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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM			10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ____________


Commission File Number:			1-11961

CARRIAGE SERVICES, INC.

(Exact name of registrant as specified in its charter)


Delaware			76-0423828
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

3040 Post Oak Boulevard, Suite 300

Houston, Texas, 77056

(Address of principal executive offices)

(713) 332-8400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $.01 per share	CSV	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s Common Stock, $.01 par value per share, outstanding as of July 31, 2025 was 15,698,487.

CARRIAGE SERVICES, INC.

INDEX


			Page
PART I – FINANCIAL INFORMATION

Item 1. Financial Statements			3

Unaudited Condense d Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024			3

Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months ended June 30, 2025 and 2024			4

Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2025 and 2024			5

Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Six Months ended June 30, 2025 and 2024			6

Unaudited Condensed Notes to Consolidated Financial Statements			8
1. Basis of Presentation and Summary of Significant Accounting Policies			8
2. Recently Issued Accounting Standards			10
3. Goodwill			11
4. Divested Operations			11
5. Receivables			12
6. Fair Value Measurements			13
7. Trust Investments			14
8. Receivables from Preneed Trusts			23
9. Credit Facility and Acquisition Debt			23
10. Senior Notes			25
11. Earnings Per Share			26
12. Segment Reporting			26
13. Subsequent Events			30

Cautionary Statement on Forward–Looking Statements			31

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			33

Item 3. Quantitative and Qualitative Disclosures About Market Risk			43

Item 4. Controls and Procedures			43

PART II – OTHER INFORMATION

Item 1. Legal Proceedings			44

Item 1A. Risk Factors			44

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			45

Item 3. Defaults Upon Senior Securities			45

Item 4. Mine Safety Disclosures			45

Item 5. Other Information			45

Item 6. Exhibits			45

SIGNATURE			46

INDEX OF EXHIBITS			47

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements.

CARRIAGE SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands, except share data)





	June 30, 2025		December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	1,398	$	1,165
Accounts receivable, net	34,830		30,193
Inventories	7,580		7,920
Prepaid and other current assets	7,454		4,123
Current assets held for sale	61		1,135
Total current assets	51,323		44,536
Preneed cemetery trust investments	99,908		98,120
Preneed funeral trust investments	108,167		106,219
Preneed cemetery receivables, net	56,717		50,958
Receivables from preneed funeral trusts, net	22,024		22,372
Property, plant, and equipment, net	271,445		273,004
Cemetery property, net	110,574		109,576
Goodwill	410,703		414,859
Intangible and other non-current assets, net	40,382		40,427
Operating lease right-of-use assets	14,268		14,953
Cemetery perpetual care trust investments	86,744		85,103
Non-current assets held for sale	3,459		19,453
Total assets	$	1,275,714	$	1,279,580
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:



Current portion of debt and lease obligations	$	4,745	$	3,914
Accounts payable	16,691		15,427
Accrued and other liabilities	26,897		38,460
Current liabilities held for sale	130		240
Total current liabilities	48,463		58,041
Acquisition debt, net of current portion	4,817		4,895
Long-term liabilities held for sale	1,743		13,842
Credit facility	111,458		135,382

Senior notes	396,954		396,597
Obligations under finance leases, net of current portion	8,908		6,045
Obligations under operating leases, net of current portion	12,923		14,035
Deferred preneed cemetery revenue	64,379		61,767
Deferred preneed funeral revenue	39,437		39,261
Deferred tax liability	54,693		51,429
Other long-term liabilities	1,334		1,179
Deferred preneed cemetery receipts held in trust	99,908		98,120
Deferred preneed funeral receipts held in trust	108,167		106,219
Care trusts’ corpus	87,110		84,218
Total liabilities	1,040,294		1,071,030
Commitments and contingencies:
Stockholders’ equity:
Common stock, $0.01 par value; 80,000,000 shares authorized and 27,328,939 and 26,881,355 shares issued, respectively and 15,701,121 and 15,253,537 shares outstanding, respectively	273		269
Additional paid-in capital	238,026		243,825
Retained earnings	275,874		243,209
Treasury stock, at cost; 11,627,818 shares	(278,753)		(278,753)
Total stockholders’ equity	235,420		208,550
Total liabilities and stockholders’ equity	$	1,275,714	$	1,279,580

The accompanying condensed notes are an integral part of these Condensed Consolidated Financial Statements.

CARRIAGE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share data)




	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Revenue:
Service revenue	$	46,510	$	44,433	$	99,520	$	94,132
Property and merchandise revenue	46,513		49,590		92,099		95,092
Other revenue	9,124		8,295		17,597		16,587
	102,147		102,318		209,216		205,811
Field costs and expenses:
Cost of service	23,787		21,672		48,364		45,380
Cost of merchandise	32,156		31,981		64,765		63,931
Cemetery property amortization	2,241		2,560		4,069		4,316
Field depreciation expense	3,288		3,405		6,610		6,872
Regional and unallocated funeral and cemetery costs	3,260		4,245		8,495		8,087
Other expenses	1,480		1,462		3,136		2,970
	66,212		65,325		135,439		131,556
Gross profit	35,935		36,993		73,777		74,255
Corporate costs and expenses:
General, administrative and other	11,938		18,601		23,986		34,841

Net (gain) loss on divestitures, disposals, and impairments charges	(1)		23		(5,771)		1,568
Operating income	23,998		18,369		55,562		37,846

Interest expense	7,034		8,324		14,332		17,036


Net gain on property damage, net of insurance claims	—		(417)		—		(417)
Other, net	107		3		(1,881)		46
Income before income taxes	16,857		10,459		43,111		21,181
Expense for income taxes	5,260		3,513		13,451		7,032
(Benefit) expense related to discrete income tax items	(142)		687		(3,005)		917
Total expense for income taxes	5,118		4,200		10,446		7,949
Net income	$	11,739	$	6,259	$	32,665	$	13,232

Basic earnings per common share:	$	0.75	$	0.41	$	2.09	$	0.87
Diluted earnings per common share:	$	0.74	$	0.40	$	2.07	$	0.85

Dividends declared per common share:	$	0.1125	$	0.1125	$	0.2250	$	0.2250
Weighted average number of common and common equivalent shares outstanding:
Basic	15,458		14,965		15,352		14,920
Diluted	15,653		15,403		15,528		15,356

The accompanying condensed notes are an integral part of these Condensed Consolidated Financial Statements.

CARRIAGE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)


	Six months ended June 30,
	2025		2024
Cash flows from operating activities:
Net income	$	32,665	$	13,232
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	11,574		11,664
Provision for credit losses	1,973		1,447
Stock-based compensation expense	3,845		2,671
Deferred income tax (benefit) expense	3,264		(1,477)
Amortization of intangibles	660		669
Amortization of debt issuance costs	255		352
Amortization and accretion of debt	278		266

Net (gain) loss on divestitures, disposals, and impairment charges	(5,771)		1,568
Net gain on property damage, net of insurance claims	—		(417)
Gain on sale of excess real property	(1,993)		—
Changes in operating assets and liabilities that provided (used) cash:
Accounts and preneed receivables	(11,430)		(13,939)
Inventories, prepaid, and other current assets	(3,136)		1,224
Intangible and other non-current assets	(1,117)		(2,339)
Preneed funeral and cemetery trust investments	(4,281)		(9,523)
Accounts payable	(2,245)		3,084
Accrued and other liabilities	(10,458)		(3,999)
Deferred preneed funeral and cemetery revenue	1,941		7,064
Deferred preneed funeral and cemetery receipts held in trust	5,853		10,313
Net cash provided by operating activities	21,877		21,860

Cash flows from investing activities:

Proceeds from divestitures and sale of other assets	18,822		11,174
Proceeds from insurance claims	—		314
Capital expenditures	(6,009)		(7,096)
Net cash provided by investing activities	12,813		4,392

Cash flows from financing activities:
Borrowings from the credit facility	24,600		24,800
Payments against the credit facility	(48,700)		(48,900)





Payments on acquisition debt and obligations under finance leases	(221)		(305)

Proceeds from the exercise of stock options and employee stock purchase plan contributions	983		1,942
Taxes paid on restricted stock, performance award vestings, and exercise of stock options	(7,631)		(419)
Dividends paid on common stock	(3,488)		(3,390)

Net cash used in financing activities	(34,457)		(26,272)


Net increase (decrease) in cash and cash equivalents	233		(20)
Cash and cash equivalents at beginning of period	1,165		1,523
Cash and cash equivalents at end of period	$	1,398	$	1,503

Supplemental disclosure of cash flow information:
Cash paid for interest and financing costs	$	13,614	$	16,258
Cash paid for taxes	9,884		9,200

The accompanying condensed notes are an integral part of these Condensed Consolidated Financial Statements.

