CSV - Earnings call transcript Q1 2019 | Carriage Services, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Carriage Services First Quarter 2019 Earnings Webcast. At this time all participants are in a listen mode. Later, we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to hand over the call to your host, Ms. President. Vice Senior Blinderman, Viki

Viki Blinderman

Thank you, discussing we be everyone. good company's first morning, the XXXX. Today, quarter will and results for

can earnings tables website. and This public made on the Carriage the release of the information release, related our page the is recorded, press financial and Replay available closed. posted Services yesterday release later website our May being an X. made supplemental in conference including audio Investors today for information market be has Our distributed yesterday. call the on press archive will after found through was be

with On management, Officer; today statements management and followed to XX-K these Exchange safe XXXX. in period. Please the filings by Mel with to of of fully Form during more Today's is Executive Chief report like call the the the Brink, Securities Securities with begin call risk other Commission. Officer. a call, forward-looking Financial question-and-answer Act Reform described besides company's Chairman the making filed Private myself Litigation that we'll be harbor which are provisions Ben call in note Chief on your from for and the remarks associated attention and accordance I'd will Payne, and statements, with formal

or or the will with opinion with in this call non-GAAP usefulness provide circumstances of of to assumptions date of such included Carriage filings for as regarding duty reference to the of of certain Services company's these the most Management's together to assumptions to performance expectations. changes in on Services on financial to directly SEC. comparable available disclaims other reflect occurrence this to during factors any and or referred measures, statements, Furthermore, course the the are historical reconciliation stated or measures GAAP after forward-looking press measures, morning's periods, based today. of Forward-looking information the such conference this the call release events, measures. factors a call, the the are updates expressly statements, we Carriage

the like Now turn Ben. to I'd over call to

Ben Brink

Viki. we X Thank financial the progress XXXX: during our we and the have the first Part are Future operational of in - made and Back quarter, with our Carriage with II. - first you, New results The months To A Services Beginning Overall, pleased

and decline in per the share. during Operating the high-performance partners responded year-over-year performance last flu $X.XX experienced decline of the the As XXXX. part first due funeral balance year announced of early the to the that quarter the $X.X operating the their funeral we diluted process our evidence we versus increase and decline Model expense managing our last The have made saw May, expected, in severe that interest in recapitalization from quarter primary fourth volumes of teams changes quarter volumes season year. evolutionary first in to million an were Standards we our earnings drivers of our in during unusually Nonetheless, the our in last significant to sheet were

collaboration discipline X year, the operational of Over morale, across the first experienced months improved of we've Carriage. all and

more we numerous will have opportunities into turn advantage identified and We we our we managing specific businesses, throughout the specific our have ideas to improved continue and markets support of have sharing In our challenges, and that areas last entire year, have resources those to creative improved the were necessary proactive to our we Carriage long-term challenges changes work rapid short-term and do. strategic partners the of businesses face in take here unique to were persist in operating feedback to service teams still our diligent portfolio. in plenty at rate of say, and Needless across opportunities. the making change as been and has from

remain our both to the improve expectations and comparatively Taken to relative remainder last throughout that operational together, year will we our high-performance results financial of and confident the year.

Now of a our review financial results.

first EBITDA Adjusted due contract points lower adjusted in that revenue XX quarter ended $XX.X revenue last the of the loss management home call funeral revenue first primarily in million $XX.X and of basis volume to to million, the EBITDA X.X% a to related million, or XX.X%. to and year. $X.X declined consolidated to same-store X.X% quarter, For a decrease declined declined consolidated Cemetery from margin

million, EBITDA to declined Funeral points $XX.X diluted field XXX to for by the and operating and Home and due from $X.X driven basis field margin million, of In in leverage. EBITDA the associated funeral volumes a share contracted in entire lower million revenue volumes to $X.XX decline same-store $X.X lower a higher field Funeral Home was earnings decline first negative call XX.X%. margin EBITDA interest The per quarter expense. segment same-store call was million our to declined funeral same-store of first Our primarily our adjusted the XXXX, $X.XX, quarter segment, $XX.X

around all Margins have as as Acquisition the lower improved a past of in Home improved portfolio to Funeral we in have indicator performance basis over expenses We our addressed operating for many through positive points controllable two move quarters. XX is which previous expense categories, integration XX.X% margin the significant the been issues year.

