~~15.RELATED PARTY TRANSACTIONS~~

On August 18, 2017, we purchased 100,000 shares of our common stock from Melvin C. Payne, our Chairman of the Board and Chief Executive Officer. These shares had been held by Mr. Payne prior to such repurchase for over one year. The purchase of these shares was made pursuant to a privately negotiated transaction at a price of $23.85 per share for a total purchase price of $2.4 million. The purchase price was the stock's trading price at the time of the transaction. These shares are currently held as treasury shares. This purchase was not a part of the share repurchase program approved by the Board on February 25, 2016. The repurchase of the shares held by Mr. Payne was approved in advance by our Board, with Mr. Payne abstaining.

~~16.SUBSEQUENT EVENTS~~

~~On October 14, 2017, we completed construction of and began operating a new funeral home in Pennsylvania.~~

On October 25, 2017, our Board approved an increase in our quarterly dividend on our common stock from $0.050 to $0.075 per share, effective with respect to dividends payable on December 1, 2017 and later.

~~On October 25, 2017, our Board approved a $15.0 million increase in its authorization for repurchases of ourcommon stock in addition to the $25.0 million approved on February 25, 2016, bringing the total authorized repurchase amount to $40.0 million, in accordance with the Exchange Act.~~

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q contains certain statements and information that may constitute forward-looking statements within the ~~safe harbor provisions~~meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical information, should be deemed to be forward-looking statements. Words such as “may”, “will”, “estimate”, “intend”, “believe”, “expect”, “seek”, “project”, “forecast”, “foresee”, “should”, “would”, “could”, “plan”, “anticipate” and other similar words or expressions may be used to identify forward-looking statements; however, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements include, but are not limited to, statements regarding any projections of earnings, ~~revenues, asset sales,~~revenue, cash flow, investment returns, capital allocation, debt levels, equity performance, death rates, market share growth, cost inflation, overhead, including talent recruitment, field and corporate incentive compensation, preneed sales or other financial items; any statements of the plans, strategies, objectives and timing of management for future operations or financing activities, including, but not limited to, technology improvements, product development, capital allocation, organizational performance, execution of our strategic objectives and growth plan, planned divestitures, the ability to obtain credit or financing, anticipated integration, performance and other benefits of recently completed and anticipated acquisitions, and cost management and debt reductions; any statements of the plans, timing and objectives of management for ~~future operations;~~acquisition and divestiture activities; any statements regarding future economic and market conditions or performance; any projections or expectations related to the conclusion of the Board's strategic review; any statements of belief; and any statements of assumptions underlying any of the foregoing and are based on our current expectations and beliefs concerning future developments and their potential effect on us. The words “may”, “will”, “estimate”, “intend”, “believe”, “expect”, “seek”, “project”, “forecast”, “foresee”, “should”, “would”, “could”, “plan”, “anticipate” and other similar words or expressions are intended to identify forward-looking statements, which are generally not historical in nature. While ~~management believes that~~we believe these ~~forward-looking statements~~assumptions concerning future events are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future ~~revenues~~revenue and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited ~~to, those summarized below:~~to:

•our ability to find and retain skilled personnel;

•the effects of our talent recruitment efforts, incentive and compensation plans and programs, including such effects on our Standards Operating Model and the Company’s operational and financial performance;

•our ability to execute our strategic objectives and growth ~~strategy;~~strategy, if at all;

•the potential adverse effects on the Company's business, financial and equity performance if management fails to meet the expectations of ~~competition;~~its strategic objectives and growth plan;

•our ability to execute and meet the objectives of our High Performance and Credit Profile Restoration Plan, if at all;

•the execution of our Standards Operating ~~4E Leadership~~ and Strategic Acquisition Models;

•the effects of competition;

•changes in the number of deaths in our ~~markets;~~markets, which are not predictable from market to market or over the short term;

•changes in consumer ~~preferences;~~preferences and our ability to adapt to or meet those changes;

•our ability to generate preneed ~~sales;~~sales, including implementing our cemetery portfolio sales strategy, product development and optimization plans;

•the investment performance of our funeral and cemetery trust funds;

•fluctuations in interest ~~rates;~~rates, including, but not limited to, the effects of increased borrowing costs under our Credit Facility and our ability to minimize such costs, if at all;

•the effects of inflation on our operational and financial performance, including the increased overall costs for our goods and services, the impact on customer preferences as a result of changes in discretionary income, and our ability, if at all, to mitigate such effects;

•our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness;

•our ability to meet the timing, objectives and expectations related to our capital allocation framework, including our forecasted rates of return, planned uses of free cash flow and future capital allocation, including share repurchases, potential strategic acquisitions, internal growth projects, dividend increases, or debt repayment plans;

•our ability to meet the projected financial and equity performance goals of our full year outlook, if at all;

•the timely and full payment of death benefits related to preneed funeral contracts funded through life insurance contracts;

•the financial condition of third-party insurance companies that fund our preneed funeral contracts;

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•increased or unanticipated costs, such as merchandise, goods, insurance or ~~taxes;~~taxes, and our ability to mitigate or minimize such costs, if at all;

•our level of indebtedness and the cash required to service our indebtedness;

•changes in federal income tax laws and regulations and the implementation and interpretation of these laws and regulations by the Internal Revenue Service;

•effects of the application of other applicable laws and regulations, including changes in such regulations or the interpretation thereof;

•the potential impact of epidemics and pandemics, such as the COVID-19 coronavirus, including any new or emerging public health threats, on customer preferences and on our business;

•government, social, business and other actions that have been and will be taken in response to pandemics and epidemics, such as those that were taken with the COVID-19 coronavirus, including potential responses to any new or emerging public health threats;

•effects and expense of litigation;

•consolidation in the funeral and cemetery industry;

•our ability to identify and consummate strategic acquisitions, if at all, and successfully integrate acquired businesses with our existing businesses, including expected performance and financial improvements related thereto;

•potential adverse impacts resulting from shareholder or market perceptions of our recent announcement regarding the ~~deathcare~~conclusion of our Board’s review of potential strategic alternatives;

•economic, financial and stock market fluctuations;

•interruptions or security lapses of our information technology, including any cybersecurity or ransomware incidents;

•adverse developments affecting the financial services industry;

•acts of war or terrorists acts and the governmental or military response to such acts;

•our failure to maintain effective control over financial reporting; and

•other factors and uncertainties inherent in the ~~deathcare~~funeral and cemetery industry.

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see (i) Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q and (ii) Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2023.

~~Readers~~Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

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~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW

General

Carriage Services, Inc. (“Carriage,” the “Company,” “we,” “us,” or “our”) was incorporated in the State of Delaware in December 1993 and is a leading provider of funeral and cemetery services and merchandise in the United States. We operate in two business segments: ~~funeral home~~Funeral Home operations, which currently ~~account~~accounts for approximately ~~78%~~70% of our ~~revenues,~~total revenue, and ~~cemetery~~Cemetery operations, which ~~account~~currently accounts for approximately ~~22%~~30% of our ~~revenues.~~

total revenue. At ~~September 30, 2017,~~March 31, 2024, we operated ~~171~~165 funeral homes in 2826 states and 3231 cemeteries in 11 states. We compete with other ~~public~~publicly held, privately held and independent operators of funeral and cemetery companies and smaller, independent operators. We believe we are a market leader in most of our markets. We provide funeral and cemetery services and products on both an “at-need” (time of death) and “preneed” (planned prior to death) basis.companies.

Our funeral ~~homes offer a complete range~~home operations are principally service businesses that generate revenue from sales of ~~high value personal~~burial and cremation services ~~to meet a family’s funeral needs, including~~and related merchandise, such as caskets and urns. Funeral services include consultation, the removal and preparation of remains, the sale of caskets and related funeral merchandise, the use of funeral home facilities for visitation and ~~remembrance~~memorial services and transportation services. We provide funeral services and products on both an “atneed” (time of death) and “preneed” (planned prior to death) basis.

Our ~~cemeteries provide~~cemetery operations generate revenue primarily through sales of cemetery interment rights ~~(grave~~(primarily grave sites, lawn crypts, mausoleum spaces and ~~mausoleum spaces) and~~niches), related cemetery merchandise ~~such~~(such as memorial markers, ~~and~~ outer burial containers and monuments) and services (interments, inurnments and installation of cemetery merchandise). We provide cemetery services and products on both on an ~~at-need~~atneed and preneed basis.

COMPANY DEVELOPMENTS

Board of Directors and Leadership Changes

On February 22, 2024, the Board of Directors (the “Board”) of the Company announced the conclusion of the Company’s review of strategic alternatives, first announced on June 29, 2023, which was overseen by the Board with assistance from experienced financial advisors and legal counsel. On February 21, 2024, the Board voted to bring the strategic review process to a close. The Board unanimously determined that continuing to execute on the Company’s strategic plan as an independent, public company is in the best interests of the Company and its stockholders at this time.

On February 22, 2024 (the “Transition Date”), the Company announced that Melvin C. Payne, the Company’s founder and former Chief Executive Officer, would cease to serve as Executive Chairman of the Board, but will remain on the Board until the Company’s 2024 annual meeting of stockholders, when the term for Class I directors is scheduled to expire. Beginning on the Transition Date, Mr. Payne began serving as a special advisor to the Board and senior management in a consulting role.

In connection with Mr. Payne’s termination of employment, the employment-related provisions of his Employment Agreement, dated as of November 5, 2019, with the Company (as amended prior to the Transition Date, the “Employment Agreement”) terminated on the Transition Date.

On February 21, 2024, the Company and Mr. Payne entered into a Transition Agreement (the “Transition Agreement”), setting forth the terms of his severance benefits and his consulting arrangement. Under the Transition Agreement, Mr. Payne is entitled to receive certain benefits, subject to the timely execution and non-revocation by Mr. Payne and his spouse of waiver and release agreements in connection with the Transition Date and the end of the 12-month consulting term set forth in the Transition Agreement (the “Releases”).

These payments and benefits include the following:

• Salary continuation for 24 months of $2.0 million;

• 2023 annual bonus of $1.25 million;

• Prorated 2024 bonus of $181,500;

• Prorated settlement of performance awards of $3.0 million payable in cash;

• Consulting payments of $1.0 million;

• Payments for maintaining health benefits for Mr. Payne and his spouse for up to 36 months; and

• Reimbursement of legal expenses up to $35,000.

All of the payments and benefits provided under the Transition Agreement are subject to Mr. Payne’s continued compliance with certain confidentiality, non-competition, non-solicitation and non-disparagement provisions of the Employment Agreement, as well as compliance by Mr. Payne and his spouse with their respective Releases. The Transition Agreement may be terminated by the Company upon the material breach of the Transition Agreement, the Employment Agreement or either of the Releases. Upon Mr. Payne’s death, any consulting fee payments would be paid to his estate.

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On March 7, 2024, upon the recommendation of the Corporate Governance Committee of the Company, the Board realigned the Company’s classes of directors to provide for equal apportionment among the three classes as a result of the previous announcement of Mr. Payne, a current Class I director, remaining on the Board until the Company’s 2024 annual meeting of stockholders, at which time his term will expire. To facilitate the class realignment, on March 7, 2024, Julie Sanders resigned from the Board as a Class II director (term expiring in 2025), and, effective as of March 7, 2024, was re-elected by the Board to serve as a Class I director until the Company’s 2024 annual meeting of shareholders. Ms. Sanders will continue to serve on the Audit, Compensation and Corporate Governance Committees of the Board.

On March 7, 2024, upon the recommendation of the Corporate Governance Committee of the Company, the Board elected Chad Fargason to serve as the Company’s first Non-Executive Chairman of the Board, effective on that date. The election of Mr. Fargason as the Board’s Non-Executive Chairman was as a result of the previous announcement of Mr. Payne ceasing to serve as Executive Chairman of the Board of the Company, effective February 22, 2024.

Effective March 25, 2024, Kathryn Shanley was appointed to serve as the Company’s Chief Accounting Officer (Principal Accounting Officer). In connection with the appointment of Ms. Shanley as the Company’s Chief Accounting Officer (Principal Accounting Officer), effective March 25, 2024, L. Kian Granmayeh ceased serving as the Company’s Principal Accounting Officer. Mr. Granmayeh continues to serve as the Company’s Executive Vice President, Chief Financial Officer, and Treasurer (Principal Financial Officer).

Divestitures

During the three months ended March 31, 2024, we sold six funeral homes and one cemetery for an aggregate of $10.9 million for a net loss of $1.5 million.

Inflationary and Macroeconomic Trends

During the first quarter of 2024, we experienced a stabilization of inflationary costs from our vendors and suppliers for merchandise and goods, particularly as it relates to utilities, funeral supplies and merchandise costs, with costs remaining flat when compared to the same period during 2023. Although we continue to experience higher variable interest rates under our Credit Facility, we anticipate lower borrowing costs as we continue prioritizing paying down our outstanding debt throughout the year. While we are encouraged by the stabilization of inflationary costs that we have experienced thus far in 2024, we are unable to forecast with any certainty whether inflationary costs will continue to moderate in future periods, as the ultimate scope and duration of these impacts remain unknown at this time. More broadly, the U.S. economy continues to experience the impact of several years of higher rates of inflation, which has impacted a wide variety of industries and sectors, with consumers facing rising prices. Such inflation may negatively impact consumer discretionary spending, including the amount that consumers are able to spend on our services, although we have not experienced any material impacts to date and our industry has been largely resilient to similar adverse economic and market environments in the past. Although we expect these trends to continue throughout the year, we will assess these impacts and take the appropriate steps, if necessary, to mitigate any changes in consumer preferences or additional cost increases, if possible.

During the first quarter of 2024, we experienced lower volumes as compared to prior years due to fluctuations in the death rate, although overall financial performance remains at or above prior reporting periods. Although we expect fluctuations in the death rate to continue, we are unable to predict or forecast the duration or variation of the death rate with any certainty. Regardless of these fluctuations in the death rate, we continue to focus on expanding market share, cost management and executing on our strategic operational plans.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our ~~business strategy~~primary sources of liquidity and capital resources are internally generated cash flows from operating activities and availability under our Credit Facility (defined below).

We generate cash in our operations primarily from atneed sales and delivery of preneed sales. We also generate cash from earnings on our cemetery perpetual care trusts. Based on our recent operating results, current cash position and anticipated future cash flows, we do not anticipate any significant liquidity constraints in the foreseeable future. We have the ability to draw on our Credit Facility, subject to its customary terms and conditions. However, if our capital allocations and expenditures or acquisition plans change, we may need to access the capital markets or seek further borrowing capacity from our lenders to obtain additional funding and we may not be able to obtain such funding on terms and conditions that are acceptable to us. Further, to the extent operating cash flow or access to and cost of financing sources are materially different than expected, future liquidity may be adversely affected. For additional information regarding known material factors that could cause cash flow or access to and cost of finance sources to differ from our expectations, please read Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023.

