CSV - Earnings call transcript Q2 2019 | Carriage Services, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Carriage Services Second Quarter 2019 Conference Call. [Operator Instructions] I would now like to turn the call over to Viki Blinderman, Senior Vice President and Chief Accounting Officer.

You may begin.

Viki Blinderman

Thank you and good morning, everyone. Today, we’ll be discussing the company’s second quarter results for 2019.

was yesterday release close. the earnings related made after public market Our website. Services release the information our press posted Investors’ supplemental of Carriage the and including has financial tables page on

an The release archive our audio distributed later August call yesterday. for through Replay today being in can conference recorded, be website will made found available is be on information the X. and the press

and and myself. today question-and-answer from call followed Chief management Chief Chairman Executive call Payne, Brink, management Officer the with On Financial period. begin Mal Officer Today’s will from formal Ben and are remarks a by

Please and call other Safe note Commission. the the Harbor with your Form risks associated attention will XXXX. statements, Litigation we the the statements on XX-K of and of make Securities to are in Private the forward-looking that Exchange described during these more fully provisions Reform company’s Securities with with to in which filed like accordance report filings Act call, I’d the

Forward-looking date or on statements, or referred these assumptions to changes call factors today. information as updates available Services to any assumptions the based provide events, call the Carriage or conference this of of duty statements, Carriage or after circumstances to are expressly to of disclaims to on this forward-looking factors Services reflect other stated occurrence expectation. in

the the measures, and usefulness to GAAP such are will company’s non-GAAP measures in press financial certain directly of comparable reference with performance of course with we opinion the historical the measures, call, during Management’s regarding morning’s release periods, most filings Furthermore, the the of a included SEC. the measures. for such together reconciliation

over turn the to I’d Ben. Now, to call like

Ben Brink

were results second Services’ year fantastic financial a and were for we ago. progress tremendous you, Viki. simply comparative from year-over-year where Thank the Carriage and showed quarter operational

basis laid as basis expectations performance, Our year-to-date comparative the in our through XXXX: and a both we The on relative performance January Future-A we line with quarter improved second in Beginning-Part a Back out To II. is in our and progressed for New

to of of much that have minimum businesses, the six our we portfolio performance we be the while funeral the improved our through by of achievement of first of below proud are portions And year. months standards homes and recognized cemetery many

focused across the the in to across improving company results teams with Our we are high remainder broadly highly performance momentum businesses achievement exit on the over standards these the XXXX ensure year more company. of

started And stated reporting year-to-date for in in referred my the now, and I’ll we and in interest fourth management our normally completed May. a expenses in results. contract we review the press costs forma as cemetery balance and remarks, we the results pro trend XXXX, quarter fourth our both our release restructuring normalized second In to sheet of XXXX and the large of last of our quarter recapitalization increase loss from quarter the

most Carriage. primarily with six pro year in the operational will provides the potential the forma we accurate accurate that place results to as months it refer the the of reflection and also the earnings I most improvement taken of current first the picture of was of has believe investors

a for XXXX XX.X% of increased revenue of margin Total million. field year, to So the million to basis $X.X EBITDA second compared XXX to $XX.X quarter last points. $XX.X total increased million, increase

increase XX.X% Adjusted share. per or $X.XX to diluted Adjusted with of XX.X%. $XX.X increased basis million increased to EPS margin $X.X to consolidated EBITDA points million, XXX a consolidated $X.XX

increase XX.X%. with the positive increased points to months XX six quarter, months. $XX.X first a of $XXX.X first to trends increased X% basis Total now X.X% Revenue the six we for second to million. year-over-year strong For field a million, with slight have EBITDA

increased consolidated Adjusted EBITDA million. $XX.X X.X% to

term. to shareholder quarter results lead the long dynamics that second the creation will demonstrated four Our important for the over year-over-year value

to portfolio to The XX.X%, EBITDA has remained X.X% which first of increase cremation the in XX.X%. into basis the field funeral the average XXX contract our of in basis points at increase first same-store consistent funeral represents second a point of EBITDA, a local leveraged revenue same-store approximately XX same-store $X,XXX rate increased in leverage is an X.X% level. and per months revenue margin business quarter, the six through in at operating we the In increase has our field The year. which

