Carriage Services Earns 39 Cents per Share

Carriage Services (CSV) reported Q4 earnings of 39 cents per share. We decided to add the stock this year due to some poor business performance in 2017, so bear in mind that that’s old news.

Mel Payne, Chief Executive Officer, stated, “After eight consecutive years of record performance, our 2017 consolidated operational and financial performance did not meet our reported high performance expectations, as Adjusted Diluted Earnings Per Share declined 14.2% to $1.39, Adjusted Consolidated EBITDA declined 6.8% to $68.7 million, Adjusted Consolidated EBITDA Margin declined 310 basis points to 26.6% and Adjusted Free Cash Flow declined 21.4% to $37.4 million.

Many of the reasons behind the decline in our operating performance were addressed in our Second and Third quarter earnings releases, e.g. weak cemetery preneed sales, lower Field EBITDA Margins of funeral home acquisitions made in 2016 not yet integrated under our Standards Operating Model, and investment in overhead infrastructure and people. However, beneath the covers of the reported performance our company was continuously improving in many areas during the year. We were encouraged by the fourth quarter results from our Acquisition Funeral Home and Cemetery segments as these businesses achieved year over year improvement in both organic revenue growth and Field EBITDA Margins. The momentum shown in these segments in the fourth quarter has accelerated into 2018.

For the year, sales rose 4% to $258.1 million. Earnings-per-share fell 14.2% to $1.39 per share.

For Q4, sales rose 3.5% to $65.1 million. Earnings-per-share rose 8% to 39 cents per share. That was a penny below expectations (of just two analysts).

The best news is that Carriage is increasing its outlook:

We are increasing our Rolling Four Quarter ‘Roughly Right Outlook Range’ of Adjusted Diluted EPS to $2.00 – $2.05, a 16% increase compared to the previous Outlook. The Rolling Four Quarter Outlook includes the impact from the recently enacted tax reform legislation and a continuation of the positive operating momentum we experienced in the latter part of 2017 that has continued into 2018. The Outlook does not include any future acquisition activity, although we are more excited than ever about the industry consolidation landscape and the pipeline of high quality candidates produced by our Corporate Development Team. We expect our effective GAAP tax rate to be in a range of 26%-28% in 2018, compared to our historic rate of 40%.

Posted by on February 14th, 2018 at 4:38 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.