two to was for the the excited declined with remain $XXX,XXX $X.X the over business $XX.X potential. field made, EBITDA long-term at acquired Cemetery flat and past their have million and Cemetery progress pleased million. years are has We revenue

XXXX to our has in year that support Cemetery first our in all carry staff, sales done of quarter we Overhead the counselors not beyond. inventory, up million good that fully the heavy lot million, believe in leaders, evident of lifting $X or a declined organization we portfolio momentum can our $X.X and which sales Cemetery line work. cash with with to to compensation sales and -- sales issued performance rest is of line To in a decrease declined keep expectation XX.X% previously due the in numbers, decrease expectations expenses throughout cancellation Noncash positive of long-term of our our results $X approved compared in and While people, generated flow we've we structure the a around year. award. stock last the free some due of in normalize in the million to declines Adjusted recently related discussed overhead anticipate rest $X.X that of and variances incentive and will also our capital expense small expenses over year. operating working previously awards declined million to

remain from $XX a our capital leverage XXXX. maintenance with million expenditures compliance Also As debt-to-EBITDA and ratio to summarize, no covenant number. the the million progress in benefit Carriage Carriage. cash this federal between confident still true throughout we times. of to be of year, the of will improve increased of year X.X results that that in income we've made flow show amount power $XX our slightly expect cash We To as the $XX earnings free begin paying taxes about feel short rest time, reminder, the will we and good million CapEx representing to

therefore, four to share introduce heroes. quarter would are, our high-performance $X.XX to first per earnings and adjusted rolling outlook diluting our We quarter reiterating I now $X.XX. like

Funeral to Liz Funeral Chapel; Lucero, Home Winsconsin; Home Lauderdale, Tennessee; Oglethorpe, Georgia; Becker-Ritter Jordan-Fannin Santa Fry Service; And the Funeral Son Franklin Chapel, Modesto, Amarillo, Texas. Summers, Downs call Funeral Lane Family Fort open and Coffelt, Keller, -- California; Home, Park; & Kristi Fe, Waterwash, Funeral Steve David like & Funeral Chattanooga, Funeral Home, Florida; California; California. Heritage off, New & Conejo that, Green, Mountain & Joe Robert Manteca, we'd Berardinelli Brookfield, Baird-Case Friberg, Crematory, Raymond Ben Center, Service Schooler-Armstrong Mexico; with First Home-Coulter Cremation Homes, Memorial and Home for P.L. questions. Ken AhYou, up Fort Family Funeral Mora, Camarillo,

Operator

first Alex from The from is Instructions] Barrington question Research. [Operator Paris

Alex Paris

was tough side. said comp on expected, that we QX had you the services a as As had and funeral

publicly-traded said the larger, Your week reported. same last when competitor they

course quarter were impact If you numbers. same-store course sort normalized, ultimately, contracts of death quarter against the using assuming X.X% with last of they And down would funeral year line in look X.X% metric, of full last QX really the the being And looks that both that down comp, were comps the like it tough funeral in first that over total have a the And total year-over-year. that expect with in same-store over of QX, flat. of you it contracts given up you to then, easy your rate so normalize we Likewise, year annual QX first year. at had year-over-year year, pretty historical I'm the year. being

right? Am And and and remarks, some things Am the all positive then results wrong? noted Standard should that funeral like better your services that easier. So to of assume things year. the I volume. your to much comps that toughest changes the you'd in in you've I lead and of the prepared Model was Operating contract get QX, that QX, for made comp the would QX, I of us

Mel Payne

it's Mel. Alex,

and last last in You're spot the all was was And but a extraordinarily or on year, not, December in question. deaths I because I was from flu you severe. it with the there call don't January, know like right. and from crisis if flu year, season remember that. I remember the and this getting country

Chattanooga, be said, a into I you the January. remember of are look, year again. by of left of just flu I again. year, margin feeling I'll been I a course, for January. season. expect severe the rich this learning North The And I the that flu in XX% I'm group guess, Well, the by unpredictable go. season January I poor we before. this feeling We God, me we was can beginning "Oh on saying, Georgia. And asked of end and dying seasons me beginning in People And rich." this that how were, right. seeing bought EBITDA of I we've was was and somebody the through question, And about remember had 'XX, this severest were year? the my fully end that

Alex Paris

Great.

