CARRIAGE SERVICES INC — Call Transcript 2026

Welcome to the Carriage Services Q1 2026 earnings webcast. 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. Good morning, everyone, and thank you for joining us to discuss our first quarter results. In addition to myself, on the call this morning for management are Carlos R. Quezada, Chief Executive Officer and Vice Chairman of the Board of Directors, and John Enwright, Senior Vice President and 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. 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 press 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, now I'd like to turn the call over to Carlos. Thank you, Steve, and welcome to everyone joining us for today's first quarter earnings call. We're pleased with our first quarter performance, especially against a strong comparison to the first quarter of 2025. Our results reflect steady execution, discipline, and continued focus on what we can control. As I step back and look at our progress, I am encouraged by the consistency we're building across the businesses. We are strengthening our foundation, improving how we operate, and positioning Carriage for long-term value creation. Before turning to financials, I want to recognize our managing partners, our field teams, and our Houston Support Center. You are the heartbeat of Carriage. These results are not by chance. They are built on a clear vision, high standards, a strong accountability, and a deep passion for this profession. Thank you for living our values and for delivering premier experiences to the families every day. Today, we'll cover our first quarter performance and share three key phases of our journey, where we were, where we are today, and most importantly, where we are going. John will walk through our financial details, including cash from operating activities, balance sheet strength, capital expenditures, overhead, and our at-the-market offering program. Now to my report. For the first quarter, we reported revenue of $106.1 million, a 0.9% decrease from the same period last year. The primary reason for this variance was a decline in funeral home at-need volume of 5.8%. As you may remember, we had a strong first quarter last year due to the flu season pushing into January and February. 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%. 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. This growth was primarily driven by a 9% increase in comparable pre-need cemetery sales production and a 15.3% increase in average revenue per property contract. The cemetery segment continues to benefit from our disciplined inventory development and strategic pricing and focused pre-need execution. Financial revenue for the quarter was $8.5 million, up 15.7% year-over-year, primarily reflecting a strong performance in our pre-need funeral sales strategy and the pre-need funeral commission income we generated from those sales. We ended the quarter at $2.5 million, an increase of 26% compared to the same period last year. Consolidated pre-need funeral insurance contracts sold increased 8% compared to the same quarter last year, reinforcing the strength and scalability of our funeral pre-need insurance platform, supported by the continued execution of our sales organization. On profitability, 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. Adjusted diluted EPS for the first quarter was $0.86 per share compared to $0.96 per share in the prior year quarter, representing a decrease of $0.10 per share or 10.4%. John Enwright will share more details on these variances. Overall, we're pleased with our first quarter results, which reflect a strong operating momentum and continued progress towards our strategic objectives. Let's talk about where we were. 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. 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, the business reflects a fundamentally different operating profile. We have materially strengthened the balance sheet, reduced leverage, and enhanced liquidity. 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. Importantly, we continue to build a culture of operational excellence that is embedded, repeatable, and scalable across our businesses. An example of this is that 2025 marked the strongest financial performance in Carriage 35-year history, surpassing even 2021 results during the peak of the pandemic. Where we are heading. Our focus is on compounding this progress in line with our long-term strategic objectives and 2030 vision. We are building a data-driven, high-performance platform designed to deliver sustained organic growth, margin expansion, and superior capital efficiency. Our priorities include deepening pre-need penetration across both funeral and cemetery segments, optimizing the service mix towards 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. By 2030, our vision is to position the company as a premier best-in-class operator in the death care industry, defined by consistent top-tier margins, improved free cash flow generation, and a scalable technology-enabled operating model. We believe this strategy will drive durable long-term value creation and establish a structurally advantaged business capable of outperforming across market cycles. Finally, the at-the-market offering program is a strategic extension of the progress we have already made. With a stronger balance sheet, improved free cash flow, and a more disciplined, scalable operating platform, we believe we are now in a position to deploy capital with precision. This program gives us the flexibility to do that strategically, raising equity at market prices in a measured way and only when it supports high returns for shareholders. Additionally, the at-the-market program allows us to accelerate strategic growth initiatives, pursue disciplined acquisitions in a highly fragmented industry, and maintain balance sheet strength. It enable us to move faster on opportunities and convert our operational momentum into sustained shareholder value creation. We are energized by our growth plans and confident in the long-term value we're building through disciplined capital execution, growth generated with purpose and intention, and an unwavering commitment to service excellence. Thank you. With that, I will turn the call over to John. Thank you, Carlos, and good morning, everyone. As Carlos mentioned, we are pleased with our first quarter results, especially considering the tough comparison to prior year, which included approximately $4.8 million in revenue from businesses that were divested during 2025. As noted in our earnings release, we are excited to announce that we established an at-the-market equity offering program or ATM program as a prudent enhancement to our capital markets toolkit. 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. With that, let's discuss first quarter results. We reported consolidated adjusted EBITDA of $33.8 million or 31.8% of revenue, up from $32.9 million or 30.8% of revenue of last year's first quarter. Gains were driven by improved cemetery operations and pre-need funeral sales, adding $2.5 million of EBITDA. Comparable funeral EBITDA fell by approximately $2.4 million due to lower volume within the channel this quarter, which offset the majority of those gains. For the first quarter of 2026, our adjusted diluted EPS declined to $0.86, representing a 10.4% decrease from $0.96 in the prior year. The decline was primarily a result of a higher effective tax rate in this year's first quarter. The effective tax rate for the first quarter was 26.7%, compared to 20.3% in the first quarter of 2025. The adjustment in tax rate resulted in an estimated impact of $0.07-$0.08, primarily due to higher excess tax benefits recognized in the previous year upon the settlement of employee share-based awards. On a GAAP basis, diluted EPS for the first quarter was $0.84, compared to $1.34 in the same period last year. The prior year results included the benefit of a $7.9 million gain associated with a divestiture in a sale of real estate assets. Moving on to cash from operating activities, we saw an increase of $1.1 million over the prior year or an 8% increase, primarily because of year-over-year improvement in operating results. Free cash flow in the quarter was $400,000 or 3.5% higher than the prior year first quarter. Adjusted free cash flow was $2.2 million lower than the prior year first quarter, as the first quarter of 2025 was impacted by special payments for professional services related to the review of strategic alternatives, as well as severance payments. As a result of our ongoing commitment to executing disciplined capital allocation, our bank leverage ratio decreased to 4 times from 4.2 times at the close of the first quarter of 2025. We remain within our long-term leverage ratio target of 3.5 times-4 times. Capital expenditures for the quarter totaled $3.9 million in the first quarter of 2026, compared to $3.2 million in the prior year's first quarter. The $700,000 increase was predominantly associated with maintenance capital, driven by incremental spending in our funeral homes, coupled with an IT investment to refresh and improve the quality of our network connectivity within our field locations. For the quarter, we spent $2.2 million on maintenance capital and $1.7 million on growth capital. Overhead expenses for the quarter totaled $14.8 million or 14% of revenues, compared to $15.3 million or 14.3% of revenues in the first quarter of 2025. The decrease was a result of some variable expenses coupled with effective cost management. Moving on to our 2026 outlook. We are maintaining our previously disclosed full-year outlook. As a reminder, our outlook anticipates certain planned acquisitions that we expect to be completed in 2026. Also, utilization of the previously mentioned ATM program have not been factored into any of our metrics in our outlook. As a reminder, our outlook for the following metrics are: revenues are expected to be in the $440 million-$450 million range. Adjusted consolidated EBITDA is expected to be in the range of $135 million-$140 million. Adjusted EBITDA margins between 30.5% and 31.5%. Adjusted diluted EPS of $3.35-$3.55. Overhead expenses to be between 13.5%-14.5% of revenue. Adjusted free cash flow in the range of $40 million-$50 million. Leverage ratio to end 2026 between 3.5 times-4 times. That concludes our prepared remarks, and I will turn it back over to the operator to open it up for questions. Thank you. We will now conduct a question-and-answer session. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We will take our first question from Alex Paris with Barrington Research. Hi, guys. Thanks for taking my question. I got a couple. I think I'll start with funeral results, you know, which were down year-over-year. I get it. Tough comp. Strong flu season a year ago. Not too different from your large publicly traded competitor who said the same thing and had a similar comparable volume decline year-over-year. You reaffirmed your guidance for the full year. It's early in the year. It suggests that there should be revenue growth returning in the remaining quarters of the year. Can you comment on that or provide some additional color? Your thoughts or your confidence why revenue growth will return in the subsequent quarters? Absolutely. Thank you, Alex, for the question. It's a great question. You know, we have seen in cycles, right? That death care, it has this seasonality, if you will. It goes up and down. Normally, it's always been, you know, first quarter, first, fourth quarter, second. You know, since COVID-19, that has actually changed significantly. What we have seen is that may, even though, first quarter may be down, it picks up some of that volume as we go throughout the year. For us, especially because we are still in the process of integrating our latest two acquisitions in Florida, and the divestiture that we did from last year also impacts that. As we wash off Q1, we have now passed the largest divestiture, and we feel pretty positive we will be able to make our volume up for the, you know, for the next three quarters. Good. That's helpful. Speaking of acquisitions, I was wondering if you can give us an update on the integration process with Osceola. How is it performing? Osceola and the other acquisitions since they were acquired last September. Yeah. Good morning, Alex. It's Steve. Yeah, both acquisitions are really trending in a positive direction. Faith Chapel over at Pensacola, and then Osceola that you mentioned over in Kissimmee. Excited about the progress of both businesses. As you know, with the Osceola business, it allows us, with our current footprint in that market, to really recognize some synergies that's unique for us with acquisitions. Excited to see how that continues to move forward. Are these acquisitions fully integrated at this point? Are they on their common systems and things like that? Yeah. All the systems and people are fully integrated. We actually just, with Osceola, broke ground two months ago with a new development in the cemetery, so adding some additional inventory and product for the community there. That should be finished in the next one or two months. All systems go with Osceola and Faith Chapel in terms of integration. Great. Then just one last one, and I'll get back in the queue. I'm wondering if you can give us a little update on the M&A pipeline and outlook. As you noted in the prepared comments, there is an acquisition assumption for likely acquisitions or potential acquisitions that might close in 2026. I think that assumption was $5 million-$10 million in revenue. Just looking for a little color there. You bet. The, yeah, the pipeline is robust right now. We have one acquisition that is scheduled to close later this month. It's gonna allow us to enter a new market with a pretty strong growth profile. 