Carriage Services - Earnings Call - Q2 2025

Executive Summary

• Q2 revenue was $102.1M, essentially flat year over year (-$0.2M), while GAAP diluted EPS rose 85% to $0.74; operating income margin expanded to 23.5% from 18.0%.
• The company delivered a clean beat versus Wall Street: EPS $0.74 vs $0.727* and revenue $102.147M vs $101.360M*; Q1 and Q4 were also beats, showing consistent estimate momentum.
• Management raised FY 2025 guidance: revenue to $410–$420M (from $400–$410M), adjusted EBITDA to $129–$134M (from $128–$133M), and adjusted EPS to $3.15–$3.35 (from $3.10–$3.30); adjusted FCF unchanged at $40–$50M.
• Strategic catalyst: return to M&A—CSV is under contract to acquire businesses with >$15M prior-year revenue, expected to close in Q3; leverage ratio improved to 4.2x, aided by $7.1M debt paydown in Q2.

What Went Well and What Went Wrong

What Went Well

• Margin expansion and earnings quality: operating income rose to $24.0M with margin of 23.5% (18.0% a year ago); adjusted EPS $0.74 vs $0.63 YoY; adjusted EBITDA margin 31.6% (31.9% YoY).
• Overhead discipline and lower interest burden: general, administrative, and other expenses fell by $6.7M YoY and interest expense decreased by $1.3M YoY in Q2.
• Strategic re-acceleration via acquisitions: “we are under contract to acquire new businesses… served more than 2,600 families and generated more than $15 million in revenue last year,” and raised the full-year outlook accordingly.

What Went Wrong

• Cemetery preneed softness: consolidated preneed interment rights sold fell 3.9% YoY and average price declined 0.6% YoY in Q2.
• Slight funeral volume pressure: consolidated funeral contract volume decreased 0.8% YoY, though average revenue per contract rose 1.4%.
• Segment margin compression: cemetery operating EBITDA margin decreased to 44.9% (49.7% YoY); funeral operating EBITDA margin to 37.0% (39.5% YoY).

Transcript

Speaker 6

Okay, thank you for standing by. Welcome to the Carriage Services second quarter 2025 earnings conference call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Steve Metzger, President. Please go ahead, sir.

Speaker 3

Morning, everyone. Thank you for joining us to discuss our second quarter result. In addition to myself, on the call this morning for management are Carlos Quezada, Chief Executive Officer and Vice Chairman of the Board of Directors, and John Enwright, 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 include 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 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, and now I'd like to turn the call over to Carlos.

Speaker 0

Thank you, Steve, and welcome to everyone joining today's second quarter earnings call. As we move through 2025, I continue to be inspired by the dedication and purpose that drive our Carriage team. The results we're sharing today reflect that our strategy is working, but more importantly, they reflect the power of execution across every level of our organization. To every employee who wakes up each day committed to delivering premier experiences to families in need, thank you. Your impact is felt far and wide. Today, I will walk you through our financial performance for the quarter, followed by updates on a couple of key initiatives. John will then provide more detail around our financial drivers, cash flow, and updated guidance. Let's begin with the financial results. Total revenue for the second quarter was $102.1 million, essentially flat compared to the same quarter last year.

Total funeral operating revenue grew 1.4%, reaching $69.6 million, driven by a slight increase in cost of 0.5% for the quarter. Year-to-date, total funeral operating revenue grew $3.9 million, or 3.1%, while year-to-date volume increased by 1.5%. We feel encouraged to see this volume trend, especially after accounting for the divestitures of non-core assets. We're confident in a slight organic volume growth rate of 50 to 100 basis points for the remainder of the year, and returning to a normalized volume rate of 1% to 2% in 2026. Cemetery operating revenue was $33.5 million, a slight decrease of 0.6% from the same period last year. While modest, this variance is linked to timing differences in premium sales against a strong second quarter last year, which were driven by more large sales in addition to the divestiture of two non-core cemeteries in the first quarter of this year.

Year-to-date, cemetery revenue is up 2.2%, which is below our year-over-year growth range of 10% to 20%. As mentioned on our previous call, the main reason was the availability of high-end inventory at some of our top cemeteries due to delays in new construction projects. We estimate that most projects will be completed this quarter, and we have a strategy and plan in place that we believe will help us achieve at least a 10% year-over-year growth rate for the remainder of the year. We continue to see strong results in our financial revenue, which rose 18.8% to $8.2 million. This growth was primarily driven by an impressive 96.2% increase in premium funeral commission income when compared to the same period last year, showcasing the continued strength of our insurance premium strategy and the ongoing success of our sales teams in helping families plan their final wishes.