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Our plan is ~~based on having strong, local leadership with entrepreneurial principles that is~~to remain focused on ~~sustainable long term market share, revenue,~~integrating our recently acquired business and ~~profitability~~prioritizing our capital allocation for debt repayments, the payment of dividends and debt obligations and internal growth ~~in each local business.~~capital expenditures, which we expect to fund using cash on hand and borrowings under our Credit Facility, along with general corporate purposes, as allowed under our Credit Facility. We believe ~~Carriage has~~that our existing and anticipated cash resources, including, as needed, additional borrowings or other financings that we may be able to obtain, will be sufficient to meet our anticipated working capital requirements, capital expenditures, scheduled debt payments, commitments and dividends for the ~~most innovative~~next 12 months, as well as our long-term financial obligations.

Cash Flows

We began 2024 with $1.5 million in cash and ended the first quarter with $1.7 million in cash. At March 31, 2024, we had borrowings of $154.1 million outstanding on our Credit Facility compared to $179.1 million at December 31, 2023.

The following table sets forth the elements of cash flow (in thousands):


	Three months ended March 31,
	2023		2024
Cash at beginning of the year	$	1,170	$	1,523

Net cash provided by operating activities	25,869		19,703

Acquisitions of businesses	(44,000)		—

Proceeds from divestitures and sale of other assets	1,275		10,877
Proceeds from insurance claims	421		46
Capital expenditures	(4,982)		(3,551)
Net (cash used) provided by investing activities	(47,286)		7,372

Net borrowings (payments) on our Credit Facility, acquisition debt and finance lease obligations	22,773		(25,152)




Net proceeds from (payments for) employee equity plans	428		(71)
Dividends paid on common stock	(1,661)		(1,686)


Net cash provided by (used in) financing activities	21,540		(26,909)

Cash at end of the period	$	1,293	$	1,689

Operating Activities

For the three months ended March 31, 2024, cash provided by operating ~~model in~~activities was $19.7 million compared to $25.9 million for the three months ended March 31, 2023, a decrease of $6.2 million primarily due to a $7.0 million withdrawal of realized capital gains and earnings from our preneed funeral and cemetery ~~industry,~~trust investments received in the first quarter of 2023.

Investing Activities

Our investing activities, resulted in a net cash inflow of $7.4 million for the three months ended March 31, 2024 compared to a net cash outflow of $47.3 million for the three months ended March 31, 2023, an increase of $54.7 million.

Acquisition and Divestiture Activity

During the three months ended March 31, 2024, we sold six funeral homes and one cemetery for an aggregate of $10.9 million.

During the three months ended March 31, 2023, we acquired a business consisting of three funeral homes, two cemeteries and one cremation focused business for $44.0 million. In addition, we sold one funeral home and two cemeteries for $0.8 million.

Capital Expenditures

For the three months ended March 31, 2024, our capital expenditures (comprised of growth and maintenance spend) totaled $3.6 million compared to $5.0 million for the three months ended March 31, 2023, a decrease of $1.4 million.

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The following tables present our growth and maintenance capital expenditures (in thousands):


	Three months ended March 31,
	2023		2024
Growth
Cemetery development	$	2,118	$	2,000

Renovations at certain businesses	906		362

Other	116		27
Total Growth	$	3,140	$	2,389


	Three months ended March 31,
	2023		2024
Maintenance
General equipment and furniture	$	1,218	$	623
Facility repairs and improvements	89		302
Vehicles	233		14
Paving roads and parking lots	156		60
Other	146		163
Total Maintenance	$	1,842	$	1,162

Financing Activities

Our financing activities resulted in a net cash outflow of $26.9 million for the three months ended March 31, 2024 compared to a net cash inflow of $21.5 million for the three months ended March 31, 2023, a decrease of $48.4 million.

During the three months ended March 31, 2024, we had net payments on our Credit Facility, acquisition debt and finance leases of $25.2 million and paid dividends of $1.7 million.

During the three months ended March 31, 2023, we had net borrowings on our Credit Facility, acquisition debt and finance leases of $22.8 million, offset by $1.7 million of dividends paid.

Share Repurchase

We did not repurchase any shares during the three months ended March 31, 2023 and 2024. At March 31, 2024, our share repurchase program had $48.9 million authorized for repurchases.

Cash Dividends

Our Board declared the following dividends payable on the dates below (in thousands, except per share amounts):


2024	Per Share		Dollar Value
March 1st	$	0.1125	$	1,686



2023	Per Share		Dollar Value
March 1st	$	0.1125	$	1,661

Credit Facility, Lease Obligations and Acquisition Debt

The outstanding principal of our Credit Facility, lease obligations and acquisition debt at March 31, 2024 is as follows (in thousands):


	March 31, 2024
Credit Facility	$	154,100
Operating leases	18,642
Finance leases	5,948
Acquisition debt	5,979
Total	$	184,669

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Credit Facility

At March 31, 2024, our senior secured revolving credit facility (the “Credit Facility”) was comprised of: (i) a $250.0 million revolving credit facility, including a $15.0 million subfacility for letters of credit and a $10.0 million swingline, and (ii) an accordion or incremental option allowing for future increases in the facility size by an additional amount of up to $75.0 million in the aggregate in the form of increased revolving commitments or incremental term loans. The final maturity of the Credit Facility will occur on May 13, 2026.

Our obligations under the Credit Facility are unconditionally guaranteed on a joint and several basis by the same subsidiaries which guarantee the Senior Notes (as defined in Note 12) and certain of our subsequently acquired or organized domestic subsidiaries (collectively, the “Subsidiary Guarantors”).

The Credit Facility contains customary affirmative covenants, including, but not limited to, covenants with respect to the use of proceeds, payment of taxes and other obligations, continuation of the Company’s business and the maintenance of existing rights and privileges, and the maintenance of property and insurance, among others.

In addition, the Credit Facility also contains customary negative covenants, including, but not limited to, covenants that restrict (subject to certain exceptions) the ability of the Company and the Subsidiary Guarantors to incur indebtedness, grant liens, make investments, engage in mergers and acquisitions, pay dividends and make other restricted payments, and certain financial maintenance covenants. At March 31, 2024, we were subject to the following financial covenants under our Credit Facility: (A) a Total Leverage Ratio not to exceed 5.50 to 1.00 and (B) a Fixed Charge Coverage Ratio (as defined in the Credit Facility) of not less than 1.20 to 1.00 as of the end of any period of four consecutive fiscal quarters. These financial maintenance covenants are ~~able~~calculated for the Company and its subsidiaries on a consolidated basis. We were in compliance with all of the covenants contained in our Credit Facility at March 31, 2024.

At March 31, 2024, we had outstanding borrowings under the Credit Facility of $154.1 million. We also had one letter of credit for $2.6 million under the Credit Facility. The letter of credit will expire on November 25, 2024 and is expected to ~~achieve through a decentralized, high performance culture operating framework linked with incentive compensation programs that attract top-quality industry talent~~automatically renew annually and secures our obligations under our various self-insured policies. At March 31, 2024, we had $93.3 million of availability under the Credit Facility.

The interest expense and amortization of debt issuance costs related to our ~~organization~~Credit Facility are as follows (in thousands):


	Three months ended March 31,
	2023		2024
Credit Facility interest expense	$	3,811	$	3,916
Credit Facility amortization of debt issuance costs	138		138

Outstanding borrowings under our Credit Facility bear interest at a prime rate or the Bloomberg Short-Term Bank Yield Index (“BSBY”) rate, plus an applicable margin based on our leverage ratio. At March 31, 2024, the prime rate margin was equivalent to 2.375% and the BSBY rate margin was 3.375%. The weighted average interest rate on our Credit Facility was 7.9% and 8.9% for the three months ended March 31, 2023 and 2024, respectively.

The interest payments on our remaining borrowings under the Credit Facility will be determined based on the average outstanding balance of our borrowings and the prevailing interest rate during that time.

Lease Obligations

Our ~~Mission Statement~~ ~~states that “we~~lease obligations consist of operating and finance leases. We lease certain office facilities, certain funeral homes, vehicles and equipment under operating leases with original terms ranging from one to twenty years. Many leases include one or more options to renew, some of which include options to extend the leases for up to forty years. In addition, we lease certain other funeral homes, vehicles and equipment under finance leases with original terms ranging from three and a half to forty years. At March 31, 2024, operating and finance lease obligations were $35.5 million, with $5.5 million payable within 12 months.

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The components of lease cost are ~~committed~~as follows (in thousands):


	Three months ended March 31,
	2023		2024
Operating lease cost	$	875	$	978
Short-term lease cost	94		18
Variable lease cost	58		104

Finance lease cost:
Depreciation of leased assets	$	108	$	126
Interest on lease liabilities	105		125
Total finance lease cost	213		251
Total lease cost	$	1,240	$	1,351

Acquisition Debt

Acquisition debt consists of deferred purchase price and promissory notes payable to sellers. A majority of the deferred purchase price and notes bear no interest and are discounted at imputed interest rates ranging from 6.5% to 7.3%. Original maturities typically range from five to twenty years. At March 31, 2024, acquisition debt obligations were $9.2 million, with $0.9 million payable within 12 months.

The imputed interest expense related to our acquisition debt is as follows (in thousands):


	Three months ended March 31,
	2023		2024
Acquisition debt imputed interest expense	$	71	$	104

Senior Notes

At March 31, 2024, the principal amount of our 4.25% senior notes due in May 2029 (the “Senior Notes”) was $400.0 million. The Senior Notes were issued under an indenture, dated as of May 13, 2021 (the “Indenture”), among the Company, the Subsidiary Guarantors and Wilmington Trust, National Association, as trustee. The Senior Notes are unsecured, senior obligations and are fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally by each of the Subsidiary Guarantors. The Senior Notes mature on May 15, 2029, unless earlier redeemed or purchased and bear interest at 4.25% per year, which is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2021.

The Indenture contains restrictive covenants limiting our ability and the ability of our Restricted Subsidiaries (as defined in the Indenture) to, among other things, incur additional indebtedness or issue certain preferred shares, create liens on certain assets to secure debt, pay dividends or make other equity distributions, purchase or redeem capital stock, make certain investments, sell assets, agree to certain restrictions on the ability of Restricted Subsidiaries to make payments to us, consolidate, merge, sell or otherwise dispose of all or substantially all assets, or engage in transactions with affiliates. The Indenture also contains customary events of default.

The debt discount and the debt issuance costs are being amortized using the ~~most professional, ethical~~effective interest method over the remaining term of approximately 62 months of the Senior Notes. The effective interest rate on the unamortized debt discount and ~~highest quality~~the unamortized debt issuance costs for the Senior Notes for both the three months ended March 31, 2023 and 2024 was 4.42% and 4.30%, respectively.

At March 31, 2024, the fair value of the Senior Notes, which are Level 2 measurements, was $355.2 million.

The interest expense and amortization of debt discount and debt issuance costs related to our Senior Notes are as follows (in thousands):


	Three months ended March 31,
	2023		2024
Senior Notes interest expense	$	4,250	$	4,250
Senior Notes amortization of debt discount	127		132

Senior Notes amortization of debt issuance costs	36		38

At March 31, 2024, our future interest payments on our outstanding balance were $93.5 million, with $17.0 million payable within 12 months.

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FINANCIAL HIGHLIGHTS

Below are our financial highlights (in thousands except for volumes and averages):


	Three months ended March 31,
	2023		2024
Revenue	$	95,514	$	103,493
Funeral contracts	12,415		12,091
Average revenue per funeral contract	$	5,527	$	5,756
Preneed interment rights (property) sold	2,504		3,437
Average price per preneed interment right sold	$	4,496	$	4,849
Gross profit	$	31,055	$	37,262
Net income	$	8,844	$	6,973

Revenue for the three months ended March 31, 2024 increased $8.0 million compared to the three months ended March 31, 2023, as we experienced a 37.3% increase in the number of preneed interment rights (property) sold, a 7.9% increase in the average price per interment right sold and a 4.1% increase in the average revenue per funeral contract, offset by a 2.6% decrease in funeral contract volume. The increase in cemetery revenue highlights the effectiveness of our preneed cemetery sales growth plan, as we continue to focus on executing our strategic goals. Additionally, despite the funeral contract volume decline due to the COVID-19 related pull forward effect, we increased our average revenue per funeral contract through the successful execution of our enhanced pricing strategy, which was the primary driver in funeral revenue growth this quarter.

Gross profit for the three months ended March 31, 2024 increased $6.2 million compared to the three months ended March 31, 2023, primarily due to the increase in revenue from both our funeral and cemetery ~~service organization~~segments, as well as the continued progress we have made successfully executing on our cost management initiatives this quarter.

Net income for the three months ended March 31, 2024 decreased $1.9 million compared to the three months ended March 31, 2023, as the $6.2 million increase in profit contribution from our ~~industry”~~businesses was offset by a $6.1 million increase in general, administrative and ~~our~~ ~~Guiding Principles~~ ~~state our core values, which are comprised of:~~ other expenses and a $1.3 million increase in loss on divestitures.

~~honesty, integrity and quality in all that we do;~~

~~hard work, pride~~Further discussion of ~~accomplishment and shared success through employee ownership;~~

~~belief in the power of people through individual initiative and teamwork;~~

~~outstanding service and profitability go hand-in-hand; and~~

~~growth of the Company is driven by decentralization and partnership.~~

~~Our five~~ ~~Guiding Principles~~ ~~collectively embody our~~ ~~Being The Best~~ ~~high-performance culture, operating framework. Our operations and business strategy are built upon the execution of the following three models:~~

~~Standards Operating Model;~~

~~4E Leadership Model; and~~

~~Strategic Acquisition Model.~~

~~Standards Operating Model~~

~~Our Standards Operating Model is focused on growing local market share, people development,~~revenue and the ~~key operating~~components of gross profit for our funeral home and ~~financial metrics that drive long-term, sustainable revenue growth~~cemetery segments is presented under “– Results of Operations.”

Further discussion of general, administrative and ~~improved earning power~~other expenses, interest expense, income taxes and other components of ~~our portfolio of businesses by employing leadership~~income and entrepreneurial principles that fit the nature of our high-value personal service business. Standards Achievement is the measure by which we judge the success of each business and incentivize our local managers and their teams. Our Standards Operating Model is not designed to produce maximum short-term earnings because we believe such performance is unsustainable and will ultimately stress the business, which very often leads to declining market share, revenues and earnings.expenses are presented under “– Other Financial Statement Items.”

~~4E Leadership Model~~

Our 4E Leadership Model requires strong local leadership in each business to grow an entrepreneurial, decentralized, high-value, personal service and sales business at sustainable profit margins. Our 4E Leadership Model is based upon principles established by Jack Welch during his tenure at General Electric, and is based upon 4E qualities essential to succeed in a high-performance culture: ~~Energy~~ ~~to get the job done; the ability to~~ ~~Energize~~ ~~others; the~~ ~~Edge~~ ~~necessary to make difficult decisions; and the ability to~~ ~~Execute~~ and produce results. To achieve a high level within our Standards in a business year after year, we require local Managing Partners that have the 4E Leadership skills to entrepreneurially grow the business by hiring, training and developing highly motivated and productive local teams.