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 gonna see significant activity that we'll be able to report on. Carlos, John mentioned this, you know, one of the benefits with the ATM is being able to support what we think is going to be a pretty significant opportunity for growth through M&A. Last related, with the ATM, would you think that there's the potential to exceed that $5 million-$10 million assumption that's baked in guidance, given the greater flexibility and wherewithal? Yeah, my expectation is you're going to see more activity in the back half of the year. In terms of when things close, you may see some of that bleed into early next year as well. We continue to be focused on ensuring the businesses that we're working with and we're integrating are, you know, high-value businesses, high-growth markets. We're not just going to add businesses to add to the top line. That means probably Q3, Q4 into Q1, you'll see some significant activity. Look, I think in the next three or four quarters, this certainly plan to exceed the $10 million. Whether it hits in Q1 of next year or Q3 and Q4 this year remains to be seen. Great. Thank you very much. I'll get back in the queue. We will take our next question from Laura Maher with B. Riley Securities. Hi. Good morning. Thanks for taking my question. My first question, it seems the burial to cremation mix is stabilizing. How does this influence your average revenue per contract in funeral home EBITDA margins going forward? Do you wanna answer? Go ahead. Yeah. Yeah. We've seen over the last three quarters some normalization or some benefit associated with the cremation mix. You know, it was 40 basis points growth in this quarter. As burial kind of flattens, you should see and we should see our ARPC increase. Great. Thanks. Second, are there any other funeral home properties you're looking to divest? Yeah. At this time, Laura Maher, we feel pretty good about the portfolio as currently constructed. No additional divestitures are planned. Okay, thank you. Thank you, Laura. We will take our next question from Parker Snurr with Raymond James. Hey, good morning. Just on the funeral volumes, just curious on, you know, comparable funeral volumes, how they progress through the quarter, you know, January, February, March. What are you seeing in early days of the second quarter? Yeah. You know, the tough comp was really January and February. March also came a little light. To be, you know, pretty straightforward, I think the three months were pretty much the same as it comes to the decline. April started a little slow. We do believe that with the divestiture out, may come back. We do foresee, you know, these cyclical turns of Q2, Q3, Q4 coming in to being able to make up for what Q1 is missing. That's what we have seen in years past, and that's what we're, you know, really aiming to do. In addition to that, our teams see at the field level, which is what truly matters, continue to fight pretty hard for market share gains. While there might be a compression of death rates, seems like it, because as we talk to vendors, we've seen reports from other public companies, we see that that's probably the case. We continue to fight pretty hard to make sure that the Carriage businesses gain as many, you know, market share gains as we can by providing, you know, premier experiences to the families that we serve and delivering on that experience to each one of those families. Okay. Okay. Understood. On the pre-need cemetery production, you had strong growth there despite lower contract volume. You had better revenue per contract. Just curious on the puts and takes there, were there any large ticket sales that helped drive that better product, increased pricing? Maybe just more details on the pre-need cemetery growth. We have the normal, you know, large sales activity, nothing too large that will offset that. We have been actually working really hard in making sure we have a great sales average on the pre-need cemetery side. We're hoping for a little bit more, although, you know, if I go back, I'll give you some data, which I think is fascinating to me. If I go back to Q1 2019 and then calculate the CAGR to Q1 2026, pre-need sales is at 22.4% CAGR over this period, which is fantastic. For Q1 2026, what was a little light, you know, Qingming really started a little later this year. It's been, you know, not great. That's what we have seen. Even on top of that, we're still able to deliver some pretty amazing performance in Q1. Feel pretty excited about our pipeline for pre-need business on both funeral and cemetery. I don't see why would that slow down. Okay. Okay. Just last one from me. Just given the news of the ATM program, is it a reasonable expectation that you will finance the acquisitions that are built into your 2026 guidance with the ATM program? Or will you use a combination of that and free cash flow from this year? Also just curious on the expected cash needs or cash outlays to complete these acquisitions. Yeah. I think it might be on timing, so there might be usage of basically free cash flow that we can fund through the ATM program. To the point it depends on the size of the acquisitions is really when we would be opportunistically accessing the ATM. Really, if you just look at a typical the multiples, if from the $5 million-$10 million of expected revenue, you know, our typical margins are, you know, depending on if it's funeral or cemetery, we still expect the margins or the multiples, depending on the size, to call it to be in the average range and call it six times-eight times from an EBITDA multiple percent. The cash needs will be based on that. Okay. All right. Helpful. Thank you. Thanks, Parker. We will take our next question from George Kelly with ROTH Capital Partners. Hey, everyone. Thanks for taking the questions. A couple for you. First, can you update us on the status of Trinity? Yeah. I'll speak to that. Trinity, as you know, George, we're in one location right now, where the second location is going to go live in May. Provided that is successful, which we expect it to be successful, we will do a rollout of our funeral home starting in July, what we're calling Velocity. All the funeral homes, not the combos or cemeteries, but all the funeral homes should be done in 2026. We move into the first quarter of 2027, and we expect all the combos and cemeteries to be up and live. Okay. Okay. Understood. Thanks. Second question from me. Your funeral margin held in pretty well given the downtick in revenue. You commented in your prepared remarks about finding efficiencies and just being disciplined on the cost side. What efficiencies were you able to find, and are those things sustainable? Should we think of, you know, you being able to maintain, like, pretty easily maintain that above 40% margin? Or just how should we think about those efficiencies? Can you detail any of that? Yeah. In, in that particular channel, we saw some efficiencies on the labor side. Labor was comparatively speaking to last year's in the first quarter, down or roughly flattish, right? From a margin perspective. We saw some other expenses, some one-time expenses that may have happened last year that ultimately didn't reoccur in 2025 in the first quarter. When we talk about just efficiencies in general, it wasn't just within the field. We saw some efficiencies in the cemetery locations, but also in corporate, right? We made some disciplined choices this year in the corporate side to, you know, to kind of manage as we saw the volume tick down, and we'll continue to do that. We'll be very thoughtful as we think about the next three quarters on where we can and can't spend, especially on discretionary. Yeah, George. If you think about, you know, we saw the volume starting to come down early January and we make decisions, but just for that, you know, we've still been able to have adjusted consolidated EBITDA margin greater than Q1 2025 of 31.8% and up 2.4% to last year is pretty impressive. It speaks highly of the disciplined execution from the bottom up, business by business and, you know, leader by leader all the way through our overhead. We feel pretty proud about accomplishing that despite the volume decline. Okay. Okay. Last question from me, I guess a follow-up to one of your earlier responses. Can you talk more about how you're going after market share gains? Absolutely. Happy to do that. One of the things we're doing, George, is earlier last year, well, mid-year last year, we started to do mystery call shops. Basically what that is, we start to call the funeral homes and through our company, so they can let us know how good are we at picking up the phone call, right? That matters because a significant percentage of the volume that comes through the funeral homes comes through the phone. That first call, that's why we call them calls, is because people call in, set up an appointment to go and see if that's a good funeral home for their family. We learned that we had some opportunities for improvement, and we have since then started the program to finalize training, to really improve how we answering the phone, to elevate that experience, to address all the touch points we wanna address through the phone call. In doing so, you know, keeping those families more interested in staying with us than going to the competition. Okay. Understood. Thanks. Thanks, George. We will take our next question from Scott Schneeberger with Oppenheimer. Thanks very much. Good morning. Just one from me. Could you guys just provide an overview of what you look for in M&A? What are some of the things that you're looking to achieve as you're in the market? Thanks. Good morning, Scott. There are a few things that are core to how we view an opportunity. The first is the market. We do wanna be focused on a market that has a favorable growth profile. Also looking at the growth of certain age ranges that are significant with our consumers. The second is the opportunity to grow the business. For example, and we've seen a lot of this, there may be great businesses with great owners, but the ability to grow that business may be limited. That would be one that we pass on. If we see an opportunity with a cemetery or with the sales team or with pre-need, to grow that with the support and the investment from Carriage, that becomes very attractive to us. The final piece is the valuation. As we've talked about, I would say, of the consolidators in this business, we probably do, on average, the fewest number of total transactions, but we see that come back on revenue and margin and growth of those businesses. The reason for that is we see the same number of opportunities, we just pass on a lot of them because of either valuation and price or opportunity. We'll continue to be selective, and that's why, you know, it's tough for us to predict quarter by quarter, you know, which businesses will come in, but long term, we know there's gonna be a pretty significant growth for Carriage on the M&A front. Great. Thanks very much. There are no further questions in the queue at this time. I will now turn the call back over to Carlos R. Quezada for closing remarks. Thank you, everybody, for attending our call today. Our focus remains clear: disciplined execution, purposeful growth, and consistent improvement. We appreciate your confidence support. Have a great day, and we'll talk during our second quarter report. This concludes today's call. Thank you for your participation. You may now disconnect.