Mel Payne

some The doing against for everything people cops throughout right I on our the thing, who made but lot are are with this Ben more in us, in are a more and room focused, organization, whom us, business of them, there were We've the has aligned, agree and are people businesses supporting responding. are been the of said. never changes. that

And here from on. we're so optimistic very

Alex Paris

reflected that's guidance? X-quarter your rolling in And Great.

Mel Payne

is. Yes, it

Alex Paris

that it headwind your of by shifted of again, the about So cremation publicly-traded rate quarter basis first had or impact, XXX a year-over-year. competitor say, the large in quarter, a What's said, much portfolio I it the points -- recently? experiences negative in homes? think, XXX how Services the of Carriage your in was funeral

Ben Brink

Yes.

So same-store basis XX, portfolio, points rate over the increase XX within XX%. apples-to-apples about in just was cremation delta our in

we've the So Nothing seen, seen. we've what line of historically. of norm with kind trend, the in what outside

Mel Payne

lot of function place. Model the my make including successful years, even look this was that this shareholder rate. that believing I'm a 'XX and to company. It's made we we're like first paying what letter be people everything the and Alex, it ticks in 'XX, having on a supported mix attention. the to happened updated about It that's was wasn't but point, not the a wasn't. of was new there, I we've not really factor, in And to the changes, and right it up symptom cremation people causal that believing made X And of to the wrote what what now, last that And can mean attention really now but be I the they paying in this I in and a function successful, -- being is driving quarter. and over seeing in right factor Standards it am us and world here performance of a outside

a opportunities is continue upside, case-by-case, business-by-business, discovering making where focus We there to and lot hard moves. we're really on of

Alex Paris

just then, What's And there. a rate Refresh the the you traditional on the In what's And the revenue versus question? per to roughly, per or quarter, contract, growth follow been recent my want revenue in funeral each? on contract memory. however on years recent answer cremation? to

Ben Brink

Yes.

over but from or about approximately that's been a level. a months and approximately $X,XXX from it's $X,XXX, or that It's so, to cremation last moved the to to that's X contract. going So for for $X,XXX that I'm the $X,XXX within burial traditional $X,XXX, contract. moved and burial the portfolio, show cremation $X,XXX, not $X,XXX years last that X contract's over percentages, has contract XX our where average

Mel Payne

have the same. side, remained up has rate because on higher has you the about delta number. gone The cremation The smaller growth just a

Alex Paris

process, also Not just rather have of just... the than you I number, people-driven because life, like again, that would are because that, you assume, services a celebration a things adding and smaller be for

Mel Payne

no are cremations. be with There were direct commodity on don't No, focused the really we to you rules want a on. cremation, business and in

a of being and portal out innovative services to a information lot the area, way shared lot different tools, this only platform. support So work your teams than proud of Carriage that Very that and with are to across we've practices, ideas on a competitors, is the create in done IT business additional technology our the side, done. of have of best what get

Alex Paris

given the now, portfolio last in what integration term? acquired Carriage your expect intermediate And M&A increased terms of behind and issues is, from question the you within then can my to Services seemingly we in activity the near optimism,

Mel Payne

We and the of we're opportunities, continue at look game. out to not

compounded X% we'll that, first and we X%, do right or are and value. a candidates, business be growth of of business in to creating I'd We EBITDA four so multiples if stay our say pipeline have relationships, apt criteria, revenue building get kind tuned. based then can the growth that, a five that X% a over vetting of future high-quality likelihood which updated We're more compounded they we're of the and and years, criteria, grow rate acquisition the X% to can applying some got strategic to lot or looking, at a the rate and on

Alex Paris

or number the the has period last last of or Say, increased, same, And so? the of year decreased, opportunities time? stayed over

Mel Payne

that Shawn back Well, partner, a and what now we that part-time. wears the with hat, went into regional it's because also have Foil operating collapsed that we who flexibility, but acquisition part-time, more part-time. that have been the group, we Central still reinvigorated interesting mode, total say, and heading have team to now hat, also all I Region let's hat, as some We group. the Phillips, went of call

So We'll to make there. approach team. approach. we're sometimes going and customize go adaptive the it the Standards to more Council members change And with have our

right would going than to level of We continued the turn we're be be more what to having have good. not ever tell, all get activity than more But say not to best them. candidates. think, do of -- the I a on been And often in is I effective work now, auctions. deals I So of can we're more And past. we we we're we've quality handful the news from through deals down has