~~Strategic Acquisition Model~~

Our Standards Operating Model led to the development of our Strategic Acquisition Model, which guides our acquisition strategy. Both models, when executed effectively, will drive long-term, sustainable increases in market share, revenue, earnings and cash flow. We believe a primary driver of higher revenue and profits in the future will be the execution of our Strategic Acquisition Model using strategic ranking criteria to assess acquisition candidates. As we execute this strategy over time, we will acquire larger, higher margin strategic businesses.

~~Our belief in our~~ ~~Mission Statement~~ ~~and~~ ~~Guiding Principles~~ that define us and proper execution of the three models that define our strategy have given us the competitive advantage in any market in which we compete. We believe that we can execute our three models without proportionate incremental investment in our consolidation platform infrastructure and without additional fixed regional and corporate overhead. This gives us a competitive advantage that is evidenced by the sustained earning power of our portfolio as defined by our EBITDA margin.

REPORTING AND NON-GAAP FINANCIAL MEASURES

We also present our financial performance in our ~~“Operating~~“Condensed Operating and Financial Trend Report” (“Trend Report”) as reported in our earnings release for the ~~quarter ending September 30, 2017 dated October 25, 2017~~three months ended March 31, 2024 issued on May 1, 2024, and discussed in the corresponding earnings conference call. ~~This~~The Trend Report is used as a supplemental financial ~~measurement~~ statement by management and investors to compare our current financial performance with our previous results and with the performance of other companies. We do not intend for this information to be considered in isolation or as a substitute for other measures of performance prepared in accordance with United States generally accepted accounting principles (“GAAP”). The Trend Report is a non-GAAP statement that also provides insight into underlying trends in our business.

~~Historically, the dynamic nature of the evolutionary process of building our culture, especially since launching the~~ ~~Good To Great Journey~~ in the beginning of 2012, has led to a large number of charges such as severance and retirement, consulting and other activities, which are not core to our operations and as such, have been added back to GAAP earnings as “Special Items”. The Special Items are important to add back because of the transformational nature of major changes over the last several years within our Operations and Strategic Growth Leadership Team.

Accordingly, these non-GAAP Special Items will be comprised of only those charges materially outside the normal course of business. The number of these Special Items were minimal in 2016 and should continue to be minimal thereafter, which should result in major shrinkage of “the gap” between our GAAP and non-GAAP reported performance.

The non-GAAP financial measures in the Trend Report include such measures as “Special Items,” “Adjusted Net Income,” “Consolidated EBITDA,” “Adjusted Consolidated EBITDA,” “Adjusted Consolidated EBITDA Margin,” “Adjusted Free Cash Flow,” “Funeral Field EBITDA,” “Cemetery Field EBITDA,” “Funeral Financial EBITDA,” “Cemetery Financial EBITDA,” “Total Field EBITDA,” “Total Field EBITDA Margin,” “Operating Profit,” “Operating Profit Margin,” “Adjusted Basic Earnings Per Share” and “Adjusted Diluted Earnings Per Share.” These financial measurements are defined as GAAP items adjusted for Special Items and are reconciled to GAAP in our earnings release and on the Trend Reports posted on our website (www.carriageservices.com). Our presentation of these measures may not be comparable to similarly titled measures in other companies’ reports.

~~The non-GAAP definitions we use are as follows:~~

Special Items are defined as charges or credits included in our GAAP financial statements that can vary from period to period and are not reflective of costs incurred in the ordinary course of our operations. Special Items are taxed at the federal statutory rate of 35% for both the three and nine months ended September 30, 2016 and 2017, except for the accretion of the discount on the Convertible Notes as thisBelow is ~~a non-tax deductible item.~~

~~Adjusted Net Income is defined as net income plus adjustments for Special Items.~~

~~Consolidated EBITDA is defined as net income before income taxes, interest expenses, non-cash stock compensation, depreciation and amortization, and interest income and other, net.~~

~~Adjusted Consolidated EBITDA is defined as Consolidated EBITDA plus adjustments for Special Items.~~

~~Adjusted Consolidated EBITDA Margin is defined as Adjusted Consolidated EBITDA as a percentage of revenue.~~

~~Adjusted Free Cash Flow is defined as net cash provided by operations, adjusted by Special Items as deemed necessary, less cash for maintenance capital expenditures.~~

Funeral Field EBITDA is defined as Funeral Gross Profit, which is funeral revenue minus funeral field costs and expenses, less depreciation and amortization, regional and unallocated funeral costs and Funeral Financial EBITDA.

Cemetery Field EBITDA is defined as Cemetery Gross Profit, which is cemetery revenue minus cemetery field costs and expenses, less depreciation and amortization, regional and unallocated cemetery costs and Cemetery Financial EBITDA.

~~Funeral Financial EBITDA is defined as Funeral Financial Revenue less Funeral Financial Expenses.~~

~~Cemetery Financial EBITDA is defined as Cemetery Financial Revenue less Cemetery Financial Expenses.~~

~~Total Field EBITDA is defined as Gross Profit less depreciation and amortization, regional and unallocated costs.~~

~~Total Field EBITDA Margin is defined as Total Field EBITDA as a percentage of revenue.~~

Operating Profit is defined as Gross Profit, which is funeral and cemetery revenue minus funeral and cemetery field costs and expenses, less field depreciation and amortization and regional and unallocated funeral and cemetery costs.

~~Operating Profit Margin is defined as Operating Profit as a percentage of revenue.~~

~~Adjusted Basic Earnings Per Share is defined as GAAP Basic Earnings Per Share, adjusted for Special Items.~~

~~Adjusted Diluted Earnings Per Share is defined as GAAP Diluted Earnings Per Share, adjusted for Special Items.~~

~~We are providing below~~ a reconciliation of ~~Gross~~gross profit (a GAAP financial measure) to ~~Operating~~operating profit (a non-GAAP financial measure) ~~for the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016~~ (in thousands):


	Three months ended March 31,
	2023		2024
Gross profit	$	31,055	$	37,262

Cemetery property amortization	1,201		1,756
Field depreciation expense	3,357		3,467
Regional and unallocated funeral and cemetery costs	5,437		3,842
Operating profit(1)	$	41,050	$	46,327

(1)

Operating profit is defined as gross profit plus cemetery property amortization, field depreciation expense and regional and unallocated funeral and cemetery costs.

- 39 -

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2016 2017 2016 2017
Gross profit $ 18,228
$ 15,480
$ 58,338
$ 57,239

Field depreciation and amortization 3,452
3,601
10,359
10,719
Regional and unallocated funeral and cemetery costs 2,783
3,937
8,547
9,845
Operating profit $ 24,463
$ 23,018
$ 77,244
$ 77,803

WeOur operations are ~~providing below~~reported in two business segments: Funeral Home and Cemetery. Below is a breakdown of ~~Operating~~operating profit (a non-GAAP financial measure) by ~~Segment for the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016~~segment (in thousands):


	Three months ended March 31,
	2023		2024
Funeral Home	$	28,966	$	30,602
Cemetery	12,084		15,725
Operating profit	$	41,050	$	46,327

Operating profit margin(1)	43.0%		44.8%

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2016 2017 2016 2017
Funeral Home Segment $ 18,201
$ 18,062
$ 58,406
$ 61,161
Cemetery Segment 6,262
4,956
18,838
16,642
Operating profit $ 24,463
$ 23,018
$ 77,244
$ 77,803

(1)

Operating profit margin is defined as operating profit as a percentage of revenue.

Further discussion of ~~Operating~~operating profit ~~for our Funeral Home and Cemetery Segments is presented herein under “Results of Operations.”~~

~~Financial Highlights~~

~~Three months ended September 30, 2017 compared to three months ended September 30, 2016~~

Total revenue for the three months ended September 30, 2017 and 2016 was $61.1 million and $60.1 million, respectively, which represents an increase of approximately $0.9 million, or 1.5%. Funeral revenue increased $2.1 million to $47.3 million, while cemetery revenue decreased $1.2 million to $13.7 million in the three months ended September 30, 2017 compared to the same period in 2016. For the quarter comparatives, we experienced a 3.3% increase in total funeral contracts and an increase in the average revenue per funeral contract of 1.8%. In addition, while we experienced a decrease of 6.3% in the number of preneed interment rights (property) sold, the average price per interment right sold increased 1.2%. Further discussion of revenue for our funeral home and cemetery segments ~~on a same store and acquired basis~~ is presented ~~herein~~ under ~~“Results~~“– Results of Operations.”

Gross profit for the three months ended September 30, 2017 decreased $2.7 million, or 15.1%, to $15.5 million, from $18.2 million for the three months ended September 30, 2016 primarily due to a decline in preneed cemetery revenue and higher costs as a percentage of revenue in the six businesses we acquired in 2016. As these acquired businesses transition into our Standards Operating Model, we expect to see their gross profit margins rise towards those on a same store basis.

Further discussion of the components of Gross profit, excluding field depreciation and amortization and regional and unallocated funeral and cemetery costs is presented herein under “Results of Operations” within our funeral home and cemetery segments. Further discussion of field depreciation and amortization and regional and unallocated funeral and cemetery costs are presented herein under “Other Financial Statement Items.”

Net income for the three months ended September 30, 2017 decreased $2.6 million to $3.0 million, equal to $0.17 per diluted share, compared to net income of $5.7 million, equal to $0.33 per diluted share, for the three months ended September 30, 2016. Further discussion of general, administrative and other expenses, home office depreciation and amortization expense, interest expense, income taxes and other components of income and expenses are presented herein under “Other Financial Statement Items.”

~~Nine months ended September 30, 2017 compared to Nine months ended September 30, 2016~~

Total revenue for the nine months ended September 30, 2017 and 2016 was $193.1 million and $185.3 million, respectively, which represents an increase of approximately $7.7 million, or 4.2%. Funeral revenue increased $9.3 million to $150.3 million, while cemetery revenue decreased $1.6 million to $42.8 million in the nine months ended September 30, 2017 compared to the same period in 2016. For the period comparatives, we experienced a 5.2% increase in total funeral contracts and an increase in the average revenue per funeral contract of 1.7%. In addition, while we experienced a decrease of 10.4% in the number of preneed interment rights (property) sold, the average price per interment right sold increased 4.6%. Further discussion of revenue for our funeral home and cemetery segments on a same store and acquired basis is presented herein under “Results of Operations.”

Gross profit for the nine months ended September 30, 2017 decreased $1.1 million, or 1.9%, to $57.2 million, from $58.3 million for the nine months ended September 30, 2016 primarily due to a decline in preneed cemetery revenue and higher costs as a percentage of revenue in the six businesses we acquired in 2016. As these acquired businesses transition into our Standards Operating Model, we expect to see their gross profit margins rise towards those on a same store basis.

Net income for the nine months ended September 30, 2017 decreased $0.9 million to $14.5 million, equal to $0.81 per diluted share, compared to net income of $15.4 million, equal to $0.91 per diluted share, for the nine months ended September 30, 2016. Further discussion of general, administrative and other expenses, home office depreciation and amortization expense, interest expense, income taxes and other components of income and expenses are presented herein under “Other Financial Statement Items.”

~~OVERVIEW OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES~~

The preparation of the Consolidated Financial Statements requires us to make estimates and judgments that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. We base our estimates on historical experience, third-party data and assumptions that we believe to be reasonable under the circumstances. The results of these considerations form the basis for making judgments about the amount and timing of revenues and expenses, the carrying value of assets and the recorded amounts of liabilities. Actual results may differ from these estimates and such estimates may change if the underlying conditions or assumptions change. Historical performance should not be viewed as indicative of future performance because there

~~can be no assurance the margins, operating income and net earnings, as a percentage of revenues, will be consistent from year to year.~~

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is based upon our Consolidated Financial Statements presented herewith, which have been prepared in accordance with GAAP. Our critical accounting policies are discussed in MD&A in our Annual Report on Form 10-K for the year ended December 31, 2016.

RESULTS OF OPERATIONS

The following is a discussion of our results of operations for the three ~~and nine~~ months ended ~~September 30, 2017 compared to the same periods of 2016.~~ March 31, 2024 and 2023.

The term ~~“same store”~~“operating” in the funeral home and cemetery segments refers to all funeral homes and cemeteries ~~acquired prior to January 1, 2013~~that we owned and operated ~~for~~in the ~~entirety~~current reporting period, excluding certain funeral home and cemetery businesses that we have divested in such period.

The term “divested” when discussed in the funeral home segment, refers to six funeral homes we sold in the three months ended March 31, 2024 and one funeral home we sold in the three months ended March 31, 2023. The term “divested” when discussed in the cemetery segment, refers to the sale of one cemetery in each ~~period being presented. Funeral homes~~of the three months ended March 31, 2024 and ~~cemeteries purchased after December 31, 2012 are referred to as “acquired.” This classification of acquisitions has been important to management~~2023.

The term “ancillary” in the funeral home segment represents our flower shop, monument business, pet cremation business and investors in monitoring the results of these businesses and to gauge the leveraging performance contribution that a selective acquisition program can have on total company performance. Depreciation andonline cremation businesses.

Cemetery property amortization, ~~within our~~ field ~~costs and expenses~~depreciation expense and regional and unallocated funeral and cemetery costs, are not included in operating profit, a non-GAAP financial measure. Adding back these items will result in ~~Gross Profit,~~gross profit, a GAAP financial measure.

- 40 -

Funeral Home ~~Segment.~~Segment

The following ~~tables set~~table sets forth certain information regarding ~~the revenues~~our revenue and operating profit ~~from~~for our funeral home operations (in thousands):


	Three months ended March 31,
	2023		2024
Revenue:
Operating	$	65,407	$	66,578
Divested	1,164		888
Ancillary	1,057		1,247
Other	2,457		3,118
Total	$	70,085	$	71,831

Operating profit:
Operating	$	26,327	$	27,527
Divested	275		99
Ancillary	146		173
Other	2,218		2,803
Total	$	28,966	$	30,602

The following operating measures reflect the significant metrics over this comparative period:

Contract volume	12,415		12,091
Average revenue per contract, excluding preneed funeral trust earnings	$	5,362	$	5,580
Average revenue per contract, including preneed funeral trust earnings	$	5,527	$	5,756
Cremation rate	59.1%		59.0%

Funeral home operating revenue increased $1.2 million for the three months ended ~~September 30, 2017 compared to three months ended September 30, 2016 (dollars in thousands):~~

For the Three Months Ended September 30, Change
2016 2017 Amount %
Revenues:
Same store operating revenue $ 37,094
$ 38,032
$ 938
2.5 %
Acquired operating revenue 5,996
7,363
1,367
22.8 %
Preneed funeral insurance commissions 361
315
(46 ) (12.7 )%
Preneed funeral trust earnings 1,732
1,618
(114 ) (6.6 )%
Total $ 45,183
$ 47,328
$ 2,145
4.7 %

Operating profit:

Same store operating profit $ 13,894
$ 13,938
$ 44
0.3 %
Acquired operating profit 2,431
2,419
(12 ) (0.5 )%
Preneed funeral insurance commissions 166
120
(46 ) (27.7 )%
Preneed funeral trust earnings 1,710
1,585
(125 ) (7.3 )%
Total $ 18,201
$ 18,062
$ (139 ) (0.8 )%

~~Funeral home same store operating revenues for the three months ended September 30, 2017 increased $0.9 million or 2.5%, when~~March 31, 2024, compared to the three months ended ~~September 30, 2016. This was due primarily to a 0.7%~~March 31, 2023. The increase in ~~same store contract volumes to 7,093 and~~operating revenue is primarily driven by a ~~1.8%~~4.1% increase in the average revenue per contract excluding preneed interest, which was partially offset by a 2.6% decrease in contract volume. Despite the funeral contract volume decline due to ~~$5,362. The~~the COVID-19 related pull forward effect, we increased our average revenue per funeral contract ~~excludes~~through the ~~impact~~successful execution of our enhanced pricing strategy, which was the ~~preneed~~primary driver in funeral ~~trust earnings (separately reflected in~~ ~~Revenues~~ ~~above) recognized at the time that we provide the services pursuant to the preneed contract. Including preneed funeral trust earnings, the average~~ revenue per contract increased 1.6% to $5,543 in the three months ended September 30, 2017. The average revenue per burial contract increased 0.2% to $8,832 and the number of burial contracts increased 1.9% to 2,898. The average revenue per cremation contract increased 1.1% to $3,352 and the number of cremation contracts increased 1.7% to 3,702.growth this quarter.

