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    CSV
    Earnings call· Jun 2026(Q2 FY26)

    CARRIAGE SERVICES Q2 FY26 earnings call CSV

    Aug 6, 2026 Source

    Executive summary

    Carriage Services Q2 FY26 — Resilience Amidst Softening Mortality Trends

    Carriage Services demonstrated operational resilience in Q2 FY26, achieving revenue and profitability growth despite a challenging environment marked by softening mortality trends and declining funeral volumes. The company's focus on disciplined execution, cost management, and strategic initiatives allowed it to mitigate volume pressure and improve margins. Management is encouraged by a return to positive funeral volume growth in July and remains confident in its strategy and capital allocation approach for long-term shareholder value creation.

    Highlights

    5

    • Total revenue increased by $800,000 or 0.8% over the prior year quarter to $102.9 million.

    • Adjusted consolidated EBITDA grew 3.1% to $33.3 million, representing a margin of 32.3%, an increase of 70 basis points YoY.

    • Adjusted diluted EPS increased by 5.4% to $0.78 compared to $0.74 last year.

    • Consolidated insurance-funded pre-need fuel contracts sold increased by 21.1% compared to last year.

    • Bank leverage ratio improved to 4.0x at quarter-end, down from 4.2x in Q2 FY25.

    Concerns

    3

    • Comparable funeral volume declined by 3.5% in Q2 FY26 and 4.7% for the first six months compared to last year.

    • Funeral comparable revenue decreased by 2.4% to $55.7 million compared to $57 million last year due to lower volume.

    • Adjusted free cash flow for H1 FY26 totaled $13.8 million, down from $20.3 million in H1 FY25, primarily due to higher capital expenditures.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $435 million - $445 million
    high materiality
    High
    Full-year 2026 Adjusted Consolidated EBITDA
    $135 million - $140 million
    high materiality
    High
    Full-year 2026 Adjusted EBITDA Margin
    31% - 31.5%
    high materiality
    High
    Full-year 2026 Adjusted Diluted EPS
    $3.35 - $3.55
    high materiality
    High
    Full-year 2026 Overhead Expenses as % of Revenue
    13.5% - 14%
    medium materiality
    High
    Full-year 2026 Adjusted Free Cash Flow
    $40 million - $50 million
    high materiality
    High
    Full-year 2026 Ending Leverage Ratio
    3.9x - 4.0x
    high materiality
    High
    Second Half 2026 Funeral Volume Growth
    low single-digit growth
    medium materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Funeral
    Revenue decreased due to lower funeral volume driven by reduced mortality rates. Operational efficiency improvements partially offset the volume decline.
    Comparable volume declined: 3.5%Comparable Average Revenue per Contract growth: 3.7%Cremation rate: 60.6% (Q2 FY26) vs 61.2% (Q2 FY25)Cremation rate (full year): 60.5% (FY26) vs 60.6% (FY25)
    		$55.7 million-2.4%——
    Cemetery
    Revenue was essentially flat compared to prior year despite strong pre-need sales production growth, due to timing of revenue recognition. Lower volume also affected the ad-need side of the business.
    Consolidated pre-need sales production growth: 5%Consolidated average price per pre-need internment rights sold increase: 17.3%
    		$33.2 million-0.3%——
    Financial
    Reflects continued contribution from insurance-funded pre-need strategy and efforts of the sales organization.
    		$9.3 million14%——

    Operational metrics

    18
    Total revenue increase
    $800,0000.8% YoY
    Q2 FY26

    Increase over the prior year quarter.

    Funeral comparable revenue
    $57 million
    Q2 FY25

    Prior year comparable funeral revenue.

    Adjusted consolidated EBITDA margin
    31.6%
    Q2 FY25

    Prior year adjusted consolidated EBITDA margin.

    Funeral volume impact on EBITDA
    -$1.4 millionless than prior year
    Q2 FY26

    Volume impact from comparable funeral locations contributed less EBITDA compared to the prior year quarter.