Speaker 6: Welcome to the Carriage Services Q1 2026 earnings webcast. 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. Welcome to the Carriage Services Q1 2026 earnings webcast. 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. welcome to the carriage services q1 2026 earnings webcast. 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

Speaker 9: Good morning, everyone, and thank you for joining us to discuss our first quarter results. In addition to myself, on the call this morning for management are Carlos R. Quezada, Chief Executive Officer and Vice Chairman of the Board of Directors, and John Enwright, Senior Vice President and 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. 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. Good morning, everyone, and thank you for joining us to discuss our first quarter results. good morning everyone and thank you for joining us to discuss our first quarter results In addition to myself, on the call this morning for management are Carlos R. Quezada, Chief Executive Officer and Vice Chairman of the Board of Directors, and John Enwright, Senior Vice President and Chief Financial Officer. in addition to myself on the call this morning for management are carlos r. quezada chief executive officer and vice chairman of the board of directors and john enwright senior vice president and chief financial officer On the Carriage Services website, you can find our earnings press release, which was issued yesterday after the market closed. 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. 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 Today's call will begin with formal remarks from Carlos and John and will be followed by a question-and-answer period. 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. 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 press 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, now I'd like to turn the call over to Carlos. Forward-looking statements inherently involve risks and uncertainties and only reflect our views as of today. 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 press release as well as in our SEC filings, all of which can be found on our website. these risks and uncertainties include but are not limited to factors identified in our earnings press 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, now I'd like to turn the call over to Carlos. thank you all for joining us this morning now i'd like to turn the call over to carlos

Speaker 2: Thank you, Steve, and welcome to everyone joining us for today's first quarter earnings call. We're pleased with our first quarter performance, especially against a strong comparison to the first quarter of 2025. Our results reflect steady execution, discipline, and continued focus on what we can control. As I step back and look at our progress, I am encouraged by the consistency we're building across the businesses. We are strengthening our foundation, improving how we operate, and positioning Carriage for long-term value creation. Before turning to financials, I want to recognize our managing partners, our field teams, and our Houston Support Center. You are the heartbeat of Carriage. These results are not by chance. They are built on a clear vision, high standards, a strong accountability, and a deep passion for this profession. Thank you for living our values and for delivering premier experiences to the families every day. Thank you, Steve, and welcome to everyone joining us for today's first quarter earnings call. thank you steve and welcome to everyone joining us for today's first quarter earnings call We're pleased with our first quarter performance, especially against a strong comparison to the first quarter of 2025. we're pleased with our first quarter performance especially against a strong comparison to the first quarter of 2025 Our results reflect steady execution, discipline, and continued focus on what we can control. our results reflect steady execution discipline and continued focus on what we can control As I step back and look at our progress, I am encouraged by the consistency we're building across the businesses. as i step back and look at our progress i am encouraged by the consistency we're building across the businesses We are strengthening our foundation, improving how we operate, and positioning Carriage for long-term value creation. we are strengthening our foundation improving how we operate and positioning carriage for long-term value creation Before turning to financials, I want to recognize our managing partners, our field teams, and our Houston Support Center. before turning to financials i want to recognize our managing partners our field teams and our houston support center You are the heartbeat of Carriage. you are the heartbeat of carriage These results are not by chance. these results are not by chance They are built on a clear vision, high standards, a strong accountability, and a deep passion for this profession. they are built on a clear vision high standards a strong accountability and a deep passion for this profession Thank you for living our values and for delivering premier experiences to the families every day. thank you for living our values and for delivering premier experiences to the families every day Today, we'll cover our first quarter performance and share three key phases of our journey, where we were, where we are today, and most importantly, where we are going. John will walk through our financial details, including cash from operating activities, balance sheet strength, capital expenditures, overhead, and our at-the-market offering program. Now to my report. For the first quarter, we reported revenue of $106.1 million, a 0.9% decrease from the same period last year. The primary reason for this variance was a decline in funeral home at-need volume of 5.8%. As you may remember, we had a strong first quarter last year due to the flu season pushing into January and February. Today, we'll cover our first quarter performance and share three key phases of our journey, where we were, where we are today, and most importantly, where we are going. today we'll cover our first quarter performance and share three key phases of our journey where we were where we are today and most importantly where we are going John will walk through our financial details, including cash from operating activities, balance sheet strength, capital expenditures, overhead, and our at-the-market offering program. john will walk through our financial details including cash from operating activities balance sheet strength capital expenditures overhead and our at-the-market offering program Now to my report. now to my report For the first quarter, we reported revenue of $106.1 million, a 0.9% decrease from the same period last year. for the first quarter we reported revenue of $106.1 million a 0.9% decrease from the same period last year The primary reason for this variance was a decline in funeral home at-need volume of 5.8%. the primary reason for this variance was a decline in funeral home at-need volume of 5.8% As you may remember, we had a strong first quarter last year due to the flu season pushing into January and February. as you may remember we had a strong first quarter last year due to the flu season pushing into january and february 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%. 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. 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%. 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% As we look at our segments, funeral comparable revenue was $63.3 million, down 4.2% from the previous year. 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. 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. 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. 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 This growth was primarily driven by a 9% increase in comparable pre-need cemetery sales production and a 15.3% increase in average revenue per property contract. The cemetery segment continues to benefit from our disciplined inventory development and strategic pricing and focused pre-need execution. Financial revenue for the quarter was $8.5 million, up 15.7% year-over-year, primarily reflecting a strong performance in our pre-need funeral sales strategy and the pre-need funeral commission income we generated from those sales. We ended the quarter at $2.5 million, an increase of 26% compared to the same period last year. Consolidated pre-need funeral insurance contracts sold increased 8% compared to the same quarter last year, reinforcing the strength and scalability of our funeral pre-need insurance platform, supported by the continued execution of our sales organization. This growth was primarily driven by a 9% increase in comparable pre-need cemetery sales production and a 15.3% increase in average revenue per property contract. this growth was primarily driven by a 9% increase in comparable pre-need cemetery sales production and a 15.3% increase in average revenue per property contract The cemetery segment continues to benefit from our disciplined inventory development and strategic pricing and focused pre-need execution. the cemetery segment continues to benefit from our disciplined inventory development and strategic pricing and focused pre-need execution Financial revenue for the quarter was $8.5 million, up 15.7% year-over-year, primarily reflecting a strong performance in our pre-need funeral sales strategy and the pre-need funeral commission income we generated from those sales. financial revenue for the quarter was $8.5 million up 15.7% year-over-year primarily reflecting a strong performance in our pre-need funeral sales strategy and the pre-need funeral commission income we generated from those sales We ended the quarter at $2.5 million, an increase of 26% compared to the same period last year. we ended the quarter at $2.5 million an increase of 26% compared to the same period last year Consolidated pre-need funeral insurance contracts sold increased 8% compared to the same quarter last year, reinforcing the strength and scalability of our funeral pre-need insurance platform, supported by the continued execution of our sales organization. consolidated pre-need funeral insurance contracts sold increased 8% compared to the same quarter last year reinforcing the strength and scalability of our funeral pre-need insurance platform supported by the continued execution of our sales organization On profitability, 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. Adjusted diluted EPS for the first quarter was $0.86 per share compared to $0.96 per share in the prior year quarter, representing a decrease of $0.10 per share or 10.4%. John Enwright will share more details on these variances. Overall, we're pleased with our first quarter results, which reflect a strong operating momentum and continued progress towards our strategic objectives. Let's talk about where we were. 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. On profitability, 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. on profitability 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 Adjusted diluted EPS for the first quarter was $0.86 per share compared to $0.96 per share in the prior year quarter, representing a decrease of $0.10 per share or 10.4%. adjusted diluted eps for the first quarter was $0.86 per share compared to $0.96 per share in the prior year quarter representing a decrease of $0.10 per share or 10.4% John Enwright will share more details on these variances. john enwright will share more details on these variances Overall, we're pleased with our first quarter results, which reflect a strong operating momentum and continued progress towards our strategic objectives. overall we're pleased with our first quarter results which reflect a strong operating momentum and continued progress towards our strategic objectives Let's talk about where we were. let's talk about where we were 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. 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 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, the business reflects a fundamentally different operating profile. We have materially strengthened the balance sheet, reduced leverage, and enhanced liquidity. 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. Importantly, we continue to build a culture of operational excellence that is embedded, repeatable, and scalable across our businesses. Pricing discipline was inconsistent, and capital allocation lacked the rigor required to optimize returns. 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. in short our company had strong underlying assets but was not positioned to fully convert that potential into durable financial performance Today, the business reflects a fundamentally different operating profile. today the business reflects a fundamentally different operating profile We have materially strengthened the balance sheet, reduced leverage, and enhanced liquidity. we have materially strengthened the balance sheet reduced leverage and enhanced liquidity 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. 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. these changes are translating strategy into disciplined execution driving greater sales predictability expanding margins and delivering consistent free cash flow Importantly, we continue to build a culture of operational excellence that is embedded, repeatable, and scalable across our businesses. importantly we continue to build a culture of operational excellence that is embedded repeatable and scalable across our businesses An example of this is that 2025 marked the strongest financial performance in Carriage 35-year history, surpassing even 2021 results during the peak of the pandemic. Where we are heading. Our focus is on compounding this progress in line with our long-term strategic objectives and 2030 vision. We are building a data-driven, high-performance platform designed to deliver sustained organic growth, margin expansion, and superior capital efficiency. Our priorities include deepening pre-need penetration across both funeral and cemetery segments, optimizing the service mix towards 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. An example of this is that 2025 marked the strongest financial performance in Carriage 35-year history, surpassing even 2021 results during the peak of the pandemic. an example of this is that 2025 marked the strongest financial performance in carriage 35-year history surpassing even 2021 results during the peak of the pandemic Where we are heading. where we are heading Our focus is on compounding this progress in line with our long-term strategic objectives and 2030 vision. our focus is on compounding this progress in line with our long-term strategic objectives and 2030 vision We are building a data-driven, high-performance platform designed to deliver sustained organic growth, margin expansion, and superior capital efficiency. we are building a data-driven high-performance platform designed to deliver sustained organic growth margin expansion and superior capital efficiency Our priorities include deepening pre-need penetration across both funeral and cemetery segments, optimizing the service mix towards higher volume offerings, expanding pricing sophistication, and leveraging technology to enhance both the customer experience and operating leverage. our priorities include deepening pre-need penetration across both funeral and cemetery segments optimizing the service mix towards 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. in parallel we will continue to execute a disciplined capital allocation framework that balances high return investments and strategic acquisitions and shareholder returns By 2030, our vision is to position the company as a premier best-in-class operator in the death care industry, defined by consistent top-tier margins, improved free cash flow generation, and a scalable technology-enabled operating model. We believe this strategy will drive durable long-term value creation and establish a structurally advantaged business capable of outperforming across market cycles. Finally, the at-the-market offering program is a strategic extension of the progress we have already made. With a stronger balance sheet, improved free cash flow, and a more disciplined, scalable operating platform, we believe we are now in a position to deploy capital with precision. This program gives us the flexibility to do that strategically, raising equity at market prices in a measured way and only when it supports high returns for shareholders. By 2030, our vision is to position the company as a premier best-in-class operator in the death care industry, defined by consistent top-tier margins, improved free cash flow generation, and a scalable technology-enabled operating model. by 2030 our vision is to position the company as a premier best-in-class operator in the death care industry defined by consistent top-tier margins improved free cash flow generation and a scalable technology-enabled operating model We believe this strategy will drive durable long-term value creation and establish a structurally advantaged business capable of outperforming across market cycles. we believe this strategy will drive durable long-term value creation and establish a structurally advantaged business capable of outperforming across market cycles Finally, the at-the-market offering program is a strategic extension of the progress we have already made. finally the at-the-market offering program is a strategic extension of the progress we have already made With a stronger balance sheet, improved free cash flow, and a more disciplined, scalable operating platform, we believe we are now in a position to deploy capital with precision. with a stronger balance sheet improved free cash flow and a more disciplined scalable operating platform we believe we are now in a position to deploy capital with precision This program gives us the flexibility to do that strategically, raising equity at market prices in a measured way and only when it supports high returns for shareholders. this program gives us the flexibility to do that strategically raising equity at market prices in a measured way and only when it supports high returns for shareholders Additionally, the at-the-market program allows us to accelerate strategic growth initiatives, pursue disciplined acquisitions in a highly fragmented industry, and maintain balance sheet strength. It enable us to move faster on opportunities and convert our operational momentum into sustained shareholder value creation. We are energized by our growth plans and confident in the long-term value we're building through disciplined capital execution, growth generated with purpose and intention, and an unwavering commitment to service excellence. Thank you. With that, I will turn the call over to John. Additionally, the at-the-market program allows us to accelerate strategic growth initiatives, pursue disciplined acquisitions in a highly fragmented industry, and maintain balance sheet strength. additionally the at-the-market program allows us to accelerate strategic growth initiatives pursue disciplined acquisitions in a highly fragmented industry and maintain balance sheet strength It enable us to move faster on opportunities and convert our operational momentum into sustained shareholder value creation. it enable us to move faster on opportunities and convert our operational momentum into sustained shareholder value creation We are energized by our growth plans and confident in the long-term value we're building through disciplined capital execution, growth generated with purpose and intention, and an unwavering commitment to service excellence. we are energized by our growth plans and confident in the long-term value we're building through disciplined capital execution growth generated with purpose and intention and an unwavering commitment to service excellence Thank you. thank you With that, I will turn the call over to John. with that i will turn the call over to john