The burial rate for our same store businesses increased 50 basis points to 40.9% and the cremation rate also increased 50 basis points to 52.2% for the three months ended September 30, 2017 when compared to the three months ended September 30, 2016. The average revenue for “other” contracts, which are charges for merchandise or services for which we do not perform a funeral service and which made up approximately 6.9% of the total number of contracts in the three months ended September 30, 2017, increased 16.6% to $2,669.

~~Same store~~Funeral home operating profit for the three months ended ~~September 30, 2017~~March 31, 2024 increased $1.2 million when compared to the same period in 2023, primarily due to the increase in operating revenue, as well as a decrease in operating expenses as a percentage of revenue. The comparable operating profit margin increased 100 basis points to 41.3%. Operating expenses as a percentage of revenue decreased 1.1%, with the largest decreases in salaries and benefits expenses of 0.6% and promotional expenses of 0.2%, which reflects the continued progress we have made successfully executing on our cost management initiatives this quarter.

Ancillary revenue, which represents revenue from our flower shop, monument business, pet cremation business and online cremation businesses, increased $0.2 million, while ancillary operating profit remained flat ~~when~~for the three months ended March 31, 2024, compared to the three months ended ~~September 30, 2016. Although~~March 31, 2023. The increase in ancillary revenue ~~increased,~~is primarily due to our Bakersfield, CA business, which was acquired during the last week of March 2023 and therefore was not fully present in the comparative period.

Other revenue and other operating profit, ~~margin decreased by 90 basis points to 36.6%~~which consists of preneed funeral insurance commissions and earnings from delivered preneed funeral trust and insurance contracts, increased $0.7 million and $0.6 million, respectively, for the three months ended ~~September 30, 2017~~March 31, 2024, compared to the same period in ~~2016.~~ 2023. These increases are primarily due to our continued focus on growth of our preneed funeral sales through our strategic partnership with a national insurance provider that began during the second quarter of 2023. As a result, we have experienced a 25.7% increase in preneed insurance contracts sold during the first quarter of 2024, compared to the same period in 2023.

- 41 -

Cemetery Segment

The ~~decline in~~following table sets forth certain information regarding our revenue and operating profit ~~margin largely relates to significant increases in certain expenses including $0.4~~for our cemetery operations (in thousands):


	Three months ended March 31,
	2023		2024
Revenue:
Operating	$	21,317	$	27,581
Divested	330		154
Other	3,782		3,927
Total	$	25,429	$	31,662

Operating profit (loss):
Operating	$	8,312	$	11,952
Divested	93		(35)
Other	3,679		3,808
Total	$	12,084	$	15,725

The following operating measures reflect the significant metrics over this comparative period:

Preneed revenue as a percentage of operating revenue	58.0%		65.0%
Preneed revenue (in thousands)	$	12,324	$	17,932
Atneed revenue (in thousands)	$	8,993	$	9,649
Number of preneed interment rights sold	2,504		3,437
Average price per interment right sold	$	4,496	$	4,849

Cemetery operating revenue increased $6.3 million ~~of general liability and other insurance related expenses, $0.2 million of salaries and benefits and $0.1 million of bad debt expense.~~

~~Funeral home acquired operating revenues~~ for the three months ended ~~September 30, 2017 increased $1.4 million, or 22.8%, when~~March 31, 2024, compared to the three months ended September 30, 2016. The funeral home acquired portfolio for the three months ended September 30, 2017 includes four businesses acquired in the latter half of 2016, not fully present in the three months ended September 30, 2016 results. We experienced a slight increase in the average revenue per contract of 0.2% to $6,370 and a 22.6% increase in the total number of contracts to 1,156. The average revenue per contract excludes the impact of the preneed funeral trust earnings (reflected separately in ~~Revenues~~ above) recognized at the time that we provide the services pursuant to the preneed contract. Including funeral trust earnings, the average revenue per contract slightly decreased 0.4% to $6,538 in the three months ended September 30, 2017. The average revenue per burial contract decreased 1.7% to $9,458, while the number of burial contracts increased 22.4% to 525. The average revenue per cremation contract increased 6.1% to $4,421 and the number of cremation contracts increased 18.3% to 531.

The burial rate for our acquired businesses slightly decreased 10 basis points to 45.4% and the cremation rate also decreased 170 basis points to 45.9% for the three months ended September 30, 2017 when compared to the three months ended September 30, 2016. The average revenue for “other” contracts, which are charges for merchandise or services for which we do not perform a funeral service and which made up approximately 8.7% of the total number of contracts in the three months ended September 30, 2017, decreased 17.6% to $2,446.

Acquired operating profit for the three months ended September 30, 2017 remained flat when compared to the three months ended September 30, 2016. Although revenue increased, operating profit margin decreased 760 basis points to 32.9% for the three months ended September 30, 2017 compared to the same period in 2016. The decrease is primarily due to the businesses we acquired in 2016, as salaries and benefits for newly acquired businesses are generally higher as a percentage of revenue than same store businesses. As these acquired businesses transition into our Standards Operating Model, we expect to see their operating profit margins rise towards those on a same store basis.

The two categories of financial revenue consist of preneed funeral insurance commission revenue and preneed funeral trust earnings. Preneed funeral insurance commission revenue decreased by 12.7% for the three months ended September 30, 2017 compared to the same period in 2016. Preneed funeral insurance commission revenue is deferred for one year after the preneed funeral contracts are sold. The Preneed commission revenue recognized for the three months ended September 30, 2017 is from the preneed funeral insurance contracts sold in the three months ended September 30, 2016. The number of preneed insurance contracts sold in the three months ended September 30, 2016 decreased 4.9% and the face value of the insurance products that earned commissions decreased 2.3% compared to the contracts sold during the same period of the prior year. Preneed funeral trust earnings include trust management fees charged by our wholly-owned registered investment advisor based on the fair market value of the trust assets and earnings from the maturity of preneed funeral contracts. Trust earnings decreased $0.1 million or 6.6% for the three months ended September 30, 2017, which is comprised of a 7.8% decrease in earnings from the maturity of preneed contracts, offset by an 8.9% increase in earnings from trust management fees.

Operating profit for our two categories of financial revenue, on a combined basis, decreased 9.1% in the three months ended September 30, 2017 due to the decrease in preneed funeral trust earnings and preneed funeral insurance commission revenue, along with an increase in commission and preneed selling expenses.

The following tables set forth certain information regarding the revenues and operating profit from our funeral home operations for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 (dollars in thousands):

For the Nine Months Ended September 30, Change
2016 2017 Amount %
Revenues:
Same store operating revenue $ 117,029
$ 119,310
$ 2,281
1.9 %
Acquired operating revenue 17,303
24,727
7,424
42.9 %
Preneed funeral insurance commissions 1,138
951
(187 ) (16.4 )%
Preneed funeral trust earnings 5,482
5,290
(192 ) (3.5 )%
Total $ 140,952
$ 150,278
$ 9,326
6.6 %

Operating profit:
Same store operating profit $ 45,119
$ 46,111
$ 992
2.2 %
Acquired operating profit 7,293
9,515
2,222
30.5 %
Preneed funeral insurance commissions 577
329
(248 ) (43.0 )%
Preneed funeral trust earnings 5,417
5,206
(211 ) (3.9 )%
Total $ 58,406
$ 61,161
$ 2,755
4.7 %

Funeral home same store operating revenues for the nine months ended September 30, 2017 increased $2.3 million, or 1.9%, when compared to the nine months ended September 30, 2016. The increase was due primarily to a 0.9% increase in same store contract volumes to 22,296 and a 1.0% increase in the average revenue per contract to $5,351. The average revenue per contract excludes the impact of the preneed funeral trust earnings (separately reflected in ~~Revenues~~ above) recognized at the time that we provide the services pursuant to the preneed contract. Including preneed funeral trust earnings, the average revenue per contract increased 0.9% to $5,540 in the nine months ended September 30, 2017. The average revenue per burial contract increased 1.1% to $8,877, while the number of burial contracts decreased 0.6% to 9,037. The average revenue per cremation contract increased ~~1.3% to $3,363 and the number of cremation contracts increased 3.0% to 11,664.~~

The burial rate for our same store businesses decreased 70 basis points to 40.5%, while the cremation rate increased 100 basis points to 52.3% for the nine months ended September 30, 2017 when compared to the nine months ended September 30, 2016. The average revenue for “other” contracts, which are charges for merchandise or services for which we do not perform a funeral service and which made up approximately 7.2% of the total number of contracts in the nine months ended September 30, 2017, increased 10.8% to $2,561.

Same store operating profit for the nine months ended September 30, 2017 increased $1.0 million, or 2.2%, when compared to the nine months ended September 30, 2016. This increase is a result of increased revenue and better management of expenses as operating profit margin remained stable at 38.6% for the nine months ended September 30, 2017 compared to the same period in 2016.

Funeral home acquired operating revenues for the nine months ended September 30, 2017 increased $7.4 million, or 42.9%, when compared to the nine months ended September 30, 2016. The funeral home acquired portfolio for the nine months ended September 30, 2017 includes six businesses acquired during 2016, not fully present in the nine months ended September 30, 2016 results. We experienced an increase in the average revenue per contract of 1.7% to $6,524 and a 40.5% increase in the total number of contracts to 3,790. The average revenue per contract excludes the impact of the preneed funeral trust earnings (reflected separately in ~~Revenues~~ above) recognized at the time that we provide the services pursuant to the preneed contract. Including funeral trust earnings, the average revenue per contract increased 1.2% to $6,699 in the nine months ended September 30, 2017. The average revenue per burial contract decreased 1.3% to $9,505, while the number of burial contracts increased 43.4% to 1,817. The average revenue per cremation contract increased 5.9% to $4,396 and the number of cremation contracts increased 35.8% to 1,661.

The burial rate for our acquired businesses increased 90 basis points to 47.9%, while the cremation rate decreased 150 basis points to 43.8%. This is the result of an increase in the number of burial versus cremation contract sales at the businesses that were acquired the latter half of 2016. The average revenue for “other” contracts, which are charges for merchandise or services for which we do not perform a funeral service and which made up approximately 8.3% of the total number of contracts in the nine months ended September 30, 2017, decreased 5.1% to $2,625.

Acquired operating profit for the nine months ended September 30, 2017 increased $2.2 million, or 30.5%, from the nine months ended September 30, 2016, primarily due to the six businesses acquired during 2016 and not fully present in the nine months ended September 30, 2016 results. Although revenues increased, operating profit margin decreased 360 basis points to 38.5% for the nine months ended September 30, 2017 compared to the same period in 2016. The decrease is primarily due to the

businesses we acquired in 2016, as salaries and benefits for newly acquired businesses are generally higher as a percentage of revenue than same store businesses. As these acquired businesses transition into our Standards Operating Model, we expect to see their operating profit margins rise towards those on a same store basis.

The two categories of financial revenue consist of preneed funeral insurance commission revenue and preneed funeral trust earnings. Preneed funeral insurance commission revenue decreased $0.2 million or 16.4% for the nine months ended September 30, 2017 compared to the same period in 2016. Preneed funeral insurance commission revenue is deferred for one year after the preneed funeral contracts are sold. The Preneed commission revenue recognized for the nine months ended September 30, 2017 is from the preneed funeral insurance contracts sold in the nine months ended September 30, 2016. The number of preneed insurance contracts sold in the nine months ended September 30, 2016 decreased 1.1% and the face value of the insurance products that earned commissions decreased 7.1% over the same period of the prior year. Preneed funeral trust earnings include trust management fees charged by our wholly-owned registered investment advisor based on the fair market value of the trust assets and earnings from the maturity of preneed funeral contracts. Trust earnings decreased $0.2 million or 3.5% for the nine months ended September 30, 2017, which is comprised of a 4.6% decrease in earnings from the maturity of preneed contracts, offset by a 12.3% increase in earnings from trust management fees.

Operating profit for our two categories of financial revenue, on a combined basis, decreased 7.7% in the nine months ended September 30, 2017 due to the decrease in preneed funeral trust earnings and preneed funeral insurance commission revenue, along with an increase in commission and preneed selling expenses.

~~Cemetery Segment.~~ The following tables set forth certain information regarding the revenues and operating profit from the cemetery operations for the three months ended September 30, 2017 compared to three months ended September 30, 2016 (dollars in thousands):

For the Three Months Ended September 30, Change
2016 2017 Amount %
Revenues:
Same store operating revenue $ 11,467
$ 10,748
$ (719 ) (6.3 )%
Acquired operating revenue 978
761
(217 ) (22.2 )%
Cemetery trust earnings 2,025
1,768
(257 ) (12.7 )%
Preneed cemetery finance charges 487
449
(38 ) (7.8 )%
Total $ 14,957
$ 13,726
$ (1,231 ) (8.2 )%

Operating profit:
Same store operating profit $ 3,342
$ 2,649
$ (693 ) (20.7 )%
Acquired operating profit 479
200
(279 ) (58.2 )%
Cemetery trust earnings 1,954
1,658
(296 ) (15.1 )%
Preneed cemetery finance charges 487
449
(38 ) (7.8 )%
Total $ 6,262
$ 4,956
$ (1,306 ) (20.9 )%

Cemetery same store operating revenues for the three months ended September 30, 2017 decreased $0.7 million, or 6.3%, when compared to the three months ended September 30, 2016. Approximately 55.0% of our same store operating revenues were related to preneed sales of interment rights and related merchandise and services for the three months ended September 30, 2017. Preneed revenue decreased $0.9 million, or 13.6%,March 31, 2023, as we experienced a ~~5.7% decrease~~37.3% increase in the number of preneed interment rights (property) sold ~~to 1,542~~ and a 5.9% decrease in average price per interment to $3,278 for the three months ended September 30, 2017 compared to the same period in 2016. The decrease in preneed revenue was due to the attrition of key sales personnel at certain businesses, the absence of approximately $0.4 million of large private estate sales we had in the third quarter of last year, as well as the impact of the Texas and Florida hurricanes which caused business closures and displaced workers in these States during the period. Same store at-need revenue, which represents approximately 45.0% of our same store operating revenues, increased $0.2 million, or 4.4%, due primarily to a 7.9% ~~increase in the average sale per contract to $1,562.~~

Cemetery same store operating profit for the three months ended September 30, 2017 decreased $0.7 million, or 20.7% from the same period in 2016. As a percentage of revenue, cemetery operating profit decreased to 24.6% in the three months ended September 30, 2017 compared to 29.1% in the same period in 2016. The decline in operating profit margin largely relates to significant increases in certain expenses including $0.2 million of general liability and other insurance related expenses, $0.1 million of salaries and benefits and $0.1 million of facilities and grounds expenses, offset by a $0.4 million decrease in promotional expenses.