    Cash from operating activities
    $21.9 million
    H1 FY25

    Cash generated from operating activities in the first half of the prior year.

    Cash from operating activities increase
    $600,0002.7% YoY
    H1 FY26

    Increase in cash from operating activities compared to the first half of the prior year.

    Interest expense reduction
    $350,000lower than prior year
    Q2 FY26

    Reduction in interest expense compared to the prior year quarter, driven by a lower bank leverage ratio and average borrowing rate.

    Funeral Home Comparable Average Revenue per Contract growth
    3.7%YoY
    Q2 FY26

    Growth compared to the same period last year.

    Consolidated average price per printed internment right growth
    17.3%YoY
    Q2 FY26

    Growth compared to the same period last year.

    Consolidated insurance-funded pre-need fuel contracts sold increase
    21.1%YoY
    Q2 FY26

    Increase compared to last year.

    Consolidated pre-need cemetery sales production growth
    5%YoY
    Q2 FY26

    Growth over the previous year's quarter.

    Consolidated average price per pre-need internment rights sold increase
    17.3%YoY
    Q2 FY26

    Increase over the same period last year.

    Bank leverage ratio
    4.0xvs 4.2x Q2 FY25
    Q2 FY26

    Ratio at quarter end, compared to the end of the second quarter of 2025.

    Average borrowing rate under credit facility
    80 bps lowerYoY
    Q2 FY26

    Lower than in the second quarter of 2025.

    Capital expenditures
    $5.3 millionvs $2.8 million Q2 FY25
    Q2 FY26

    Year-over-year increase primarily driven by cemetery development and previously deferred maintenance projects.

    Overhead expenses
    $12.1 millionvs $12.5 million Q2 FY25
    Q2 FY26

    Year-over-year change reflects incentive compensation adjustments and focus on cost management.

    Trinity locations rolled out
    15added
    Q3 FY26

    Trinity was rolled out to 15 more locations on July 1st, bringing the total pilot locations to 17.

    Funeral volume trend
    strong low single-digit growthYoY
    July 2026

    After being negative from January through June, July saw a positive shift in funeral volume.

    Industry KPIs

    5
    MetricValueDetails
    EPS$0.78USD
    Revenue$102.9 millionUSD
    Market shareflat
    Sg a OPEX ratio11.8%%
    Adjusted EBITDA ebita$33.3 millionUSD

    Product announcements

    3
    ProductTypeDetails
    Trinity Technology Platformexpansion
    Coraline for urns and casketsupdate
    Passion for Service programexpansion

    Deals & partnerships

    1
    McCammonAcquisition of a funeral home in the greater Knoxville area, a new market for Carriage Services.

    The acquisition of McCammon in Knoxville, a growing market, is expected to provide opportunities for growth through leadership, pricing, and market share. Knoxville is a new market for Carriage Services, which aims to grow its presence there and throughout Tennessee.

    Risks & headwinds

    4
    Softening mortality trendsQ2 FY26 and H1 FY26

    Comparable funeral volume declined by 3.5% in Q2 FY26 and 4.7% for H1 FY26 YoY.

    Mitigation: Disciplined execution, operating efficiency, cost management, and focus on average revenue per contract growth.

    Impact of lower funeral volume on fixed-cost businessQ2 FY26

    Volume impact contributed approximately $1.4 million less in EBITDA in Q2 FY26 compared to prior year.

    Mitigation: Stronger execution, operating discipline, managing labor, controlling discretionary spending, and improving productivity.

    Timing of pre-need cemetery revenue recognitionQ2 FY26

    Pre-need cemetery sales production grew 5%, but revenue was relatively flat due to timing.

    Mitigation: Payments are collected over the life of the contract, generating stable long-term cash flow and building a strong backlog of future revenue.

    Delay in expected acquisitionsFY26

    Full-year revenue outlook adjusted downwards by $5 million due to revised timing of expected acquisitions.