CARRIAGE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited and in thousands)


	Three months ended June 30, 2025
	Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Total
Balance - March 31, 2025	15,693	$	273	$	237,407	$	264,135	$	(278,753)	$	223,062
Net income	—	—		—		11,739		—		11,739
Issuance of common stock from employee stock purchase plan	9	—		295		—		—		295
Issuance of common stock to directors and board advisor	1	—		63		—		—		63


Exercise of stock options	2	—		—		—		—		—
Restricted common stock, performance awards and stock options surrendered for taxes paid	(4)	—		(2)		—		—		(2)
Stock-based compensation expense	—	—		2,029		—		—		2,029
Dividends on common stock ($0.1125 per share)	—	—		(1,766)		—		—		(1,766)



Balance - June 30, 2025	15,701	$	273	$	238,026	$	275,874	$	(278,753)	$	235,420


	Three months ended June 30, 2024
	Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Total
Balance - March 31, 2024	15,165	$	268	$	240,811	$	217,229	$	(278,753)	$	179,555
Net income	—	—		—		6,259		—		6,259
Issuance of common stock from employee stock purchase plan	15	—		324		—		—		324
Issuance of common stock to directors and board advisor	6	—		151		—		—		151


Exercise of stock options	50	1		1,271		—		—		1,272
Restricted common stock and stock options surrendered for taxes paid	—	—		(1)		—		—		(1)
Stock-based compensation expense	—	—		2,031		—		—		2,031
Dividends on common stock ($0.1125 per share)	—	—		(1,704)		—		—		(1,704)



Balance - June 30, 2024	15,236	$	269	$	242,883	$	223,488	$	(278,753)	$	187,887


	Six months ended June 30, 2025
	Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Total
Balance - December 31, 2024	15,254	$	269	$	243,825	$	243,209	$	(278,753)	$	208,550
Net income	—	—		—		32,665		—		32,665
Issuance of common stock from employee stock purchase plan	20	—		662		—		—		662
Issuance of common stock to directors and board advisor	3	—		140		—		—		140
Issuance of common stock	271	3		(3)		—		—		—
Issuance of restricted common stock	115	1		(1)		—		—		—
Exercise of stock options	79	—		321		—		—		321
Restricted common stock, performance awards and stock options surrendered for taxes paid	(53)	—		(7,631)		—		—		(7,631)
Stock-based compensation expense	—	—		3,705		—		—		3,705
Dividends on common stock ($0.2250 per share)	—	—		(3,488)		—		—		(3,488)


Other	12	—		496		—		—		496
Balance - June 30, 2025	15,701	$	273	$	238,026	$	275,874	$	(278,753)	$	235,420


	Six months ended June 30, 2024
	Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Total
Balance - December 31, 2023	15,000	$	266	$	241,291	$	210,256	$	(278,753)	$	173,060
Net income	—	—		—		13,232		—		13,232
Issuance of common stock from employee stock purchase plan	31	—		671		—		—		671
Issuance of common stock to directors and board advisor	10	—		264		—		—		264
Issuance of common stock	—	—		—		—		—		—
Issuance of restricted common stock	157	2		(2)		—		—		—
Exercise of stock options	50	1		1,271		—		—		1,272
Restricted common stock and stock options surrendered for taxes paid	(43)	—		(419)		—		—		(419)
Stock-based compensation expense	—	—		2,407		—		—		2,407
Dividends on common stock ($0.2250 per share)	—	—		(3,390)		—		—		(3,390)


Other	31	—		790		—		—		790
Balance - June 30, 2024	15,236	$	269	$	242,883	$	223,488	$	(278,753)	$	187,887

The accompanying condensed notes are an integral part of these Condensed Consolidated Financial Statements.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Carriage Services, Inc. (“Carriage,” the “Company,” “we,” “us,” or “our”) is a leading provider of funeral and cemetery services and merchandise in the United States. Our operations are reported in two business segments: Funeral Home Operations, which currently accounts for approximately 70% of our total revenue and Cemetery Operations, which currently accounts for approximately 30% of our total revenue. At June 30, 2025, we operated 159 funeral homes in 25 states and 28 cemeteries in 10 states.

Our funeral home operations are principally service businesses that generate revenue from sales of burial and cremation services and related merchandise, such as caskets and urns. Funeral services include consultation, the removal and preparation of remains, the sale of caskets and related funeral merchandise, the use of funeral home facilities for visitation and memorial services and transportation services. We provide funeral services and products on both an “atneed” (time of death) and “preneed” (planned prior to death) basis.

Our cemetery operations generate revenue primarily through sales of cemetery interment rights (primarily grave sites, lawn crypts, mausoleum spaces and niches), related cemetery merchandise (such as memorial markers, outer burial containers and monuments) and services (interments, inurnments and installation of cemetery merchandise). We provide cemetery services and products on both an atneed and preneed basis.

Principles of Consolidation and Interim Condensed Disclosures

Our unaudited Condensed Consolidated Financial Statements include the Company and its subsidiaries. All intercompany balances and transactions have been eliminated. Our interim Condensed Consolidated Financial Statements are unaudited, but include all adjustments, which consist of normal, recurring accruals, that are necessary for a fair presentation of our financial position and results of operations as of and for the interim periods presented.

There have been no material changes in our accounting policies previously disclosed in Part II, Item 8 “Financial Statements and Supplementary Data” in Note 1 in our Annual Report on Form 10-K for the year ended December 31, 2024. In addition, our unaudited Condensed Consolidated Financial Statements have been prepared in a manner consistent with the accounting principles described in our Annual Report on Form 10-K for the year ended December 31, 2024, unless otherwise disclosed herein, and should be read in conjunction therewith.

Use of Estimates

The preparation of our Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses. On an ongoing basis, we evaluate our critical estimates and judgments, which include those related to the impairment of goodwill and the fair value measurements used in business combinations. These policies are considered critical because they may result in fluctuations in our reported results from period to period due to significant judgments, estimates and assumptions about complex and inherently uncertain matters and because the use of different judgments, assumptions or estimates could have a material impact on our financial condition or results of operations. Actual results may differ from these estimates and such estimates may change if the underlying conditions or assumptions change. Historical performance should not be viewed as indicative of future performance because there can be no assurance the margins, operating income and net earnings, as a percentage of revenue, will be consistent from period to period.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Inventory

Inventory consists primarily of caskets, outer burial containers and cemetery monuments and markers and is recorded at the lower of its cost basis or net realizable value. Inventory is relieved using specific identification in fulfillment of performance obligations on our contracts.

