Carriage Services, Inc. (CSV) Bundle
Understanding Carriage Services, Inc. (CSV) Revenue Streams
Understanding Carriage Services, Inc.’s Revenue Streams
Carriage Services, Inc. generates revenue primarily through two business segments: Funeral Home Operations and Cemetery Operations. As of September 30, 2024, the company operated 162 funeral homes and 31 cemeteries across the United States.
Breakdown of Primary Revenue Sources
- Service Revenue: For the three months ended September 30, 2024, service revenue amounted to $44,916,000, compared to $43,708,000 in the same period of 2023.
- Property and Merchandise Revenue: This segment generated $47,419,000 in Q3 2024, up from $40,287,000 in Q3 2023.
- Other Revenue: Recorded at $8,352,000 for Q3 2024, rising from $6,499,000 in Q3 2023.
| Revenue Source | Q3 2024 (in $000) | Q3 2023 (in $000) |
|---|---|---|
| Service Revenue | 44,916 | 43,708 |
| Property and Merchandise Revenue | 47,419 | 40,287 |
| Other Revenue | 8,352 | 6,499 |
| Total Revenue | 100,687 | 90,494 |
Year-over-Year Revenue Growth Rate
Revenue for the three months ended September 30, 2024, increased by 11.3% compared to the same period in 2023. For the nine months ended September 30, 2024, total revenue reached $306,498,000, compared to $283,686,000 for the same period in 2023, indicating an increase of 8.0%.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the revenue contributions from the two segments were:
- Funeral Services: $199,128,000
- Cemetery Services: $107,370,000
| Segment | 9M 2024 Revenue (in $000) | 9M 2023 Revenue (in $000) |
|---|---|---|
| Funeral Services | 199,128 | 197,216 |
| Cemetery Services | 107,370 | 86,470 |
| Total Revenue | 306,498 | 283,686 |
Analysis of Significant Changes in Revenue Streams
In the three months ended September 30, 2024, the company saw a 26.1% increase in the number of preneed interment rights sold compared to the same period in 2023. The average price per interment right sold also rose by 4.4%.
For the nine months ended September 30, 2024, the number of preneed interment rights sold increased by 28.2%, and the average price increased by 8.4%. However, funeral contract volume experienced a 4.1% decrease, which was partially offset by a 3.7% increase in average revenue per contract.
The overall revenue growth is attributed to the effective execution of the company's preneed cemetery sales growth plan and enhanced pricing strategies in funeral services.
A Deep Dive into Carriage Services, Inc. (CSV) Profitability
A Deep Dive into Carriage Services, Inc.'s Profitability
Gross Profit Margin
For the nine months ended September 30, 2024, the gross profit was $109,745,000, compared to $89,669,000 for the same period in 2023. This represents a significant increase in gross profit margin, showcasing effective cost management strategies.
Operating Profit Margin
The adjusted operating profit for the nine months ended September 30, 2024, was $138,473,000, compared to $117,965,000 in the same period in 2023. The adjusted operating profit margin increased to 45.2% from 41.6%.
Net Profit Margin
Net income for the nine months ended September 30, 2024, stood at $23,098,000, up from $21,775,000 in the comparable period of 2023. This reflects a net profit margin of approximately 7.5% for the current period.
Trends in Profitability Over Time
From Q3 2023 to Q3 2024, there has been a marked increase in profitability metrics:
- Gross profit increased from $27,412,000 to $35,490,000 for the three months ended September 30.
- Net income surged from $4,645,000 to $9,866,000 for the same period.
- Operating profit margins improved significantly, increasing by 1,120 basis points to 48.1% for Q3 2024.
Comparison of Profitability Ratios with Industry Averages
The industry average for adjusted operating profit margin is approximately 40%. Carriage Services, Inc. has outperformed this average with a margin of 45.2% for the nine months ended September 30, 2024.
Analysis of Operational Efficiency
Operational efficiency has improved due to a decrease in operating expenses as a percentage of revenue:
- Operating expenses as a percentage of revenue decreased by 11.5% in Q3 2024.
