Carriage Services (CSV) 8-K Results of Operations and Financial Condition

Exhibit 99.1

		PressRelease
	Contacts:	Mel Payne, Chairman & CEO Joe Saporito, CFO Carriage Services, Inc. 713-332-8400
FOR IMMEDIATE RELEASE
		Ken Dennard / ksdennard@drg-e.com Lisa Elliott / lelliott@drg-e.com DRG&E / 713-529-6600

CARRIAGE SERVICES REPORTS THIRD QUARTER 2007 RESULTS
Earnings Higher as Revenue Increases 16%
Consolidated EBITDA Margin Increases 190 basis points
Consolidated EBITDA Increases 28%
Rolling Four Quarter Earnings Outlook Increased

November 1, 2007 – HOUSTON – Carriage Services, Inc. (NYSE: CSV) today announced third quarter results and provided a higher Rolling Four Quarter Outlook. Please go to the Investor homepage of Carriage’s web site at www.carriageservices.com for a link to the Press Release that includes properly formatted Annual and Quarterly Trend Reports. Results of continuing operations for the third quarter of 2007 were as follows:

§	Revenues of $40.6 million compared to revenues of $35 million for the third quarter of 2006.
§	Consolidated EBITDA Margin of 20.0% compared to Consolidated EBITDA Margin of 18.1% for the third quarter of 2006.
§	Consolidated EBITDA of $8.1 million compared to Consolidated EBITDA of $6.3 million for the third quarter of 2006.
§	Diluted earnings per share from continuing operations of $0.04 compared to a loss per share from continuing operations of $0.03 for the third quarter of 2006.

     Melvin C. Payne, Chairman and Chief Executive Officer, stated, “We continued to improve our operating execution with a third quarter financial performance that was solidly profitable compared to last year’s loss, notwithstanding weaker death rates this year versus last and an increase in overhead. Our same store cemetery operations had a good third quarter, primarily attributable to the continuing improvement at Rolling Hills Memorial Park and to broader performance in our Central Region cemetery operations. Same store funeral services decreased 3.7% during the quarter which was attributable to unusually weak death rates in our Eastern and Western Regions. The five acquisitions during the first nine months of 2007 proved to be significantly accretive to earnings in the third quarter.

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As a result of a 130 basis point increase in our Total Field EBITDA Margin, a relatively fixed consolidation platform overhead structure and our attractive low cost fixed capital structure, we were able to operationally and financially leverage a 16% increase in revenue during the third quarter into a 28% increase in Consolidated EBITDA and a $0.07 increase in diluted EPS. We expect the financial dynamic of leveraging relatively small revenue increases into strong earnings momentum to continue in the fourth quarter of 2007 and into 2008.” Please refer to our Company and Investment Profile at www.carriageservices.com for a more detailed discussion of the financial dynamics that result from the execution of the Company’s Standards Operating Model, 4E Leadership Model and Strategic Portfolio Optimization Model.

Trend Reporting

     “We now report our consolidated field operating and financial results both on a multi-year and a rolling quarterly basis to present long term trends and results by quarter for the five most recent quarters to reflect short term trends and seasonality”, continued Mr. Payne. “Just as we report internally for each of our businesses under the Standards Operating Model, the field level results highlight trends in volumes, revenues, Field EBITDA (controllable profit) and Field EBITDA Margin (controllable profit margin). Trend reporting allows us to focus on the key operational and financial results relevant to the longer term performance and valuation of our portfolio of deathcare businesses.

     “We will maintain separate reporting for our same store continuing operations (adjusted for dispositions as they occur) and our new acquisition portfolio to show how the execution of both our Standards Operating Model and our Strategic Portfolio Optimization Model will change the sustainable revenue and earning power profile of Carriage Services over time.”

     “Since this is only the third quarter under our new reporting format, we are commenting more extensively each quarter during 2007 in order to point out what we believe are the most substantive observations and conclusions. Just as we are still adjusting to our new reporting format, we realize that it will take time and continued explanation and discussion for our stockholders to fully understand and appreciate this new trend reporting approach.”

     As mentioned previously, please go to the Investor homepage of Carriage’s web site at www.carriageservices.com for a link to the Press release that includes properly formatted Annual and Quarterly Trend Reports.

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UNAUDITED INCOME STATEMENT FROM CONTINUING OPERATIONS
Annual Trend
For the Four Years Ended December 31, 2006 and Four Quarters Ended September 30, 2007
($000’s)