Held for Sale

At June 30, 2025, the assets and liabilities of non-core funeral home and cemetery businesses expected to be sold within the next twelve months, which have met the criteria for such classification, have been classified as held for sale.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The table below presents the carrying amounts of the assets and liabilities included as part of the expected sale (in thousands):


	June 30, 2025		December 31, 2024
Accounts receivable, net	$	1	$	833
Inventories	57		302
Prepaid and other current assets	3		—
Current assets held for sale	$	61	$	1,135

Preneed cemetery trust investments	$	1,104	$	4,876
Preneed funeral trust investments	177		2,197
Preneed cemetery receivables, net	5		1,671
Receivables from funeral preneed trusts, net	27		—
Property, plant, and equipment, net	1,404		4,898
Cemetery property, net	127		3,362
Intangible and other non-current assets, net	224		215
Operating lease right-of-use assets	69		—
Cemetery perpetual care trust investments	322		2,234
Non-current assets held for sale	$	3,459	$	19,453

Current portion of operating lease obligations	$	23	$	—
Accounts payable	24		94
Accrued and other liabilities	83		146
Current liabilities held for sale	$	130	$	240

Obligations under operating leases, net of current portion	$	47	$	—
Deferred preneed cemetery revenue	66		3,517
Deferred preneed funeral revenue	27		1,018
Deferred preneed cemetery receipts held in trust	1,104		4,876
Deferred preneed funeral receipts held in trust	177		2,197
Care trusts’ corpus	322		2,234
Long-term liabilities held for sale	$	1,743	$	13,842

Property, Plant, and Equipment

Property, plant, and equipment is comprised of the following (in thousands):


	June 30, 2025		December 31, 2024
Land	$	85,479	$	86,609
Buildings and improvements	261,978		265,231
Furniture, equipment and vehicles	70,602		72,052
Property, plant, and equipment, at cost	418,059		423,892
Less: accumulated depreciation	(145,210)		(145,990)
Property, plant, and equipment, net	$	272,849	$	277,902
Less: Held for sale	(1,404)		(4,898)
Property, plant, and equipment, net	$	271,445	$	273,004

During the six months ended June 30, 2025, we sold two funeral homes and three cemeteries that had a carrying value of property, plant, and equipment of $3.4 million, which was included in the gain on sale and recorded in Net (gain) loss on divestitures, disposals, and impairment charges on our Consolidated Statements of Operations, more fully described in Note 4 to the Condensed Consolidated Financial Statements.

Additionally, during the six months ended June 30, 2025, we sold real property for $3.0 million, with a carrying value of $1.0 million, resulting in a $2.0 million gain on the sale, which was recorded in Net (gain) loss on divestitures, disposals, and impairment charges on our Consolidated Statements of Operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

During the six months ended June 30, 2024, we sold six funeral homes and one cemetery that had a carrying value of property, plant, and equipment of $3.1 million, which was included in the loss on sale and recorded in Net (gain) loss on divestitures, disposals, and impairment charges on our Consolidated Statements of Operations. Additionally, we sold real property for $0.3 million, with a carrying value of $0.3 million.

Our growth and maintenance capital expenditures totaled $1.4 million and $1.9 million for the three months ended June 30, 2025 and 2024, respectively, and $3.0 million and $3.5 million for the six months ended June 30, 2025 and 2024, respectively. In addition, we recorded depreciation expense of $3.3 million and $3.5 million for the three months ended June 30, 2025 and 2024, respectively, and $6.8 million and $7.2 million for the six months ended June 30, 2025 and 2024, respectively.

Cemetery Property

Cemetery property was $110.7 million and $112.9 million, net of accumulated amortization of $73.7 million and $72.6 million at June 30, 2025 and December 31, 2024, respectively. When cemetery property is sold, the value of the cemetery property (interment right costs) is expensed as amortization using the specific identification method in the period in which the sale of the interment right is recognized as revenue. Our growth capital expenditures for cemetery property development totaled $1.4 million and $1.6 million for the three months ended June 30, 2025 and 2024, respectively, and $3.0 million and $3.5 million for the six months ended June 30, 2025 and 2024, respectively. We recorded amortization expense for cemetery interment rights of $2.2 million and $2.6 million for the three months ended June 30, 2025 and 2024, respectively, and $4.1 million and $4.3 million for the six months ended June 30, 2025 and 2024, respectively.

During the six months ended June 30, 2025, we sold three cemeteries that had a carrying value of cemetery property of $3.3 million, which was included in the gain on sale and recorded in Net (gain) loss on divestitures, disposals, and impairment charges on our Consolidated Statements of Operations, more fully described in Note 4 to the Condensed Consolidated Financial Statements.

During the six months ended June 30, 2024, we sold one cemetery that had a carrying value of cemetery property of $0.8 million, which was included in the loss on sale and recorded in Net (gain) loss on divestitures, disposals, and impairment charges on our Consolidated Statements of Operations.

Income Taxes

Income tax expense was $5.1 million and $4.2 million for the three months ended June 30, 2025 and 2024, respectively, and $10.4 million and $7.9 million for the six months ended June 30, 2025 and 2024, respectively. Our operating tax rate before discrete items was 31.2% and 33.6% for the six months ended June 30, 2025 and 2024, respectively, and 31.2% and 33.2% for the three months ended June 30, 2025 and 2024, respectively.

2. RECENTLY ISSUED ACCOUNTING STANDARDS

Income Taxes

In December 2023, the FASB issued ASU, Income Taxes - Improvements to Income Tax Disclosures to enhance the transparency about income tax information through improvements to income tax disclosures primarily related to rate reconciliation and income taxes paid information. The amendments in this update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation; and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate). The amendments in this update also require that all entities disclose on an annual basis (1) the amount of net income taxes paid disaggregated by federal and state taxes; and (2) the amount of net income taxes paid disaggregated by individual jurisdictions in which net income taxes paid is equal to or greater than five percent of total net income taxes paid. The amendments are effective for annual periods beginning after December 15, 2024, and therefore were effective for us for our fiscal year beginning January 1, 2025, and for interim periods within our fiscal year beginning January 1, 2026. The adoption has no material impact on our consolidated financial statements as it modified disclosure requirements only.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Accounting Pronouncements Not Yet Adopted

Expense Disaggregation

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses. The amendments in this update require, in the notes to the financial statements, disclosure of specified information about certain costs and expenses, which includes purchases of inventory, employee compensation, depreciation and intangible asset amortization included in each relevant expense caption. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. We expect the adoption will have no material impact on our condensed consolidated financial statements as it modifies disclosure requirements only.

3. GOODWILL

The following table presents changes in goodwill in the accompanying Consolidated Balance Sheets (in thousands):


	June 30, 2025		December 31, 2024
Goodwill at the beginning of the period	$	414,859	$	423,643

Decrease in goodwill related to divestitures	(4,156)		(8,784)

Goodwill at the end of the period	$	410,703	$	414,859

During the six months ended June 30, 2025, we allocated $4.2 million of goodwill to the sale of two funeral homes and three cemeteries which was recorded in Net (gain) loss on divestitures, disposals, and impairment charges on our Consolidated Statements of Operations, of which $2.6 million was allocated to our funeral home segment and $1.6 million was allocated to our cemetery segment.

During the six months ended June 30, 2024, we allocated $8.7 million of goodwill to the sale of six funeral homes and one cemetery which was recorded in Net (gain) loss on divestitures, disposals, and impairment charges on our Consolidated Statements of Operations, of which $7.8 million was allocated to our funeral homes segment and $1.0 million was allocated to our cemetery segment.

4. DIVESTED OPERATIONS

During the three months ended June 30, 2025, we merged one funeral home with another business we own in an existing market. During the six months ended June 30, 2025, we sold two funeral homes and three cemeteries for an aggregate of $15.8 million and merged one funeral homes with another business we own in an existing market.

During the three months ended June 30, 2024, we merged one funeral home with another business we own in an existing market. During the six months ended June 30, 2024, we sold six funeral homes and one cemetery for an aggregate of $10.9 million and merged one funeral home with another business we own in an existing market.

The operating results of these divested funeral homes and cemeteries are reflected on our Consolidated Statements of Operations as shown in the table below (in thousands):


	Three months ended June 30,				Six months ended, June 30,
	2025		2024		2025		2024
Revenue	$	(3)	$	121	$	1,650	$	1,272

Operating income	42		33		518		151
Income on divestitures(1)	1		(8)		5,938		(1,509)
Income tax (expense) benefit	(13)		(8)		(2,014)		451
Net gain (loss) from divested operations, after tax	$	30	$	17	$	4,442	$	(907)



(1)			Net loss on divestitures is recorded in Net (gain) loss on divestitures, disposals, and impairment charges on our Consolidated Statements of Operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. RECEIVABLES

Accounts Receivable

Our funeral receivables are recorded in Accounts receivable, net and primarily consist of amounts due for funeral services already performed.

Atneed cemetery receivables and preneed cemetery receivables with payments expected to be received within one year from the balance sheet date are also recorded in Accounts receivable, net. Preneed cemetery receivables with payments expected to be received beyond one year from the balance sheet date are recorded in Preneed cemetery receivables, net.