improving the are The performance months. point quarter cemetery impressive greatest opportunity, throughout quarter improvement year local We incredibly growth where leverage second we businesses dynamics home in evident six should standards XX.X% our was revenue of a our continue EBITDA that an basis increase as I indicative the in operating funeral growth also cemetery in results into XXX of leveraged field second same-store XX.X%. our first margin view funeral as minimum and of XX.X% to mentioned is the a below businesses to while trends the the accelerate segment the same-store that of before, through cemetery in in

were in of could sales in None the without to our unique inventory history larger occurred been development These our of best driven improvement XX parks. which broad of including accomplished efforts past performance the cemetery the of leadership months upgrade sales have talent in and cemetery Carriage, results in high-quality preneed management sales a the the over accelerate this and quarter, property by April. the in

stage and do XX% sit long-term sustainable and we we growth we margin year-over-year cemeteries. consistent in the performance set guarantee revenue believe While revenue all growth here for time, a our have won’t the

local areas regulatory state Another ability leverage technology, benefits, business to information in provide important resource to human or operational our platform improvement. matters is dynamic our to like our overhead support world-class businesses

and XX.X%, million those XXXX. year $X year, severance by non-GAAP stock-based line set with months in of which as $X to out in charges decrease expectations beginning has decrease six decreased million, of with million our in expenditures, to all expense fallen continued $X the the first $X.X of overhead have almost percentage is compensation excluding we revenue the all million at our non-cash of the categories our a overhead while For has to

support invest forward, organic where overhead to falls As growth we inorganic we organization line in leverage to and we revenue of our the continue our a ability of move are amount our ensure bottom to confident greater in Carriage. platform to

margin and to local of them points, great The field and portfolio, funeral great points our acquired into basis examples over quarter time. better up year-to-date are performance to EBITDA our ability respectively, XXX platform home second XXX consolidation of basis company make our bring leverage businesses our and

decision-making it is the solution right are businesses face local choices communities. we best on funeral planning judged on culture, country we solution our we offer for Whether our client, across of quality belief Standards families, operating to succession in for continued succession or is the of passion landscape best-in-class Operating staffs independent It Model as a consolidation comes years and their XX our owners choosing strong the corporate the businesses planning our the the purpose, of cemeteries highest that distinct believe when Carriage favorable to with highly homes based entrepreneurial and and integrity, set country.

apparent allocation fully to Carriage component and our within not creation maintain structure leverage results, decisions. allow fourth capital to the our flexibility value us year-to-date While results capital is in quarter to our in second

XX repurchase shares credit beginning in of repurchase During the to our the support. thank amendment with their bank quarter Directors facility continued of and our our allow an authorization activity. share to approved conjunction additional future the million We for $XX.XX. Board our have an for price average average group Board we the quarter, Since shares Yesterday, X.X of we the an $XX.XX. repurchased XXXX, of fourth XXX,XXX million price for repurchased approximately

second quarter Our months pro ratio times next forma XX performance. as ratio leverage end XX We to of due progress improved operational to to fully months. to five meaningful expect toward times X.X over fell of make forma leverage the the pro the

total equity continued Discretionary XX.X% half Our a the we of our lows the the credit and and to dry their increase from December through benefited over return perform as have well. year Trust markets first had the in put to Funds powder portfolio from work the year, of

to first invested fixed mixed equity between the remaining throughout months, and between we portfolio six income the was averaged in cash Additionally, the while in XX% XX% securities.

that to expect of the throughout maintain rest year. We the

our months and Given and XX the our four to between share our reaffirming $XX rolling revenues our for reaffirming earnings months, the are $XX adjusted consolidated outlook million we of adjusted $XXX are and business million, million per $XXX we next current outlook $X.XX. over six million to -- quarter diluted results $X.XX next EBITDA of