Alex Paris

year-end debt-to-EBITDA? a X.X at I Do you Very you have good. target And or it last one just within a time? period then, said question. Ben, think was for of times by

Ben Brink

would say leverage improve I specific, improved through performance. operating will Nothing

in think I and is, I But to we progress XX follow. will the meaningful months. can performance down improved lower next make profile XX the focus that X.X leverage times operational think range to a

Mel Payne

even way this it the deal one with, we third year. in on through all dealt best of you you up. I right. other what it do that's didn't have quarter to and to in be There's year-end, and Both Alex, with of to do to to that once corporate individual did, can starting begin broad, something, went businesses Yes. But only execution and to you we expect when start the which and The we with a needed define do phase the the have links plan, middle it it weak we show dealt do last you mean, in with, deep, organization. then out. right. do And point,

means that very Carriage. is, what vis-à-vis out be make price understand to quarter. in our We low the there market, it changes expectations continued throughout first is. that. What we wouldn't the So were Otherwise,

and 'XX, so looked through before. back 'XX. 'XX, then, been at we've and happened went what this 'XX, And We

happen going You'll see will what forward. I think

even policy, the when terms time all, focused And of I what really in would first leverage, and say were and before like operating in that. on, even is debt things peak and we getting 'XX, Funeral Cemetery and in back to So that's this way that, allocation, results our capital of they beyond Homes. beyond in

But won't when, only that market While value that, that, won't in a the it's will value, in matter we do at and it'll of about it look for opportunistic we entrepreneurial. be be create more of various intrinsic be will shareholders. ways itself show it we're pessimistic formulaic, value not bowler-played, terms to company and

Operator

Fargo. is The Duncan from Wells question next Brown from

Duncan Brown

can Following how looking? Maybe how comment that's the you multiples, on over changed question, valuations and on M&A anything bit? up the and that's last

Mel Payne

it are to the question likely hoping The it versus evaluation hanging is more grow It's more and has, tricky strong you revenue a it be case case, at The more is a the the This on by revenue, competitive big very standing compounded stable. is. Mel. how business your on to would high market to going is. rate better the valuable, change depending bigger,

all throw range X, at would multiple of that, depending fast on it. place out to it's we having how we're somewhere can But be of in look misleading EBITDA a there be probably because to in to future. the over predicted grow not how depending And on the So said revenue criteria. the the that's X in simple

Duncan Brown

the think, the think initial heavy relatively Cemetery flattened Cemetery in for little a tough on comments you've I and with outlook and side side, said, can lifting, In there. comp. wondered on, going the you did you people what's infrastructure. provide And in a I that if Great. color on more on Ben I invested the that was

Mel Payne

in upside the Cemetery side realized. say right that will the has be to history would And the now. of company, greatest begin I

don't at in then I and think that can last a performance, the recent it when a that structural can sometimes, months high we X learned The been, X slide months, make And more, the over has in shows we will will past. it year, be look that And problem We lot the changes past the again. juice then, mean sure to will I some it. it maybe it We organization up, want little to case. sustained. be a

activity, going between I teams, X big about really when or where past XX larger inventory that out, see product those incentive sustained, here the getting we're real see, place, the be on think now components it's recognition get the you'll forward. availability, And a performance that the We've will structural executed. to think maybe cemeteries. in on you in think we're a I Cemetery system performance sure they all system accretive. I move and followed sales And the very meter working close will got constant but you'll the higher difference you that's make can on our and structure, and from businesses, of and our

Duncan Brown

just a you that. little mean in there maybe about? can like And infrastructure. I been or additions it on some people know -- some that Has more talk or -- I don't so newbuilds have and highlight you changes sounds

Mel Payne

The can't leadership, and you is, place you leadership, simple change had operational things you you in do were been out thing find that. do can't that -- that, once put that

and especially And what If get you this sales demoralize is no is organization. a found. you paid, we've any you this, more, what organization, this do primarily but that, but and this,

of And rid that, got paid, you turn product the players when it, with mean so you to out. them and and you and you able achieve good And not what support. no look to be in all limit got reasons get just we can on do place, with and loose and

deserve. You're going what to get you

Duncan Brown

if strength. little And wondering I just than down have given the I comment can on one the quarter, a And you market was financial in bit then revenue might for last more that? guess me. expected,