Speaker 4: Thank you, Carlos, and good morning, everyone. As Carlos mentioned, we are pleased with our first quarter results, especially considering the tough comparison to prior year, which included approximately $4.8 million in revenue from businesses that were divested during 2025. As noted in our earnings release, we are excited to announce that we established an at-the-market equity offering program or ATM program as a prudent enhancement to our capital markets toolkit. 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. With that, let's discuss first quarter results. Thank you, Carlos, and good morning, everyone. thank you carlos and good morning everyone As Carlos mentioned, we are pleased with our first quarter results, especially considering the tough comparison to prior year, which included approximately $4.8 million in revenue from businesses that were divested during 2025. as carlos mentioned we are pleased with our first quarter results especially considering the tough comparison to prior year which included approximately $4.8 million in revenue from businesses that were divested during 2025 As noted in our earnings release, we are excited to announce that we established an at-the-market equity offering program or ATM program as a prudent enhancement to our capital markets toolkit. as noted in our earnings release we are excited to announce that we established an at-the-market equity offering program or atm program as a prudent enhancement to our capital markets toolkit 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. 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. 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 With that, let's discuss first quarter results. with that let's discuss first quarter results We reported consolidated adjusted EBITDA of $33.8 million or 31.8% of revenue, up from $32.9 million or 30.8% of revenue of last year's first quarter. Gains were driven by improved cemetery operations and pre-need funeral sales, adding $2.5 million of EBITDA. Comparable funeral EBITDA fell by approximately $2.4 million due to lower volume within the channel this quarter, which offset the majority of those gains. For the first quarter of 2026, our adjusted diluted EPS declined to $0.86, representing a 10.4% decrease from $0.96 in the prior year. We reported consolidated adjusted EBITDA of $33.8 million or 31.8% of revenue, up from $32.9 million or 30.8% of revenue of last year's first quarter. we reported consolidated adjusted ebitda of $33.8 million or 31.8% of revenue up from $32.9 million or 30.8% of revenue of last year's first quarter Gains were driven by improved cemetery operations and pre-need funeral sales, adding $2.5 million of EBITDA. gains were driven by improved cemetery operations and pre-need funeral sales adding $2.5 million of ebitda Comparable funeral EBITDA fell by approximately $2.4 million due to lower volume within the channel this quarter, which offset the majority of those gains. comparable funeral ebitda fell by approximately $2.4 million due to lower volume within the channel this quarter which offset the majority of those gains For the first quarter of 2026, our adjusted diluted EPS declined to $0.86, representing a 10.4% decrease from $0.96 in the prior year. for the first quarter of 2026 our adjusted diluted eps declined to $0.86 representing a 10.4% decrease from $0.96 in the prior year The decline was primarily a result of a higher effective tax rate in this year's first quarter. The effective tax rate for the first quarter was 26.7%, compared to 20.3% in the first quarter of 2025. The adjustment in tax rate resulted in an estimated impact of $0.07-$0.08, primarily due to higher excess tax benefits recognized in the previous year upon the settlement of employee share-based awards. On a GAAP basis, diluted EPS for the first quarter was $0.84, compared to $1.34 in the same period last year. The prior year results included the benefit of a $7.9 million gain associated with a divestiture in a sale of real estate assets. The decline was primarily a result of a higher effective tax rate in this year's first quarter. The effective tax rate for the first quarter was 26.7%, compared to 20.3% in the first quarter of 2025. the decline was primarily a result of a higher effective tax rate in this year's first quarter. the effective tax rate for the first quarter was 26.7% compared to 20.3% in the first quarter of 2025 The adjustment in tax rate resulted in an estimated impact of $0.07-$0.08, primarily due to higher excess tax benefits recognized in the previous year upon the settlement of employee share-based awards. the adjustment in tax rate resulted in an estimated impact of $0.07-$0.08 primarily due to higher excess tax benefits recognized in the previous year upon the settlement of employee share-based awards On a GAAP basis, diluted EPS for the first quarter was $0.84, compared to $1.34 in the same period last year. on a gaap basis diluted eps for the first quarter was $0.84 compared to $1.34 in the same period last year The prior year results included the benefit of a $7.9 million gain associated with a divestiture in a sale of real estate assets. the prior year results included the benefit of a $7.9 million gain associated with a divestiture in a sale of real estate assets Moving on to cash from operating activities, we saw an increase of $1.1 million over the prior year or an 8% increase, primarily because of year-over-year improvement in operating results. Free cash flow in the quarter was $400,000 or 3.5% higher than the prior year first quarter. Adjusted free cash flow was $2.2 million lower than the prior year first quarter, as the first quarter of 2025 was impacted by special payments for professional services related to the review of strategic alternatives, as well as severance payments. As a result of our ongoing commitment to executing disciplined capital allocation, our bank leverage ratio decreased to 4 times from 4.2 times at the close of the first quarter of 2025. Moving on to cash from operating activities, we saw an increase of $1.1 million over the prior year or an 8% increase, primarily because of year-over-year improvement in operating results. moving on to cash from operating activities we saw an increase of $1.1 million over the prior year or an 8% increase primarily because of year-over-year improvement in operating results Free cash flow in the quarter was $400,000 or 3.5% higher than the prior year first quarter. free cash flow in the quarter was $400,000 or 3.5% higher than the prior year first quarter Adjusted free cash flow was $2.2 million lower than the prior year first quarter, as the first quarter of 2025 was impacted by special payments for professional services related to the review of strategic alternatives, as well as severance payments. adjusted free cash flow was $2.2 million lower than the prior year first quarter as the first quarter of 2025 was impacted by special payments for professional services related to the review of strategic alternatives as well as severance payments As a result of our ongoing commitment to executing disciplined capital allocation, our bank leverage ratio decreased to 4 times from 4.2 times at the close of the first quarter of 2025. as a result of our ongoing commitment to executing disciplined capital allocation our bank leverage ratio decreased to 4 times from 4.2 times at the close of the first quarter of 2025 We remain within our long-term leverage ratio target of 3.5 times-4 times. Capital expenditures for the quarter totaled $3.9 million in the first quarter of 2026, compared to $3.2 million in the prior year's first quarter. The $700,000 increase was predominantly associated with maintenance capital, driven by incremental spending in our funeral homes, coupled with an IT investment to refresh and improve the quality of our network connectivity within our field locations. For the quarter, we spent $2.2 million on maintenance capital and $1.7 million on growth capital. Overhead expenses for the quarter totaled $14.8 million or 14% of revenues, compared to $15.3 million or 14.3% of revenues in the first quarter of 2025. We remain within our long-term leverage ratio target of 3.5 times-4 times. we remain within our long-term leverage ratio target of 3.5 times-4 times Capital expenditures for the quarter totaled $3.9 million in the first quarter of 2026, compared to $3.2 million in the prior year's first quarter. capital expenditures for the quarter totaled $3.9 million in the first quarter of 2026 compared to $3.2 million in the prior year's first quarter The $700,000 increase was predominantly associated with maintenance capital, driven by incremental spending in our funeral homes, coupled with an IT investment to refresh and improve the quality of our network connectivity within our field locations. the $700,000 increase was predominantly associated with maintenance capital driven by incremental spending in our funeral homes coupled with an it investment to refresh and improve the quality of our network connectivity within our field locations For the quarter, we spent $2.2 million on maintenance capital and $1.7 million on growth capital. for the quarter we spent $2.2 million on maintenance capital and $1.7 million on growth capital Overhead expenses for the quarter totaled $14.8 million or 14% of revenues, compared to $15.3 million or 14.3% of revenues in the first quarter of 2025. overhead expenses for the quarter totaled $14.8 million or 14% of revenues compared to $15.3 million or 14.3% of revenues in the first quarter of 2025 The decrease was a result of some variable expenses coupled with effective cost management. Moving on to our 2026 outlook. We are maintaining our previously disclosed full-year outlook. As a reminder, our outlook anticipates certain planned acquisitions that we expect to be completed in 2026. Also, utilization of the previously mentioned ATM program have not been factored into any of our metrics in our outlook. As a reminder, our outlook for the following metrics are: revenues are expected to be in the $440 million-$450 million range. Adjusted consolidated EBITDA is expected to be in the range of $135 million-$140 million. Adjusted EBITDA margins between 30.5% and 31.5%. Adjusted diluted EPS of $3.35-$3.55. The decrease was a result of some variable expenses coupled with effective cost management. the decrease was a result of some variable expenses coupled with effective cost management Moving on to our 2026 outlook. moving on to our 2026 outlook We are maintaining our previously disclosed full-year outlook. we are maintaining our previously disclosed full-year outlook As a reminder, our outlook anticipates certain planned acquisitions that we expect to be completed in 2026. as a reminder our outlook anticipates certain planned acquisitions that we expect to be completed in 2026 Also, utilization of the previously mentioned ATM program have not been factored into any of our metrics in our outlook. also utilization of the previously mentioned atm program have not been factored into any of our metrics in our outlook As a reminder, our outlook for the following metrics are: revenues are expected to be in the $440 million-$450 million range. as a reminder our outlook for the following metrics are revenues are expected to be in the $440 million-$450 million range Adjusted consolidated EBITDA is expected to be in the range of $135 million-$140 million. adjusted consolidated ebitda is expected to be in the range of $135 million-$140 million Adjusted EBITDA margins between 30.5% and 31.5%. adjusted ebitda margins between 30.5% and 31.5% Adjusted diluted EPS of $3.35-$3.55. adjusted diluted eps of $3.35-$3.55 Overhead expenses to be between 13.5%-14.5% of revenue. Adjusted free cash flow in the range of $40 million-$50 million. Leverage ratio to end 2026 between 3.5 times-4 times. That concludes our prepared remarks, and I will turn it back over to the operator to open it up for questions. Overhead expenses to be between 13.5%-14.5% of revenue. overhead expenses to be between 13.5%-14.5% of revenue Adjusted free cash flow in the range of $40 million-$50 million. adjusted free cash flow in the range of $40 million-$50 million Leverage ratio to end 2026 between 3.5 times-4 times. leverage ratio to end 2026 between 3.5 times-4 times That concludes our prepared remarks, and I will turn it back over to the operator to open it up for questions. that concludes our prepared remarks and i will turn it back over to the operator to open it up for questions

