in quarter for the for the second quarter, our contract count versus last year, contract volume is higher on bringing cemetery sales than last year. But these are the the single sales. Right?

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

So low average sales, you know, your bread and butter sales, which we always wanna do. It's just the lack of of higher end sales because of the lack of inventory that we're not able to to be sold pre melt for the second quarter and really the first half of this year. We do expect those projects to be finalized and able to sell within the third quarter and then fourth quarter should allow us to then catch up to some of that growth we're expecting for for the for the year. That that's really it because the the the Salesforce are working really well. They're they're delivering the numbers with honestly just single sales, and and that's pretty hard to do.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

And I'm very proud of their work on being able to achieve that without having those, you know, hundred and fifty, two hundred and fifty thousand dollar sales, which imagine that that makes up, you know, probably about 50 contracts. So great, great job, and and I do expect to track on track by by q three.

[George Kelly, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Okay. Okay. Great.

[George Kelly, MD & Senior Research Analyst at Roth Capital Partners, LLC]

And then last question for me is just back to m and a. Can you talk about beyond these transactions that that you've talked about and expect to close in March. What what does the pipeline look like behind these transactions? And should we anticipate that in I don't know if maybe q four is too early, but in in 2026, there will be, you know, continued stuff that you're seeing that you like that you're working towards or just I I guess, what's the kind of frequency that that you hope to execute on on more m and a?

[Steven Metzger, President at Carriage Services]

George, the pipeline is strong right now for us.

[Steven Metzger, President at Carriage Services]

We're currently in several conversations with owners of premium businesses that we're excited about. With that said, the real benefit for us is we're in a position to be selective. So there are some opportunities where we've had to walk away just because the valuation we couldn't all agree on. And at the end the day, what we're trying to do is continue to build a portfolio that we believe pound for pound is the highest quality group of assets in the industry. So we'll continue to be active with M and A throughout this year.

[Steven Metzger, President at Carriage Services]

I can't give you timing in terms of when the announcement will be. And then certainly through '26 and moving forward, I wanna get to a regular cadence on acquisitions while we continue to balance our leverage, which has been the goal going back to two years ago.

[George Kelly, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Okay. Thank you. Best of luck.

[Steven Metzger, President at Carriage Services]

Thank you, George. George.

[Operator]

Thank you. Your next question comes from Scott Schneeberger with Oppenheimer.

[Scott Schneeberger, Managing Director at Oppenheimer & Co. Inc.]

I just wanted to ask, you had in second quarter last year strong growth in average revenue per funeral contracts. And again, this year, you had nice growth as well. Could you just speak to what's behind that and the sustainability of that attractive growth? Thanks.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Good morning, Scott. Thank you for your question. It's really coming from two fronts. At at the end of last year, we started with what we call the strategic pricing reviews. And and what that is on a quarterly basis, the director of operations for that for that business and our analyst here at the Houston Cortezo, they come together with the managing partners to evaluate with a very specific set of metrics that look at volume trends for five years.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

They look at average cremation rates, burial rates, and look at competition pricing, their pricing, when was the last time they increased price, service, you know, charge, all these different things. And then after the meeting, they they decide based on their trends if they wanna increase the price. Of course, they look at the cost, margins, and things of that nature. And so that has worked really, really well because it's not a push down price strategy. It's really making, you know, the managing partner aware of what's going on in their market, going on in their business, and what strategy they can use to price to make up for any customer calls they have seen or salaries that may have been increasing or perhaps volume trends are going down, and we need to think actually the opposite and and decrease price if that's the case, or increase price if the volume trends continue to be to be spiking up.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

That's one side. The other side is being our cremation conversion strategy, which basically emphasizes an educational process with the family. We we created this brochures, if you will, where a family can sit down and be more educated about reclamation. So that most likely than not, they can walk away from the funeral with something more other than just a reclamation. That could be just an upgrade of earn, could be a visitation, could be a viewing, could be an ID, could be a full blown funeral service, could be a light probation, and that has worked really, really well.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

And so that's that's helping. And I'll ask one more, Scott, if you don't mind, and that is our our our earned core line strategy. So the the margins are expanding a little bit, and the price has not decreased from our our core line that we launched at the beginning of of q one this year. That's helping also on our average revenue per contract on the commercial side. And so I I truly believe these are those are the three things that are helping us drive our price in the funeral home side.

[Scott Schneeberger, Managing Director at Oppenheimer & Co. Inc.]

Great. Thanks, Carl. Appreciate that color. And sorry, John, for you, my follow-up, the any have you had a chance to look at the July 4 Federal Tax Act? Might you see some benefit going forward in free cash flow and tax taxes from anything in the bill at Kerry James?

[John Enwright, SVP, CFO & Treasurer at Carriage Services]

Yes. So we look at it right now, our expectation is probably around about a 5,000,000 to $6,000,000 benefit associated with cash taxes in 2025. And as we look through the remainder of kind of the the bill time frame, we'll see small incremental benefits associated with cash taxes.

[Scott Schneeberger, Managing Director at Oppenheimer & Co. Inc.]

Great. Thanks very much.

[Operator]

Thank you. This does conclude today's question and answer session. I would now like to turn the call back to Carlos for closing remarks.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Thank you all for joining us today. As we reflect on a strong second quarter, it's clear that our transformation is delivering results. But we're just getting started. The foundation we have built is unlocking new opportunities for sustainable growth, operational excellence, and long term value creation. We're confident in the upside that lies ahead, and we remain focused on executing with discipline, innovation, and a passion for service.

[Carlos Quezada, CEO & Vice Chairman at Carriage Services]

Thank you for your continued support and believe in our vision. Have a great day.

[Operator]

This concludes today's call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Steven Metzger, President
• Carlos Quezada, CEO & Vice Chairman
• John Enwright, SVP, CFO & Treasurer

Analysts

• Alexander Paris, President & Senior MD at Barrington Research Associates
• Liam Burke, MD - Research Analyst at B. Riley Securities
• George Kelly, MD & Senior Research Analyst at Roth Capital Partners, LLC
• Scott Schneeberger, Managing Director at Oppenheimer & Co. Inc.