turn I’ll it over that, with And Viki. back to

Viki Blinderman

Florida; Funeral Partners Logiudice; Thomas Michael Home; Thank you. very Fredericksburg, Dean Home; Coulter F. Redgate, Lakeland, Charvet, Lakeland time, New Florida, David Trumbull, Keller; Titusville; this Homes; Higgins Bob Funeral to Funeral Performance our Home; Funeral Prindiville, Forest, Brian Hoots, Katy, Connecticut, the Greer Jason to Floral Bright am Chattanooga, Higginbotham, Maddux Park, Harvey-Engelhardt Funeral Managing Carolina, for Lane Dalton Anthony Cyndi Harlingen, Vegas, Brevard Chapel; Texas; Congratulations Hopkinsville, Florida; Mortuary; California. Fuqua-Hinton Tim all. Pitts, Latham, Fort Las Kentucky; Funeral Texas; Service; Funeral Buck Kevin Jim Larry Rodriguez, Ashland, and Bunkers Antioch, Alameda, Binion, Schmidt Homes; North Chapel; Hero North quarter. second Marnell, announce Davis, Funeral and Home; Ashcraft Home; Victor at Funeral Kentucky; Steen Homes; Nevada Family Funeral Redgate Tennessee, Myers, Courtney & Amittone, York; Homes; Hauck, Virginia, And Home; Christine Covenant High California; Wake Mortuary Funeral Home, honored I Cemeteries, Funeral Cremation

the call over to turn Now, Mel. I’m to going

Mel Payne

the to ex-military. meeting It’s you, yesterday. have our it’s our and He of other West was Thank a an operations Board what Members and best James I’ll we military. what Without third joined since that then in this we just of me Dinner, I our got primarily Point after my night. do an got He’s the our consolidating and out Viki. next team remarks four It intend on credit the and had our and a union, leadership He’s is beginning started yesterday, from he’s exception, a quarter large focused and wasn’t Thank is graduate, heard been this unions Board and Members. of had. in America doing one and was XXXX. the Board honor you, and start with across credit the quarter we’ve me I MBA, Board a year here him to CEO It Meeting to Board. years. And ever fourth in the Ben. PenFed, James the went and been We from Harvard, note Schenck, Board of Tuesday Washington.

lot says, There I’ll business that? you quarters James’ is a make, what work on the earnings by in forward work together. of the a when there on results. the release, This done. my six and a I mean read Well done. What points a be rowing a lot work good of done. got financial of So, all done. already and in quarter There reason lot is you that our of into for does few team this energized It he note have bullet months a first is be front to take I the been has place. is was page been difference has to take second the the the guy. year-to-date.

In quarter, revenue. in had consolidated the on $X.X increase EBITDA of million increase, second we XX.X% an X.X%

$X.X EBITDA, of the divided to increase the cash leveraging which the cash that divide by of gave earnings Ben incremental consolidated we that converted EBITDA, you that dynamics consolidated various $X.X at If increase cause company, the consider revenue happen. work revenue, you million in into XX.X%. XX.X% we in the million in

the new first growth we the a was also comparison in would quarter And six XX.X% though the tough of the There for decline. the time. that, We first and were There a X.X% even into market mentioned I was the at very case. that belief, was cash. converted that months, earnings in that the had not to continue think, quarter we hints

into first what the flu. because revenue at in earnings. XX.X% this got lot the reversed the conversion XX.X% go quarter consolidated had EBITDA revenue. the strong on a of of was XXXX on quarter a you margin look less and XX high first volumes But year EBITDA and If back That points of we only we consolidated of printed, of second cash quarter very additional less

margin. What look, I quarter at I first second that margin, was pathetic. of EBITDA symptomatic. the And been said, wasn’t. year, then a think last It consolidated meant XX.X% end That was of should was XXXX the have the quarter was XX% the call, last it XX% or

ourselves unchanged, accountable. we’ve were XX% pathetic. higher, quarter little was quarter hold don’t We and bit third I fourth pathetic. again. The a like higher, When a That little happen humiliated, embarrassed that say already like April, means pathetic. things pathetic The will seen We something. bit and not

year-over-year. months million of had EBITDA revenue we So the $X.X we have additional six million of $X.X and

we into EBITDA now we’re cash XXX.X% is revenue. consolidated So, All of the earnings. additional revenue lacking converted more

much And guess to done. done what? more higher done And margin get is broadly. because and we will much pop margins. is work we’re being in work not having area higher be the We’re There that

the entire Over an through portfolio last weeks, review, two we’ve gone business-by-business.

