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CS

CARRIAGE SERVICES INC (CSV)·Q2 2025 Earnings Summary

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) .

Financial Results

Headline Financials (Actuals)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$97.7 $107.069 $102.147
Operating Income ($USD Millions)$21.056 $31.564 $23.998
Operating Income Margin (%)21.6% 29.5% 23.5%
Net Income ($USD Millions)$9.855 $20.926 $11.739
Diluted EPS ($USD)$0.62 $1.34 $0.74
Adjusted Consolidated EBITDA ($USD Thousands)$29,296 $32,948 $32,262
Adjusted EBITDA Margin (%)30.0% 30.8% 31.6%
Cash from Operations ($USD Millions)$9.280 $13.792 $8.085

Actual vs. Wall Street Consensus

MetricQ4 2024 ActualQ4 2024 Consensus*Q1 2025 ActualQ1 2025 Consensus*Q2 2025 ActualQ2 2025 Consensus*
Revenue ($USD Millions)$97.700 $96.722*$107.069 $104.170*$102.147 $101.360*
Diluted EPS ($USD)$0.62 $0.51*$1.34 $0.84*$0.74 $0.7267*

Values retrieved from S&P Global.*

Segment Breakdown (Operating)

MetricQ1 2025Q2 2025
Funeral Operating Revenue ($USD Thousands)$69,090 $59,572
Cemetery Operating Revenue ($USD Thousands)$27,938 $33,450
Financial Revenue ($USD Thousands)$7,356 $8,224
Ancillary Revenue ($USD Thousands)$1,032 $904
Divested Revenue ($USD Thousands)$1,653 $(3)
Funeral Operating EBITDA ($USD Thousands)$29,540 $22,030
Funeral Operating EBITDA Margin (%)42.8% 37.0%
Cemetery Operating EBITDA ($USD Thousands)$11,365 $15,003
Cemetery Operating EBITDA Margin (%)40.7% 44.9%
Total Field EBITDA ($USD Thousands)$48,227 $44,724
Consolidated EBITDA ($USD Thousands)$32,948 $32,262
Consolidated EBITDA Margin (%)30.8% 31.6%

KPIs

KPIQ4 2024Q1 2025Q2 2025
Funeral Contracts (units)10,620 12,055 10,589
Avg Revenue per Funeral Contract ($USD)$5,524 $5,731 $5,626
Burial Rate (%)31.2% 33.2% 31.4%
Cremation Rate (%)61.5% 60.5% 61.6%
Preneed Interment Rights Sold (units)3,396 3,100 4,016
Avg Price per Preneed Interment Right ($USD)$5,264 $5,490 $5,871

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Millions)FY 2025$400–$410 $410–$420 Raised
Adjusted Consolidated EBITDA ($USD Millions)FY 2025$128–$133 $129–$134 Raised
Adjusted Diluted EPS ($USD)FY 2025$3.10–$3.30 $3.15–$3.35 Raised
Adjusted Free Cash Flow ($USD Millions)FY 2025$40–$50 $40–$50 Maintained
Quarterly Dividend per Share ($USD)Q3 2025$0.1125 $0.1125 (declared July 16) Maintained

Notes: CSV expects acquisitions/divestitures to affect 2H results; non-GAAP forward guidance excludes specified special items .

Earnings Call Themes & Trends

TopicQ4 2024 (Prev Mentions)Q1 2025 (Prev Mentions)Q2 2025 (Current Period)Trend
M&A/Portfolio actionsFY 2025 guide contemplated divestitures; 2024 saw non-core divestitures Divested non-core assets ($18.7M proceeds) Under contract to acquire >$15M revenue businesses; return to growth via acquisitions Improving
Leverage/B/SLeverage ratio lowered to 4.3x in 2024 Leverage ratio down to 4.2x; paid down $17.0M on credit facility Leverage ratio 4.2x; paid down $7.1M in Q2 Stable/Improving
Funeral pricing/mixAvg revenue/contract up 1.4% YoY; volumes declined Avg revenue/contract +2.3%; delayed flu season boosted volume Avg revenue/contract +1.4%; slight volume decline Improving mix, modest volume headwinds
Cemetery preneed salesStrong preneed growth in FY 2024 Avg price +11.8%; units -5.8% Units -3.9% YoY; avg price -0.6% YoY Mixed
Overhead/cost disciplineElevated 2024 overhead due to special items G&A down $4.2M YoY G&A down $6.7M YoY; interest expense down $1.3M YoY Improving
Technology & partnerships“Technology improvements” cited in outlook/risk disclosures “Investments in innovation” and expansion of partnerships “Technology improvements” referenced in forward-looking statements Ongoing
Macro/ratesInflation and rates impact noted Continued macro sensitivity Interest rate and inflation risks reiterated Ongoing

Management Commentary

  • “We are pleased with our second quarter performance… GAAP diluted EPS reached $0.74… Excluding the impact of divestitures, revenue increased $1.8 million, or 1.7%… we are under contract to acquire new businesses… generated more than $15 million in revenue last year… updating our full-year guidance” — Carlos Quezada, Vice Chairman & CEO .
  • “Our solid financial performance… delivering adjusted diluted EPS of $0.96… Through continued investments in innovation, the expansion of key partnerships, and the empowerment of our people, we are building the Carriage of the future” — Carlos Quezada (Q1) .

Q&A Highlights

  • Closing tone emphasized transformation, operational excellence, and sustainable growth: “our transformation is delivering results… unlocking new opportunities for sustainable growth, operational excellence, and long term value creation” .
  • The company reiterated strategic focus areas in press materials: acquisitions, cost discipline, leverage reduction, and technology/partnerships .
  • Conference call logistics and replay availability provided; no detailed transcript Q&A available in-source for additional clarifications .

Estimates Context

  • Q2 2025: EPS $0.74 vs $0.727*, revenue $102.147M vs $101.360M* — modest beats on both lines .
  • Q1 2025: EPS $1.34 vs $0.84*, revenue $107.069M vs $104.170M* — sizable beats indicating upside momentum .
  • Q4 2024: EPS $0.62 vs $0.51*, revenue $97.700M vs $96.722M* — beats despite softer volume backdrop .

Values retrieved from S&P Global.*

Where estimates may need to adjust: FY revenue, adjusted EBITDA, and adjusted EPS have been raised reflecting expected acquisitions and better margin/cost control; street models should incorporate higher mix of acquisition-driven contribution and lower overhead run rate .

Key Takeaways for Investors

  • Consistent beat cadence across Q4, Q1, and Q2 supports estimate momentum; near-term sentiment likely supported by raised FY guide and acquisition pipeline .
  • Margin expansion is broad-based, driven by overhead reductions and lower interest expense; watch sustainability as cemetery margins saw some YoY compression in Q2 .
  • Strategic pivot back to M&A (> $15M revenue under contract) should reaccelerate top-line in 2H; integration execution and pricing discipline are key for maintaining margins .
  • Balance sheet improving with leverage at 4.2x and ongoing debt paydown; deleveraging plus accretive acquisitions is a supportive capital allocation narrative .
  • Funeral pricing/mix is favorable (higher ARPC), while volume remains a modest headwind; preneed trajectory mixed—monitor unit trends and pricing elasticity .
  • Dividend maintained at $0.1125/qtr; cash generation steady with Q2 CFO of $8.1M and YTD CFO of $21.9M; adjusted FCF guide unchanged .
  • Near-term trading lens: modest beats and guidance raise are positives; medium-term thesis hinges on successful acquisition closings, margin retention, and continued deleveraging .