Turning to profitability, GAAP net income for the quarter was $11.7 million, up 85.7% from $6.3 million in the same quarter last year. GAAP diluted EPS came in at an impressive $0.74 compared to $0.40, an 85% increase when compared to the same period last year. Adjusted consolidated EBITDA for the second quarter was $32.3 million, down 1% from the prior year period. The decline was driven by last year's adjusted expense of $5 million related to non-recurring costs. However, our corporate overhead costs for the second quarter of this year came in at 12.2% of revenue, 80 basis points lower than our long-term range of 13 to 14% and 39% lower than the same quarter last year. This allowed for adjusted consolidated EBITDA margin to be 31.6%, a slight decrease of 30 basis points from the prior year period.

The modest decline in EBITDA margin is directly correlated to margin compression in both our funeral and cemetery segments. Funeral services EBITDA margin was 37%, down 250 basis points from 39.5% last year. Cemetery services EBITDA margin was 44.9%, down 480 basis points from 49.7% last year. While our revenue performance remains solid, this margin pressure reflects the ongoing impact of inflationary costs primarily related to SMB, planned investments in our systems, including our new ERP, as well as the timing of unrecognized profits from undeveloped cemetery sales in previous months. John will share more details regarding services margins. On the earnings front, adjusted diluted EPS for the second quarter was $0.74 per share, an increase of 17.5% compared to $0.63 per share in the prior year quarter.

Year-to-date, adjusted diluted EPS was $1.70 per share, a 23.2% increase over the first half of 2024, and a reflection of our commitment to the execution of our strategic objectives. Looking ahead, we remain confident in our strategy and execution. After two years of disciplined capital management and more than $100 million paid to reduce our debt, we're pleased to share that we're back to growth mode, and we're under contract to acquire new businesses, which we anticipate will close this quarter subject to customary regulatory approvals. Combining these premier locations served more than 2,600 families and generated more than $50 million in revenue last year. We are excited to return to our long-term strategy of adding shareholder value through high-quality acquisitions, and we look forward to providing more details once these transactions formally close in the coming weeks.

With these new acquisitions, and after accounting for the divestitures of 13 non-core assets that closed in the first quarter and others expected to close in the third quarter of this year, we're updating our full-year guidance. John will share our updated ranges later on this call. We continue to monitor broader economic trends and indicators, and as we move forward with our strategic objectives, we will continue to track them closely. At the same time, we reaffirm our commitment to being prudent stewards of our capital while leaving room for upside value creation through high-quality and strategic acquisitions. As a quick update, our urn and casket core lines continue to gain traction across our businesses, and we're in the final planning stages of rolling out our casket core lines.

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

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

Now our systems, processes, and people are in place, and with our acquisition strategy back in place, Carriage Services is positioned well for the future and continues to create value for our employees, the families we serve, and our shareholders. Thank you again for your continued trust and belief in Carriage Services. With that, I will now turn the call over to John.

Speaker 3

Thank you, Carlos, and good morning. The company reported strong second quarter results and a solid first half of performance. The organization retained a disciplined approach, resulting in a 17.5% increase in adjusted EPS for the second quarter of 2025. These results would not be possible if it weren't for the collective efforts of the field and support teams and their dedicated service to our families. As Carlos mentioned, EBITDA margins in the field have faced some pressure in the second quarter of 2025 compared to 2024. Funeral margins decreased by 250 basis points year over year. Approximately half of the decline was due to expenses unlikely to recur, while the remaining half was attributed to inflationary increases, primarily salary expenses. Cemetery margins declined by 480 basis points compared to the prior year, with the erosions being more fraud-based.

Salary and benefit expenses increased due to market adjustments for maintenance teams, as well as recently filled positions. Farewell expenses tied to revenues were higher in the second quarter of 2025 compared to 2024. General liability expenses increased year over year, and unrecognized revenue and profit for land under development also contributed to the variance. If those revenues had been fully recognized during the quarter, cemetery margins would have improved by approximately 180 basis points. Cash from operating activities for the quarter totaled $8.1 million, an increase of $2.2 million in the same period last year. The $5.9 million increase was mainly attributable to operational results. Adjusted free cash flow for the second quarter was $6.9 million compared to a cash outflow of $0.3 million in 2024. The variance was driven by higher operational cash flow and lower capital expenditures in 2025.