Accounts receivable is comprised of the following (in thousands):


	June 30, 2025
Column1	Funeral		Cemetery		Corporate		Held for Sale		Total
Trade and financed receivables	$	6,972	$	26,292	$	—	$	(1)	$	33,263
Other receivables	969		1,425		713		—		3,107
Allowance for credit losses	(358)		(1,182)		—		—		(1,540)
Accounts receivable, net	$	7,583	$	26,535	$	713	$	(1)	$	34,830


	December 31, 2024
Column1	Funeral		Cemetery		Corporate		Held for Sale		Total
Trade and financed receivables	$	7,085	$	24,355	$	—	$	(833)	$	30,607
Other receivables	557		345		—		—		902
Allowance for credit losses	(302)		(1,014)		—		—		(1,316)
Accounts receivable, net	$	7,340	$	23,686	$	—	$	(833)	$	30,193

Other receivables include supplier rebates, commissions due from third-party insurance companies and perpetual care income receivables.

The following table summarizes the activity in our allowance for credit losses by portfolio segment for the six months ended June 30, 2025 (in thousands):


	January 1, 2025		Provision for Credit Losses		Write Offs		Recoveries		June 30, 2025
Trade and financed receivables:
Funeral	$	302	$	(518)	$	232	$	(374)	$	(358)
Cemetery	(1,014)		(577)		1,591		—		—
Total allowance for credit losses on trade and financed receivables	$	(712)	$	(1,095)	$	1,823	$	(374)	$	(358)

Balances due on undelivered preneed funeral trust contracts have been reclassified to reduce Deferred preneed funeral revenue on our Consolidated Balance Sheets of $8.9 million and $10.2 million at June 30, 2025 and December 31, 2024, respectively. As these performance obligations are to be completed after the date of death, we cannot quantify the recognition of revenue in future periods. However, we estimate an average maturity period of ten years for preneed funeral contracts.

Cemetery Receivables

Our cemetery receivables are comprised of the following (in thousands):


	June 30, 2025		December 31, 2024
Interment rights	$	87,512	$	79,436
Merchandise and services	13,614		13,128
Unearned finance charges	4,787		4,983
Cemetery receivables	$	105,913	$	97,547

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The components of our cemetery receivables are as follows (in thousands):


	June 30, 2025		December 31, 2024
Cemetery receivables	$	105,913	$	97,547
Less: unearned finance charges	(4,787)		(4,983)
Cemetery receivables, at amortized cost	$	101,126	$	92,564
Less: allowance for contract cancellation and credit losses	(3,544)		(3,018)
Less: balances due on undelivered cemetery preneed contracts	(15,750)		(13,576)
Less: amounts in accounts receivable	(25,110)		(23,341)
Preneed cemetery receivables, net including HFS	$	56,722	$	52,629
Less: Held for sale	(5)		(1,671)
Preneed cemetery receivables, net	$	56,717	$	50,958

The following table summarizes the activity in our allowance for credit losses for Preneed cemetery receivables, net for the six months ended June 30, 2025 (in thousands):


	January 1, 2025		Provision for Credit Losses		Write Offs		June 30, 2025
Total allowance for credit losses on Preneed cemetery receivables, net	$	(2,004)	$	(878)	$	520	$	(2,362)

The amortized cost basis of our cemetery receivables by year of origination as of June 30, 2025 is as follows (in thousands):


	2025		2024		2023		2022		2021		Prior		Total
Total cemetery receivables, at amortized cost	$	30,003	$	39,497	$	17,377	$	9,396	$	3,431	$	1,422	$	101,126

The aging of past due cemetery receivables as of June 30, 2025 is as follows (in thousands):


	31-60 Past Due		61-90 Past Due		91-120 Past Due		>120 Past Due		Total Past Due		Current		Total
Recognized revenue	$	1,857	$	1,142	$	668	$	3,263	$	6,930	$	78,446	$	85,376
Deferred revenue	515		168		184		626		1,493		19,044		20,537
Total contracts	$	2,372	$	1,310	$	852	$	3,889	$	8,423	$	97,490	$	105,913

Balances due on undelivered preneed cemetery contracts have been reclassified to reduce Deferred preneed cemetery revenue on our Consolidated Balance Sheets. The transaction price allocated to preneed merchandise and service performance obligations that were unfulfilled were $15.8 million and $13.6 million at June 30, 2025 and December 31, 2024, respectively. As these performance obligations are to be completed after the date of death, we cannot quantify the recognition of revenue in future periods. However, we estimate an average maturity period of eight years for preneed cemetery contracts.

6. FAIR VALUE MEASUREMENTS

We evaluated our financial assets and liabilities for those that met the criteria of the disclosure requirements and fair value framework. The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate the fair values of those instruments due to the short-term nature of the instruments. The fair values of our receivables on preneed cemetery contracts are impracticable to estimate because of the lack of a trading market and the diverse number of individual contracts with varying terms. Our acquisition debt and Credit Facility (as defined in Note 9) and Senior Notes (as defined in Note 10) are classified within Level 2 of the Fair Value Measurements hierarchy.

At June 30, 2025, the carrying value and fair value of our Credit Facility was $112.9 million. We believe that our Credit Facility bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics and therefore, the carrying value of our Credit Facility approximates fair value. We estimate the fair value of our acquisition debt utilizing an income approach, which uses a present value calculation to discount payments based on current market rates as of the reporting date. At June 30, 2025, the carrying value of our acquisition debt was $5.4 million, which approximated its fair value. The fair value of our Senior Notes was $378.3 million at June 30, 2025, based on the last traded or broker quoted price.

We identified investments in fixed income securities, common stock and mutual funds presented within the preneed and perpetual care trust investments categories on our Consolidated Balance Sheets as having met the criteria for fair value measurement. Where quoted prices are available in an active market, investments held by the trusts are classified as Level 1 investments pursuant to the three-level valuation hierarchy. Our Level 1 investments include cash, common stock and equity

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

mutual funds. Where quoted market prices are not available for the specific security, then fair values are estimated by using quoted prices of similar securities in active markets or inputs other than quoted prices that can corroborate observable market data. These investments are fixed income securities, including U.S. agency obligations, foreign debt, corporate debt, preferred stocks, certificates of deposit and fixed income mutual funds and other investments, all of which are classified within Level 2 of the valuation hierarchy.

In addition, we have an investment in a limited partnership fund, whose fair value has been estimated using the net asset value per share (“NAV”) practical expedient described in ASC 820-10-35-59, Fair Value Measurement of Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) and therefore, has not been classified in the fair value hierarchy. The investment strategy of this fund is to generate attractive, risk-adjusted returns over a multi-year performance period through the construction of a concentrated portfolio of investments possessing certain distinct business attributes that suggest the potential for long-term value creation. The value of the investments in this fund cannot be liquidated at June 30, 2025 because the investments include restrictions that do not allow for liquidation until 2027. As of June 30, 2025, we do not have an unfunded commitment for this investment.

Furthermore, we have two investments in real estate debt and structured credit (“alternative investments”), whose fair value has been estimated using NAV and therefore, has not been classified in the fair value hierarchy. The investment strategy for these alternative investments is to create capital growth, income generation, and risk-adjusted returns. Capital growth is achieved by identifying high-potential investments that are appreciated over time. Income generation may involve dividends, rental income, or interest from various investments. Risk-adjusted returns focus on balancing potential profits with acceptable levels of risk, often through diversification and careful asset allocation. The real estate debt is approximately 48% of the total alternative investment and can be liquidated with a 40-day notice period and cannot exceed 5% of the total fund’s value. The structured credit is approximately 52% of the total alternative investment and can be liquidated with a 15-day notice period with no restrictions. As of June 30, 2025, we do not have an unfunded commitment for these investments.

Our receivables from preneed funeral trusts represent assets in trusts which are controlled and operated by third parties in which we do not have a controlling financial interest (less than 50%) in the trust assets. We account for these investments at cost. See Notes 7 and 8 to our Condensed Consolidated Financial Statements for the fair value hierarchy levels of our trust investments.