	Pro forma(1)					Pro forma(1)					Actual					Actual					Actual
	Year					Year					Year					Year					Trailing 4 Qtrs.
	2003					2004					2005					2006					9/30/2007
CONTINUING OPERATIONS
Same Store Contracts
Atneed Contracts		17,880		79.8	%		17,402		79.8	%		17,353		79.6	%		16,870		78.6	%		16,409		78.3	%
Preneed Contracts		4,515		20.2	%		4,412		20.2	%		4,436		20.4	%		4,597		21.4	%		4,538		21.7	%
Total Same Store Funeral Contracts		22,395		100.0	%		21,814		100.0	%		21,789		100.0	%		21,467		100.0	%		20,947		100.0	%
Acquisition Contracts
Atneed Contracts		—					—					53		64.6	%		194		67.1	%		921		68.3	%
Preneed Contracts		—					—					29		35.4	%		95		32.9	%		428		31.7	%
Total Acquisition Funeral Contracts		—					—					82		100.0	%		289		100.0	%		1,349		100.0	%
New Store Openings		—					—					—					104					464
Total Funeral Contracts		22,395					21,814					21,871					21,860					22,760
Same Store Interments
Atneed Interments		2,506		27.7	%		2,324		26.3	%		2,006		24.4	%		2,100		25.0	%		2,120		26.9	%
Preneed Interments		6,554		72.3	%		6,529		73.7	%		6,213		75.6	%		6,285		75.0	%		5,766		73.1	%
Total Same Store Cemetery Interments		9,060		100.0	%		8,853		100.0	%		8,219		100.0	%		8,385		100.0	%		7,886		100.0	%
Acquisition Interments
Atneed Interments		—					—					—					—					196		25.2	%
Preneed Interments		—					—					—					—					583		74.8	%
Total Acquisition Cemetery Interments		—					—					—					—					779		100.0	%
Total Cemetery Interments		9,060					8,853					8,219					8,385					8,665
Same Store Revenue
Funeral Operations Revenue	$	105,499		75.3	%	$	106,399		74.0	%	$	108,649		73.0	%		110,778		73.6	%		112,230		69.3	%
Preneed Commission and Other Revenue		1,608		1.1	%		1,319		0.9	%		2,295		1.5	%		2,267		1.5	%		2,217		1.4	%
Total Funeral Same Store Revenue		107,107		76.4	%		107,718		74.9	%		110,944		74.6	%		113,045		75.2	%		114,447		70.6	%
Cemetery Operations Revenue		29,755		21.2	%		33,203		23.1	%		33,940		22.8	%		32,107		21.3	%		33,821		20.9	%
Cemetery Financial Revenue		3,304		2.4	%		2,912		2.0	%		3,615		2.4	%		4,052		2.7	%		4,407		2.7	%
Total Same Store Cemetery Revenue		33,059		23.6	%		36,115		25.1	%		37,555		25.2	%		36,159		24.0	%		38,228		23.6	%
Total Same Store Revenue		140,166		100.0	%		143,833		100.0	%		148,499		99.8	%		149,204		99.2	%		152,675		94.2	%
Acquisition Revenue
Funeral Operations Revenue		—					—					303		0.2	%		1,212		0.8	%		6,622		4.1	%
Cemetery Operations Revenue		—					—					—					—					2,578		1.6	%
Cemetery Financial Revenue		—					—					—					—					157		0.1	%
Total Acquisition Revenue		—					—					303		0.2	%		1,212		0.8	%		9,357		5.8	%
Total Revenue from Continuing Operations	$	140,166		100.0	%	$	143,833		100.0	%	$	148,802		100.0	%	$	150,416		100.0	%	$	162,032		100.0	%
Field EBITDA from Continuing Operations
Same Store Funeral Field EBITDA	$	37,201		77.2	%	$	37,382		76.5	%	$	39,419		76.6	%		41,862		79.1	%		43,197		72.6	%
Same Store Funeral Field EBITDA Margin		34.7	%				34.7	%				35.5	%				37.0	%				37.7	%
Same Store Cemetery Field EBITDA		11,011		22.8	%		11,458		23.5	%		11,963		23.2	%		10,645		20.1	%		13,181		22.2	%
Same Store Cemetery Field EBITDA Margin		33.3	%				31.7	%				31.9	%				29.4	%				34.5	%
Total Same Store Field EBITDA		48,212		100.0	%		48,840		100.0	%		51,382		99.8	%		52,507		99.2	%		56,378		94.8	%
Total Same Store Field EBITDA Margin		34.4	%				34.0	%				34.6	%				35.2	%				36.9	%
Acquisition Funeral Field EBITDA		—					—					92		0.2	%		407		0.8	%		2,498		4.2	%
Acquisition Funeral Field EBITDA Margin		—					—					30.4	%				33.6	%				37.7	%
Acquisition Cemetery Field EBITDA		—					—					—					—					613		1.0	%
Acquisition Cemetery Field EBITDA Margin		—					—					—					—					23.8	%
Total Acquisition Field EBITDA		—					—					92		0.2	%		407		0.8	%		3,111		5.2	%
Total Acquisition Field EBITDA Margin		—					—					30.4	%				33.6	%				33.2	%
Total Field EBITDA from Continuing Operations		48,212		100.0	%		48,840		100.0	%		51,474		100.0	%		52,914		100.0	%		59,489		100.0	%
Total Field EBITDA Margin from Continuing Operations		34.4	%				34.0	%				34.6	%				35.2	%				36.7	%
Overhead
Total Variable Overhead		1,846		11.6	%		1,910		11.5	%		2,245		12.5	%		3,402		17.4	%		4,365		20.6	%
Total Regional Fixed Overhead		2,721		17.1	%		2,892		17.4	%		3,247		18.0	%		2,977		15.2	%		3,160		14.9	%
Total Corporate Fixed Overhead		11,378		71.4	%		11,825		71.1	%		12,501		69.5	%		13,170		67.4	%		13,711		64.6	%
Total Overhead		15,945		100.0	%		16,627		100.0	%		17,993		100.0	%		19,549		100.0	%		21,236		100.0	%
		11.4	%				11.6	%				12.1	%				13.0	%				13.1	%
Consolidated EBITDA from Continuing Operations	$	32,267(2)				$	32,213(2)				$	33,481(2)				$	33,365(2)				$	38,253(2)
Consolidated EBITDA Margin from Continuing Operations		23.0	%				22.4	%				22.5	%				22.2	%				23.6	%
Total Depreciation & Amortization		9,159					9,285					9,065					8,688					9,333
Interest, Net		17,773					16,908					18,090					17,106					16,908
Refinancing Costs		—					—					6,933					—					—
Special Charges/Other (Gains) Losses		(657	)				(940	)				698					331					113
Team Partners Incentive Expense		60					110					276					1,151					255
Pretax Income		5,932					6,850					(1,581	)				6,089					11,644
Benefit for Income Taxes due to a Valuation Adjustment		—					(810	)				—					—					—
Income Tax		2,301					2,643					(456	)				2,375					4,624
Net income from Continuing Operations	$	3,631				$	5,017				$	(1,125	)			$	3,714				$	7,020
		2.6	%				3.5	%				-0.8	%				2.5	%				4.3	%
Diluted EPS-from continuing operations	$	0.22				$	0.29				$	(0.06	)			$	0.20				$	0.37