Speaker 6: Thank you. We will now conduct a question-and-answer session. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We will take our first question from Alex Paris with Barrington Research. Thank you. thank you We will now conduct a question-and-answer session. we will now conduct a question-and-answer session If you would like to ask a question, please signal by pressing star one on your telephone keypad. if you would like to ask a question please signal by pressing star one on your telephone keypad If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. if you are using a speakerphone please make sure your mute function is turned off to allow your signal to reach our equipment Again, press star one to ask a question. again press star one to ask a question We'll pause for just a moment to allow everyone an opportunity to signal for questions. we'll pause for just a moment to allow everyone an opportunity to signal for questions We will take our first question from Alex Paris with Barrington Research. we will take our first question from alex paris with barrington research

Speaker 1: Hi, guys. Thanks for taking my question. I got a couple. I think I'll start with funeral results, you know, which were down year-over-year. I get it. Tough comp. Strong flu season a year ago. Not too different from your large publicly traded competitor who said the same thing and had a similar comparable volume decline year-over-year. You reaffirmed your guidance for the full year. It's early in the year. It suggests that there should be revenue growth returning in the remaining quarters of the year. Can you comment on that or provide some additional color? Your thoughts or your confidence why revenue growth will return in the subsequent quarters? Hi, guys. hi guys Thanks for taking my question. thanks for taking my question I got a couple. i got a couple I think I'll start with funeral results, you know, which were down year-over-year. i think i'll start with funeral results you know which were down year-over-year I get it. i get it Tough comp. tough comp Strong flu season a year ago. strong flu season a year ago Not too different from your large publicly traded competitor who said the same thing and had a similar comparable volume decline year-over-year. not too different from your large publicly traded competitor who said the same thing and had a similar comparable volume decline year-over-year You reaffirmed your guidance for the full year. you reaffirmed your guidance for the full year It's early in the year. it's early in the year It suggests that there should be revenue growth returning in the remaining quarters of the year. it suggests that there should be revenue growth returning in the remaining quarters of the year Can you comment on that or provide some additional color? can you comment on that or provide some additional color Your thoughts or your confidence why revenue growth will return in the subsequent quarters? your thoughts or your confidence why revenue growth will return in the subsequent quarters

Speaker 2: Absolutely. Thank you, Alex, for the question. It's a great question. You know, we have seen in cycles, right? That death care, it has this seasonality, if you will. It goes up and down. Normally, it's always been, you know, first quarter, first, fourth quarter, second. You know, since COVID-19, that has actually changed significantly. What we have seen is that may, even though, first quarter may be down, it picks up some of that volume as we go throughout the year. For us, especially because we are still in the process of integrating our latest two acquisitions in Florida, and the divestiture that we did from last year also impacts that. Absolutely. absolutely Thank you, Alex, for the question. thank you alex for the question It's a great question. it's a great question You know, we have seen in cycles, right? you know we have seen in cycles right That death care, it has this seasonality, if you will. that death care it has this seasonality if you will It goes up and down. it goes up and down Normally, it's always been, you know, first quarter, first, fourth quarter, second. normally it's always been you know first quarter first fourth quarter second You know, since COVID-19, that has actually changed significantly. you know since covid-19 that has actually changed significantly What we have seen is that may, even though, first quarter may be down, it picks up some of that volume as we go throughout the year. what we have seen is that may even though first quarter may be down it picks up some of that volume as we go throughout the year For us, especially because we are still in the process of integrating our latest two acquisitions in Florida, and the divestiture that we did from last year also impacts that. for us especially because we are still in the process of integrating our latest two acquisitions in florida and the divestiture that we did from last year also impacts that As we wash off Q1, we have now passed the largest divestiture, and we feel pretty positive we will be able to make our volume up for the, you know, for the next three quarters. As we wash off Q1, we have now passed the largest divestiture, and we feel pretty positive we will be able to make our volume up for the, you know, for the next three quarters. as we wash off q1 we have now passed the largest divestiture and we feel pretty positive we will be able to make our volume up for the you know for the next three quarters

Speaker 1: Good. That's helpful. Speaking of acquisitions, I was wondering if you can give us an update on the integration process with Osceola. How is it performing? Osceola and the other acquisitions since they were acquired last September. Good. good That's helpful. that's helpful Speaking of acquisitions, I was wondering if you can give us an update on the integration process with Osceola. speaking of acquisitions i was wondering if you can give us an update on the integration process with osceola How is it performing? how is it performing Osceola and the other acquisitions since they were acquired last September. osceola and the other acquisitions since they were acquired last september

Speaker 9: Yeah. Good morning, Alex. It's Steve. Yeah, both acquisitions are really trending in a positive direction. Faith Chapel over at Pensacola, and then Osceola that you mentioned over in Kissimmee. Excited about the progress of both businesses. As you know, with the Osceola business, it allows us, with our current footprint in that market, to really recognize some synergies that's unique for us with acquisitions. Excited to see how that continues to move forward. Yeah. yeah Good morning, Alex. good morning alex It's Steve. it's steve Yeah, both acquisitions are really trending in a positive direction. yeah both acquisitions are really trending in a positive direction Faith Chapel over at Pensacola, and then Osceola that you mentioned over in Kissimmee. faith chapel over at pensacola and then osceola that you mentioned over in kissimmee Excited about the progress of both businesses. excited about the progress of both businesses As you know, with the Osceola business, it allows us, with our current footprint in that market, to really recognize some synergies that's unique for us with acquisitions. as you know with the osceola business it allows us with our current footprint in that market to really recognize some synergies that's unique for us with acquisitions Excited to see how that continues to move forward. excited to see how that continues to move forward