7. TRUST INVESTMENTS

Preneed trust investments represent trust fund assets that we are generally permitted to withdraw as the services and merchandise are provided to customers. Preneed funeral and cemetery contracts are secured by payments from customers, less amounts not required by law to be deposited into trust. These earnings are recognized in Other revenue on our Consolidated Statements of Operations, when a service is performed or merchandise is delivered. Trust management fees charged by our wholly owned registered investment advisory firm are included as revenue in the period in which they are earned. Our investments are diversified across multiple industry segments using a balanced allocation strategy to minimize long-term risk. We do not intend to sell and it is likely that we will not be required to sell the securities prior to their anticipated recovery.

Cemetery perpetual care trust investments represent a portion of the proceeds from the sale of cemetery property interment rights that we are required by various state laws to deposit into perpetual care trust funds. The income earned from these perpetual care trusts offsets maintenance expenses for cemetery property and memorials. This trust fund income is recognized in Other revenue.

Changes in the fair value of our trust fund assets (Preneed funeral, cemetery and perpetual care trust investments) are offset by changes in the fair value of our trust fund liabilities (Deferred preneed funeral and cemetery receipts held in trust and Care trusts’ corpus) and reflected in Other, net. There is no impact on earnings until such time the services are performed, or the merchandise is delivered, causing the contract to be withdrawn from the trust in accordance with state regulations and the gain or loss is allocated to the contract.

We rely on our trust investments to provide funding for the various contractual obligations that arise upon maturity of the underlying preneed contracts. Because of the long-term relationship between the establishment of trust investments and the required performance of the underlying contractual obligations, the impact of current market conditions that may exist at any given time is not necessarily indicative of our ability to generate profit on our future performance obligations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Preneed Cemetery Trust Investments

The components of Preneed cemetery trust investments on our Consolidated Balance Sheets are as follows (in thousands):


	June 30, 2025		December 31, 2024
Preneed cemetery trust investments, at market value	$	104,114	$	106,143
Less: allowance for contract cancellation	(3,102)		(3,147)
Preneed cemetery trust investments	$	101,012	$	102,996
Less: Held for sale	(1,104)		(4,876)
Preneed cemetery trust investments	$	99,908	$	98,120

The cost and market values associated with preneed cemetery trust investments at June 30, 2025, are detailed below (in thousands):


	Fair Value Hierarchy Level	Cost		Unrealized Gains		Unrealized Losses		Fair Market Value
Cash and money market accounts	1	$	17,436	$	—	$	—	$	17,436
Fixed income securities:

U.S. agency obligations	2	526		—		(30)		496
Foreign debt	2	1,542		85		—		1,627
Corporate debt	2	2,725		167		(46)		2,846
Preferred stock	2	43		1		—		44
Certificates of deposit	2	79		—		(5)		74

Common stock	1	14,838		1,435		(1,754)		14,519
Limited partnership fund		3,550		—		(237)		3,313
Mutual funds:
Equity	1	500		—		(5)		495
Fixed income	2	37,791		272		(53)		38,010
Alternative investments		24,384		139		—		24,523
Trust securities		$	103,414	$	2,099	$	(2,130)	$	103,383
Accrued investment income		$	731					$	731

Preneed cemetery trust investments								$	104,114
Market value as a percentage of cost								100.0		%

The estimated maturities of the fixed income securities (excluding mutual funds) included above are as follows (in thousands):


Due in one year or less	$	74
Due in one to five years	2,120
Due in five to ten years	211
Thereafter	2,682
Total fixed income securities	$	5,087

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The cost and market values associated with preneed cemetery trust investments at December 31, 2024 are detailed below (in thousands):


	Fair Value Hierarchy Level	Cost		Unrealized Gains		Unrealized Losses		Fair Market Value
Cash and money market accounts	1	$	23,215	$	—	$	—	$	23,215
Fixed income securities:

U.S. agency obligations	2	664		1		(46)		$	619
Foreign debt	2	8,575		1,431		(8)		9,998
Corporate debt	2	8,500		365		(256)		8,609
Preferred stock	2	2,833		479		(176)		3,136
Certificates of deposit	2	79		—		(5)		74

Common stock	1	29,325		4,322		(3,381)		30,266
Limited partnership fund		3,530		84		—		3,614

Mutual funds:
Equity	1	911		85		—		996
Fixed income	2	27,268		94		(2,376)		24,986


Trust securities		$	104,900	$	6,861	$	(6,248)	$	105,513
Accrued investment income		$	630					$	630
Preneed cemetery trust investments								$	106,143
Market value as a percentage of cost								100.6		%

The following table summarizes our fixed income securities (excluding mutual funds) within our preneed cemetery trust investments in an unrealized loss position at June 30, 2025, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):


	June 30, 2025
	In Loss Position Less than 12 months				In Loss Position Greater than 12 months				Total
	Fair market value		Unrealized Losses		Fair market value		Unrealized Losses		Fair market value		Unrealized Losses
Fixed income securities:
U.S. agency obligations	$	—	$	—	$	496	$	(30)	$	496	$	(30)
Foreign debt	—		—		—		—		—		—
Corporate debt	—		—		6		(46)		6		(46)
Preferred stock	—		—		—		—		—		—
Certificates of deposit	—		—		74		(5)		74		(5)
Total fixed income securities with an unrealized loss	$	—	$	—	$	576	$	(81)	$	576	$	(81)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes our fixed income securities (excluding mutual funds) within our preneed cemetery trust investments in an unrealized loss position at December 31, 2024, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):


	December 31, 2024
	In Loss Position Less than 12 months				In Loss Position Greater than 12 months				Total
	Fair market value		Unrealized Losses		Fair market value		Unrealized Losses		Fair market value		Unrealized Losses
Fixed income securities:
U.S. agency obligations	$	—	$	—	$	479	$	(46)	$	479	$	(46)
Foreign debt	—		—		211		(8)		211		(8)
Corporate debt	1,274		(139)		94		(117)		1,368		(256)
Preferred stock	889		(5)		891		(171)		1,780		(176)
Certificates of deposit	—		—		74		(5)		74		(5)
Total fixed income securities with an unrealized loss	$	2,163	$	(144)	$	1,749	$	(347)	$	3,912	$	(491)

Preneed cemetery trust investment security transactions recorded in Other, net on our Consolidated Statements of Operations are as follows (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Investment income	$	770	$	844	$	1,417	$	1,383
Realized gains	6,199		924		8,202		11,500
Realized losses	(5,494)		(4,747)		(7,097)		(8,511)
Unrealized gains (losses), net	(886)		2,023		(31)		(4,936)
Expenses and taxes	(585)		(705)		(809)		(1,339)
Net change in deferred preneed cemetery receipts held in trust	(4)		1,661		(1,682)		1,903
	$	—	$	—	$	—	$	—

Purchases and sales of investments in the preneed cemetery trusts are as follows (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Purchases	$	(38,172)	$	(6,784)	$	(41,678)	$	(11,110)
Sales	29,933		5,177		48,002		21,737

Preneed Funeral Trust Investments

Preneed funeral trust investments represent trust fund assets that we are permitted to withdraw as services and merchandise are provided to customers. Preneed funeral contracts are secured by payments from customers, less retained amounts not required to be deposited into trust.