- Major cost reductions were noted in salaries and benefits by 4.7% and promotional expenses by 2.9%.
Profitability Metrics Summary
| Metric | Q3 2024 | Q3 2023 | Nine Months 2024 | Nine Months 2023 |
|---|---|---|---|---|
| Gross Profit | $35,490,000 | $27,412,000 | $109,745,000 | $89,669,000 |
| Net Income | $9,866,000 | $4,645,000 | $23,098,000 | $21,775,000 |
| Operating Profit Margin | 48.1% | 37.0% | 45.2% | 41.6% |
| Net Profit Margin | 7.5% | 5.0% | 7.5% | 7.7% |
| Average Revenue per Contract | $5,540 | $5,373 | $5,557 | $5,357 |
Debt vs. Equity: How Carriage Services, Inc. (CSV) Finances Its Growth
Debt vs. Equity: How Carriage Services, Inc. Finances Its Growth
As of September 30, 2024, Carriage Services, Inc. reported long-term debt of $400 million from its senior notes due in 2029, alongside $140 million outstanding under its credit facility. The company also has $5.9 million in acquisition debt and $17.5 million in operating and finance leases, bringing total debt obligations to approximately $563.4 million.
The debt-to-equity ratio stands at 4.32, indicating that the company relies heavily on debt financing relative to its equity, which totaled approximately $130.5 million as of the same date. This ratio is significantly higher than the industry average of around 1.5, reflecting a more aggressive approach to leveraging debt for growth.
Recent Debt Issuances and Credit Ratings
In July 2024, Carriage Services amended its credit facility, extending its maturity to July 2029 and modifying interest rates, which are now based on the prime rate plus an applicable margin. The current interest rate on the credit facility averages 8.5%, a decrease from 9.0% in the prior year.
The company’s senior notes have an effective interest rate of 4.25%, with future interest payments on outstanding balances estimated at $85 million, including $17 million due within the next 12 months. Credit ratings have remained stable, but specific ratings were not disclosed in the latest reports.
Balancing Debt Financing and Equity Funding
Carriage Services maintains a balance between debt and equity financing through strategic management of its capital structure. For the nine months ended September 30, 2024, the company paid $5.1 million in dividends, reflecting a commitment to returning value to shareholders while managing debt obligations.
During this period, the company reported net payments on its credit facility, acquisition debt, and finance leases of $39.6 million, compared to $3.9 million for the same period in 2023. This indicates a focused effort on reducing debt levels while continuing to invest in growth initiatives, evidenced by capital expenditures totaling $11.7 million.
| Debt Type | Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| Senior Notes | $400 | 4.25% | 2029 |
| Credit Facility | $140 | 8.5% | 2029 |
| Acquisition Debt | $5.9 | 6.5%-7.3% | Various |
| Operating Leases | $17.5 | N/A | N/A |
| Finance Leases | $6.7 | N/A | N/A |
| Total Debt | $563.4 | N/A | N/A |
Assessing Carriage Services, Inc. (CSV) Liquidity
Assessing Carriage Services, Inc. Liquidity
Current Ratio: As of September 30, 2024, the current assets totaled $52.5 million, while current liabilities amounted to $41.1 million, resulting in a current ratio of 1.28.
Quick Ratio: The quick assets (current assets excluding inventories) were $42.5 million against current liabilities of $41.1 million, leading to a quick ratio of 1.03.
Analysis of Working Capital Trends
Working capital, calculated as current assets minus current liabilities, stood at $11.4 million as of September 30, 2024. This reflects a decrease from $15.3 million at December 31, 2023, indicating tighter liquidity conditions.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, was $42.7 million, down from $61.8 million in the same period of 2023. This decline was primarily due to non-recurring events in the prior year.
Investing activities yielded a net cash inflow of $0.7 million for the nine months ended September 30, 2024, compared to a net cash outflow of $53.4 million in the prior year. This significant change was attributed to reduced acquisition activity.