Speaker 1: Are these acquisitions fully integrated at this point? Are they on their common systems and things like that? Are these acquisitions fully integrated at this point? are these acquisitions fully integrated at this point Are they on their common systems and things like that? are they on their common systems and things like that

Speaker 9: Yeah. All the systems and people are fully integrated. We actually just, with Osceola, broke ground two months ago with a new development in the cemetery, so adding some additional inventory and product for the community there. That should be finished in the next one or two months. All systems go with Osceola and Faith Chapel in terms of integration. Yeah. yeah All the systems and people are fully integrated. all the systems and people are fully integrated We actually just, with Osceola, broke ground two months ago with a new development in the cemetery, so adding some additional inventory and product for the community there. we actually just with osceola broke ground two months ago with a new development in the cemetery so adding some additional inventory and product for the community there That should be finished in the next one or two months. that should be finished in the next one or two months All systems go with Osceola and Faith Chapel in terms of integration. all systems go with osceola and faith chapel in terms of integration

Speaker 1: Great. Then just one last one, and I'll get back in the queue. I'm wondering if you can give us a little update on the M&A pipeline and outlook. As you noted in the prepared comments, there is an acquisition assumption for likely acquisitions or potential acquisitions that might close in 2026. I think that assumption was $5 million-$10 million in revenue. Just looking for a little color there. Great. great Then just one last one, and I'll get back in the queue. then just one last one and i'll get back in the queue I'm wondering if you can give us a little update on the M&A pipeline and outlook. i'm wondering if you can give us a little update on the m&a pipeline and outlook As you noted in the prepared comments, there is an acquisition assumption for likely acquisitions or potential acquisitions that might close in 2026. as you noted in the prepared comments there is an acquisition assumption for likely acquisitions or potential acquisitions that might close in 2026 I think that assumption was $5 million-$10 million in revenue. i think that assumption was $5 million-$10 million in revenue Just looking for a little color there. just looking for a little color there

Speaker 9: You bet. The, yeah, the pipeline is robust right now. We have one acquisition that is scheduled to close later this month. It's gonna allow us to enter a new market with a pretty strong growth profile. 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 gonna see significant activity that we'll be able to report on. You bet. you bet The, yeah, the pipeline is robust right now. the yeah the pipeline is robust right now We have one acquisition that is scheduled to close later this month. we have one acquisition that is scheduled to close later this month It's gonna allow us to enter a new market with a pretty strong growth profile. it's gonna allow us to enter a new market with a pretty strong growth profile We're excited to provide some more detail on that here probably in the next couple of weeks. 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'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 grown the corporate development team out of need quite frankly We've just had a lot of interest from owners across country. we've just had a lot of interest from owners across country I would expect in the back half of the year, we're gonna see significant activity that we'll be able to report on. i would expect in the back half of the year we're gonna see significant activity that we'll be able to report on Carlos, John mentioned this, you know, one of the benefits with the ATM is being able to support what we think is going to be a pretty significant opportunity for growth through M&A. Carlos, John mentioned this, you know, one of the benefits with the ATM is being able to support what we think is going to be a pretty significant opportunity for growth through M&A. carlos john mentioned this you know one of the benefits with the atm is being able to support what we think is going to be a pretty significant opportunity for growth through m&a

Speaker 1: Last related, with the ATM, would you think that there's the potential to exceed that $5 million-$10 million assumption that's baked in guidance, given the greater flexibility and wherewithal? Last related, with the ATM, would you think that there's the potential to exceed that $5 million-$10 million assumption that's baked in guidance, given the greater flexibility and wherewithal? last related with the atm would you think that there's the potential to exceed that $5 million-$10 million assumption that's baked in guidance given the greater flexibility and wherewithal

Speaker 9: Yeah, my expectation is you're going to see more activity in the back half of the year. In terms of when things close, you may see some of that bleed into early next year as well. We continue to be focused on ensuring the businesses that we're working with and we're integrating are, you know, high-value businesses, high-growth markets. We're not just going to add businesses to add to the top line. That means probably Q3, Q4 into Q1, you'll see some significant activity. Look, I think in the next three or four quarters, this certainly plan to exceed the $10 million. Whether it hits in Q1 of next year or Q3 and Q4 this year remains to be seen. Yeah, my expectation is you're going to see more activity in the back half of the year. yeah my expectation is you're going to see more activity in the back half of the year In terms of when things close, you may see some of that bleed into early next year as well. in terms of when things close you may see some of that bleed into early next year as well We continue to be focused on ensuring the businesses that we're working with and we're integrating are, you know, high-value businesses, high-growth markets. we continue to be focused on ensuring the businesses that we're working with and we're integrating are you know high-value businesses high-growth markets We're not just going to add businesses to add to the top line. we're not just going to add businesses to add to the top line That means probably Q3, Q4 into Q1, you'll see some significant activity. that means probably q3 q4 into q1 you'll see some significant activity Look, I think in the next three or four quarters, this certainly plan to exceed the $10 million. look i think in the next three or four quarters this certainly plan to exceed the $10 million Whether it hits in Q1 of next year or Q3 and Q4 this year remains to be seen. whether it hits in q1 of next year or q3 and q4 this year remains to be seen

Speaker 1: Great. Thank you very much. I'll get back in the queue. Great. great Thank you very much. thank you very much I'll get back in the queue. i'll get back in the queue

Speaker 6: We will take our next question from Laura Maher with B. Riley Securities. We will take our next question from Laura Maher with B. we will take our next question from laura maher with b Riley Securities. riley securities

Speaker 5: Hi. Good morning. Thanks for taking my question. My first question, it seems the burial to cremation mix is stabilizing. How does this influence your average revenue per contract in funeral home EBITDA margins going forward? Hi. hi Good morning. good morning Thanks for taking my question. thanks for taking my question My first question, it seems the burial to cremation mix is stabilizing. my first question it seems the burial to cremation mix is stabilizing How does this influence your average revenue per contract in funeral home EBITDA margins going forward? how does this influence your average revenue per contract in funeral home ebitda margins going forward

Speaker 2: Do you wanna answer? Go ahead. Do you wanna answer? do you wanna answer Go ahead. go ahead

Speaker 9: Yeah. Yeah. We've seen over the last three quarters some normalization or some benefit associated with the cremation mix. You know, it was 40 basis points growth in this quarter. As burial kind of flattens, you should see and we should see our ARPC increase. Yeah. yeah Yeah. yeah We've seen over the last three quarters some normalization or some benefit associated with the cremation mix. we've seen over the last three quarters some normalization or some benefit associated with the cremation mix You know, it was 40 basis points growth in this quarter. you know it was 40 basis points growth in this quarter As burial kind of flattens, you should see and we should see our ARPC increase. as burial kind of flattens you should see and we should see our arpc increase

Speaker 5: Great. Thanks. Second, are there any other funeral home properties you're looking to divest? Great. great Thanks. thanks Second, are there any other funeral home properties you're looking to divest? second are there any other funeral home properties you're looking to divest

Speaker 9: Yeah. At this time, Laura Maher, we feel pretty good about the portfolio as currently constructed. No additional divestitures are planned. Yeah. yeah At this time, Laura Maher, we feel pretty good about the portfolio as currently constructed. at this time laura maher we feel pretty good about the portfolio as currently constructed No additional divestitures are planned. no additional divestitures are planned

Speaker 5: Okay, thank you. Okay, thank you. okay thank you

Speaker 2: Thank you, Laura. Thank you, Laura. thank you laura

Speaker 6: We will take our next question from Parker Snurr with Raymond James. We will take our next question from Parker Snurr with Raymond James. we will take our next question from parker snurr with raymond james

Speaker 7: Hey, good morning. Just on the funeral volumes, just curious on, you know, comparable funeral volumes, how they progress through the quarter, you know, January, February, March. What are you seeing in early days of the second quarter? Hey, good morning. hey good morning Just on the funeral volumes, just curious on, you know, comparable funeral volumes, how they progress through the quarter, you know, January, February, March. just on the funeral volumes just curious on you know comparable funeral volumes how they progress through the quarter you know january february march What are you seeing in early days of the second quarter? what are you seeing in early days of the second quarter

Speaker 2: Yeah. You know, the tough comp was really January and February. March also came a little light. To be, you know, pretty straightforward, I think the three months were pretty much the same as it comes to the decline. April started a little slow. We do believe that with the divestiture out, may come back. We do foresee, you know, these cyclical turns of Q2, Q3, Q4 coming in to being able to make up for what Q1 is missing. That's what we have seen in years past, and that's what we're, you know, really aiming to do. In addition to that, our teams see at the field level, which is what truly matters, continue to fight pretty hard for market share gains. Yeah. yeah You know, the tough comp was really January and February. you know the tough comp was really january and february March also came a little light. march also came a little light To be, you know, pretty straightforward, I think the three months were pretty much the same as it comes to the decline. to be you know pretty straightforward i think the three months were pretty much the same as it comes to the decline April started a little slow. april started a little slow We do believe that with the divestiture out, may come back. we do believe that with the divestiture out may come back We do foresee, you know, these cyclical turns of Q2, Q3, Q4 coming in to being able to make up for what Q1 is missing. we do foresee you know these cyclical turns of q2 q3 q4 coming in to being able to make up for what q1 is missing That's what we have seen in years past, and that's what we're, you know, really aiming to do. that's what we have seen in years past and that's what we're you know really aiming to do In addition to that, our teams see at the field level, which is what truly matters, continue to fight pretty hard for market share gains. in addition to that our teams see at the field level which is what truly matters continue to fight pretty hard for market share gains While there might be a compression of death rates, seems like it, because as we talk to vendors, we've seen reports from other public companies, we see that that's probably the case. We continue to fight pretty hard to make sure that the Carriage businesses gain as many, you know, market share gains as we can by providing, you know, premier experiences to the families that we serve and delivering on that experience to each one of those families. While there might be a compression of death rates, seems like it, because as we talk to vendors, we've seen reports from other public companies, we see that that's probably the case. while there might be a compression of death rates seems like it because as we talk to vendors we've seen reports from other public companies we see that that's probably the case We continue to fight pretty hard to make sure that the Carriage businesses gain as many, you know, market share gains as we can by providing, you know, premier experiences to the families that we serve and delivering on that experience to each one of those families. we continue to fight pretty hard to make sure that the carriage businesses gain as many you know market share gains as we can by providing you know premier experiences to the families that we serve and delivering on that experience to each one of those families