The components of Preneed funeral trust investments on our Consolidated Balance Sheets are as follows (in thousands):


	June 30, 2025		December 31, 2024
Preneed funeral trust investments, at market value	$	111,668	$	111,721
Less: allowance for contract cancellation	(3,324)		(3,305)
Preneed funeral trust investments	$	108,344	$	108,416
Less: Held for sale	(177)		(2,197)
Preneed funeral trust investments	$	108,167	$	106,219

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The cost and market values associated with preneed funeral trust investments at June 30, 2025 are detailed below (in thousands):


	Fair Value Hierarchy Level	Cost		Unrealized Gains		Unrealized Losses		Fair Market Value
Cash and money market accounts	1	$	31,781	$	—	$	—	$	31,781
Fixed income securities:

U.S agency obligations	2	305		—		(21)		284
Foreign debt	2	1,397		81		—		1,478
Corporate debt	2	2,503		156		—		2,659



Common stock	1	13,570		1,343		(1,460)		13,453
Limited partnership fund		3,325		—		(222)		3,103
Mutual funds:
Equity	1	—		—		—		—
Fixed income	2	33,196		252		(49)		33,399
Other investments	2	1,880		—		—		1,880
Alternative investments		22,838		131		—		22,969
Trust securities		$	110,795	$	1,963	$	(1,752)	$	111,006
Accrued investment income		$	662					$	662
Preneed cemetery trust investments								$	111,668
Market value as a percentage of cost								100.2		%

The estimated maturities of the fixed income securities (excluding mutual funds) included above are as follows (in thousands):


Due in one year or less	$	—
Due in one to five years	1,858
Due in five to ten years	98
Thereafter	2,465
Total fixed income securities	$	4,421

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The cost and market values associated with preneed funeral trust investments at December 31, 2024 are detailed below (in thousands):


	Fair Value Hierarchy Level	Cost		Unrealized Gains		Unrealized Losses		Fair Market Value
Cash and money market accounts	1	$	33,735	$	—	$	—	$	33,735
Fixed income securities:

U.S agency obligations	2	387		—		(30)		357
Foreign debt	2	8,193		1,373		(7)		9,559
Corporate debt	2	7,941		351		(134)		8,158
Preferred stock	2	2,577		460		(218)		2,819


Common stock	1	26,293		3,989		(2,876)		27,406
Limited partnership fund		3,392		80		—		3,472

Mutual funds:
Equity	1	763		41		—		804
Fixed income	2	24,952		83		(2,118)		22,917
Other investments	2	1,910		—		—		1,910

Trust securities		$	110,143	$	6,377	$	(5,383)	$	111,137
Accrued investment income		$	584					$	584
Preneed cemetery trust investments								$	111,721
Market value as a percentage of cost								100.9		%

The following table summarizes our fixed income securities (excluding mutual funds) within our preneed funeral trust investment in an unrealized loss position at June 30, 2025, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):


	June 30, 2025
	In Loss Position Less than 12 months				In Loss Position Greater than 12 months				Total
	Fair market value		Unrealized Losses		Fair market value		Unrealized Losses		Fair market value		Unrealized Losses
Fixed income securities:
U.S agency obligations	$	—	$	—	$	283	$	(21)	$	283	$	(21)
Foreign debt	—		—		—		—		—		—
Corporate debt	—		—		—		—		—		—
Preferred stock	—		—		—		—		—		—

Total fixed income securities with an unrealized loss	$	—	$	—	$	283	$	(21)	$	283	$	(21)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes our fixed income securities (excluding mutual funds) within our preneed funeral trust investment in an unrealized loss position at December 31, 2024, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):


	December 31, 2024
	In Loss Position Less than 12 months				In Loss Position Greater than 12 months				Total
	Fair market value		Unrealized Losses		Fair market value		Unrealized Losses		Fair market value		Unrealized Losses
Fixed income securities:
U.S agency obligations	$	—	$	—	$	274	$	(30)	$	274	$	(30)
Foreign debt	—		—		203		(7)		203		(7)
Corporate debt	1,225		(133)		—		(1)		1,225		(134)
Preferred stock	842		(4)		717		(214)		1,559		(218)

Total fixed income securities with an unrealized loss	$	2,067	$	(137)	$	1,194	$	(252)	$	3,261	$	(389)

Preneed funeral trust investment security transactions recorded in Other, net on our Consolidated Statements of Operations are as follows (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Investment income	$	521	$	675	994		1,111
Realized gains	5,521		846		7,448		10,626
Realized losses	(4,519)		(4,295)		(6,228)		(7,504)
Unrealized gains (losses), net	(1,102)		1,873		211		(3,975)
Expenses and taxes	(365)		(296)		(470)		(667)
Net change in deferred preneed funeral receipts held in trust	(56)		1,197		(1,955)		409
	$	—	$	—	$	—	$	—

Purchases and sales of investments in the preneed funeral trusts are as follows (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025	2024
Purchases	$	(33,083)	$	(6,211)	(36,455)	(10,214)
Sales	25,098		4,608		42,457	19,726

Cemetery Perpetual Care Trust Investments

Care trusts’ corpus on our Consolidated Balance Sheets represent the corpus of those trusts plus undistributed income. The components of Care trusts’ corpus are as follows (in thousands):


	June 30, 2025		December 31, 2024
Cemetery perpetual care trust investments, at market value	$	87,066	$	87,337
Obligations due to (due from) trust	366		(885)
Care trusts’ corpus, including HFS	$	87,432	$	86,452
Less: Held for sale	(322)		(2,234)
Care trusts' corpus	$	87,110	$	84,218

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table reflects the cost and market values associated with the trust investments held in perpetual care trust funds at June 30, 2025 (in thousands):


	Fair Value Hierarchy Level	Cost		Unrealized Gains		Unrealized Losses		Fair Market Value
Cash and money market accounts	1	$	8,552	$	—	$	—	$	8,552
Fixed income securities:


Foreign debt	2	1,413		76		—		1,489
Corporate debt	2	2,517		147		(145)		2,519
Preferred stock	2	112		—		(2)		110


Common stock	1	13,521		1,353		(1,741)		13,133
Limited partnership fund		3,126		—		(209)		2,917
Mutual funds:
Equity	1	750		—		(8)		742
Fixed income	2	35,130		241		(48)		35,323

Alternative investments		21,468		123		—		21,591
Trust securities		$	86,589	$	1,940	$	(2,153)	$	86,376
Accrued investment income		$	690					$	690
Preneed cemetery trust investments								$	87,066
Market value as a percentage of cost								99.8		%

The estimated maturities of the fixed income securities (excluding mutual funds) included above are as follows (in thousands):


Due in one year or less	$	—
Due in one to five years	1,590
Due in five to ten years	110
Thereafter	2,418
Total fixed income securities	$	4,118

The following table reflects the cost and market values associated with the trust investments held in perpetual care trust funds at December 31, 2024 (in thousands):


	Fair Value Hierarchy Level	Cost		Unrealized Gains		Unrealized Losses		Fair Market Value
Cash and money market accounts	1	$	14,054	$	—	$	—	$	14,054
Fixed income securities:


Foreign debt	2	7,770		1,262		(7)		9,025
Corporate debt	2	7,942		357		(402)		7,897
Preferred stock	2	2,725		418		(148)		2,995


Common stock	1	25,563		3,866		(3,036)		26,393
Limited partnership fund		3,078		73		—		3,151

Mutual funds:
Equity	1	789		68		—		857
Fixed income	2	24,374		111		(2,115)		22,370


Trust securities		$	86,295	$	6,155	$	(5,708)	$	86,742
Accrued investment income		$	595					$	595
Preneed cemetery trust investments								$	87,337
Market value as a percentage of cost								100.5		%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes our fixed income securities (excluding mutual funds) within our perpetual care trust investment in an unrealized loss position at June 30, 2025, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):


	June 30, 2025
	In Loss Position Less than 12 months				In Loss Position Greater than 12 months				Total
	Fair market value		Unrealized Losses		Fair market value		Unrealized Losses		Fair market value		Unrealized Losses
Fixed income securities:

Foreign debt	$	—	$	—	$	—	$	—	$	—	$	—
Corporate debt	—		—		18		(145)		18		(145)
Preferred stock	111		(2)		—		—		111		(2)

Total fixed income securities with an unrealized loss	$	111	$	(2)	$	18	$	(145)	$	129	$	(147)

The following table summarizes our fixed income securities within our perpetual care trust investment in an unrealized loss position at December 31, 2024, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):


	December 31, 2024
	In Loss Position Less than 12 months				In Loss Position Greater than 12 months				Total
	Fair market value		Unrealized Losses		Fair market value		Unrealized Losses		Fair market value		Unrealized Losses
Fixed income securities:

Foreign debt	$	—	$	—	$	184	$	(7)	$	184	$	(7)
Corporate debt	1,111		(121)		316		(281)		1,427		(402)
Preferred stock	764		(4)		1,086		(144)		1,850		(148)

Total fixed income securities with an unrealized loss	$	1,875	$	(125)	$	1,586	$	(432)	$	3,461	$	(557)