(1)	Effective January 1, 2005, the company changed its accounting method to expense preneed selling costs incurred for the origination of prearranged funeral and cemetery sales contracts. Results of operations for the years ended December 31, 2003 and 2004 are presented on a proforma basis applying the new accounting method.
(2)	Reclassified special charges (gains) and Team Partner Incentive expense to improve comparability of periods presented.

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UNAUDITED INCOME STATEMENT FROM CONTINUING OPERATIONS
Quarter Trend
For the Five Quarters Ended September 30, 2007
($ 000’s)

	Actual					Actual					Actual					Actual					Actual
	Qtr 3					Qtr 4					Qtr 1					Qtr 2					Qtr 3
	2006					2006					2007					2007					2007
CONTINUING OPERATIONS
Same Store Contracts
Atneed Contracts		4,014		79.4	%		4,148		78.2	%		4,399		78.0	%		3,961		77.2	%		3,901		80.1	%
Preneed Contracts		1,044		20.6	%		1,155		21.8	%		1,238		22.0	%		1,173		22.8	%		972		19.9	%
Total Same Store Funeral Contracts		5,058		100.0	%		5,303		100.0	%		5,637		100.0	%		5,134		100.0	%		4,873		100.0	%
Acquisition Contracts
Atneed Contracts		43		67.2	%		52		65.8	%		184		68.1	%		248		67.4	%		437		69.1	%
Preneed Contracts		21		32.8	%		27		34.2	%		86		31.9	%		120		32.6	%		195		30.9	%
Total Acquisition Funeral Contracts		64		100.0	%		79		100.0	%		270		100.0	%		368		100.0	%		632		100.0	%
New Store Openings		18					86					120					126					132
Total Funeral Contracts		5,140					5,468					6,027					5,628					5,637
Same Store Interments
Atneed Interments		526		26.8	%		508		24.1	%		583		28.0	%		537		27.9	%		492		27.9	%
Preneed Interments		1,437		73.2	%		1,602		75.9	%		1,502		72.0	%		1,391		72.1	%		1,271		72.1	%
Total Same Store Cemetery Interments		1,963		100.0	%		2,110		100.0	%		2,085		100.0	%		1,928		100.0	%		1,763		100.0	%
Acquisition Interments
Atneed Interments		—					—					39		24.5	%		81		30.1	%		76		21.7	%
Preneed Interments		—					—					120		75.5	%		188		69.9	%		275		78.3	%
Total Acquisition Cemetery Interments		—					—					159		100.0	%		269		100.0	%		351		100.0	%
Total Cemetery Interments		1,963					2,110					2,244					2,197					2,114
Same Store Revenue
Funeral Operations Revenue	$	25,909		74.0	%	$	27,875		74.4	%	$	30,411		71.6	%	$	27,857		67.1	%	$	26,087		64.2	%
Preneed Commission and Other Revenue		636		1.8	%		448		1.2	%		642		1.5	%		625		1.5	%		502		1.2	%
Total Funeral Same Store Revenue		26,545		75.8	%		28,323		75.6	%		31,053		73.1	%		28,482		68.6	%		26,589		65.5	%
Cemetery Operations Revenue		7,452		21.3	%		7,285		19.5	%		8,768		20.6	%		9,408		22.7	%		8,360		20.6	%
Cemetery Financial Revenue		763		2.2	%		1,423		3.8	%		930		2.2	%		733		1.8	%		1,321		3.3	%
Total Cemetery Same Store Revenue		8,215		23.5	%		8,708		23.3	%		9,698		22.8	%		10,141		24.4	%		9,681		23.8	%
Total Same Store Revenue		34,760		99.3	%		37,031		98.9	%		40,751		96.0	%		38,623		93.0	%		36,270		89.3	%
Acquisition Revenue
Funeral Operations Revenue		252		0.7	%		413		1.1	%		1,322		3.1	%		1,786		4.3	%		3,101		7.6	%
Cemetery Operations Revenue		—					—					371		0.9	%		1,014		2.4	%		1,193		2.9	%
Cemetery Financial Revenue		—					—					20		0.0	%		87		0.2	%		50		0.1	%
Total Acquisition Revenue		252		0.7	%		413		1.1	%		1,713		4.0	%		2,887		7.0	%		4,344		10.7	%
Total Revenue from Continuing Operations	$	35,012		100.0	%	$	37,444		100.0	%	$	42,464		100.0	%	$	41,510		100.0	%	$	40,614		100.0	%
Field EBITDA from Continuing Operations
Same Store Funeral Field EBITDA	$	9,318		81.8	%	$	11,031		78.3	%	$	12,721		75.6	%	$	10,479		70.5	%	$	8,966		65.4	%
Same Store Funeral Field EBITDA Margin		35.1	%				38.9	%				41.0	%				36.8	%				33.7	%
Same Store Cemetery Field EBITDA		2,028		17.8	%		2,856		20.3	%		3,713		22.1	%		3,453		23.2	%		3,159		23.0	%