Speaker 7: Okay. Okay. Understood. On the pre-need cemetery production, you had strong growth there despite lower contract volume. You had better revenue per contract. Just curious on the puts and takes there, were there any large ticket sales that helped drive that better product, increased pricing? Maybe just more details on the pre-need cemetery growth. Okay. okay Okay. okay Understood. understood On the pre-need cemetery production, you had strong growth there despite lower contract volume. on the pre-need cemetery production you had strong growth there despite lower contract volume You had better revenue per contract. you had better revenue per contract Just curious on the puts and takes there, were there any large ticket sales that helped drive that better product, increased pricing? just curious on the puts and takes there were there any large ticket sales that helped drive that better product increased pricing Maybe just more details on the pre-need cemetery growth. maybe just more details on the pre-need cemetery growth

Speaker 2: We have the normal, you know, large sales activity, nothing too large that will offset that. We have been actually working really hard in making sure we have a great sales average on the pre-need cemetery side. We're hoping for a little bit more, although, you know, if I go back, I'll give you some data, which I think is fascinating to me. If I go back to Q1 2019 and then calculate the CAGR to Q1 2026, pre-need sales is at 22.4% CAGR over this period, which is fantastic. For Q1 2026, what was a little light, you know, Qingming really started a little later this year. It's been, you know, not great. That's what we have seen. We have the normal, you know, large sales activity, nothing too large that will offset that. we have the normal you know large sales activity nothing too large that will offset that We have been actually working really hard in making sure we have a great sales average on the pre-need cemetery side. we have been actually working really hard in making sure we have a great sales average on the pre-need cemetery side We're hoping for a little bit more, although, you know, if I go back, I'll give you some data, which I think is fascinating to me. we're hoping for a little bit more although you know if i go back i'll give you some data which i think is fascinating to me If I go back to Q1 2019 and then calculate the CAGR to Q1 2026, pre-need sales is at 22.4% CAGR over this period, which is fantastic. if i go back to q1 2019 and then calculate the cagr to q1 2026 pre-need sales is at 22.4% cagr over this period which is fantastic For Q1 2026, what was a little light, you know, Qingming really started a little later this year. for q1 2026 what was a little light you know qingming really started a little later this year It's been, you know, not great. it's been you know not great That's what we have seen. that's what we have seen Even on top of that, we're still able to deliver some pretty amazing performance in Q1. Feel pretty excited about our pipeline for pre-need business on both funeral and cemetery. I don't see why would that slow down. Even on top of that, we're still able to deliver some pretty amazing performance in Q1. even on top of that we're still able to deliver some pretty amazing performance in q1 Feel pretty excited about our pipeline for pre-need business on both funeral and cemetery. feel pretty excited about our pipeline for pre-need business on both funeral and cemetery I don't see why would that slow down. i don't see why would that slow down

Speaker 7: Okay. Okay. Just last one from me. Just given the news of the ATM program, is it a reasonable expectation that you will finance the acquisitions that are built into your 2026 guidance with the ATM program? Or will you use a combination of that and free cash flow from this year? Also just curious on the expected cash needs or cash outlays to complete these acquisitions. Okay. okay Okay. okay Just last one from me. just last one from me Just given the news of the ATM program, is it a reasonable expectation that you will finance the acquisitions that are built into your 2026 guidance with the ATM program? just given the news of the atm program is it a reasonable expectation that you will finance the acquisitions that are built into your 2026 guidance with the atm program Or will you use a combination of that and free cash flow from this year? or will you use a combination of that and free cash flow from this year Also just curious on the expected cash needs or cash outlays to complete these acquisitions. also just curious on the expected cash needs or cash outlays to complete these acquisitions

Speaker 4: Yeah. I think it might be on timing, so there might be usage of basically free cash flow that we can fund through the ATM program. To the point it depends on the size of the acquisitions is really when we would be opportunistically accessing the ATM. Really, if you just look at a typical the multiples, if from the $5 million-$10 million of expected revenue, you know, our typical margins are, you know, depending on if it's funeral or cemetery, we still expect the margins or the multiples, depending on the size, to call it to be in the average range and call it six times-eight times from an EBITDA multiple percent. The cash needs will be based on that. Yeah. yeah I think it might be on timing, so there might be usage of basically free cash flow that we can fund through the ATM program. i think it might be on timing so there might be usage of basically free cash flow that we can fund through the atm program To the point it depends on the size of the acquisitions is really when we would be opportunistically accessing the ATM. to the point it depends on the size of the acquisitions is really when we would be opportunistically accessing the atm Really, if you just look at a typical the multiples, if from the $5 million-$10 million of expected revenue, you know, our typical margins are, you know, depending on if it's funeral or cemetery, we still expect the margins or the multiples, depending on the size, to call it to be in the average range and call it six times-eight times from an EBITDA multiple percent. really if you just look at a typical the multiples if from the $5 million-$10 million of expected revenue you know our typical margins are you know depending on if it's funeral or cemetery we still expect the margins or the multiples depending on the size to call it to be in the average range and call it six times-eight times from an ebitda multiple percent The cash needs will be based on that. the cash needs will be based on that

Speaker 7: Okay. All right. Helpful. Thank you. Okay. okay All right. all right Helpful. helpful Thank you. thank you

Speaker 4: Thanks, Parker. Thanks, Parker. thanks parker

Speaker 6: We will take our next question from George Kelly with ROTH Capital Partners. We will take our next question from George Kelly with ROTH Capital Partners. we will take our next question from george kelly with roth capital partners

Speaker 3: Hey, everyone. Thanks for taking the questions. A couple for you. First, can you update us on the status of Trinity? Hey, everyone. hey everyone Thanks for taking the questions. thanks for taking the questions A couple for you. a couple for you First, can you update us on the status of Trinity? first can you update us on the status of trinity

Speaker 4: Yeah. I'll speak to that. Trinity, as you know, George, we're in one location right now, where the second location is going to go live in May. Provided that is successful, which we expect it to be successful, we will do a rollout of our funeral home starting in July, what we're calling Velocity. All the funeral homes, not the combos or cemeteries, but all the funeral homes should be done in 2026. We move into the first quarter of 2027, and we expect all the combos and cemeteries to be up and live. Yeah. yeah I'll speak to that. i'll speak to that Trinity, as you know, George, we're in one location right now, where the second location is going to go live in May. trinity as you know george we're in one location right now where the second location is going to go live in may Provided that is successful, which we expect it to be successful, we will do a rollout of our funeral home starting in July, what we're calling Velocity. provided that is successful which we expect it to be successful we will do a rollout of our funeral home starting in july what we're calling velocity All the funeral homes, not the combos or cemeteries, but all the funeral homes should be done in 2026. all the funeral homes not the combos or cemeteries but all the funeral homes should be done in 2026 We move into the first quarter of 2027, and we expect all the combos and cemeteries to be up and live. we move into the first quarter of 2027 and we expect all the combos and cemeteries to be up and live

Speaker 3: Okay. Okay. Understood. Thanks. Second question from me. Your funeral margin held in pretty well given the downtick in revenue. You commented in your prepared remarks about finding efficiencies and just being disciplined on the cost side. What efficiencies were you able to find, and are those things sustainable? Should we think of, you know, you being able to maintain, like, pretty easily maintain that above 40% margin? Or just how should we think about those efficiencies? Can you detail any of that? Okay. okay Okay. okay Understood. understood Thanks. thanks Second question from me. second question from me Your funeral margin held in pretty well given the downtick in revenue. your funeral margin held in pretty well given the downtick in revenue You commented in your prepared remarks about finding efficiencies and just being disciplined on the cost side. you commented in your prepared remarks about finding efficiencies and just being disciplined on the cost side What efficiencies were you able to find, and are those things sustainable? what efficiencies were you able to find and are those things sustainable Should we think of, you know, you being able to maintain, like, pretty easily maintain that above 40% margin? should we think of you know you being able to maintain like pretty easily maintain that above 40% margin Or just how should we think about those efficiencies? or just how should we think about those efficiencies Can you detail any of that? can you detail any of that