Perpetual care trust investment security transactions recorded in Other, net on our Consolidated Statements of Operations are as follows (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

Realized gains	$	1,028	$	113	1,279		1,419
Realized losses	(1,228)		(663)		$	(1,429)	$	(1,089)
Unrealized gains (losses), net	(901)		1,840		(213)		(4,229)

Net change in care trusts’ corpus	1,101		(1,290)		363		3,899
	$	—	$	—	$	—	$	—

Perpetual care trust investment security transactions recorded in Other revenue are as follows (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Investment income	$	2,420	$	3,495	$	4,907	$	6,624
Realized losses	(587)		(751)		(1,259)		(1,125)
Total	$	1,833	$	2,744	$	3,648	$	5,499

Purchases and sales of investments in the perpetual care trusts are as follows (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Purchases	$	(35,774)	$	(5,464)	$	(38,896)	$	(9,113)
Sales	26,968		4,469		$	42,931	$	19,130

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8. RECEIVABLES FROM PRENEED FUNERAL TRUSTS

Our receivables from preneed funeral trusts represent assets in trusts which are controlled and operated by third parties in which we do not have a controlling financial interest (less than 50%) in the trust assets. We account for these investments at cost. Receivables from preneed funeral trusts are as follows (in thousands):


	June 30, 2025		December 31, 2024
Preneed funeral trust funds, at cost	$	22,733	$	23,063
Less: allowance for contract cancellation	(682)		(691)
Receivables from preneed funeral trusts, net including HFS	$	22,051	$	22,372
Less: Held for sale	(27)		—
Receivables from preneed funeral trusts, net	$	22,024	$	22,372

The following summary reflects the composition of the assets held in trust and controlled by third parties to satisfy our future obligations related to the underlying preneed funeral contracts at June 30, 2025 and December 31, 2024. The cost basis includes reinvested interest and dividends that have been earned on the trust assets. Fair value includes unrealized gains and losses on trust assets.

The composition of the preneed trust funds at June 30, 2025, is as follows (in thousands):


	Historical Cost Basis		Fair Value
Cash and cash equivalents	$	6,964	$	6,964
Fixed income investments	12,530		12,530
Mutual funds and common stocks	3,235		3,082
Annuities	4		4
Total	$	22,733	$	22,580

The composition of the preneed trust funds at December 31, 2024, is as follows (in thousands):


	Historical Cost Basis		Fair Value
Cash and cash equivalents	$	6,826	$	6,826
Fixed income investments	12,998		12,998
Mutual funds and common stocks	3,235		2,999
Annuities	4		4
Total	$	23,063	$	22,827

9. CREDIT FACILITY AND ACQUISITION DEBT

At June 30, 2025, our senior secured revolving credit facility (as amended, the “Credit Facility”) was comprised of: (i) a $250.0 million revolving credit facility, including a $15.0 million subfacility for letters of credit and a $10.0 million swingline, and (ii) an accordion or incremental option allowing for future increases in the facility size by an additional amount of up to $75.0 million in the aggregate in the form of increased revolving commitments or incremental term loans.

Our obligations under the Credit Facility are unconditionally guaranteed on a joint and several basis by the same subsidiaries which guarantee the Senior Notes (as defined in Note 10) and certain of our subsequently acquired or organized domestic subsidiaries (collectively, the “Subsidiary Guarantors”).

On July 31, 2024, the Company entered into a fourth amendment, (the “Credit Facility Amendment”), to our Credit Facility, with the financial institutions party thereto, as lenders, and Bank of America, N.A., as administrative agent. The Credit Facility Amendment provided, among other things, for (i) the extension of the maturity date of the Credit Facility to July 31, 2029, provided that, if the Senior Notes (as defined in the Credit Facility) have a stated maturity date that is prior to July 31, 2029, then the maturity date shall instead be the date that is 91 days prior to the stated maturity date of the Senior Notes; (ii) the establishment of Term Secured Overnight Financing Rate (“SOFR”) as a benchmark rate and the removal of BSBY from the Credit Facility, including conforming revisions to certain defined terms under the Credit Facility; (iii) the conversion of each existing BSBY Rate Loan (as defined in the Credit Facility prior to giving effect to the Credit Facility Amendment) to a Term SOFR Loan (as defined in the Credit Facility); (iv) modifications to the definitions of “Applicable Rate” and “Applicable Fee Rate” to change the applicable rates and pricing levels set forth in each pricing grid; (v) the removal of certain mandatory prepayments arising from the issuance of either Equity Interests or Debt (as both are defined by the Credit Facility); and (vi)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

modifications to the permitted investments covenant, relating to the Company’s ability to make certain acquisitions, subject to the satisfaction of certain conditions therein.

The Credit Facility contains customary affirmative covenants, including, but not limited to, covenants with respect to the use of proceeds, payment of taxes and other obligations, continuation of the Company’s business and the maintenance of existing rights and privileges, the maintenance of property and insurance, among others.

In addition, the Credit Facility also contains customary negative covenants, including, but not limited to, covenants that restrict (subject to certain exceptions) the ability of the Company and the Subsidiary Guarantors to incur indebtedness, grant liens, make investments, engage in mergers and acquisitions, and pay dividends and other restricted payments, and certain financial maintenance covenants. At June 30, 2025, we were subject to the following financial covenants under our Credit Facility: (A) a Total Leverage Ratio not to exceed 5.00 to 1.00 and (B) a Fixed Charge Coverage Ratio (as defined in the Credit Facility) of not less than 1.20 to 1.00 as of the end of any period of four consecutive fiscal quarters. These financial maintenance covenants are calculated for the Company and its subsidiaries on a consolidated basis. We were in compliance with all of the covenants contained in our Credit Facility at June 30, 2025.

Our Credit Facility and acquisition debt consisted of the following (in thousands):


	June 30, 2025		December 31, 2024
Credit Facility	$	112,900	$	137,000
Debt issuance costs, net of accumulated amortization of $3,124 and $2,947, respectively	(1,442)		(1,618)
Total Credit Facility	$	111,458	$	135,382

Acquisition debt	$	5,408	$	5,466
Less: current portion	(591)		(571)
Total acquisition debt, net of current portion	$	4,817	$	4,895

At June 30, 2025, we had outstanding borrowings under the Credit Facility of $112.9 million. We also had one letter of credit for $2.2 million under the Credit Facility. The letter of credit will expire on November 25, 2025, and is expected to automatically renew annually and secures our obligations under our various self-insured policies. At June 30, 2025, we had $134.9 million of availability under the Credit Facility.

The interest expense and amortization of debt issuance costs related to our Credit Facility are as follows (in thousands):



	Three months ended June 30,		Six months ended June 30,
	2025	2024	2025		2024
Credit Facility interest expense	2,102	3,523	$	4,601	$	7,439
Credit Facility amortization of debt issuance costs	89	138	177		276

At June 30, 2025, our outstanding borrowings under our Credit Facility bore interest at a prime rate or the SOFR rate, plus an applicable margin based on our leverage ratio. At June 30, 2025, the prime rate margin was equivalent to 1.125% and the SOFR term margin was 2.125%. The weighted average interest rate on our Credit Facility was 6.8% and 8.7% for the three months ended June 30, 2025 and 2024, respectively, and 6.9% and 8.8% for the six months ended June 30, 2025 and 2024, respectively.

Acquisition debt consists of deferred purchase price and promissory notes payable to sellers. A majority of the deferred purchase price and notes bear no interest and are discounted at imputed interest rates ranging from 6.5% to 7.3%. Original maturities typically range from nine to twenty years.

The imputed interest expense related to our acquisition debt is as follows (in thousands):



	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025	2024
Acquisition debt imputed interest expense	$	93	$	103	187	207

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. SENIOR NOTES

The carrying value of our 4.25% senior notes due 2029 (the “Senior Notes”) is reflected on our Consolidated Balance Sheets as follows (in thousands):


	June 30, 2025		December 31, 2024

Principal amount	$	400,000	$	400,000

Debt discount, net of accumulated amortization of $2,126 and $1,848, respectively	(2,374)		(2,652)
Debt issuance costs, net of accumulated amortization of $605 and $526, respectively	(672)		(751)
Carrying value of the Senior Notes	$	396,954	$	396,597

At June 30, 2025, the fair value of the Senior Notes, which are Level 2 measurements, was $378.3 million.