Ben Brink

doing kind market going what Yes. financial what and it's think is relationship one-for-one of our to a revenue I that kind shows not between is the No, stock be. it of

year. income. It'll allocation of lower go is we a that do little of through to Some kind the normalize have fixed We as reoccurring of bit onetime. kind

year. cemetery care a normalize as So we little earnings. expect the that role bit of played in to the of go But through again, that perpetual we of kind rest

Mel Payne

fully when It's money big back at right beginning the and last started Ben had putting from plus withdrew the time, south. cash side primarily right the participated we year. the turned work, the equity off went We and some Yes. in Mel. to pile the comeback We year. that time money the backed a of market at of big heavy,

Operator

is from question from next The Chris McGinnis Sidoti.

Chris McGinnis

a I I the The responding that pay? could lot them it just they it, last on in thing how obviously, biggest -- What responding sounds changes, just some structurally, Mel compensation? were the few you're touched you months. just to they're are highlight the -- the like Is wondering a but think more opportunity changes, maybe if how giving compensate people better to the to? It There's the little in is was of of change that? themselves.

you what about most? employees responding the talk Just think to are

Ben Brink

it's the Yes. in No, and really I structure, incentive think change the change in about mindset and it's less about attitude.

alluded stream people business. why give As breaking were people down and and told breaking be them finding no told Mel reasons being all their for to, yes, opportunities ways and barriers to the down to to the

results moving the want There's and resolve of entire live up of sure to that quiet lot The think, sense bought of morale in been tremendous. I all a we people been make the organization, across -- in expectations who've we and people that has the find that portfolio, us. have they we all the to up expect the fantastic to feedback across for and urgency a show that has forward.

are more So responding to anything I people what than think, that's else.

Mel Payne

if quarterly important. then quarter pathetic. the In In XX.X% me in last is learned XX.X%. in adjusted just about I'm they're lot Chris, the which a EBITDA a it going language. of This I the they're That's the it last second what's language because XX.X%. first That's XX.X%. important was pathetic. that's that pathetic. And me strong third how was volume XX.X%. looking a looking quarter fourth margin. how financial they're our career numbers year, businesses. because at was -- mean, I'm are And tell quarter Mel. I'm That's consolidated it's to pathetic. but quarter, doing, year, whether we a numbers a quarter, are -- they're what people Not performance, morale, they're is they're on looking whether I've at certain feeling, aligned, whether of stretching, my focused. our And the had

our this were can They're XX.X%, people what first they're those feedback. you company, When the middle it stuff. problem, this lost get XX.X% these I I damn demoralized expect. willing about didn't they're And low get they're we're know quarter versus have soon us Okay, all do out in of the company. changes we you in of to We numbers, it what in got even the didn't these though the silent, Well broadly. And XX.X%. year, this We're the we're as versus low people, know And to feedback no they're incredible is XX.X%. And volumes contribution to their XX.X%, we goes do, and were quarters, XX.X%. three company. The about let when by you and demoralized. What hear They the giving touch you've not for send people. feeling with how hearing. our aligned. as touch tell versus you've feedback your numbers here. anymore. highly look, they really we're will you motivated a longer this, with

convert just And getting when the And your the promise into people, your nature how it's company, knowing And way numbers high it this bad. and so it's margins. that will you. converted in of converted is knowing gets good. the around and other knowing is numbers I when high into itself

a history shooting break the been it. We on of to Never but not industry. we'll company, or to headed EBITDA back toward an for, counting That's we're luck, where the of get barrier. that not we're want to XX%. broken us quarterly want before point annual We're some number. take where I in margin the So

Operator

this like time. now the turn back am showing Payne to questions to would remarks. closing for I Mel conference further at no I

Mel Payne

partners much. our will Foil our very elaborate a you feel I Thank here just of Great not but We've company. about in the questions. we lot group great our support Houston. got what field, in said, I on from

to know you're book. said investor much interest you our look visit get to numbers everybody We Thank what an just going visit I we and visible, If And our Don't in won't more you here how deep. at for out to an being you got long-term your want investment have of invite our dive find we're the let we calling Company, just come to to welcome in open in. businesses. Bye. who's a people and is down. and or and

Operator

call. Ladies day. gentlemen, Thank for your wonderful participation and this a today's concludes and you conference have

all may You disconnect.

Carriage Services (CSV) 4 May 192019 Q1 Earnings call transcript