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Carriage Services (CSV) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 6, 2026

Source: earnings call transcript

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

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

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%——

Product announcements

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

Deals & partnerships

McCammon Acquisition 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

Softening mortality trends Q2 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 business Q2 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 recognition Q2 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 acquisitions FY26

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

Funeral volume growth

Q3 FY26
Current strong low single-digit growth in July
Target continued 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.

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Q&A highlights

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 read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.