Speaker 4: Yeah. In, in that particular channel, we saw some efficiencies on the labor side. Labor was comparatively speaking to last year's in the first quarter, down or roughly flattish, right? From a margin perspective. We saw some other expenses, some one-time expenses that may have happened last year that ultimately didn't reoccur in 2025 in the first quarter. When we talk about just efficiencies in general, it wasn't just within the field. We saw some efficiencies in the cemetery locations, but also in corporate, right? We made some disciplined choices this year in the corporate side to, you know, to kind of manage as we saw the volume tick down, and we'll continue to do that. We'll be very thoughtful as we think about the next three quarters on where we can and can't spend, especially on discretionary. Yeah. yeah In, in that particular channel, we saw some efficiencies on the labor side. in in that particular channel we saw some efficiencies on the labor side Labor was comparatively speaking to last year's in the first quarter, down or roughly flattish, right? labor was comparatively speaking to last year's in the first quarter down or roughly flattish right From a margin perspective. from a margin perspective We saw some other expenses, some one-time expenses that may have happened last year that ultimately didn't reoccur in 2025 in the first quarter. we saw some other expenses some one-time expenses that may have happened last year that ultimately didn't reoccur in 2025 in the first quarter When we talk about just efficiencies in general, it wasn't just within the field. when we talk about just efficiencies in general it wasn't just within the field We saw some efficiencies in the cemetery locations, but also in corporate, right? we saw some efficiencies in the cemetery locations but also in corporate right We made some disciplined choices this year in the corporate side to, you know, to kind of manage as we saw the volume tick down, and we'll continue to do that. we made some disciplined choices this year in the corporate side to you know to kind of manage as we saw the volume tick down and we'll continue to do that We'll be very thoughtful as we think about the next three quarters on where we can and can't spend, especially on discretionary. we'll be very thoughtful as we think about the next three quarters on where we can and can't spend especially on discretionary

Speaker 2: Yeah, George. If you think about, you know, we saw the volume starting to come down early January and we make decisions, but just for that, you know, we've still been able to have adjusted consolidated EBITDA margin greater than Q1 2025 of 31.8% and up 2.4% to last year is pretty impressive. It speaks highly of the disciplined execution from the bottom up, business by business and, you know, leader by leader all the way through our overhead. We feel pretty proud about accomplishing that despite the volume decline. Yeah, George. yeah george If you think about, you know, we saw the volume starting to come down early January and we make decisions, but just for that, you know, we've still been able to have adjusted consolidated EBITDA margin greater than Q1 2025 of 31.8% and up 2.4% to last year is pretty impressive. if you think about you know we saw the volume starting to come down early january and we make decisions but just for that you know we've still been able to have adjusted consolidated ebitda margin greater than q1 2025 of 31.8% and up 2.4% to last year is pretty impressive It speaks highly of the disciplined execution from the bottom up, business by business and, you know, leader by leader all the way through our overhead. it speaks highly of the disciplined execution from the bottom up business by business and you know leader by leader all the way through our overhead We feel pretty proud about accomplishing that despite the volume decline. we feel pretty proud about accomplishing that despite the volume decline

Speaker 3: Okay. Okay. Last question from me, I guess a follow-up to one of your earlier responses. Can you talk more about how you're going after market share gains? Okay. okay Okay. okay Last question from me, I guess a follow-up to one of your earlier responses. last question from me i guess a follow-up to one of your earlier responses Can you talk more about how you're going after market share gains? can you talk more about how you're going after market share gains

Speaker 2: Absolutely. Happy to do that. One of the things we're doing, George, is earlier last year, well, mid-year last year, we started to do mystery call shops. Basically what that is, we start to call the funeral homes and through our company, so they can let us know how good are we at picking up the phone call, right? That matters because a significant percentage of the volume that comes through the funeral homes comes through the phone. That first call, that's why we call them calls, is because people call in, set up an appointment to go and see if that's a good funeral home for their family. Absolutely. absolutely Happy to do that. happy to do that One of the things we're doing, George, is earlier last year, well, mid-year last year, we started to do mystery call shops. one of the things we're doing george is earlier last year well mid-year last year we started to do mystery call shops Basically what that is, we start to call the funeral homes and through our company, so they can let us know how good are we at picking up the phone call, right? basically what that is we start to call the funeral homes and through our company so they can let us know how good are we at picking up the phone call right That matters because a significant percentage of the volume that comes through the funeral homes comes through the phone. that matters because a significant percentage of the volume that comes through the funeral homes comes through the phone That first call, that's why we call them calls, is because people call in, set up an appointment to go and see if that's a good funeral home for their family. that first call that's why we call them calls is because people call in set up an appointment to go and see if that's a good funeral home for their family We learned that we had some opportunities for improvement, and we have since then started the program to finalize training, to really improve how we answering the phone, to elevate that experience, to address all the touch points we wanna address through the phone call. In doing so, you know, keeping those families more interested in staying with us than going to the competition. We learned that we had some opportunities for improvement, and we have since then started the program to finalize training, to really improve how we answering the phone, to elevate that experience, to address all the touch points we wanna address through the phone call. we learned that we had some opportunities for improvement and we have since then started the program to finalize training to really improve how we answering the phone to elevate that experience to address all the touch points we wanna address through the phone call In doing so, you know, keeping those families more interested in staying with us than going to the competition. in doing so you know keeping those families more interested in staying with us than going to the competition

Speaker 3: Okay. Understood. Thanks. Okay. okay Understood. understood Thanks. thanks

Speaker 2: Thanks, George. Thanks, George. thanks george

Speaker 6: We will take our next question from Scott Schneeberger with Oppenheimer. We will take our next question from Scott Schneeberger with Oppenheimer. we will take our next question from scott schneeberger with oppenheimer

Speaker 8: Thanks very much. Good morning. Just one from me. Could you guys just provide an overview of what you look for in M&A? What are some of the things that you're looking to achieve as you're in the market? Thanks. Thanks very much. thanks very much Good morning. good morning Just one from me. just one from me Could you guys just provide an overview of what you look for in M&A? could you guys just provide an overview of what you look for in m&a What are some of the things that you're looking to achieve as you're in the market? what are some of the things that you're looking to achieve as you're in the market Thanks. thanks

Speaker 9: Good morning, Scott. There are a few things that are core to how we view an opportunity. The first is the market. We do wanna be focused on a market that has a favorable growth profile. Also looking at the growth of certain age ranges that are significant with our consumers. The second is the opportunity to grow the business. For example, and we've seen a lot of this, there may be great businesses with great owners, but the ability to grow that business may be limited. That would be one that we pass on. If we see an opportunity with a cemetery or with the sales team or with pre-need, to grow that with the support and the investment from Carriage, that becomes very attractive to us. Good morning, Scott. good morning scott There are a few things that are core to how we view an opportunity. there are a few things that are core to how we view an opportunity The first is the market. the first is the market We do wanna be focused on a market that has a favorable growth profile. we do wanna be focused on a market that has a favorable growth profile Also looking at the growth of certain age ranges that are significant with our consumers. also looking at the growth of certain age ranges that are significant with our consumers The second is the opportunity to grow the business. the second is the opportunity to grow the business For example, and we've seen a lot of this, there may be great businesses with great owners, but the ability to grow that business may be limited. for example and we've seen a lot of this there may be great businesses with great owners but the ability to grow that business may be limited That would be one that we pass on. that would be one that we pass on If we see an opportunity with a cemetery or with the sales team or with pre-need, to grow that with the support and the investment from Carriage, that becomes very attractive to us. if we see an opportunity with a cemetery or with the sales team or with pre-need to grow that with the support and the investment from carriage that becomes very attractive to us The final piece is the valuation. As we've talked about, I would say, of the consolidators in this business, we probably do, on average, the fewest number of total transactions, but we see that come back on revenue and margin and growth of those businesses. The reason for that is we see the same number of opportunities, we just pass on a lot of them because of either valuation and price or opportunity. We'll continue to be selective, and that's why, you know, it's tough for us to predict quarter by quarter, you know, which businesses will come in, but long term, we know there's gonna be a pretty significant growth for Carriage on the M&A front. The final piece is the valuation. the final piece is the valuation As we've talked about, I would say, of the consolidators in this business, we probably do, on average, the fewest number of total transactions, but we see that come back on revenue and margin and growth of those businesses. as we've talked about i would say of the consolidators in this business we probably do on average the fewest number of total transactions but we see that come back on revenue and margin and growth of those businesses The reason for that is we see the same number of opportunities, we just pass on a lot of them because of either valuation and price or opportunity. the reason for that is we see the same number of opportunities we just pass on a lot of them because of either valuation and price or opportunity We'll continue to be selective, and that's why, you know, it's tough for us to predict quarter by quarter, you know, which businesses will come in, but long term, we know there's gonna be a pretty significant growth for Carriage on the M&A front. we'll continue to be selective and that's why you know it's tough for us to predict quarter by quarter you know which businesses will come in but long term we know there's gonna be a pretty significant growth for carriage on the m&a front

Speaker 8: Great. Thanks very much. Great. great Thanks very much. thanks very much

Speaker 6: There are no further questions in the queue at this time. I will now turn the call back over to Carlos R. Quezada for closing remarks. There are no further questions in the queue at this time. there are no further questions in the queue at this time I will now turn the call back over to Carlos R. Quezada for closing remarks. i will now turn the call back over to carlos r. quezada for closing remarks

Speaker 2: Thank you, everybody, for attending our call today. Our focus remains clear: disciplined execution, purposeful growth, and consistent improvement. We appreciate your confidence support. Have a great day, and we'll talk during our second quarter report. Thank you, everybody, for attending our call today. thank you everybody for attending our call today Our focus remains clear: disciplined execution, purposeful growth, and consistent improvement. our focus remains clear disciplined execution purposeful growth and consistent improvement We appreciate your confidence support. we appreciate your confidence support Have a great day, and we'll talk during our second quarter report. have a great day and we'll talk during our second quarter report

Speaker 6: This concludes today's call. Thank you for your participation. You may now disconnect. This concludes today's call. this concludes today's call Thank you for your participation. thank you for your participation You may now disconnect. you may now disconnect