Our leverage ratio was 4.2 times compared to 4.6 times at the end of the second quarter of 2024. The company paid $7 million toward outstanding debt during the quarter, bringing a year-to-date total to $24 million. As a result of our ongoing debt reduction, interest expense for the quarter was $1.3 million lower than the previous year, with a year-to-date decrease of $2.7 million. The quarter ended, $113 million was gone on the credit facility. Capital expenditures for the quarter totaled $2.8 million compared to $3.5 million in the same period last year. Of the $2.8 million, $1.1 million was allocated to maintenance capital and $1.7 million to growth capital. Overhead spending was $12.5 million, or 12.2%, compared to $20.4 million, or 20%, in the prior year quarter. The previous year's figures included $5.1 million in non-recurring expenses related to the strategic review and $0.8 million in separation expenses.

Excluding these one-time expenses, prior year overhead was 14.2%, or 200 basis points higher than the second quarter of 2025. The main factors for the improvement in 2025 were reduced incentive compensation and the consolidation and management of awards reps, which led to lower expenses than initially expected. Moving on to our updated outlook. For the remainder of 2025, the outlook includes the impact of acquisitions and additional divestitures expected to close in the third quarter, which are not part of our initial guidance. Additionally, small adjustments in the back half of the year have been made to our original expectations to the cemetery segment to reflect current trends, which should result in full-year margins in this segment between 44.7% and 45%. Nevertheless, measures are being taken to address the shortfall of the first two quarters, and we expect to have a strong second half of the year.

The current outlook anticipates revenues in the range of $410 to $420 million, adjusted consolidated EBITDA between $129 to $134 million, adjusted diluted EPS of $3.15 to $3.35, overhead expenses ranging from 13% to 13.5%, adjusted free cash flow between $40 to $50 million, leverage ratio ending between 4.1 and 4.2 times. This concludes the prepared remarks. I will now turn it over to the operator to open it up for questions.

Speaker 6

Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star one to ask a question. We will take our first question from Alex Paris with Barrington Research.

Speaker 5

Hi guys, thanks for taking my question. Congratulations on the quarter. I have a few questions for you. I guess I'll start with the exciting news on M&A. The businesses are under contract. Just the way the press release was written, is this more than one entity you're acquiring, or is it an entity with multiple locations?

Speaker 4

Morning, Alex. This is Steve. Yes, just the bulk. It's multiple transactions, and each one has multiple businesses.

Speaker 5

Okay. You expect it to close in Q3. That will be considering the first closed acquisitions of GreenLawn in the first quarter of 2023. You say it had more than $15 million in revenue. I'm curious as to pricing. What did pricing look like relative to recent acquisitions in the market?

Speaker 4

Yeah, I'd say pricing is aligned with kind of our philosophy on valuation. Generally speaking, without going into specifics, for a premium business where it's a competitive landscape, which is generally the type of business we're looking at, high single digits on the multiple is a fair estimate. Then, there's specifics around the actual business. What's the potential for value creation? Does it have a cemetery resource? Those types of details will help you fine-tune what that multiple will look like.

Speaker 5

Gotcha. At this point, you're not going to talk about the properties acquired as you go after you close, is that it?

Speaker 4

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

Speaker 5

Great. On the subject of M&A, divestitures, in the first quarter, you received proceeds of close to $19 million. I think you still had a $6 million property left to sell. Did you sell that in Q2? I don't think so. Do you expect to sell it in Q3?

Speaker 4

Yeah, we have closed one divestiture in Q3. We have a couple others pending, so more details to come there. I would say, in terms of thinking about divestitures for us moving forward, they could tail off this year. The reality is we're not stopping businesses, but every now and then we'll have some inbound interest. I expect that to really tail off as we get back to focusing on activists.

Speaker 5

You didn't close a divestiture in Q2, but you closed one in early Q3, is that what I'm hearing?

Speaker 4

Correct.

Speaker 5

Gotcha. Did the press release suggest that there had been some other properties added to the target list for divestitures from the last time you said?

Speaker 4

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

Speaker 5

Gotcha. All right.

Speaker 4

Those businesses, I think in particular, divestiture list are businesses that are located in areas where the demographics are declining, where the trends are not in the right direction, where the business, you know, it's really not feeding off of a business that Carriage Services' portfolio is made of today, and they're not really using that or the freelance capital for a different type of business that is more fitting off our current portfolio.

Speaker 5

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

Speaker 4

Yes, sir.