teams and months. giving which six businesses, mean end earnings power earnings second are country, it speak. over across as not half. itself of our That you time, We for we the and year this at normalized operating second the earnings repeat portfolio spread Normalized want months all. better at six working will backs, the add in the not Our that’s the did to will get with we not doesn’t quarter optimum

down more and analogies. There months of is to I commentary as company what toward you our in what six the and to a guess want known come. far quarter seeing on that, externally to second known now power the having payment so a the we in and With colorful and rather So, I’m big I’m optimize that. end is broadly the earning between in can year do the portfolio we see

So, with to I new. come want up

questions. meals edible. sick. everybody Last up performance And was made I’ll It end take not this call we and year served that some

very one, say And no, get you a to reputation inexpensively. building beginning back, going restaurant I’m for healthy. performance even and going served fine as we So, back come up And it’s a was going be where worthy, of next you the meals to And meal be come quarter, it’s great this a a can that to it’s meal. better.

I entree to very meaty, analogy was up the Ben It first. Ben. the like So make is served

It different. many it more. described is a you And meal hard call awesome And Let’s Performance not to Heroes. followed That High Viki steak. salad. There’ll salad, hamburger. beautifully. with come be fine be our was by. that was it a a There’ll

On the dessert.

to you So, to we go some you back meal then over Carriage a -- word and want their a restaurant have consistent there. of predictable settle come and on will be that and we spread great Buy great enjoy want want watch of our you to give word stock now so we and to from back you mouth, and it. experience. and

much. very you Thank

some questions. take Let’s

Operator

Barrington the And Alex our Paris question line first from Instructions] [Operator of comes from Research.

You may begin.

Chris Howe

This for Viki. and is Ben Mel, in morning, Good Chris sitting Alex.

Ben Brink

Good Chris. Chris. morning, Hey,

Chris Howe

Morning.

been it and planted beginning harvest that you’re seems see So seeds a have Carriage. to the at

growing funeral the what’s look cemetery, we As look across XX.X% consolidated the maintaining set and at EBITDA the in conversion mentioning growth as leverage revenue metrics, and growth the foundation that you’re and should seeing XX.X% at the well in across mentioned EBITDA. here? Mel How this we key into XX.X% on as to you’ve upon that you cemetery, these

Mel Payne

quarter our in of XXXX trends stumble and in that face Yes. And we This some blah, operationally the rebooted judged. What we had toward is grown to which of very being in rigid. the demoralizing And metrics they’re last Operating outdated how your our were in secular of year, thing. questions revenue. can’t to grow blah, blah, about revenues last we funeral Model. Standards is and get and And The did difficult Mel. began the year kind achieve, we business a lot That’s year, cremation business. XXXX and is you to teams it

toward years. we compound revenue And to growth it so be changed three up oriented over

in employees, They to on adjusting partners they have supported by the out. operational the what the so you’re groups. go it don’t We by and what groups And here know behavior, field is they’re by company, And best they’re tell our seeing market key They traction leadership, analytical managing how. the more that then after and metrics figure them share. they’re so are. adjusting adjusting across

what I to the have so come. And still certainly incentivizes that growth, range of normalized change should and When across traction portfolio the different of standard of already the we over revenue two And think before. to a you businesses different dynamic And year, and at that whole getting this be. the a more different been high-performance with metric we’ve markets rewards lot through times. we know earnings new there’s next something years,

the And you’ll is at high that that. revenue consolidated incremental EBITDA. cost, down definable more seeing more of revenue you’re converted lot what businesses have and that level, EBITDA. these growth shareholder individual see it when our of to cash So, field fixed over the a to right we control level At falls overhead,

to continue that incrementally over time. you’ll think I So, see

about months convert Of we very years. And into need have revenue what for five of we that’s sustain see. I course, is like ridiculous. that’s that it six And had What I XXX% more and over will you EBITDA XX% comparison. think weak and mean, it. I think the more is

Chris Howe

was And there same you, or That What’s they larger don’t? achieve could standards you mentioned these the very progress of of standards helpful. standards? this that they Thank portions were aren’t in portfolio. and impactful be, that Ben, Mel. portion outperform the portfolio achieving the their Or the how as even the assuming achieving

Ben Brink

Yes, Chris.

it’s at partner only Mel that the hold positions, and changes managing put a of local key just some of months. traction what the have happened takes level past lot our of talked and think couple I about, in when place the in we timing

So, those changes and progress will continue.