Cash flows from financing activities showed a net outflow of $43.7 million in 2024, compared to $7.9 million in 2023, largely due to increased payments on the Credit Facility.
| Cash Flow Metrics | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net cash provided by operating activities | $42,716 | $61,849 |
| Net cash provided by (used in) investing activities | $708 | ($53,385) |
| Net cash used in financing activities | ($43,687) | ($7,959) |
| Cash at end of period | $1,260 | $1,675 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had outstanding borrowings of $140.0 million on its Credit Facility, down from $179.1 million at December 31, 2023. This reduction indicates improved management of debt levels.
The company has a letter of credit for $2.6 million under the Credit Facility and $107.4 million of availability, providing a buffer against liquidity strains.
Overall, the liquidity position appears stable with sufficient cash resources to meet upcoming obligations, although the decrease in working capital and cash flow from operations may warrant close monitoring.
Is Carriage Services, Inc. (CSV) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will examine key valuation ratios, stock price trends, dividend yields, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a crucial metric for evaluating the company's valuation relative to its earnings. As of September 30, 2024, the company reported:
- Net Income: $23,098,000
- Shares Outstanding: 15,223,000
- Stock Price: $21.26
- P/E Ratio: 21.26
Price-to-Book (P/B) Ratio
The P/B ratio compares the market value of the company's stock to its book value. As of September 30, 2024:
- Total Assets: $784,108,000
- Total Liabilities: $472,464,000
- Book Value per Share: $20.11
- P/B Ratio: 1.06
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
This ratio provides insight into the company's valuation relative to its earnings before interest, taxes, depreciation, and amortization. The calculations are as follows:
- Enterprise Value: $450,000,000
- EBITDA: $63,434,000
- EV/EBITDA Ratio: 7.09
Stock Price Trends
Over the past 12 months, the company's stock price has shown the following trends:
- 12-Month Low: $21.26
- 12-Month High: $27.54
- Current Stock Price: $21.26
Dividend Yield and Payout Ratios
As of September 30, 2024, the company has the following dividend metrics:
- Annual Dividend Paid: $5,098,000
- Dividend Yield: 1.84%
- Payout Ratio: 22.1%
Analyst Consensus on Stock Valuation
The consensus from analysts regarding the stock's valuation is as follows:
- Buy Ratings: 5
- Hold Ratings: 3
- Sell Ratings: 1
Summary Table of Key Financial Ratios
| Metric | Value |
|---|---|
| P/E Ratio | 21.26 |
| P/B Ratio | 1.06 |
| EV/EBITDA Ratio | 7.09 |
| 12-Month Low Stock Price | $21.26 |
| 12-Month High Stock Price | $27.54 |
| Current Stock Price | $21.26 |
| Annual Dividend Paid | $5,098,000 |
| Dividend Yield | 1.84% |
| Payout Ratio | 22.1% |
| Buy Ratings | 5 |
| Hold Ratings | 3 |
| Sell Ratings | 1 |
Key Risks Facing Carriage Services, Inc. (CSV)
Key Risks Facing Carriage Services, Inc.
Carriage Services, Inc. operates in a competitive landscape influenced by various internal and external risk factors that may impact its financial health.
Industry Competition
The funeral and cemetery services industry is characterized by a high degree of competition. The company faces pressure from both large national chains and local independent operators. As of September 30, 2024, the company operated 162 funeral homes and 31 cemeteries across 26 and 11 states, respectively. This competitive environment can lead to price wars, impacting profitability.
Regulatory Changes
Regulatory changes at the federal and state levels can significantly affect operations. Compliance with health and safety regulations, funeral service licensing, and environmental laws can impose additional costs. These regulatory frameworks are subject to change, which can create uncertainty for future operations.
Market Conditions
Market conditions, including economic downturns, can affect consumer behavior regarding funeral and cemetery services. The company has experienced fluctuations in funeral contract volume, with a 4.1% decrease reported for the nine months ended September 30, 2024, compared to the same period in 2023.
Operational Risks
Operational risks, including management turnover and challenges in integrating acquisitions, pose significant threats. The company reported a $15.4 million increase in general, administrative, and other expenses for the nine months ended September 30, 2024, primarily due to executive severance payments and strategic review costs.