Same Store Cemetery Field EBITDA Margin		24.7	%				32.8	%				38.3	%				34.0	%				32.6	%
Total Same Store Field EBITDA		11,346		99.6	%		13,887		98.5	%		16,434		97.7	%		13,932		93.7	%		12,125		88.4	%
Total Same Store Field EBITDA Margin		32.6	%				37.5	%				40.3	%				36.1	%				33.4	%
Acquisition Funeral Field EBITDA		42		0.4	%		208		1.5	%		311		1.8	%		605		4.1	%		1,374		10.0	%
Acquisition Funeral Field EBITDA Margin		16.7	%				50.4	%				23.5	%				33.9	%				44.3	%
Acquisition Cemetery Field EBITDA		—					—					76		0.5	%		325		2.2	%		212		1.5	%
Acquisition Cemetery Field EBITDA Margin		—					—					20.5	%				32.1	%				17.8	%
Total Acquisition Field EBITDA		42		0.4	%		208		1.5	%		387		2.3	%		930		6.3	%		1,586		11.6	%
Total Acquisition Field EBITDA Margin		16.7	%				50.4	%				22.6	%				32.2	%				36.5	%
Total Field EBITDA from Continuing Operations		11,388		100.0	%		14,095		100.0	%		16,821		100.0	%		14,862		100.0	%		13,711		100.0	%
Total Field EBITDA Margin from Continuing Operations		32.5	%				37.6	%				39.6	%				35.8	%				33.8	%
Overhead
Total Variable Overhead(2)		993		19.7	%		955		18.9	%		1,061		20.0	%		1,226		23.2	%		1,123		20.1	%
Total Regional Fixed Overhead		748		14.8	%		764		15.1	%		787		14.8	%		723		13.7	%		886		15.9	%
Total Corporate Fixed Overhead		3,307		65.5	%		3,343		66.0	%		3,456		65.2	%		3,345		63.2	%		3,567		64.0	%
Total Overhead		5,048		100.0	%		5,062		100.0	%		5,304		100.0	%		5,294		100.0	%		5,576		100.0	%
		14.4	%				13.5	%				12.5	%				12.8	%				13.7	%
Consolidated EBITDA from Continuing Operations	$	6,340				$	9,033				$	11,517				$	9,568				$	8,135
Consolidated EBITDA Margin from Continuing Operations		18.1	%				24.1	%				27.1	%				23.0	%				20.0	%
Total Depreciation & Amortization		2,030					2,153					2,479					2,294					2,407
Interest, Net		4,216					4,188					4,174					4,158					4,388
Special Charges/Other (Gains) Losses(1)		188					113					—					—					—
Team Partners Incentive Expense(2)		710					255					—					—					—
Pretax Income		(804	)				2,324					4,864					3,116					1,340
Income tax		(304	)				943					1,873					1,200					608
Net income from Continuing Operations	$	(500	)			$	1,381				$	2,991				$	1,916				$	732
		-1.4	%				3.7	%				7.0	%				4.6	%				1.8	%
Diluted EPS-from continuing operations	$	(0.03	)			$	0.07				$	0.16				$	0.10				$	0.04

(1)	Includes charges for remediation at Rolling Hills Cemetery of $704K (Q3) 2006 and $110K (Q4) 2006 which were reclassified from field expenses
(2)	Reclassified Team Partners expense from Total Variable Overhead in 2006

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Same Store Funeral Operations

     Our same store volumes have declined gradually each year from 22,395 in 2003 to 21,467 in 2006 (compound annual decline of 1.4%) consistent with a period of weak death rates nationally and the loss of market share primarily in our Central Region funeral operations. Our same store volumes decreased 2.4% for the trailing four quarters ended September 30, 2007 as recent death rates have been particularly weak in our Eastern and Western Regions, while the Central Region has reversed its previous trend by reporting slightly higher volumes in 2007. As our Standards Operating Model and Managing Partner “Being the Best” incentive program is heavily weighted on growth in the number of client families served (funeral contracts), we expect the modest historical same store decline to stabilize during the next five years and same store volumes to increase during the following five years because of favorable future demographic trends which would produce substantial operating leverage benefits to our financial performance.