Speaker 5

Last thing on guidance. I'm just wondering if we can get a little bit more color and what assumptions are embedded in the guidance. You obviously raised guidance for revenue, adjusted consolidated EBITDA, and adjusted diluted EPS. If you look at the midpoint of the new revenue guide, it suggests an acceleration in the second half versus the first half. First of all, is that true? I want to make sure I'm correct. Where would you say the greatest growth would be, Q3 or Q4? I would think Q4 because the comp is a little easier year over year.

Speaker 4

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

Speaker 5

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

Speaker 4

Yeah, so it's going to be broad-based, right? At the end of the day, we're going to expect this incremental sales rate. We're going to see some additional EBITDA, generally speaking, associated with that. The cemetery margins also were a little bit challenged in this first half of the year. We've taken it into consideration as we look at the back half. From a plan perspective and a guidance perspective, we see some opportunities in the back half of the year with cemetery margins as compared to last year.

Speaker 5

Great. Let me ask a simple question. You have given sort of a DNA target, a stock-based capitalization target in the first quarter press release. I didn't see it in the second quarter press release. I assume they're the same DNA of approximately $25 million and stock-based compensation of around $8.5 million?

Speaker 4

Yep.

Speaker 5

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

Speaker 4

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

Speaker 5

Super helpful. Thank you. I'll pass the mic.

Speaker 4

Thank you, Alex.

Speaker 5

Bye-bye.

Speaker 6

Thank you. We'll take our next question from Liam Dalton Burke with B. Riley Securities.

Speaker 2

Thank you. Good morning, Carlos. Steve Metzger?

Speaker 5

Good morning, Liam.

Speaker 2

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

Speaker 0

You know, Liam, over the last couple of years, we have worked really hard to create enough foundation for growth, right? We couldn't really go back to acquisitions as to GreenLawn. We focused on paying down our debt, but part of that was really to work really hard in systems, process, and people, especially here at the System Support Center. We have been able to ask positions we never had before within the department and also re-engineer and restructure some of what we had from a serviceability perspective and financial analysis perspective as well. I think we're pretty much where we should be. I think the overhead right now is quite stable. We might add one more position probably before the end of the year, potentially two, but they're not highly paid positions.

I do think that along with the revenue growth we're projecting, we should be right under the 13%. We have a long-term range or number of % revenue on our overhead costs here at the office. We do feel, though, that as we continue to grow through acquisitions, starting with this new acquisition in the third quarter, we will not need to add cost to the overhead for the short-term future. The only thing I would add to that was when you look at your model, we got it to where 13 to 13.5% for an overhead range perspective. We did bring that down from 13 to 14%. As you think about, as Carlos has said, if you think about long-term, roughly that's probably the right range for us to be in.

Speaker 2

Great. Thank you. John, you mentioned that on the funeral home, looking at year-over-year profitability, that half the incremental expense that held back margins was non-recurring. Is that the Trinity program?

Speaker 4

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

Speaker 2

Great. Thank you.

Speaker 6

Thank you. We will take our next question.

Speaker 4

Sorry, Steve, and sorry, pardon me.

Speaker 6

We will take our next question from George Kelly with ROTH Capital Partners.

Speaker 4

Hey, Carlos.

Speaker 0

Hey, George. How are you doing?

Speaker 4

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

Speaker 0

Doing fantastic. Thank you for asking.

Speaker 4

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

Speaker 0

Yeah. If you think about, again, these are going to be broad numbers. If you think about just the acquisitions and the comments around the $15 million of acquisition revenue, if you just think about the last third of the year, that would equate to roughly about $5 million. Obviously, it might be a little bit more weighted than that. Call it a five, call it a half the increase associated with the guide increase. Fortunately, offset a little bit by the divestitures, but not terribly significantly. The rest would be associated with the core business or the advanced business. The fourth quarter was a tough quarter for us last year as compared to kind of a normal quarter. We've taken that back into consideration and looking at a normal fourth quarter as we look at the businesses. That's both in funeral as well as cemetery.

Speaker 4

Okay. That's helpful, thanks. Second question for me on your cemetery expectations for the back half. I think in your prepared remarks, you said you expect to give practice 10+% growth. Maybe that was just preneed, but what's the plan to get back there? Is it really just all about inventory, or is there anything else that's worth flagging?