and minimum traction getting that meaningful look at the move standards portfolio meaningful can and as we and achievement. business we their as I haven’t that impacts whole way that really XX% underachievers in performance in of think results up to our level a a seen that are in folks be forward

Mel Payne

there had operations how the don’t follow it people was I going the all that Mel. business a This Nick the minute entire minute But of video I was to of into in one or group, minute Meeting, operating yesterday’s look, think, Saban In is young office. I here Board one of a Hey, played support out you and home already in were Saban. team there. know Board video. with Nick Alabama one people there Yes. the talking video they many we Football. a maybe

bus. And he and will the that goal and to the team we’re the have started about spring get off will seat baseball, you people it’s and look, winning football, organization, be season a on by best the time, the not team into he legacy Alabama in you who And sort on team that to off the in get here training saying, wrong until spring winning the talent. players be you that our and any have over that person should the bus get of to lead to a out any in then said, the will team culture bus training high-performance have and do whether will look, recruit company, at not so the right you chemistry, basketball, seat on a then to

will opportunities process This around as off will get fearful we sat lead going And time on that. This time Carriage company a we’re this be now low-performing not the said, low-performing these pruning we’re and upside back that leaders. people is what the all goes There and will the some rather we we we consider standards when risk with through, of What good natural turnover. it. see and who the over to businesses process. this is will normal how journey. And a see of kind to than time. of averse. at be this, the And And it did over is

Chris Howe

maintenance anticipate ticked line great. minor How I moving should bookkeeping then one question. we forward? quarter. expenditures up had the I noticed in That’s this item that capital And

Ben Brink

maintenance million year. the continue way just stuff is the timing Chris, think just or probably Yes, $XX were closer if to of when Yes, between that’s CapEx I $X getting And guess and for to another, million. to really $XX we million done. one we’re

Chris Howe

you. Thank That’s All have for right. now. all I

Operator

Patel question from our of the And you. Goldman from Sachs. Thank next line Komal comes

You may begin.

Komal Patel

the for big a Hi. Maybe just time. picture. Thanks

You’ve clearly shown signs of turnaround.

on you about these through of get you what into kind say list? the second And of on back the transformation way? management what Or what’s more does half the some heading would still the more inning First, year, of maybe the Just have is initiatives seeing its or importantly, to-do to of are? left trying sense of flow business? it just new a kind of

Mel Payne

This is Mel.

our do initiatives. consider We We have and simple the But lot any we concepts. we it company plate a on call initiative-free. have don’t of

wrong get wrong then, a the going like First, the you what, right bus support, the high to turns in get right you who Almost the bus. corporate then, a light. performance? first into the in people who got a the who, on what you’ve and or to in office, business whatever, the from And off the what, dark get it’s room when turning almost and

whether You that’s ticks minimum don’t it’s standards. years some right process going Performance have the the who. to up away, through under we’re pick wait see -- the of right to in businesses

terms it places we still some went the estimate are said, got still Where portfolio? how see an are let’s I just everywhere. we earnings is we maximum can’t up potential? team, the way I too but down are many give where We opportunity of are portfolio You now at in the places there. it’s second say, there, some and the much you shows I all were with hey, XXX% and the quarter had right down. Realizing the just review capacity, still would we through left. That of results, And in

I agree And that. with one analyst of XX%. our young operations said, said I acquisition and partners,

think be end, mean I XX%. That’s doesn’t at And be at So, XXX%. lot. can year by that we’ll a we

time over will the businesses door. big never businesses. very with get will get the out portfolio to be XX%, and a prune at state, XXX sustainable back steady then it we You and if But of be a XX% and ones broad XXX% then

a margin. months margin in So, company higher amazing, XX.X% for profile. the mean, profile six EBITDA consolidated we I have higher and is revenue

impressive. of middle Our we XX.X%. Anyway, in maximum was XX.X% that’s are months are. ‘XX. in turnaround at the pretty where six That’s we And here

Komal Patel

you. a helpful. That’s super second Thank question. just maybe then it. And Got

the pipeline. M&A to in on Just check

core Or being Given that’s work that your more business, has the been some of coming you’ve the even businesses, a of has of through kind in extract separately, for deals increased changed to with recently all? given progress doing? kind appetite maybe able your at synergies the confidence acquired all in