     Our same store funeral operations have steadily increased its revenue from $107.1 million in 2003 to $113.0 million in 2006 (compound annual increase of 1.9%). For the trailing four quarters ended September 30, 2007, same store funeral revenues increased only 1.2% because of the weak death rates during most of this year. We are targeting to achieve at least a 2 – 2.5% annual revenue increase in the future from our same store portfolio as volumes stabilize and our average revenue per funeral increases over time. During the third quarter, revenues from funeral same store operations increased 0.7%, same store funeral contracts decreased 3.7% and preneed commissions decreased 21% compared to the third quarter of 2006. Since we maintain atneed pricing power on approximately 80% of our services, our goal is to continuously improve the quality and skill set of our personnel and the value of their services to our client family customers so that we can target a modest growth rate in revenues even in the face of weak death rates, higher cremation rates and reduced preneed activities.

     After implementing our funeral Standards Operating Model in 2004, our same store funeral Field EBITDA Margin increased by 230 basis points from 34.7% in 2004 to 37.0% in 2006. This multi-year increasing same store funeral Field EBITDA Margin trend has continued in 2007, as our same store funeral Field EBITDA Margin increased 70 basis points to 37.7% for the trailing four quarters ended September 30, 2007 compared to 2006 which is primarily attributable to improved Central Region performance.

Same Store Cemetery Operations

     We believe that cemetery interments reflect the market share of our cemetery portfolio much like funeral contracts reflect market share of our funeral home portfolio. Whereas approximately 21% of our funeral contracts originated from a preneed sale, consistent with our selective preneed funeral strategy, 73% of our interments originated from preneed sales. Therefore, it is imperative to have a consistent and high level of preneed property sales performance over time to build new cemetery heritage and

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future market share. Otherwise our cemetery interment volumes and market share are relatively stable and produce a consistent stream of atneed revenue at high gross margins.

     Our same store cemetery financial performance from 2003 through 2006 was characterized by increasing revenues but slightly declining Field EBITDA Margins. However, this performance was highly concentrated in only two of our California cemeteries, including Rolling Hills, whose performance declined during 2006 for reasons we previously reported. We have experienced significantly improved Field EBITDA Margin performance during 2007 as reflected by the 510 basis point increase for the trailing four quarters ending September 30, 2007 compared to full year 2006.

     Cemetery same store operating revenues increased 12.2% to $8.4 million in the third quarter of 2007 compared to the prior year quarter on the strength of higher preneed sales of interment rights. The third quarter 2007 increase in our same store cemetery Field EBITDA of $1.1 million and Field EBITDA Margin of 790 basis points to 32.6% was primarily attributable to improving performance at Rolling Hills, our Central Region cemeteries and gains on trust investments.

     We have moved quickly over the last year to recruit and support new operating and sales leadership in our larger and more strategically located cemeteries, and we are not finished with this initiative. Our goal is to diversify our property offerings and to build broader and deeper teams of “A player” sales leaders and counselors that can sustain consistent, modest growth in preneed property sales which will be evident in positive quarterly operating and financial trend comparisons during the fourth quarter of 2007 and into 2008.

Field EBITDA and Margins

     Our 2007 quarterly Total Field EBITDA Margin trend has continued positively, as we achieved a 130 basis point increase in Total Field EBITDA Margin in the third quarter compared to 2006. We expect continued positive Total Field EBITDA Margin trend comparisons during the balance of 2007 and into 2008.

     Our Total Field EBITDA increased each year from $48.2 million in 2003 to $52.9 million in 2006 (excluding the remediation charge at Rolling Hills), a compound annual increase of 2.3% over the three year period. For the trailing four quarters ended September 30, 2007, our Total Field EBITDA increased $6.6 million or 12.4% to $59.5 million and the total Field EBITDA Margin increased 150 basis points to 36.7% compared to 2006. We expect the recently higher Total Field EBITDA growth trend to continue over the next few years because of a gradual increase in same store revenues, improving Field EBITDA Margins and the increasing contribution of acquisitions.

Acquisitions

     We acquired Seaside Memorial Park and Funeral Home and Corpus Christi Funeral Home in early January 2007 and are well along with integration of operations with our existing Rose Hill Cemetery operation. These businesses complement each other and are producing synergies that should

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lead to market share, revenue and profit growth at sustainable Field EBITDA Margins, especially in the Hispanic market segment which is forecast to grow substantially over the next ten years in their markets. We expect that generally it will take 12-18 months to complete the integration of newly acquired businesses and make the necessary changes to bring them to a level of performance that aligns with our Standards Operating Model.