Speaker 0

You know, George, what has happened is we got some delays on permits in some very high-end, high-volume businesses that we own, cemeteries specifically. When you look at our year-to-date and quarter for the same quarter, our contract term versus last year, contract volume is higher on premium cemetery sales than last year. These are the single sales, right? Low-average sales, your bread and butter sales, which we always want to do. It's just a lack of higher-end sales because of the lack of inventory that we're not able to be sold that pre-built for the second quarter and really the first half of this year. We do expect those projects to be finalized and able to sell within the third quarter, and the fourth quarter should allow us to then catch up to some of that growth we're expecting for the year.

That's where we are because the sales force are working really well. They're delivering the numbers. We've honestly just single sales, and that's pretty hard to do. I'm very proud of their work on being able to achieve that without having those $150,000 to $160,000 sales, which, imagine that, that makes up probably about 60 contracts. Great, great job, and I do expect to be back on track by Q3.

Speaker 4

Okay. Great. Last question for me is just back to M&A. Can you talk about beyond these transactions that you've talked about and expect to close in 3Q? What does the pipeline look like behind these transactions? Can you anticipate that in, I don't know, maybe Q4 is too early, but in 2026, there will be, you know, continued stuff that you're seeing that you like that you're working towards? I guess, what's the kind of frequency that you hope to execute on more M&A?

Speaker 0

Thank you for your inquiry. Yeah, the pipeline is strong right now for us. We're currently in several conversations with owners of premium businesses that we're excited about. With that said, the real benefit for us is we're in a position to be selective. There are some opportunities where we've had to walk away just because the valuation we couldn't all agree on. At the end of the day, what we're trying to do is continue to build a portfolio that we believe pound for pound is the highest quality group of assets in the industry. We'll continue to be active with M&A throughout this year. I can't give you timing in terms of when the announcement will be.

Certainly through 2026 and moving forward, we'll get to a regular cadence on acquisitions while we continue to balance our leverage, which has been the goal going back to two years ago.

Speaker 4

Okay. Thank you and best of luck.

Speaker 0

Thank you, George.

Speaker 4

George.

Speaker 6

Thank you. Once again, if you would like to ask a question, please signal by pressing star one. Your next question comes from Scott Andrew Schneeberger with Oppenheimer & Co.

Speaker 0

Thank you very much. Thanks for taking my question. Good morning, gentlemen. I just wanted to ask, you had in the second quarter of last year, strong growth in average revenue per funeral contracts. This year, you had nice growth as well. Could you just speak to what's behind that and the sustainability of that attractive growth? Thanks.

Speaker 1

Good morning, Scott. Thank you for your question. It's really coming from two fronts. At the end of last year, we started with what we call the strategic pricing review process, and what it is on a quarterly basis, the Director of Operations for that business and our analysts here at the Eagles Court Center come together with the Managing Partners to evaluate with a very specific set of metrics that look at volume trends for five years. They look at average cremation rates, burial rates, competition pricing, their pricing, what was the last time they increased price, service charge, all these different things. After the meeting, they decide based on their trends if they want to increase the price. Of course, they look at cost, margins, and things of that nature. That has worked really, really well because it's not a push-down price strategy.

It's really making the Managing Partner aware of what's going on in their market, going on in their business, and what strategy they can use to price to make up for any inflationary costs they have seen for salaries that may have been increasing, or perhaps the volume trends are going down, and we need to think actually the opposite and increase price if that's the case, or increase price if the volume trends continue to be striking out. That's one side. The other side is being our cremation conversion strategy, which basically emphasizes an educational process with the family. We created this brochure, if you will, where a family can sit down and be more educated about cremation so that most likely than not, they can walk away from the funeral with something more other than just a cremation.

That could be just an upgraded urn, could be a visitation, could be a viewing, could be an IMD, could be a full-blown funeral service, could be a life celebration. That has worked really, really well. That's helping. I'll add one more, Scott, if you don't mind. That is our urn and casket core lines strategy. The margin for expanding our repairs and the price has not decreased from our urn and casket core lines that we launched at the beginning of Q1 this year. That's helping also on our average revenue per contract on the cremation side. I truly believe these are the three things that are helping us raise price in the funeral side.

Speaker 0

Great. Thanks, Carlos. Appreciate that, caller. John, for you, my follow-up. Have you had a chance to look at the July 4th federal tax act? Might you see some benefit going forward in free cash flow and taxes from anything in the bill after Carriage?

Speaker 4

Yeah, we looked at it. Right now, our expectation is probably around about a $5 million to $6 million benefit associated with taxes in 2025. As we look through the remainder of the bill timeframe, we'll see small incremental benefits associated with taxes.

Speaker 0

Great, thanks very much.

Speaker 6

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

Speaker 1

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

Speaker 6

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