Mel Payne

Great That’s a question. question. wonderful

trend than lot As in was that’s improvement make he so If it ditch the and to was make we faster, consider other there when it. right, debt, out way the leverage. Only process one and yes, of and to friend ditch better would because then it of getting year, we to allocation our axe fell something a confident only very of last down out paying sure Board were what under shares my in than the it’s more that I called work was that’s buying capital until and Members, right and and slower the toward is it operations. We it, And axe carefully And is business. get now. goal when wasn’t. they’re said, cheap, wanted the you’re my the and that focus on we

as speak everybody and it in this And have now, been the not we been crash. the industry. reputation, And even scoreboard hasn’t we price the tarnished externally, watching tarnished stock industry is might in though your

active of together there, we just relationships nearing will that get and some a still point, as pause those a all need do So, to there so have with. decision quality And they of tuned. we’re points kinds matter want out then It’s relationships mentioned succession maintaining and at plan. And stay really are people Ben we and our operating act timing. businesses

Komal Patel

much. so the Thanks Appreciate color.

Ben Brink

Komal. Thanks,

Operator

question comes line Thank you. Chris the Sidoti. from Our [Operator McGinnis Instructions] next of from

You may begin.

Chris McGinnis

nice taking and a for Thanks questions my morning. Good quarter.

Ben Brink

Chris. Thanks,

Chris McGinnis

of maybe I follow-up prior on one just to the guess questions.

XXXX obviously versus you when are the, at leading But that industry maybe at [indiscernible] just you reference what you’re now? the little that hit operating Thank talking at that were guess, I a point? bit numbers. you’re you. about Now, you where

Ben Brink

progress and to range of look we in in as to of to moving still that, comparison with about. the talked I were we like quarter, even year-to-date we our work performance we said, results you be we lot still made XX%, progress So where do. that and margin there look in into portfolio, at at XX% look do, is have, second that to XXXX, back back we Mel XX% still Chris, kind that work XXXX, have the And that as just our think across getting in

look at businesses back the that goals field pretty we’re can end year you at of into trying margin our you are, profile next to and of see level XXXX. can much the to So, what what least attain and

Mel Payne

get was an look in, milestone including some I achieved in a this They but hit when I my wrote up builds in there business Mel, when the great. don’t industry to XXs. and to companies, good anything turn before history everybody I’ve various chuckle that, because and seem to in Chris, you did never built get great or Yes, last, following of so in they building anytime been get that, wanted XX.X%. back into company then last good ditch. know they they they Then and written a then it And to after

we progress to that that’s on the look down, I wrote laugh all and about are across it. standard levels back that look company on proud home that we and back no I go the where leadership office. I in I a right team on a look and it now not of. that the were at bound here’s at accelerating XX.X%, was the But Well, because what, we matter now, back I company look then and as are.

to higher. I don’t promise want going when. just We’re

Chris McGinnis

Sure. that. growth. of obviously of nice No, wondering I appreciate but quarter changes, just that I was portfolio mix that and

Mel Payne

better today. a portfolio We have

higher higher revenue of businesses, businesses, we exception the some smaller margin some With profile. businesses, larger have growth

making it’s start portfolio to We existing today improving have both than very be do portfolio when performance rapidly, and a we in we the acquisitions. going then the of and better did

that think top really there’s I will notch some add profiles. businesses to the really

So at we five-year year. things turnaround timeframe was I look the think, a over and this

more team, more I You we’ll or and And But ready next have lot the right out out five or fruit told is up a There’s for to a that. to there we’ll to like We roughly years have look lot time. show the beginning years Then more to we’re picked. that. predictability. we’ll then people over XXXX, look scenario put head in start a the think, of over might not the work. do be what visibility, of months, can company game see four six about I

Chris McGinnis

taking QX. questions. appreciate and Thanks good Great. luck it for my I in

Ben Brink

Chris. Thanks,

Operator

remarks. no call you. I’d at time. And turn back to the like I’m this Thank showing to for further Payne closing questions Mel

Mel Payne

our listening Thank call. want to out quarter, for Heroes nice performance to from year there their you those back I We for here didn’t And name today. thank all invite called much really very Performance every that every High on. meal you get

you next. be will very much. You Thank

Carriage Services (CSV) 4 Aug 192019 Q2 Earnings call transcript