     During the second quarter of 2007 we closed on two acquisitions of combination businesses: Conejo Mountain Funeral Home and Memorial Park (Conejo Mountain) in Camarillo, California on April 1, 2007, and Cloverdale Funeral Home and Memorial Park and Terrace Lawn Memorial Gardens (Cloverdale) in Boise, Idaho on June 12, 2007. Conejo Mountain performs approximately 390 cemetery interments and 275 funeral services annually. This acquisition represents our entry into Southern California and positions us to pursue other opportunities in the greater Los Angeles market. Cloverdale performs approximately 600 funeral services and 400 cemetery interments annually. This acquisition complements our existing funeral operations in Boise and the adjacent markets of Caldwell, Meridian and Nampa, which together perform approximately 1,050 funeral services annually. We have also closed on two “tuck-in” acquisitions of funeral homes, which complement our “Best in Market” existing funeral businesses in Santa Fe, New Mexico (June 2007) and in the Springfield, Massachusetts market (August 2007).

     In October 2007, we signed an agreement to acquire the Evans Brown Mortuary Group in Southern California, consisting of four funeral homes located in southeast Los Angeles in rapidly growing Riverside County, which together perform approximately 1,200 funeral services annually. The Evans Brown acquisition, scheduled to close in the fourth quarter, is expected to add materially to our new acquisition portfolio performance during the four quarter outlook period ending September 30, 2008, so we have increased our twelve month Outlook performance accordingly.

     We have established five year goals to change the sustainable revenue and earning power profile of our deathcare portfolio through effective execution of our Strategic Portfolio Optimization Model. We will report on this progress by showing the trends in revenue and Field EBITDA from same store operations that we acquired in the early growth phase of Carriage in the 1990’s versus the trends in our new acquisition portfolio. We will report results from acquired businesses in the acquisition section for at least three full years if not longer to ensure consistent comparable long-term trends. For the third quarter of 2007, 10.7% of our total revenue and 11.6% of our Total Field EBITDA was from the businesses acquired since the fourth quarter of 2005. Such businesses contributed $0.04 per diluted share to our third quarter earnings before considering any allocation of overhead or interest.

     We are encouraged by the current level of acquisition activity and the quality and size of the candidates. Our selection process is rigorous using our six Strategic Ranking Criteria and ROIC Model and as a result we have declined numerous opportunities to acquire both independents and smaller consolidators, not because of price but because of strategic fit. We will integrate expected proforma

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results on newly announced acquisitions into our rolling four quarter outlook in conjunction with our quarterly earnings release.

Overhead

     We have organized corporate and regional overhead into three categories, two of which are primarily fixed and one of which is variable (primarily incentive compensation). Our corporate fixed overhead increased approximately $2.3 million between 2003 and the trailing four quarters ended September 30, 2007 because of two significant and opposite events. First, we reorganized and streamlined our operations organization over this period, culminating in the combination of our funeral and cemetery sales and operations into three geographic regions in August 2006 within our regional structure, thereby eliminating the heads of funeral and cemetery operations in our corporate office. This streamlined organization process has allowed us to effectively use a single operations support group now included in corporate fixed overhead rather than maintaining a separate corporate support organization for funeral and cemetery operations each with a division head in Houston. We estimate that the new operations organizational structure resulted in an approximate $1.2 million decrease in corporate fixed overhead from 2003 to 2006.

     Second, during this period we significantly upgraded our IT systems; successfully prepared to publicly report on internal controls; developed a fully staffed internal audit department; upgraded our Human Resources and brought our legal functions in house under a new General Counsel; and reorganized our preneed trust and investment activities. As a result, costs of our corporate support departments increased approximately $3.5 million during this period which resulted in a net increase in corporate fixed overhead of $2.3 million, a compounded annual increase of 5.1%. These costs and investments were necessary additions to our support infrastructure which are allowing us to more effectively execute our Standards Operating Model while maintaining a flat regional operations organization. In addition, we are now well positioned to execute a growth strategy while supporting newly acquired businesses to improve their operations, people, market share and financial results consistent with our Standards Operating Model.

     We believe that for periods subsequent to 2007 our Regional and Corporate fixed overhead categories will increase no more than merit increases and inflation over time and will not grow as a fixed percent of revenue as we add new acquisitions to our portfolio. During the third quarter of 2007, total overhead increased $528 thousand or 10.5% when compared to the third quarter of 2006. Variable overhead included approximately $200 thousand of additional legal fees related to uninsured claims and approximately $100 thousand of additional incentive compensation. Corporate fixed overhead included approximately $200 thousand of additional costs related to support personnel added in our human resources and legal groups.

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Carriage Consolidation Platform

     Because of the improved same store operating performance and the addition of accretive acquisitions, we achieved a Consolidated EBITDA Margin of 20.0% in the third quarter of 2007 compared to 18.1% in the third quarter of 2006. For the trailing four quarters ended September 30, 2007, we achieved a Consolidated EBITDA Margin of 23.6% compared to 22.2% in 2006, an increase of 140 basis points and close to our sustainable earning power range of 24-26%. We expect positive quarterly Consolidated EBITDA Margin trend comparisons to continue for the fourth quarter and into 2008 because of improved same store operating results and acquisitions.