Cemetery acquired operating revenue and acquired operating profit decreased for the three months ended September 30, 2017 primarily due to a $0.2 million decrease in preneed revenue. The decrease in preneed revenue was primarily due to the absence of approximately $0.2 million of large private estate sales we had in the third quarter of last year. In addition, we experienced a 14% decrease in the number of preneed interment rights sold compared with the same period in 2016 and increases in facilities and grounds expenses and bad debt expense for the three months ended September 30, 2017 compared to the same period in 2016.

The two categories of financial revenue consist of trust earnings and finance charges on preneed receivables. Trust earnings also include trust management fees charged by our wholly-owned registered investment advisor based on the fair market value of the trust assets. Total trust earnings decreased $0.3 million or 12.7%, primarily due to a $0.3 million decrease in capital gains from our perpetual care trust in the three months ended September 30, 2017 compared to the same period in 2016. Financial revenue earned from finance charges on the preneed contracts remained flat in the three months ended September 30, 2017 compared to the same period in 2016.

~~Cemetery Segment.~~ The following tables set forth certain information regarding the revenues and operating profit from the cemetery operations for the nine months ended September 30, 2017 compared to nine months ended September 30, 2016 (dollars in thousands):

For the Nine Months Ended September 30, Change
2016 2017 Amount %
Revenues:
Same store operating revenue $ 35,093
$ 33,522
$ (1,571 ) (4.5 )%
Acquired operating revenue 2,312
2,370
58
2.5 %
Cemetery trust earnings 5,622
5,512
(110 ) (2.0 )%
Preneed cemetery finance charges 1,357
1,381
24
1.8 %
Total $ 44,384
$ 42,785
$ (1,599 ) (3.6 )%

Operating profit:
Same store operating profit $ 11,283
$ 9,287
$ (1,996 ) (17.7 )%
Acquired operating profit 791
743
(48 ) (6.1 )%
Cemetery trust earnings 5,407
5,231
(176 ) (3.3 )%
Preneed cemetery finance charges 1,357
1,381
24
1.8 %
Total $ 18,838
$ 16,642
$ (2,196 ) (11.7 )%

Cemetery same store operating revenues for the nine months ended September 30, 2017 decreased $1.6 million, or 4.5%, when compared to the nine months ended September 30, 2016. Approximately 56.0% of our same store operating revenues were related to preneed sales of interment rights and related merchandise and services for the nine months ended September 30, 2017. Preneed revenue decreased $2.4 million, or 11.2%, as we experienced a 11.4% decrease in the number of preneed interment rights sold to 4,942 in the nine months ended September 30, 2017 compared to the same period in 2016. The decrease was primarily a result of attrition of key sales personnel at certain businesses during the period. In addition, preneed sales were negatively impacted in our Texas and Florida businesses due to the hurricanes affecting those areas in the third quarter of 2017, as well as the absence of approximately $0.4 million of large private estate sales we had in the third quarter of last year. The decrease was slightly offset by a 4.0% increase in the average price per interment ~~to $3,256. Same store at-need~~right sold. Cemetery atneed revenue, which represents ~~approximately 44.0%~~35.0% of our ~~same store~~total operating ~~revenues,~~revenue, increased ~~$0.8~~$0.6 million ~~or 5.7%, due primarily to a 9.0% increase in the average sale per contract to $1,459.~~

~~Cemetery same store operating profit~~ for the ~~nine~~three months ended September 30, 2017 decreased $2.0 million, or 17.7% from the same period in 2016. As a percentage of revenue, cemetery operating profit decreased to 27.7% in the nine months ended September 30, 2017 compared to 32.2% in the same period in 2016. The decrease in operating profit was primarily a result of the decrease in revenue, combined with a $0.4 million, or 1.8%, increase in operating costs for the nine months ended September 30, 2017 compared with the same period in 2016. Those expenses with significant increases include $0.2 million of salaries and benefits and $0.2 million of facilities and grounds expenses.

Cemetery acquired operating revenue and acquired operating profit remained flat for the nine months ended September 30, 2017. Cemetery acquired operating profit margin decreased from 34.2% to 31.4% for the nine months ended September 30, 2017March 31, 2024, compared to the same period in ~~2016~~2023, primarily due to an increase in delivered merchandise and services across our cemetery portfolio. The increase in cemetery revenue highlights the effectiveness of our preneed cemetery sales growth plan, as we ~~experienced increases~~continue to focus on executing our strategic goals.

Cemetery operating profit increased $3.6 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to the increase in operating revenue, as well as a decrease in operating expenses as a percentage of revenue. The comparable operating profit margin increased 430 basis points to 43.3%. Operating expenses as a percentage of revenue decreased 4.3%, with the largest decreases in salaries and benefits expenses of 2.9%, merchandise costs of 1.2%, and ~~bad debt expense.~~facilities and grounds expenses of 0.6%, which reflects the continued progress we have made successfully executing on our cost management initiatives this quarter.

~~The two categories of financial~~Other revenue and other operating profit, which consist of preneed cemetery trust ~~earnings~~revenue and preneed cemetery finance charges, ~~on preneed receivables. Trust earnings also include trust management fees charged by our wholly-owned registered investment advisor based on the fair market value of~~

~~the trust assets. Total trust earnings decreased~~both increased $0.1 million ~~or 2.0%,~~for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to ~~decreased capital gains from our perpetual care trust~~an increase in finance charge revenue related to the ~~nine months ended September 30, 2017~~increase in cemetery sales during the first quarter of 2024, compared to the same period in ~~2016. Financial revenue earned from finance charges on~~2023.

Cemetery property amortization. Cemetery property amortization totaled $1.8 million for the ~~preneed contracts remained flat at $1.4 million in the nine~~three months ended ~~September 30, 2017~~March 31, 2024, an increase of $0.6 million compared to the same period in ~~2016.~~2023, primarily due to the increase in property sold across our cemetery portfolio.

~~Other Financial Statement Items~~

Field depreciation.Depreciation ~~and Amortization. Depreciation and amortization costs~~expense for ~~the~~our field ~~and home office~~businesses totaled ~~$4.0~~$3.5 million for the three months ended ~~September 30, 2017,~~March 31, 2024, an increase of ~~$0.2~~$0.1 million ~~or 5.1%, from~~compared to the three months ended September 30, 2016 and $11.9 million for the nine months ended September 30, 2017, an increase of $0.4 million or 3.3%, from the nine months ended September 30, 2016. These increases were primarily attributable to additional depreciation expense from assets acquiredsame period in ~~our 2016 acquisitions.~~2023.

Regional and ~~Unallocated Funeral~~unallocated funeral and ~~Cemetery Costs~~.cemetery costs. Regional and unallocated funeral and cemetery costs consist of salaries and benefits for regional management, field incentive compensation and other related costs for field infrastructure. Regional and unallocated funeral and cemetery costs totaled ~~$3.9~~$3.8 million for the three months ended ~~September 30, 2017, an increase~~March 31, 2024, a decrease of ~~$1.2~~$1.6 million ~~or 41.5%,~~ compared to the same period in ~~2016,~~2023, primarily due to ~~a $0.5~~an $0.8 million ~~increase~~decrease in ~~field~~cash incentives and equity compensation costs and an $0.8 million decrease in incentive award trip costs.

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Other Financial Statement Items

General, administrative and other. General, administrative and other expenses, which includes salaries and benefits and cash and equity incentive compensation ~~a $0.4 million increase in natural disaster related costs and a $0.3 million increase in other general administrative costs.~~

~~Regional and unallocated funeral and cemetery costs~~for the Houston support office, totaled ~~$9.8~~$16.2 million for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2024, an increase of ~~$1.3~~$6.1 million ~~or 15.2%,~~ compared to the same period in ~~2016,~~2023, which is primarily due to the following: (1) a $4.2 million increase in salary and benefits expenses and cash and equity incentive compensation costs, primarily driven by the termination expense recorded during the first quarter of 2024 for our former Executive Chairman of the Board pursuant to his Transition Agreement effective February 22, 2024; (2) a $1.5 million increase in professional fees related to the Board’s review of strategic alternatives; and (3) a $0.4 million increase in ~~field incentive compensation, a $0.4 million increase in natural disaster related costs, a $0.4 million increase in~~all other ~~general administrative costs~~expenses.

Net loss on divestitures, disposals and ~~$0.1 million increase in salaries~~impairments charges. The components of Net loss on divestitures, disposals and ~~benefits.~~impairment charges are as follows (in thousands):

On Friday, August 25, 2017 and Sunday, September 10, 2017, hurricanes Harvey and Irma struck Texas and Florida, respectively. Thirteen of our funeral homes and six of our cemeteries were impacted by either or both property damage and business interruption. Based on our preliminary review of our property, flood and business interruption insurance policies, we believe that much of the loss we have experienced will be covered by insurance. As of September 30, 2017, we have spent approximately $0.5 million for employee assistance and property repair costs. We have recognized approximately $0.4 million in expenses and recorded a receivable for insurance reimbursement of approximately $0.1 million.


	Three months ended March 31,
	2023		2024
Net loss on divestitures	$	82	$	1,501
Net loss on disposals of fixed assets	159		44
Total	$	241	$	1,545

~~General, Administrative and Other.~~ ~~General, administrative and other expenses remained flat at $6.1 million for both~~During the three months ended ~~September 30, 2016~~March 31, 2024, we sold six funeral homes and ~~2017. Those expenses with significant increases include $0.4 million~~one cemetery for an aggregate loss of ~~equity compensation, $0.2 million~~$1.5 million. During the three months ended March 31, 2023, we sold one funeral home and two cemeteries for an aggregate loss of salaries and benefits for leadership investments in our Houston support office, $0.2 million of other general administrative costs, $0.2 million of incentive compensation and $0.2 million of public company and regulatory costs$0.1 million.

Interest expense. Interest expense related to ~~tax planning, offset by a $1.2 million decrease in severance and retirement expenses primarily related to~~its respective debt arrangement is as follows (in thousands):


	Three months ended March 31,
	2023		2024
Senior Notes	$	4,413	$	4,420
Credit Facility	3,949		4,054
Finance leases	105		125
Acquisition debt	71		104
Other	1		9
Total	$	8,539	$	8,712

Net loss on property damage, net of insurance claims. During the ~~retirement of a former executive.~~

~~General, administrative and other expenses totaled $19.5 million for the nine~~three months ended September 30, 2017, a decrease of $1.7 million, or 7.8%, from the nine months ended September 30, 2016. The decrease was attributable to a $3.5 million decrease in retirement expenses primarily related to the retirement of two former executives during 2016, a $0.7 million decrease in acquisition costs, offset by a $0.9 million increase in salaries and benefits for leadership investments in our Houston support office, a $0.7 million increase in public company, regulatory and legal costs related to tax planning, filing our current shelf registration statement and adopting a new long-term incentive plan, a $0.6 million increase in other general administrative costs andMarch 31, 2023, we recorded a $0.3 million ~~increase~~loss, net of insurance proceeds, for property damaged by a fire that occurred during first quarter of 2023. We did not record any gain or loss activity during the three months ended March 31, 2024.

Other, net. During the three months ended March 31, 2023, we recorded a $0.5 million gain on the sale of other real estate not used in ~~incentive and equity compensation.~~business operations. We did not record any gain or loss activity during the three months ended March 31, 2024.

~~Interest Expense.~~ ~~Interest~~Income taxes. Income tax expense ~~was $3.3~~totaled $3.7 million for the three months ended ~~September 30, 2017 compared to $2.9 million for the three months ended September 30, 2016,~~March 31, 2024, an increase of ~~approximately $0.4 million. During the three months ended September 30, 2017, interest expense increased by approximately $0.3~~$0.2 million related to our term note and revolving credit facility and by approximately $0.1 million related to our deferred purchase obligations for our 2016 acquisitions. During the three months ended September 30, 2017, the weighted average interest rate increased 0.6% compared to the same period in ~~2016.~~

~~Interest expense was $9.5 million for the nine months ended September 30, 2017 compared~~2023, primarily due to ~~$8.7 million for the nine months ended September 30, 2016,~~ an increase of approximately $0.8 million. During the nine months ended September 30, 2017, interest expense increased by approximately $0.4 million related to our term note and revolving credit facility and by approximately $0.4 million related to our deferred purchase obligations for our 2016 acquisitions. During the nine months ended September 30, 2017, the weighted average interest rate increased 0.3% compared to the same period in ~~2016.~~

~~Accretion of Discount on Convertible Subordinated Notes.~~ For the three and nine months ended September 30, 2017, we recognized accretion of the discount on our convertible subordinated notes issued in March 2014 of $1.1 million and $3.2 million respectively,

compared to $1.0 million and $2.9 million for the three and nine months ended September 30, 2016, respectively. Accretion is calculated using the effective interest method based on a stated interest rate of 6.75%.

~~Income Taxes.~~ ~~Income~~ tax expense on discrete items. Our operating tax rate before discrete items was ~~$1.5 million~~32.8% and 28.9% for the three months ended ~~September 30, 2017 compared~~March 31, 2024 and 2023, respectively.

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CRITICAL ACCOUNTING ESTIMATES

The preparation of our Consolidated Financial Statements requires us to ~~$1.9 million for~~make estimates and assumptions that affect the ~~three months ended September 30, 2016. We recorded income taxes at the estimated effective rate, before discrete items,~~reported amounts of ~~40.0% for both the three~~assets, liabilities, revenue and nine months ended September 30, 2017 and 2016. Income tax expense was $9.3 million for the nine months ended September 30, 2017 compared to $8.4 million for the nine months ended September 30, 2016.

~~During the third quarter of 2017, we recognized a tax benefit of $0.2 million which reduced~~expenses. Understanding our effective tax rate to 39% for the nine months ended September 30, 2017. During the third quarter of 2016, we recognized a tax benefit of $1.1 million which reduced our effective tax rate to 35.2% for the nine months ended September 30, 2016.

