Carriage Services, Inc. (NYSE:CSV), a leading provider of funeral and cemetery services in the United States, has reported a strong start to 2024 with impressive financial results that showcase the company's strategic execution and growth initiatives.

Financials

In the first quarter of 2024, Carriage Services delivered robust revenue growth, expanding its top line by 8.4% year-over-year to reach $103.5 million. This milestone marks the first time the company has surpassed the $100 million revenue mark in a single quarter, underscoring its ability to drive consistent performance. The revenue growth was primarily fueled by the exceptional results in the company's preneed cemetery sales, which saw a remarkable 38.4% year-over-year increase, as well as the successful integration of the Greenland acquisition.

Segment Performance

Looking at the company's business segments, the Funeral Home Operations segment reported a 1.8% increase in operating revenue to $66.6 million, despite a 2.6% decline in funeral contract volume. This was largely offset by a 4.1% increase in the average revenue per funeral contract, a testament to Carriage Services' effective pricing strategy. The Cemetery Operations segment delivered even stronger results, with operating revenue increasing by 29.4% to $27.6 million, driven by the impressive growth in preneed cemetery sales.

The company's financial performance was further bolstered by a 14.3% increase in total financial revenue to $6.9 million, primarily driven by a 177% surge in preneed funeral commission income. Carriage Services' strategic partnership with Pricoa and the National Guardian Life Insurance Company continues to yield positive results, underscoring the company's commitment to diversifying its revenue streams.

Carriage Services' operational efficiency was also on display, with the company reporting a 20.9% increase in adjusted consolidated EBITDA to $33.6 million. This was achieved through a combination of higher average revenue per contract and the continued execution of cost management initiatives. The company's total funeral field EBITDA margin expanded by 100 basis points to 41.3%, while the total cemetery field EBITDA margin increased by 430 basis points to 43.3%.

Outlook

Despite the strong first-quarter performance, Carriage Services remains cautious in its outlook for the full year 2024, reaffirming its previously provided guidance. The company anticipates total revenue in the range of $380 million to $390 million, adjusted consolidated EBITDA between $112 million and $118 million, and adjusted diluted earnings per share of $2.20 to $2.30. The company's adjusted free cash flow, calculated using the historical methodology of maintenance capital expenditures only, is expected to be in the range of $55 million to $65 million.

Carriage Services' management cites the unpredictable COVID-19 pull-forward effect and historical seasonality patterns as factors contributing to their cautious outlook. The company will closely monitor these trends and provide further updates on the next earnings call.

Liquidity

In terms of capital allocation, Carriage Services remains focused on debt reduction, paying down an additional $25 million on its credit facility during the first quarter. This brings the outstanding borrowings under the credit facility to $154.1 million, with the company's leverage ratio now slightly below the 5x threshold at 4.99x net debt-to-EBITDA. The company's long-term target is to reach a leverage ratio of 3.5x to 4x, which it expects to achieve by the back half of 2025.

Recent Developments

Carriage Services' strategic initiatives, including its focus on pricing optimization, cost management, and preneed cemetery sales growth, have been instrumental in driving the company's strong financial performance. The company's management team remains committed to executing on its 5-year strategic objectives, which aim to establish a foundation for sustained innovation and value creation for shareholders.

Conclusion

In conclusion, Carriage Services' first-quarter results demonstrate the company's ability to capitalize on its strategic initiatives and deliver consistent financial performance. While the company remains cautious in its full-year outlook due to external factors, the strong start to 2024 and the management team's disciplined approach to capital allocation and cost management position Carriage Services well for continued success in the years ahead.