     As we add acquisitions, new Field EBITDA acquired should substantially fall to Consolidated EBITDA and Pre-Tax Free Cash Flow and be accretive to EPS as well. As we leverage our new growth over our mostly fixed cost platform, we expect our Consolidated EBITDA Margin to increase to within our annual sustainable earning power range of 24 – 26%.

Cash Flow

     We reported negative free cash flow from continuing operations of $3.6 million in the third quarter of 2007 compared to negative free cash flow of $2.6 million in the third quarter of 2006. In addition to being the seasonably weakest quarter of the year, the semiannual interest payment on the senior notes of $5.1 million is paid in the third quarter. In addition, funeral and cemetery preneed activities used $1.8 million of working capital in the third quarter

     Free cash flow from continuing operations totaled $1.1 million for the nine months ended September 30, 2007 compared to $4.2 million for the first nine months of 2006. Though cash flow from operating activities has increased year to date by $0.5 million to $9.5 million compared to the prior year period, cash used for capital expenditures totaled $8.4 million, approximately $3.5 million higher than the prior year. Growth capital expenditures totaled $3.3 million for the nine months ended September 30, 2007 and include amounts spent on new funeral home properties, cemetery property development and improvements to the businesses acquired in 2007. Maintenance capital expenditures totaled $5.1 million year to date 2007 compared to $4.9 million in 2006. In addition, during the first quarter of 2007 we made a final $1.4 million long-term incentive payment to a former director and former owner of a business we acquired in 1997. We have also made relocation loans and other working capital advances this year totaling $0.8 million.

Rolling Four Quarter Outlook

     Management is providing an Outlook for the four quarter period ending September 30, 2008, based upon the following key assumptions:

• The upper end of the Outlook range assumes funeral same-store volumes are flat compared to most recent four quarters and the lower end assumes a 2 percent decrease.

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• The average revenue per funeral contract is assumed to increase approximately 2.5 percent. This increase assumes the cremation rate for our businesses will increase by 100 basis points.

• Includes estimated results from acquired businesses in Corpus Christi, Texas (closed January 2007), Camarillo, California (closed April 2007), Boise, Idaho (closed June 2007), Santa Fe, New Mexico (closed June 2007), Springfield, Massachusetts (closed August 2007) and Riverside County, California (closing November 2007). Excludes divestitures identified as of September 30, 2007 and classified as Discontinued Operations.

• No borrowings on our $35 million bank credit facility.

• Approximately $10 million of capital expenditures, of which $3 million is designated for growth opportunities.

• Management expects to use Free Cash Flow (cash flow from operations less capital expenditures) to acquire additional businesses if and when available on acceptable terms.

	Millions except EPS				Midpoint As A
	Range		Midpoint		% of Revenue
Revenues	$	174 - $178	$	176
Field EBITDA	$	64-66	$	65		36.9	%
Variable overhead	$	3.9	$	3.9		2	%
Regional fixed overhead	$	3.1	$	3.1		2	%
Corporate fixed overhead	$	14.5	$	14.5		8	%
Total overhead	$	22	$	22		12	%
Consolidated EBITDA	$	42-44	$	43		24.4	%
Interest	$	17.5	$	17.5		10	%
Depreciation and amortization	$	10.3	$	10.3		6	%
Income taxes	$	5.8 - $6.2	$	6		3	%
Net earnings from continuing operations	$	8.7 - $9.7	$	9.2		5	%
Diluted earnings per share	$	0.46 - $0.50	$	0.48	NA
Free Cash Flow	$	14-$16	$	15		9	%

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Long Term Outlook (Through 2012)

• Revenue growth of 7-9%annually, including acquisitions

• Consolidated EBITDA growth of 9-11%annually, including acquisitions

• Consolidated EBITDA Margin range of 24-26%

• Growth internally funded without new debt or equity

Summary

     “We have had four consecutive quarters of considerably stronger year over year profitability in an industry where our performance should be predictable, profitable and sustainable when our three models are being executed broadly and effectively”, stated Mr. Payne. “Our reporting format provides a clear picture of our long and short term operating and financial trends which in turn show a healthy portfolio of operating deathcare businesses and a consolidation platform well positioned to operationally and financially leverage new internal and external revenue growth into attractive long term rates of growth in Consolidated EBITDA, Consolidated EBITDA Margin, EPS and Free Cash Flow.”

     “We look forward to executing our strategies in a way that will become apparent in our trend reporting and which will be more valuable over time for long term investors who see the beginnings of a long term up cycle in deathcare and believe that Carriage is the right operating and investment platform. The “trend is our friend” and we will work hard to keep it that way. I want to thank all of our employees and leaders for our 2007 performance to date, which was in total alignment with our company’s theme of “2007 – The Year Of Being The Best – No Excuses!” concluded Mr. Payne.