We have approximately $36.8 million of state net operating loss carry forwards that will expire between 2018 and 2038, if not utilized. Based on management’s assessment of the various state net operating losses, it has been determined that it is more likely than not that we will not be able to realize the tax benefits of certain portions of the state losses. Accordingly, a valuation allowance has been establishedaccounting policies and the ~~deferred tax asset for the state operating losses~~extent to which our management uses judgment, assumptions and estimates in applying these policies is ~~reviewed every quarter. At September 30, 2017, the valuation allowance totaled $0.2 million.~~

~~LIQUIDITY AND CAPITAL RESOURCES~~

integral to understanding our Consolidated Financial Statements. Our ~~primary sources of liquidity~~critical accounting policies are more fully described in Part II, Item 8 “Financial Statements and ~~capital resources are internally generated cash flows from operating activities and availability under our Credit Facility.~~

~~We generate cash~~Supplementary Data” in our operations primarily from at-need sales and delivery of preneed sales. We also generate cash from earnings on our cemetery perpetual care trusts. Based on our recent operating results, current cash position and anticipated future cash flows, we do not anticipate any significant liquidity constraints in the foreseeable future. However, if our capital expenditures or acquisition plans change, we may need to access the capital markets to obtain additional funding. Further, to the extent operating cash flow or access to and costs of financing sources are materially different than expected, future liquidity may be adversely affected. Please read Part I, Item 1A “Risk Factors”Note 1 in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2023.

We ~~intend to use cash on hand~~have identified Business Combinations and ~~borrowings under our Credit Facility primarily to acquire funeral home~~Goodwill as those accounting policies that require significant judgments, assumptions and ~~cemetery businesses~~estimates and for internal growth projects, such as cemetery inventory development and funeral home expansion projects, and for payment of dividends. From time to time we may also use available cash to repurchase shares of our common stock in open market or privately negotiated transactions. Wethat have ~~the ability to draw~~a significant impact on our ~~revolving credit facility, subject~~financial condition and results of operations. These policies are considered critical because they may result in fluctuations in our reported results from period to ~~customary terms~~period due to the significant judgments, estimates and assumptions about complex and inherently uncertain matters and because the use of different judgments, assumptions or estimates could have a material impact on our financial condition or results of operations. Actual results may differ from these estimates and such estimates may change if the underlying conditions or assumptions change. Historical performance should not be viewed as indicative of future performance because there can be no assurance the ~~Credit Agreement. We believe that our existing cash balance, future cash flows from operations~~margins, operating income and ~~borrowings under our Credit Facility described below~~net earnings, as a percentage of revenue, will be ~~sufficient~~consistent from period to ~~meet~~period. We evaluate our ~~anticipated working capital requirements, capital expenditures, scheduled debt payments, commitments, dividends~~critical accounting estimates and ~~acquisitions for the foreseeable future.~~

~~Cash Flows~~

~~We began 2017 with $3.3 million in cash~~judgments required by our policies on an ongoing basis and other liquid investments and ended the third quarter with $0.8 million in cash. As of September 30, 2017, we had borrowings of $75.5 million outstanding on our revolving credit facility compared to $67.7 million outstandingupdate them as ~~of December 31, 2016.~~

~~The following table sets forth the elements of cash flow for the nine months ended September 30, 2016 and 2017 (in millions):~~

For the Nine Months Ended September 30,
2016 2017
Cash at January 1^st
$ 0.5
$ 3.3
Cash flow from operating activities 34.8
30.8
Acquisitions and land for new construction (15.1 ) (0.7 )
Purchase of land and buildings previously leased (6.3 ) —
Net proceeds from the sale of other assets 1.0
0.4
Growth capital expenditures (6.8 ) (6.8 )
Maintenance capital expenditures (5.2 ) (6.3 )
Net (payments) borrowings on our revolving credit facility, term loan and long-term debt obligations 0.3
(1.7 )
Taxes paid on restricted stock vestings and exercise of non-qualified options (0.6 ) (0.5 )
Dividends paid on common stock (1.7 ) (2.5 )
Proceeds from the exercise of stock options and employee stock purchase plan contributions 0.7
1.2
Purchase of treasury stock —
(16.4 )
Payment of loan origination costs related to the credit facility (0.7 ) —
Other financing costs (0.1 ) —
Cash at September 30th $ 0.8
$ 0.8

~~Operating Activities~~

For the nine months ended September 30, 2017, cash provided by operating activities was $30.8 million compared to cash provided by operating activities of $34.8 million for the nine months ended September 30, 2016, a decrease of $4.0 million, due primarily to the decline in preneed cemetery revenue and acquired funeral home operating profit margin in the second and third quarters of 2017 and unfavorable working capital changes, which include, the timing of payments for income taxes, payments for accrued severance for the retirement of a former executive and our ~~Good To Great~~ ~~incentive compensation plan during the first quarter of 2017.~~

~~Investing Activities~~

Our investing activities resulted in a net cash outflow of $13.4 million for the nine months ended September 30, 2017 compared to $32.4 million for the nine months ended September 30, 2016, a decrease of $19.0 million. During the nine months ended September 30, 2017, we purchased real estate for funeral home parking lot expansion projects for approximately $0.7 million. Capital expenditures totaled $13.1 million, of which $6.8 million and $6.3 million were growth and maintenance capital expenditures, respectively. Our growth capital expenditures were primarily related to cemetery development costs of $3.0 million, construction costs related to two new funeral home facilities of approximately $2.5 million and renovations at certain businesses of $1.3 million. Maintenance capital expenditures in the nine months ended September 30, 2017 were primarily related to maintenance projects for facility repairs and improvements of $1.8 million, vehicle purchases of $1.7 million, IT infrastructure improvements, general equipment, and furniture purchases of $1.8 million, and paving roads, parking lots and landscaping projects of $1.0 million.

During the nine months ended September 30, 2016, we acquired three funeral home businesses for approximately $15.8 million. We purchased land for funeral home expansion projects for approximately $2.7 million. Additionally, we purchased land and buildings at four funeral home locations that were previously leased for approximately $6.3 million. Capital expenditures totaled $12.0 million, of which $6.8 million and $5.2 million were growth and maintenance capital expenditures, respectively. Our growth capital expenditures were primarily construction costs related to funeral home facilities of approximately $2.3 million, renovations at certain business locations of $1.3 million and cemetery development costs of $3.2 million. Maintenance capital expenditures in the nine months ended September 30, 2016 were primarily related to vehicle purchases of $1.2 million, general

~~equipment and furniture purchases of $1.6 million and maintenance projects such as paving roads, parking lots, facility repairs and general improvements of $2.4 million.~~

~~Financing Activities~~

Our financing activities resulted in a net cash outflow of $19.9 million for the nine months ended September 30, 2017 compared to $2.1 million for the nine months ended September 30, 2016, an increase of $17.8 million. During the nine months ended September 30, 2017, we had net payments on our revolving credit facility and term loan of $0.6 million. We also purchased treasury stock for $16.4 million and paid $2.5 million in dividends.

During the nine months ended September 30, 2016, we had net borrowings on our revolving credit facility and term loan of $1.3 million. We also paid transaction costs of approximately $0.7 million related to the Seventh Amendment of our Credit Facility and paid $1.7 million in dividends.

~~Dividends~~

On July 26, 2017 our Board declared a dividend of $0.05 per share, totaling approximately $0.8 million, which was paid on September 1, 2017 to record holders of our common stock as of August 14, 2017. For the three months ended September 30, 2016, we paid a quarterly dividend of $0.050 per share, totaling approximately $0.8 million. For the nine months ended September 30, 2016 and 2017, we paid total dividends of approximately $1.7 million and $2.5 million, respectively.

~~Share Repurchase~~

On February 25, 2016, our Board approved a share repurchase program authorizing us to purchase up to an aggregate of $25.0 million of our common stock in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). During the three months ended September 30, 2017, we repurchased 574,054 shares of common stock for a total cost of $14.0 million at an average cost of $24.35 per share pursuant to this share repurchase program. We did not purchase any shares of common stock in the first or second quarter of 2017. Our shares were purchased in the open market. Purchases were at times and in amounts as management determined appropriate based on ~~factors such as market conditions, legal requirements and other business considerations. Shares purchased pursuant to the repurchase program are currently held as treasury shares.~~changing conditions.

On August 18, 2017, we purchased 100,000 shares of our common stock from Melvin C. Payne, our Chairman of the Board and Chief Executive Officer. The purchase of these shares was made pursuant to a privately negotiated transaction at a price of $23.85 per share for a total purchase price of $2.4 million. The purchase price was the stock's trading price at the time of the transaction. This purchase was not a part of the share repurchase program approved by the Board on February 25, 2016. The repurchase of the shares held by Mr. Payne was approved in advance by our Board, with Mr. Payne abstaining.

~~Debt Obligations~~

The outstanding principal of our total long-term debt and capital lease obligations at September 30, 2017 totaled $218.8 million and consisted of $130.3 million under our term loan, $75.5 million outstanding under our revolving credit facility and $14.0 million in acquisition indebtedness and capital lease obligations.

As of September 30, 2017, we had a $300 million secured bank credit facility with Bank of America, N.A., as Administrative Agent (the “Credit Agreement”), comprised of a $150 million revolving credit facility and a $150 million term loan (collectively, the “Credit Facility”). The Credit Facility also contains an accordion provision to borrow up to an additional $75 million in revolving loans, subject to certain conditions. The Credit Facility is collateralized by all personal property and funeral home real property in certain states.

We have one letter of credit issued on November 30, 2016 and outstanding under the Credit Facility for approximately $2.0 million, which bears interest at 2.125% and will expire on November 27, 2017. The letter of credit automatically renews annually and secures our obligations under our various self-insured policies. Under the Credit Facility, outstanding borrowings bear interest at either a prime rate or a LIBOR rate, plus an applicable margin based upon our leverage ratio. At September 30, 2017, the prime rate margin was equivalent to 1.125% and the LIBOR margin was 2.125%. The weighted average interest rate on the Credit Facility for the three and nine months ended September 30, 2017 was 3.4% and 3.1%, respectively.

We have no material assets or operations independent of our subsidiaries. All assets and operations are held and conducted by our subsidiaries, each of which have fully and unconditionally guaranteed our obligations under the Credit Facility. Additionally, we do not currently have any significant restrictions on our ability to receive dividends or loans from any subsidiary guarantor under the Credit Facility.

We were in compliance with the covenants contained in the Credit Agreement as of September 30, 2017. The Credit Agreement contains key ratios with which we must comply, including a requirement to maintain a leverage ratio of no more than 3.5 to 1.00 and a covenant to maintain a fixed charge coverage ratio of no less than 1.20 to 1.00. As of September 30, 2017, the leverage ratio was 2.99 to 1.00 and the fixed charge coverage ratio was 1.89 to 1.00.

Amortization of debt issuance costs related to our Credit Facility was approximately $0.1 million for both the three months ended September 30, 2016 and 2017 and $0.3 million and $0.2 million for the nine months ended September 30, 2016 and 2017, respectively. The unamortized debt issuance costs related to the Credit Facility are being amortized over the remaining term of the related debt using the effective interest method for our term loan and the straight line method for our revolving credit facility.

~~Convertible Subordinated Notes due 2021~~

On March 19, 2014, we issued $143.75 million aggregate principal amount of 2.75% convertible subordinated notes due March 15, 2021 (the “Convertible Notes”). The Convertible Notes bear interest at 2.75% per year. Interest on the Convertible Notes began to accrue on March 19, 2014 and is payable semi-annually in arrears on March 15 and September 15 of each year.

At September 30, 2017, the carrying amount of the equity component was approximately $18.0 million. At September 30, 2017, the principal amount of the liability component was $143.75 million and the net carrying amount was $123.2 million. The unamortized discount of $18.7 million and the unamortized debt issuance costs of $1.9 million as of September 30, 2017 are being amortized using the effective interest method over the remaining term of the Convertible Notes. The effective interest rate on the unamortized discount and the debt issuance costs for the three and nine months ended September 30, 2016 and 2017 was 6.75% and 2.75%, respectively.

Interest expense on the Convertible Notes included contractual coupon interest expense of approximately $1.0 million for both the three months ended September 30, 2016 and 2017 and $3.0 million for both the nine months ended September 30, 2016 and 2017. Accretion of the discount on the Convertible Notes was $1.0 million and $1.1 million for the three months ended September 30, 2016 and 2017, respectively, and $2.9 million and $3.2 million for the nine months ended September 30, 2016 and 2017, respectively. Amortization of debt issuance costs related to our Convertible Notes was approximately $0.1 million for both the three months ended September 30, 2016 and 2017 and $0.4 million for both the nine months ended September 30, 2016 and 2017.

The initial conversion rate of the Convertible Notes, as of March 19, 2014, was 44.3169 shares of our common stock per $1,000 principal amount of Convertible Notes, equivalent to an initial conversion price of approximately $22.56 per share of common stock. The adjusted conversion rate of the Convertible Notes, in effect at September 30, 2017, is 44.5392 shares of our common stock per $1,000 principal amount of Convertible Notes, equivalent to an adjusted conversion price of approximately $22.45 per share of common stock.

SEASONALITY

Our business can be affected by seasonal fluctuations in the death ~~rate. Generally, the death~~ rate, iswith number of deaths generally higher during the winter months ~~because~~due to the higher incidences of death from influenza and pneumonia ~~are higher during this period than~~as compared to other periods of the year. Seasonal fluctuations in the death rate may be further affected by epidemics and pandemics, like COVID-19, including any new or emerging public health threats. These unexpected fluctuations may not only increase death rates during the affected period, but also may subsequently decrease death rates following the affected period as a result of an acceleration of death rates (also referred to as a “pull forward effect”). As a result, we are unable to predict or forecast the duration or variation of the current death rate with any certainty.


~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk.~~

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

In the ordinary course of business, we are typically exposed to a variety of market risks. Currently, these are primarily related to interest rate risk and changes in the values of securities associated with the preneed and perpetual care trusts. Management is actively involved in monitoring exposure to market risk and developing and utilizing appropriate risk management techniques when appropriate and when available for a reasonable price. We are not exposed to any other significant market ~~risks.~~risks other than those related to the impact of health and safety concerns from epidemics and pandemics and inflation, which are described in more detail in Part 1, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023.

The following quantitative and qualitative information is provided about financial instruments to which we are a party at ~~September 30, 2017~~March 31, 2024 and from which we may incur future gains or losses from changes in market conditions. We do not enter into derivative or other financial instruments for speculative or trading purposes.

Hypothetical changes in interest rates and the values of securities associated with the preneed and perpetual care trusts chosen for the following estimated sensitivity analysis are considered to be reasonable near-term changes generally based on consideration of past fluctuations for each risk category. However, since it is not possible to accurately predict future changes in interest rates, these hypothetical changes may not necessarily be an indicator of probable future fluctuations.

The following information about our market-sensitive financial instruments constitutes a “forward-looking statement.”

