CSV Q1 Earnings Call: Volume Growth, Operational Investments, and Cautious Full-Year Outlook

Funeral services company Carriage Services (NYSE: CSV) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 3.5% year on year to $107.1 million. On the other hand, the company’s full-year revenue guidance of $405 million at the midpoint came in 0.9% below analysts’ estimates. Its non-GAAP profit of $0.96 per share was 14.3% above analysts’ consensus estimates.

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StockStory’s Take

Carriage Services’ first quarter results were shaped by higher funeral and cemetery volumes, with management attributing growth to both a seasonal shift in flu-related deaths and continued execution on strategic initiatives. CEO Carlos Quezada highlighted increases in average revenue per contract and preneed insurance sales, underscoring improvements in both sales strategy and operational execution. The company also invested in its Trinity system and leadership development, which impacted margins but is intended to drive long-term efficiency gains.

Looking ahead, Carriage Services reaffirmed its full-year guidance despite positive first-quarter momentum, with management noting ongoing economic uncertainty. Quezada emphasized, “While April trends have remained strong, we continue to closely monitor our performance,” and suggested that guidance could be raised if these trends persist into the next quarter. The company remains focused on operational discipline and strategic investments, while cautioning that factors such as market volatility and consumer sentiment could influence results.

Key Insights from Management’s Remarks

Carriage Services’ first quarter was marked by operational initiatives and segment-specific trends that shaped both revenue and margin performance, as well as forward-looking priorities around technology and supply chain.

• Funeral Volume Increase: Management reported a notable rise in funeral home at-need volumes, citing a seasonal shift in the flu season that moved expected deaths from the fourth quarter into the first quarter. This, combined with higher average revenue per contract, underpinned revenue growth in the funeral segment.
• Cemetery Project Timing: The company’s cemetery revenue grew, but management cited delays in inventory availability at key cemeteries—particularly in California—due to permitting and development timing. This affected preneed property sales in Q1, but the completion of these projects is expected to restore typical growth rates from Q2 onward.
• Preneed Insurance Strategy: Growth in preneed insurance contracts contributed to financial revenue gains, with management pointing to a 15% year-over-year increase in contracts. This was attributed to targeted sales initiatives and a focus on generating leads and training in the sales force.
• Operational Investments: Investments in the Trinity back-office system and leadership development increased costs and temporarily reduced EBITDA margins. However, these are intended to streamline operations and support long-term margin improvement as the implementation progresses.
• Supply Chain and Cost Initiatives: New procurement strategies—including a refreshed core product line and fleet management efforts—are expected to drive cost savings and improve service delivery. Management noted early-stage benefits from these initiatives, with more savings anticipated in coming quarters.

Drivers of Future Performance

Management’s outlook for the rest of the year centers on maintaining organic growth while navigating macroeconomic uncertainty and completing operational initiatives.

• Cemetery Growth Recovery: Completion of development projects at major cemeteries is expected to return preneed sales growth to the targeted 10%–20% annual range, supporting overall revenue expansion.
• Operational Efficiency Gains: Ongoing rollout of the Trinity system and supply chain initiatives are intended to deliver cost savings and streamline processes, which management believes will gradually improve margins throughout the year.
• Acquisition and Divestiture Activity: The company plans to reinvest proceeds from recent divestitures into acquiring higher-quality businesses, aiming to accelerate growth in the second half of the year. Management indicated that additional non-core asset sales and new acquisitions could impact the growth trajectory.

Top Analyst Questions

• Alex Paris (Barrington Research): Asked about the sustainability of volume growth and the impact of the flu season shift. Management replied that momentum continued through April and that COVID-related volume distortions are expected to level out this year.
• Alex Paris (Barrington Research): Inquired about the decline in preneed cemetery sales. Management explained this was due to delayed inventory at key cemeteries rather than reduced discretionary consumer spending, and expects growth rates to normalize in Q2.
• John Franzreb (Sidoti & Company): Questioned the impact of vaccine fatigue and cost-saving measures. Management attributed performance to strategy execution rather than pandemic factors, and described ongoing cost initiatives in procurement and fleet management.
• George Kelly (ROTH Capital Partners): Sought details on upcoming asset sales and their impact on guidance. Management confirmed a pending property sale is included in current guidance and expects further divestiture opportunities.
• George Kelly (ROTH Capital Partners): Asked about tariff exposure. CFO John Enwright stated tariffs are expected to have an immaterial impact on merchandise costs for the year.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the ramp-up of preneed cemetery sales as inventory and development projects finalize, (2) the realized cost savings and operational efficiencies from the new Trinity system and supply chain initiatives, and (3) the timing and scope of acquisitions supported by recent divestiture proceeds. Additionally, we will track how macroeconomic trends influence consumer behavior and the company’s ability to maintain volume and pricing momentum.

Carriage Services currently trades at a forward EV-to-EBITDA ratio of 6.5×. Should you load up, cash out, or stay put? Find out in our free research report.

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