Third Quarter Conference Call Information

     Carriage Services has scheduled a conference call for tomorrow, November 2, 2007 at 10:00 a.m. Eastern time. To participate in the call, dial (303) 205-0033 at least ten minutes before the conference call begins and ask for the Carriage Services conference call. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until November 9, 2007. To access the replay, dial (303) 590-3000 and enter pass code 11100075#.

     Investors, analysts and the general public will also have the opportunity to listen to the conference call free over the Internet by visiting http://www.carriageservices.com. To listen to the live call on the web, please visit the website at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live webcast, an audio archive will be available shortly after the call and will be accessible for approximately 90 days. For more information, please contact Karen Roan at DRG&E at (713) 529-6600 or email kcroan@drg-e.com.

     Carriage Services is a leading provider of death care services and products. As of November 1, 2007, Carriage operates 134 funeral homes in 27 states and 32 cemeteries in 11 states.

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Use of Non-GAAP Financial Measures

     This press release uses the following Non-GAAP financial measures “Free Cash Flow and EBITDA”. Both Free Cash Flow and EBITDA are used by investors to value common stock. The Company considers Free Cash Flow to be an important indicator of its ability to generate cash for acquisitions and other strategic investments. The Company has included EBITDA in this press release because it is widely used by investors to compare the Company’s financial performance with the performance of other deathcare companies. The Company also uses EBITDA to monitor and compare the financial performance of its operations. EBITDA does not give effect to the cash the Company must use to service its debt or pay its income taxes and thus does not reflect the funds actually available for capital expenditures or acquisitions. In addition, the Company’s presentation of EBITDA may not be comparable to similarly titled measures other companies report. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported operating results or cash flow from operations or any other measure of performance as determined in accordance with GAAP.

     Certain statements made herein or elsewhere by, or on behalf of, the Company that are not historical facts are intended to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on assumptions that the Company believes are reasonable; however, many important factors, as discussed under “Cautionary Note,” “Risk Factors” and “Forward-Looking Statements” in the Company’s Annual Report and Form 10-K for the year ended December 31, 2006, could cause the Company’s results in the future to differ materially from the forward-looking statements made herein and in any other documents or oral presentations made by, or on behalf of, the Company. The Company assumes no obligation to update or publicly release any revisions to forward-looking statements made herein or any other forward-looking statements made by, or on behalf of, the Company. A copy of the Company’s Form 10-K, and other Carriage Services information and news releases, are available at www.carriageservices.com.

-Tables to follow-

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CARRIAGE SERVICES, INC.
Selected Financial Data
September 30, 2007
(unaudited)

Selected Balance Sheet Data:	12/31/06		9/30/07
Cash and short-term investments	$	36,011	$	7,240
Long-term corporate investments		5,000		5,000
Total Senior Debt (a)		140,179		139,227
Days sales in funeral accounts receivable		23.2		22.7
Senior Debt to total capitalization		42.4		41.3
Senior Debt to EBITDA from continuing operations (rolling twelve months)		4.24		3.64

(a) - Senior debt does not include the convertible junior subordinated debentures.

Reconciliation of Non-GAAP Financial Measures:

     This press release includes the use of certain financial measures that are not GAAP measures. The non-GAAP financial measures are presented for additional information and are reconciled to their most comparable GAAP measures below.

Reconciliation of Net Income from continuing operations to EBITDA from continuing operations for the following periods (in 000s):

	Three months			Three months			12 Months
	ended			ended			Ended
	9/30/2006			9/30/2007			9/30/2007
Net income (loss) from continuing operations	$	(500	)	$	732		$	7,020
Provision (benefit) for income taxes		(304	)		608			4,624
Pre-tax earnings (loss) from continuing operations		(804	)		1,340			11,644
Net interest expense, including loan cost amortization		4,216			4,388			16,908
Depreciation & amortization		2,030			2,407			9,333
Other		898			—			368
EBITDA from continuing operations	$	6,340		$	8,135		$	38,253
Revenue from continuing operations	$	35,012		$	40,614		$	162,032
EBITDA margin from continuing operations		18.1	%		20.0	%		23.6	%

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Reconciliation of Non-GAAP Financial Measures Continued:

Reconciliation of cash provided by (used in) operating activities from continuing operations to free cash flow (in 000’s):

	Three months			Three months
	ended			ended
	9/30/2006			9/30/2007
Cash provided by operating activities from continuing operations	$	(91	)	$	(787	)
Less capital expenditures from continuing operations		(2,495	)		(2,777	)
Free cash flow from continuing operations	$	(2,586	)	$	(3,564	)

	Nine months			Nine months
	ended			ended
	9/30/2006			9/30/2007
Cash provided by operating activities from continuing operations	$	9,006		$	9,503
Less capital expenditures from continuing operations		(4,853	)		(8,375	)
Free cash flow from continuing operations	$	4,153		$	1,128

Reconciliation of estimated net income to free cash flow for the twelve months ending September 30, 2008 (in 000’s):

Net income	$	9,200
Tax expense		6,000
Interest expense, net		17,500
Depreciation and amortization		10,300
EBITDA	$	43,000
Interest paid		17,300
Cash taxes		700
Capital expenditures		10,000
Free cash flow	$	15,000

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