In connection with our preneed funeral operations and preneed cemetery merchandise and service sales, the related funeral and cemetery trust funds own investments in equity and debt securities and mutual funds, which are sensitive to current market prices. Cost and market values of such investments ~~as of September 30, 2017~~at March 31, 2024 are presented in Part 1, Item 1, ~~“Condensed Notes to Consolidated~~ Financial Statements,~~” Notes 3 and 6~~ Note 8 to our Consolidated Financial Statements in this Quarterly Report on Form 10-Q. The sensitivity of the fixed income securities is such that a 0.25% change in interest rates causes an approximate ~~1.51%~~0.87% change in the value of the fixed income securities.

We monitor current and forecasted interest rate risk in the ordinary course of business and seek to maintain optimal financial flexibility, quality and solvency. ~~As of September 30, 2017,~~At March 31, 2024, we had outstanding borrowings under the Credit Facility of ~~$75.5 million under our $150.0~~

~~million revolving credit facility and approximately $130.3 million outstanding on our term loan.~~$154.1 million. Any further borrowings or voluntary prepayments against the ~~revolving credit facility~~Credit Facility or any change in the floating rate would cause a change in interest expense. We have the option to pay interest under the Credit Facility at either prime rate or ~~LIBOR~~the BSBY rate plus ~~a margin.~~an applicable margin based on our leverage ratio. At ~~September 30, 2017,~~March 31, 2024, the prime rate margin was equivalent to ~~1.125%~~2.375% and the ~~LIBOR~~BSBY rate margin was ~~2.125%~~3.375%. Assuming the outstanding balance remains unchanged, a change of 100 basis

- 44 -

points in our borrowing rate would result in a change in income before taxes of ~~$2.1~~$1.5 million. We have not entered into interest rate hedging arrangements in the past. Management continually evaluates the cost and potential benefits of interest rate hedging arrangements.

Our ~~Convertible~~Senior Notes bear interest at athe fixed annual rate of ~~2.75% per year. The Convertible~~4.25%. We may redeem the Senior Notes, ~~do not contain a call feature.~~in whole or in part, at the redemption price of 102.13% on or after May 15, 2024, 101.06% on or after May 15, 2025 and 100% on or after May 15, 2026, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. At ~~September 30, 2017,~~any time before May 15, 2024, we may also redeem all or part of the Senior Notes at the redemption prices described in the Indenture, plus accrued and unpaid interest, if any, to (but excluding) the date of redemption. At March 31, 2024, the carrying value of the Senior Notes on our Consolidated Balance Sheet was $396.1 million and the fair value of ~~these notes~~the Senior Notes was ~~approximately $179.9~~$355.2 million based on the last traded or broker quoted ~~price.~~price, reported by Financial Industry Regulatory Authority. Increases in market interest rates may cause the value of the ~~Convertible~~Senior Notes to decrease, but such changes will not affect our interest costs.

The remainder of our long-term debt and leases ~~consists~~consist of non-interest bearing notes and fixed rate instruments that do not trade in a market and do not have a quoted market value. Any increase in market interest rates ~~could cause~~causes the fair value of those liabilities to decrease, but such changes will not affect our interest costs.


~~Item 4.~~	~~Controls and Procedures.~~

Item 4.Controls and Procedures.

Management’s Evaluation of Disclosure Controls and Procedures

Our management, including our principal executive and principal financial ~~officer,~~officers, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”)~~Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the ~~Securities and Exchange Commission~~SEC's rules and forms, and to ensure that such information is accumulated and communicated to management, including our principal executive and principal financial ~~officer,~~officers, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and principal financial ~~officer~~officers have concluded that our disclosure controls and procedures are effective ~~as of September 30, 2017~~at March 31, 2024 and that the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations, and cash flows for the periods presented in conformity with US GAAP.

Changes in Internal Control over Financial Reporting

There was no change in our system of internal control over financial reporting (defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the fiscal quarter covered by this ~~quarterly report~~Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

- 45 -

PART II – OTHER INFORMATION


~~Item 1.~~	~~Legal Proceedings.~~

Item 1.Legal Proceedings.

We and our subsidiaries are parties to a number of legal proceedings that arise from time to time in the ordinary course of our business. While the outcome of these proceedings cannot be predicted with certainty, we do not expect these matters to have a material adverse effect on our financial statements.

We self-insure against certain risks and carry insurance with coverage and coverage limits for risk in excess of the coverage amounts consistent with our assessment of risks in our business and of an acceptable level of financial exposure. Although there can be no assurance that self-insurance reserves and insurance will be sufficient to mitigate all damages, claims, or contingencies, we believe that the reserves and our insurance provides reasonable coverage for known asserted and unasserted claims. In the event we sustain a loss from a claim and the insurance carrier disputes coverage or coverage limits, we may record a charge in a different period than the recovery, if any, from the insurance carrier.


~~Item 1A.~~	~~Risk Factors.~~

Item 1A.Risk Factors.

There have been no material changes in our risk factors as previously disclosed in Part I, Item 1A “Risk Factors” ofin our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2023. Readers should carefully consider the factors discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2023, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2023 are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.


~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table sets forth certain information with respect to repurchases of our common stock during the quarter ended ~~September 30, 2017:~~March 31, 2024:

Period
Total Number of Shares Purchased⁽¹⁾
Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Dollar Value of Shares That May Yet Be Purchased Under the Program

July 1, 2017 - July 31, 2017 —
$ —
—
$ —
August 1, 2017 - August 31, 2017 285,353
$ 24.30
185,353
$ 20,450,852
September 1, 2017 - September 30, 2017 388,701
$ 24.26
388,701
$ 11,019,052
Total for quarter ended September 30, 2017 674,054
574,054


Period	Total Number of Shares Purchased(1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Dollar Value of Shares That May Yet Be Purchased Under the Program(2)

January 1, 2024 - January 31, 2024	—	$	—	—	$	48,898,769
February 1, 2024 - February 29, 2024	14,597	$	25.58	—	$	48,898,769
March 1, 2024 - March 31, 2024	1,718	$	26.14	—	$	48,898,769
Total for quarter ended March 31, 2024	16,315			—



(1)			Represents shares surrendered by employees to pay taxes withheld upon the vesting of restricted stock awards.
(2)

(See Part I, Item 1,	)	~~On August 18, 2017, we purchased 100,000 shares of~~ Financial Statements, Note 14 for additional information on our common stock from Melvin C. Payne, our Chairman of the Board and Chief Executive Officer. The purchase of these shares was made pursuant to a privately negotiated transaction at a price of $23.85 per share for a total purchase price of $2.4 million.The purchase price was the stock's trading price at the time of the transaction. This purchase was not a part of thepublicly announced share repurchase ~~program approved by the Board on February 25, 2016. The repurchase of the shares held by Mr. Payne was approved in advance by our Board, with Mr. Payne abstaining~~. program.


~~Item 3.~~	~~Defaults Upon Senior Securities~~. Item 3.Defaults Upon Senior Securities.

Not applicable.


~~Item 4.~~	~~Mine Safety Disclosures.~~

Item 4.Mine Safety Disclosures.

Not applicable.


~~Item 5.~~	~~Other Information.~~

~~None.~~Item 5.Other Information.

Not applicable.


~~Item 6.~~	~~Exhibits.~~

Item 6.Exhibits.

The exhibits required to be filed pursuant to the requirements of Item 601 of Regulation S-K are set forth in the Exhibit Index accompanying this Quarterly Report on Form 10-Q and are incorporated herein by reference.

- 46 -

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	CARRIAGE SERVICES, INC.
Date:		~~October 25, 2017~~May 3, 2024	/s/ ~~Viki K. Blinderman~~L. Kian Granmayeh
			~~Viki K. Blinderman~~L. Kian Granmayeh
			~~Senior~~Executive Vice President, ~~Principal~~Chief Financial Officer and ~~Secretary~~Treasurer
			(Principal Financial Officer)

- 47 -

CARRIAGE SERVICES, INC.

INDEX OF EXHIBITS


Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation, as amended, of the Company. Incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 1996, filed on March 20, 1997.

3.2	Certificate of Amendment dated May 7, 1997. Incorporated by reference to Exhibit ~~No.~~	~~Description~~10.2 to the Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended September 30, 1997, filed on November 14, 1997.

3.3	Certificate of Amendment dated May 7, 2002. Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended June 30, 2002, filed on August 13, 2002.

3.4	Amended and Restated By-Laws of Carriage Services, Inc. dated June 21, 2023. Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 22, 2023.

10.1	Employment Agreement dated March 25, 2024, by and between the Company and Kathryn Shanley. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 25, 2024. †

10.2	Employment Agreement dated November 5, 2019, by and between the Company and Paul D. Elliott. Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 8, 2019. †

*10.3	First Amendment to Employment Agreement dated September 30, 2022, by and between the Company and Paul D. Elliott. †

*10.4	Fourth Amendment to Employment Agreement dated February 21, 2024, by and between the Company and Carlos R. Quezada. †

*10.5	Fourth Amendment to Employment Agreement dated February 21, 2024, by and between the Company and Steven D. Metzger. †

*10.6	First Amendment to Employment Agreement dated February 21, 2024, by and between the Company and L. Kian Granmayeh. †

*10.7	Second Amendment to Employment Agreement dated February 21, 2024, by and between the Company and Shawn R. Phillips. †

10.8	Transition Agreement, dated February 21, 2024, by and between the Company and Melvin C. Payne. Incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed on February 22, 2024. †

*31.1	Certification of Periodic Financial Reports by ~~Melvin C. Payne~~Carlos R. Quezada in satisfaction of Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2	Certification of Periodic Financial Reports by ~~Viki K. Blinderman~~L. Kian Granmayeh in satisfaction of Section 302 of the Sarbanes-Oxley Act of 2002.

**32	Certification of Periodic Financial Reports by ~~Melvin C. Payne~~Carlos R. Quezada and ~~Viki K. Blinderman~~L. Kian Granmayeh in satisfaction of Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. Section 1350.

*101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

*~~101~~101.SCH	Inline XBRL Taxonomy Extension Schema Documents.

*101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.

*101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.

*101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.

*101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.

*104	Cover Page Interactive Data ~~Files.~~File (formatted as Inline XBRL and contained in Exhibit 101).

~~__________________~~



(*)			Filed herewith.
(**)			Furnished herewith.
(*(†)			~~Filed herewith.~~



~~(**)~~	~~Furnished herewith.~~



~~(†)~~	Management contract or compensatory plan or arrangement.

- 4948 -



~~DELAWARE~~	~~76-0423828~~
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

~~3040 Post Oak Boulevard, Suite 300~~
~~Houston, Texas, 77056~~


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $.01 per share	CSV	New York Stock Exchange



	Page
PART I – FINANCIAL INFORMATION

Item 1. Financial Statements		3

Unaudited Consolidated Balance ~~Sheets~~Sheet as of December 31, ~~2016~~2023 and ~~September 30, 2017~~March 31, 2024		3

Unaudited Consolidated Statements of Operations for the Three ~~and Nine~~ Months ended ~~September 30, 2016~~March 31, 2023 and ~~2017~~2024		4

Unaudited Consolidated Statements of Cash Flows for the ~~Nine~~Three Months ended ~~September 30, 2016~~March 31, 2023 and ~~2017~~2024		5

Unaudited Consolidated Statements of Changes in Stockholders' Equity for the Three Months ended March 31, 2023 and 2024		6

Condensed Notes to Consolidated Financial Statements		67

Cautionary Statement on Forward–Looking Statements		3031

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		3233

Item 3. Quantitative and Qualitative Disclosures About Market Risk		4544

Item 4. Controls and Procedures		4645

PART II – OTHER INFORMATION

Item 1. Legal Proceedings		4746

Item 1A. Risk Factors		4746

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		4746

Item 3. Defaults Upon Senior Securities		4746

Item 4. Mine Safety Disclosures		4746

Item 5. Other Information		4746

Item 6. Exhibits		4746

SIGNATURE		4847

INDEX OF EXHIBITS		4948


				(unaudited)
	December 31, 2016			September 30, 2017
	December 31, 2023							December 31, 2023	March 31, 2024
ASSETS
Current assets:
Current assets:
Current assets:
Cash and cash equivalents	$	3,286		$	759
Accounts receivable, net of allowance for bad debts of $746 in 2016 and $800 in 2017	18,860			18,821
Cash and cash equivalents
Cash and cash equivalents
Accounts receivable, net
Inventories	6,147			6,346
Prepaid expenses	2,640			1,355
Other current assets	2,034			764
Prepaid and other current assets
Total current assets	32,967			28,045
Preneed cemetery trust investments	69,696			71,728
Preneed funeral trust investments	89,240			89,444
Preneed receivables, net of allowance for bad debts of $2,166 in 2016 and $2,230 in 2017	30,383			31,279
Receivables from preneed trusts	14,218			15,306
Property, plant and equipment, net of accumulated depreciation of $110,509 in 2016 and $113,616 in 2017	235,113			235,501
Cemetery property, net of accumulated amortization of $34,194 in 2016 and $36,638 in 2017	76,119			76,961
Preneed cemetery receivables, net
Receivables from preneed funeral trusts, net
Property, plant and equipment, net
Cemetery property, net
Goodwill	275,487			275,487
Intangible and other non-current assets	14,957			14,616
Intangible and other non-current assets, net
Operating lease right-of-use assets
Cemetery perpetual care trust investments	46,889			48,679
Total assets	$	885,069		$	887,046
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations	$	13,267		$	16,323
Current liabilities:
Current liabilities:
Current portion of debt and lease obligations
Current portion of debt and lease obligations
Current portion of debt and lease obligations
Accounts payable	10,198			6,686
Other liabilities	717			1,811
Accrued liabilities	20,091			15,294
Accrued and other liabilities

Total current liabilities	44,273			40,114
Long-term debt, net of current portion	137,862			125,442
Revolving credit facility	66,542			74,550
Convertible subordinated notes due 2021	119,596			123,182
Obligations under capital leases, net of current portion	2,630			2,492
Total current liabilities
Total current liabilities
Acquisition debt, net of current portion
Credit facility

Senior notes
Senior notes
Senior notes
Obligations under finance leases, net of current portion
Obligations under operating leases, net of current portion
Deferred preneed cemetery revenue	54,631			55,275
Deferred preneed funeral revenue	33,198			34,652
Deferred tax liability	42,810			44,025
Other long-term liabilities	2,567			2,723
Deferred preneed cemetery receipts held in trust	69,696			71,728
Deferred preneed funeral receipts held in trust	89,240			89,444
Care trusts’ corpus	46,290			48,186
Total liabilities	709,335			711,813
Commitments and contingencies:							Commitments and contingencies:
Stockholders’ equity:
Common stock, $.01 par value; 80,000,000 shares authorized and 22,490,855 and 22,609,120 shares issued at December 31, 2016 and September 30, 2017, respectively	225			226
Common stock, $0.01 par value; 80,000,000 shares authorized and 26,627,319 and 26,793,343 shares issued, respectively and 14,999,501 and 15,165,525 shares outstanding, respectively
Common stock, $0.01 par value; 80,000,000 shares authorized and 26,627,319 and 26,793,343 shares issued, respectively and 14,999,501 and 15,165,525 shares outstanding, respectively
Common stock, $0.01 par value; 80,000,000 shares authorized and 26,627,319 and 26,793,343 shares issued, respectively and 14,999,501 and 15,165,525 shares outstanding, respectively
Additional paid-in capital	215,064			216,396
Retained earnings	20,711			35,243
Treasury stock, at cost; 5,849,316 and 6,523,370 shares at December 31, 2016 and September 30, 2017, respectively	(60,266		)	(76,632		)
Treasury stock, at cost; 11,627,818 shares
Total stockholders’ equity	175,734			175,233
Total liabilities and stockholders’ equity	$	885,069		$	887,046