    Mitigation: Maintaining a disciplined approach to capital allocation and valuations, with continued active pipeline and expectation for more activity in H2 FY26.

    What to watch in Q3 FY26

    4

    Funeral volume growth

    Q3 FY26
    Currentstrong low single-digit growth in July
    Targetcontinued positive growth

    Why it matters

    Sustained positive volume growth is crucial for revenue recovery and leveraging the company's fixed-cost business model after a soft first half.

    As we enter the third quarter, we were encouraged to see funeral volume return to positive growth during the month of July. While one month certainly does not establish a long-term trend, it is an encouraging indicator after a softer first half of the year.

    Q&A highlights

    5

    Is the stability in cremation vs. traditional burials impacting funeral home margins, given that cremation is more profitable with a lower ticket and traditional burials have a larger ticket but lower margin?

    The mix between cremation and traditional burial is stabilizing, with the cremation rate slightly dropping by 60 basis points to 60.6% this quarter. The impact on margins is primarily due to negative volume in a fixed-cost business, rather than the mix itself. Efforts to present families with package options and cremation-related items are driving revenue per contract growth.

    “The mix is stabilizing as well, Liam. It is a great question. To give an example, our commission rate for the quarter was 60.6 percent this year, compared to the same quarter last year of 61.2 percent. Actually dropped 60 basis points from a mixed perspective.”

    asked by Liam Burke · answered by Carlos Quezada

    2 min read5 chapters

    Detailed Narrative

    01

    Operating Environment and Mortality Trends

    The second quarter of 2026 saw a challenging operating environment with mortality trends softening across the country, remaining below historical expectations. Comparable funeral volume declined by 3.5% in Q2 and 4.7% for the first six months year-over-year. Management noted that July showed an encouraging return to positive funeral volume growth, moving from high single-digit negative growth in January to positive growth in July. The company believes the full-year volume trend should be similar to last year, with the second half performing better than the first.

    02

    Operational Discipline and Efficiency

    Despite revenue headwinds from lower funeral volume, Carriage Services demonstrated improved operating leverage. The company's teams focused on managing labor, controlling discretionary spending, and improving productivity. This discipline allowed them to mitigate a significant portion of the volume decline, leading to a 70 basis point increase in adjusted consolidated EBITDA margin to 32.3%. Initiatives like Coraline for urns and caskets, package offerings, and the Passion for Service program are enhancing both family experience and business economics.

    03

    Pre-Need Sales and Revenue Recognition

    Consolidated pre-need cemetery sales production grew by 5% over the prior year's quarter, with the average price per pre-need internment rights sold increasing by 17.3%. Financial revenue, primarily from insurance-funded pre-need contracts, increased by 14% year-over-year to $9.3 million. However, the timing of📎 revenue recognition for pre-need cemetery sales meant that this production growth resulted in relatively flat revenue and EBITDA compared to the prior year quarter, as payments are collected over the life of the contract.

    04

    Capital Allocation and Acquisition Strategy

    Carriage Services maintains a healthy balance sheet with a bank leverage ratio of 4.0x, down from 4.2x in Q2 FY25, which helped reduce borrowing costs by approximately $350,000. The strategic acquisition pipeline remains active, with management emphasizing a disciplined approach to valuations. The company recently acquired McCammon in Knoxville, a growing market, and expects more acquisition activity in the second half of the year, though the timing of📎 these deals led to a downward adjustment in full-year revenue guidance.

    05

    Trinity Technology Rollout

    The company continues its rollout of the Trinity technology platform. Following an initial pilot, Trinity was expanded to 15 additional locations on July 1st, bringing the total to 17 locations. Management is currently assessing the data from this pilot phase to inform the broader network rollout strategy. This initiative is part of the company's investment in long-term capabilities and performance.

    AI-generated summary of the company’s earnings call. Not investment advice.