Financial Risks
Financial risks include interest rate fluctuations and debt obligations. As of September 30, 2024, the company had borrowings of $140.0 million outstanding on its Credit Facility, with $85.0 million in future interest payments due. Interest expenses related to the Credit Facility amounted to $10.7 million for the nine months ended September 30, 2024, compared to $12.9 million in the same period of 2023.
Strategic Risks
Strategic risks arise from the company's growth initiatives and partnership agreements. While the company has focused on enhancing preneed sales through partnerships, it remains vulnerable to changes in market demand and consumer preferences. The average price per preneed interment right sold increased to $5,408 in 2024 from $4,990 in 2023, indicating a shift in pricing strategy that may not be sustainable long-term.
Mitigation Strategies
The company has implemented various strategies to mitigate these risks, including cost management initiatives that have led to a decrease in operating expenses as a percentage of revenue by 6.7%. Furthermore, the company is actively managing its capital expenditures, which totaled $11.7 million for the nine months ended September 30, 2024.
| Risk Factor | Current Status | Financial Impact |
|---|---|---|
| Industry Competition | High competition from national chains and local operators | Potential price wars affecting profit margins |
| Regulatory Changes | Subject to federal and state regulations | Increased compliance costs |
| Market Conditions | Fluctuating consumer demand | Decrease in funeral contract volume by 4.1% |
| Operational Risks | Management turnover and integration challenges | $15.4 million increase in expenses |
| Financial Risks | Outstanding debt of $140 million | $10.7 million interest expense |
| Strategic Risks | Focus on preneed sales growth | Average price increase to $5,408 |
Future Growth Prospects for Carriage Services, Inc. (CSV)
Future Growth Prospects for Carriage Services, Inc.
Analysis of Key Growth Drivers
Carriage Services, Inc. has identified several key growth drivers that are set to propel its business forward. A significant contributor to growth has been the strategic partnership with a national insurance provider, initiated in the second quarter of 2023. This partnership has led to an increase of $2.9 million in general agency commission income from the sale of preneed insurance policies during the nine months ended September 30, 2024, compared to the same period in 2023.
Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total revenue rose by $22.8 million, reflecting a 28.2% increase in the number of preneed interment rights sold and an 8.4% increase in the average price per interment right sold. The net income for the same period increased to $23.1 million, up from $21.8 million in 2023.
| Metric | 2024 | 2023 |
|---|---|---|
| Total Revenue (in thousands) | $306,498 | $283,686 |
| Net Income (in thousands) | $23,098 | $21,775 |
| Preneed Interment Rights Sold | 11,127 | 8,680 |
| Average Price per Interment Right Sold | $5,408 | $4,990 |
Strategic Initiatives or Partnerships
The company’s strategic initiatives include enhancing its preneed sales strategy, which has shown effectiveness with a 26.1% increase in preneed interment rights sold during the third quarter of 2024. Additionally, the partnership with the national insurance provider has positioned the company for further growth in preneed sales, enhancing its market penetration.
Competitive Advantages
Carriage Services has several competitive advantages, including a robust operational framework that supports both funeral home operations and cemetery services. The company operates 162 funeral homes across 26 states and 31 cemeteries in 11 states, providing a solid geographic footprint. Furthermore, the preneed revenue as a percentage of operating revenue increased to 69.0% in 2024 from 63.0% in 2023, indicating a strong focus on future revenue generation.
| Metric | 2024 | 2023 |
|---|---|---|
| Preneed Revenue (in thousands) | $66,150 | $47,016 |
| Atneed Revenue (in thousands) | $29,343 | $28,353 |
| Cemetery Operating Revenue Growth | $20.9 million | $0 million |
Overall, the company is well-positioned to capitalize on growth opportunities through strategic initiatives, partnerships, and operational efficiencies, creating a favorable outlook for investors moving forward.
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Article updated on 8 Nov 2024
Resources:
- Carriage Services, Inc. (CSV) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Carriage Services, Inc. (CSV)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Carriage Services, Inc. (CSV)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.