			Three months ended March 31,
			Three months ended March 31,
			Three months ended March 31,
			2023
			2023
			2023
Revenue:
Revenue:
Revenue:
Service revenue
Service revenue
Service revenue
Property and merchandise revenue
Property and merchandise revenue
Property and merchandise revenue
Other revenue
Other revenue
Other revenue
			95,514
			95,514
			95,514
Field costs and expenses:
Field costs and expenses:
Field costs and expenses:
Cost of service
Cost of service
Cost of service
Cost of merchandise
Cost of merchandise
Cost of merchandise
Cemetery property amortization
Cemetery property amortization
Cemetery property amortization
Field depreciation expense
Field depreciation expense
Field depreciation expense
Regional and unallocated funeral and cemetery costs
Regional and unallocated funeral and cemetery costs
Regional and unallocated funeral and cemetery costs
Other expenses
Other expenses
Other expenses
			64,459
			64,459
			64,459
Gross profit
Gross profit
Gross profit
Corporate costs and expenses:
Corporate costs and expenses:
Corporate costs and expenses:
General, administrative and other
General, administrative and other
General, administrative and other

Net loss on divestitures, disposals and impairments charges

Net loss on divestitures, disposals and impairments charges

Net loss on divestitures, disposals and impairments charges
Operating income
Operating income
Operating income

Interest expense

Interest expense

Interest expense

Loss on property damage, net of insurance claims
	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2017			2016			2017
Revenues:
Funeral	$	45,183		$	47,329		$	140,952		$	150,279
Cemetery	14,957			13,725			44,384			42,784
Loss on property damage, net of insurance claims
	60,140			61,054			185,336			193,063
Field costs and expenses:
Funeral	26,982			29,267			82,546			89,118
Cemetery	8,695			8,769			25,546			26,142
Depreciation and amortization	3,452			3,601			10,359			10,719
Regional and unallocated funeral and cemetery costs	2,783			3,937			8,547			9,845
	41,912			45,574			126,998			135,824
Gross profit	18,228			15,480			58,338			57,239
Corporate costs and expenses:
General, administrative and other	6,130			6,134			21,208			19,549
Home office depreciation and amortization	355			401			1,139			1,155
	6,485			6,535			22,347			20,704
Operating income	11,743			8,945			35,991			36,535
Interest expense	(2,903		)	(3,282		)	(8,722		)	(9,517		)
Accretion of discount on convertible subordinated notes	(981		)	(1,097		)	(2,862		)	(3,200		)
Loss on early extinguishment of debt	—			—			(567		)	—
Loss on property damage, net of insurance claims
Other, net
Other, net
Other, net	(285		)	(6		)	20			(3		)
Income before income taxes	7,574			4,560			23,860			23,815
Provision for income taxes	(3,030		)	(1,824		)	(9,545		)	(9,526		)
Tax adjustment related to certain discrete items	1,139			302			1,139			243
Total provision for income taxes	$	(1,891	)	$	(1,522	)	$	(8,406	)	$	(9,283	)
Income before income taxes
Income before income taxes
Expense for income taxes
Expense for income taxes
Expense for income taxes
(Benefit) expense related to discrete income tax items
(Benefit) expense related to discrete income tax items
(Benefit) expense related to discrete income tax items
Total expense for income taxes
Total expense for income taxes
Total expense for income taxes
Net income
Net income
Net income	$	5,683		$	3,038		$	15,454		$	14,532

Basic earnings per common share:	$	0.34		$	0.18		$	0.93		$	0.87

Basic earnings per common share:

Basic earnings per common share:
Diluted earnings per common share:
Diluted earnings per common share:
Diluted earnings per common share:	$	0.33		$	0.17		$	0.91		$	0.81

Dividends declared per common share	$	0.050		$	0.050		$	0.100		$	0.150
Dividends declared per common share:

Dividends declared per common share:

Dividends declared per common share:

Weighted average number of common and common equivalent shares outstanding:

Weighted average number of common and common equivalent shares outstanding:

Weighted average number of common and common equivalent shares outstanding:
Basic	16,529			16,476			16,502			16,575
Basic
Basic
Diluted	17,101			17,598			16,962			17,887
Diluted
Diluted


x	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~


o	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~


	Three months ended March 31, 2023

	Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Total













Balance – December 31, 2022	14,732	$	264	$	238,780	$	176,843	$	(278,753)	$	137,134
Net income	—	—		—		8,844		—		8,844
Issuance of common stock from employee stock purchase plan	22	—		526		—		—		526
Issuance of common stock to directors and board advisor	4	—		112		—		—		112
Issuance of common stock to former executive	30	—		826		—		—		826
Issuance of restricted common stock	142	2		(2)		—		—		—
Exercise of stock options	1	—		(21)		—		—		(21)
Cancellation and surrender of restricted common stock	(4)	—		(77)		—		—		(77)
Stock-based compensation expense	—	—		1,203		—		—		1,203
Dividends on common stock	—	—		(1,661)		—		—		(1,661)


Other	8	—		276		—		—		276
Balance – March 31, 2023	14,935	$	266	$	239,962	$	185,687	$	(278,753)	$	147,162


	Three months ended March 31, 2024

	Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Total
Balance – December 31, 2023	15,000	$	266	$	241,291	$	210,256	$	(278,753)	$	173,060
Net income	—	—		—		6,973		—		6,973
Issuance of common stock from employee stock purchase plan	16	—		347		—		—		347
Issuance of common stock to directors and board advisor	4	—		113		—		—		113

Issuance of restricted common stock	157	2		(2)		—		—		—

Cancellation and surrender of restricted common stock	(43)	—		(418)		—		—		(418)
Stock-based compensation expense	—	—		376		—		—		376
Dividends on common stock	—	—		(1,686)		—		—		(1,686)

Other	31	—		790		—		—		790
Balance – March 31, 2024	15,165	$	268	$	240,811	$	217,229	$	(278,753)	$	179,555


	December 31, 2023		March 31, 2024
Land	$	87,635	$	86,888
Buildings and improvements	263,522		260,864
Furniture, equipment and vehicles	74,372		72,880
Property, plant and equipment, at cost	425,529		420,632
Less: accumulated depreciation	(138,045)		(138,667)
Property, plant and equipment, net	$	287,484	$	281,965



	December 31, 2016		September 30, 2017
Funeral receivables, net of allowance for bad debt of $189 and $197, respectively	$	8,664	$	7,865
Cemetery receivables, net of allowance for bad debt of $557 and $603, respectively	9,862		10,552
Other receivables	334		404
Accounts receivable, net	$	18,860	$	18,821



			% Change
Increase in Deferred tax liability	$	2,255	5.6	%
Increase in Total liabilities	$	2,255	0.3	%
Decrease in Retained earnings	$	2,255	9.8	%
Decrease in Total stockholders' equity	$	2,255	1.3	%


	Initial Purchase Price Allocation		Adjustments		Adjusted Purchase Price Allocation
Current assets	$	7,087	$	131	$	7,218
Preneed trust assets	—		11,428		11,428
Property, plant & equipment	12,577		245		12,822
Cemetery property	9,035		—		9,035
Goodwill	13,612		(106)		13,506
Intangible and other non-current assets	3,763		—		3,763
Assumed liabilities	(300)		(66)		(366)

Preneed trust liabilities	—		(11,428)		(11,428)
Deferred revenue	(1,774)		(204)		(1,978)
Purchase price	$	44,000	$	—	$	44,000


Acquisition Date	Type of Business	Market	Assets Acquired (Excluding Goodwill)		Goodwill Recorded		Liabilities and Debt Assumed
March 22, 2023	Three Funeral Homes, Two Cemeteries and One Cremation Focused Business	Bakersfield, CA	$	44,266	$	13,506	$	(13,772)


	December 31, 2023		March 31, 2024
Goodwill at the beginning of the period	$	410,137	$	423,643
Increase in goodwill related to acquisitions	13,506		—
Decrease in goodwill related to divestitures	—		(8,748)

Goodwill at the end of the period	$	423,643	$	414,895


FORM
~~FORM~~ 10-Q



Commission File Number:	1-11961


Delaware			76-0423828


	January 1, 2024		Provision for Credit Losses		Write Offs		Recoveries		March 31, 2024
Trade and financed receivables:
Funeral	$	(266)	$	(238)	$	459	$	(257)	$	(302)
Cemetery	(1,240)		(208)		145		—		(1,303)
Total allowance for credit losses on trade and financed receivables	$	(1,506)	$	(446)	$	604	$	(257)	$	(1,605)


	December 31, 2023		March 31, 2024
Interment rights	$	60,863	$	63,328
Merchandise and services	11,223		11,314
Unearned finance charges	5,669		5,884
Cemetery receivables	$	77,755	$	80,526


	2024		2023		2022		2021		2020		Prior		Total
Total preneed cemetery receivables, at amortized cost	$	12,395	$	29,871	$	17,435	$	8,853	$	3,818	$	2,270	$	74,642


	31-60 Past Due		61-90 Past Due		91-120 Past Due		>120 Past Due		Total Past Due		Current		Total
Recognized revenue	$	2,418	$	512	$	333	$	3,635	$	6,898	$	51,278	$	58,176
Deferred revenue	444		128		141		1,234		1,947		20,403		22,350
Total contracts	$	2,862	$	640	$	474	$	4,869	$	8,845	$	71,681	$	80,526



	December 31, 2016			September 30, 2017
Preneed cemetery trust investments, at market value	$	71,834		$	73,889
Less: allowance for contract cancellation	(2,138		)	(2,161		)
Preneed cemetery trust investments, net	$	69,696		$	71,728



	Fair Value Hierarchy Level	Cost		Unrealized Gains		Unrealized Losses			Fair Market Value
Cash and money market accounts	1	$	4,698	$	—	$	—		$	4,698
Fixed income securities:
Foreign debt	2	4,834		275		(168		)	4,941
Corporate debt	2	19,335		1,145		(553		)	19,927
Preferred stock	2	16,329		383		(524		)	16,188
Mortgage-backed securities	2	1,089		240		(23		)	1,306
Common stock	1	24,574		3,376		(3,119		)	24,831
Mutual funds:
Fixed Income	2	1,200		81		—			1,281
Trust securities		$	72,059	$	5,501	$	(4,387	)	$	73,173
Accrued investment income		$	716						$	716
Preneed cemetery trust investments									$	73,889
Market value as a percentage of cost									101.5		%



Due in one year or less	$	15
Due in one to five years	2,718
Due in five to ten years	5,751
Thereafter	33,879
Total	$	42,363


Due in one year or less	$	136
Due in one to five years	12,662
Due in five to ten years	3,303
Thereafter	17,104
Total fixed income securities	$	33,205


	March 31, 2024
	In Loss Position Less than 12 months				In Loss Position Greater than 12 months				Total
	Fair Market Value		Unrealized Losses		Fair Market Value		Unrealized Losses		Fair Market Value		Unrealized Losses
Fixed income securities:
U.S. agency obligations	$	—	$	—	$	608	$	(56)	$	608	$	(56)
Foreign debt	—		—		501		(14)		501		(14)
Corporate debt	685		(16)		5,046		(2,492)		5,731		(2,508)
Preferred stock	941		(4)		7,708		(1,786)		8,649		(1,790)
Certificates of deposit	—		—		73		(7)		73		(7)
Total fixed income securities with an unrealized loss	$	1,626	$	(20)	$	13,936	$	(4,355)	$	15,562	$	(4,375)


	December 31, 2023		March 31, 2024
Preneed funeral trust investments, at market value	$	111,247	$	113,377
Less: allowance for contract cancellation	(3,405)		(3,544)
Preneed funeral trust investments	$	107,842	$	109,833


Due in one year or less	$	80
Due in one to five years	11,310
Due in five to ten years	2,962
Thereafter	15,466
Total fixed income securities	$	29,818



Due in one year or less	$	78
Due in one to five years	4,320
Due in five to ten years	6,208
Thereafter	35,000
Total	$	45,606


Due in one year or less	$	—
Due in one to five years	10,687
Due in five to ten years	2,905
Thereafter	15,472
Total fixed income securities	$	29,064



	September 30, 2017
Beginning balance	$	1,861
Write-offs and cancellations	(1,004		)
Provision	1,093
Ending balance	$	1,950



	December 31, 2016			September 30, 2017
Preneed trust funds, at cost	$	14,658		$	15,780
Less: allowance for contract cancellation	(440		)	(474		)
Receivables from preneed trusts, net	$	14,218		$	15,306


	December 31, 2023		March 31, 2024
Preneed funeral trust funds, at cost	$	22,196	$	22,301
Less: allowance for contract cancellation	(666)		(669)
Receivables from preneed funeral trusts, net	$	21,530	$	21,632


	Historical Cost Basis		Fair Value
Cash and cash equivalents	$	6,568	$	6,568
Fixed income investments	12,665		12,665
Mutual funds and common stocks	3,064		2,815
Annuities	4		4
Total	$	22,301	$	22,052



	Historical Cost Basis		Fair Value
As of September 30, 2017
Cash and cash equivalents	$	4,054	$	4,054
Fixed income investments	9,218		9,218
Mutual funds and common stocks	2,492		2,516
Annuities	16		16
Total	$	15,780	$	15,804



	Historical Cost Basis		Fair Value
As of December 31, 2016
Cash and cash equivalents	$	3,378	$	3,378
Fixed income investments	8,809		8,809
Mutual funds and common stocks	2,455		2,463
Annuities	16		16
Total	$	14,658	$	14,666



	December 31, 2016			September 30, 2017
Trust assets, at market value	$	46,889		$	48,679
Obligations due from trust	(599		)	(493		)
Care trusts’ corpus	$	46,290		$	48,186


	December 31, 2023		March 31, 2024
Tradenames	$	28,862	$	28,713
Capitalized commissions on preneed contracts, net of accumulated amortization of $3,788 and $3,980, respectively	4,678		4,715
Prepaid agreements not-to-compete, net of accumulated amortization of $3,158 and $3,276, respectively	1,335		1,269
Internal-use software, net of accumulated amortization of $444 and $528, respectively	2,422		2,835
Other	380		340
Intangible and other non-current assets, net	$	37,677	$	37,872