The Senior Notes were issued under an indenture, dated as of May 13, 2021 (the “Indenture”), among the Company, the Subsidiary Guarantors and Wilmington Trust, National Association, as trustee. The Senior Notes are unsecured, senior obligations and are fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally by each of the Subsidiary Guarantors. The Senior Notes mature on May 15, 2029, unless earlier redeemed or purchased and bear interest at 4.25% per year, which is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2021.

The Indenture contains restrictive covenants limiting our ability and our Restricted Subsidiaries (as defined in the Indenture) to, among other things, incur additional indebtedness or issue certain preferred shares, create liens on certain assets to secure debt, pay dividends or make other equity distributions, purchase or redeem capital stock, make certain investments, sell assets, agree to certain restrictions on the ability of Restricted Subsidiaries to make payments to us, consolidate, merge, sell or otherwise dispose of all or substantially all assets, or engage in transactions with affiliates. The Indenture also contains customary events of default.

The interest expense and amortization of debt discount and debt issuance costs related to our Senior Notes are as follows (in thousands):


	Three months ended June 30,		Six months ended June 30,
	2025	2024	2025		2024
Senior Notes interest expense	4,250	4,250	$	8,500	$	8,500
Senior Notes amortization of debt discount	140	134	278		266

Senior Notes amortization of debt issuance costs	40	38	79		76

The debt discount and the debt issuance costs are being amortized using the effective interest method over the remaining term of approximately 47 months of the Senior Notes. The effective interest rates on the unamortized debt discount and the unamortized debt issuance costs for the Senior Notes for both the three and six months ended June 30, 2025 and 2024 were 4.42% and 4.30%, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. EARNINGS PER SHARE

The following table sets forth the computation of the basic and diluted earnings per share (in thousands, except per share data):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Numerator for basic and diluted earnings per share:
Net income	$	11,739	$	6,259	$	32,665	$	13,232
Less: Earnings allocated to unvested restricted stock	(175)		(93)		(510)		(194)
Income attributable to common stockholders	$	11,564	$	6,166	$	32,155	$	13,038

Denominator:
Denominator for basic earnings per common share – weighted average shares outstanding	15,458		14,965		15,352		14,920
Effect of dilutive securities:
Stock options	195		22		176		20

Performance awards	—		416		—		416
Denominator for diluted earnings per common share – weighted average shares outstanding	15,653		15,403		15,528		15,356

Basic earnings per common share:	$	0.75	$	0.41	$	2.09	$	0.87
Diluted earnings per common share:	$	0.74	$	0.40	$	2.07	$	0.85

Stock options excluded from the computation of diluted earnings per share because the inclusion of such stock options would result in an antidilutive effect are as follows (in thousands):


	Three months ended June 30,		Six months ended June 30,
	2025	2024	2025	2024
Antidilutive stock options	228	1,433	224	1,456

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. SEGMENT REPORTING

Our Chief Operating Decision Maker (the “CODM”), who is the Chief Executive Officer, utilizes segment operating income (loss) for resource allocation across segments, particularly during the annual budgeting and forecasting processes. The CODM examines variances on a monthly basis to make informed decisions regarding capital and personnel distribution among segments. Additionally, the CODM employs segment gross profit for product pricing evaluation and uses segment adjusted operating profit to assess each segment’s performance by comparing results and return on assets against expected outcomes.

The tables below present revenue, disaggregated by major source for each of our reportable segments, as well as, significant segment expenses, other segment expenses, operating income (loss), depreciation and amortization, interest expense, income (loss) before income taxes, income tax expense (benefit), capital expenditures and number of operating locations by segment as follows, (in thousands, except number of operating locations) for the three and six months ended June 30, 2025 and 2024, respectively:


Three months ended June 30, 2025	Funeral		Cemetery		Corporate		Total
Revenue
Services	$	41,308	$	5,202	$	—	$	46,510
Merchandise	18,264		4,330		—		22,594
Cemetery property	—		23,919		—		23,919
Other revenue	5,675		3,449		—		9,124
Total revenue	65,247		36,900		—		102,147

Less:
Salaries, benefits and commission expenses	17,011		10,533		—		27,544
Cost of merchandise	6,847		1,368		—		8,215
Allocated overhead costs(1)	3,386		1,368		—		4,754
Facilities and grounds expenses	2,709		1,560		—		4,269
General and administrative expenses(2)	2,703		956		—		3,659
Other segment expenses(3)	10,912		6,858		11,938		29,708
Operating income (loss)	$	21,679	$	14,257	$	(11,938)	$	23,998

Interest expense	$	404	$	3	$	6,627	$	7,034

Depreciation and amortization	$	2,835	$	2,694	$	644	$	6,173

Income (loss) before income taxes	$	21,798	$	15,062	$	(20,003)	$	16,857

Income tax expense (benefit)	$	6,463	$	4,279	$	(5,624)	$	5,118












(1) Allocated overhead costs include: property insurance costs, property tax expenses, and corporate overhead fees allocated to the field, such as information technology, human resources, legal, and finance.
(2) General and administrative expenses include: professional services, travel and meals expenses, computer software expenses, and office supplies.
(3) The Corporate segment’s other segment expenses primarily include general, administrative and other expenses, net loss on divestitures, disposals, and impairment charges and amortization and depreciation expenses. The Funeral and Cemetery segment's other segment expenses primarily include transportation costs, other funeral costs, non-payroll related promotional costs, net loss on divestitures, disposals and impairment charges, and amortization and depreciation expenses.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


Three months ended June 30, 2024	Funeral		Cemetery		Corporate		Total
Revenue
Services	$	39,589	$	4,844	$	—	$	44,433
Merchandise	19,664		4,483		—		24,147
Cemetery property	—		25,443		—		25,443
Other revenue	4,342		3,953		—		8,295
Total revenue	63,595		38,723		—		102,318

Less:
Salaries, benefits and commission expenses	16,860		10,288		—		27,148
Cost of merchandise	6,698		1,201		—		7,899
Allocated overhead costs(1)	3,310		1,201		—		4,511
Facilities and grounds expenses	2,369		1,622		—		3,991
General and administrative expenses(2)	2,499		879		—		3,378
Other segment expenses(4)	11,091		7,329		18,602		37,022
Operating income (loss)	$	20,768	$	16,203	$	(18,602)	$	18,369

Interest expense	$	222	$	3	$	8,099	$	8,324

Depreciation and amortization	$	2,907	$	3,058	$	239	$	6,204

Income (loss) before income taxes	$	21,032	$	16,303	$	(26,876)	$	10,459

Income tax expense (benefit)	$	8,479	$	6,444	$	(10,723)	$	4,200












(1) Allocated overhead costs include: property insurance costs, property tax expenses, and corporate overhead fees allocated to the field, such as information technology, human resources, legal and finance.
(2) General and administrative expenses include: professional services, travel and meals expenses, computer software expenses and office supplies.
(3) The Corporate segment’s other segment expenses primarily include general, administrative and other expenses, net loss on divestitures, disposals, and impairment charges and amortization and depreciation expenses. The Funeral and Cemetery segment's other segment expenses primarily include transportation costs, other funeral costs, non-payroll related promotional costs, net loss on divestitures, disposals and impairment charges, and amortization and depreciation expenses.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


Six months ended, June 30, 2025	Funeral		Cemetery		Corporate		Total
Revenue
Services	$	89,257	$	10,263	$	—	$	99,520
Merchandise	39,820		8,369		—		48,189
Cemetery property	—		43,910		—		43,910
Other revenue	10,789		6,808		—		17,597
Total revenue	139,866		69,350		—		209,216

Less:
Salaries, benefits and commission expenses	34,988		20,452		—		55,440
Cost of merchandise	14,979		2,699		—		17,678
Allocated overhead costs(1)	6,613		2,699		—		9,312
Facilities and grounds expenses	5,638		2,765		—		8,403
General and administrative expenses(2)	5,724		1,851		—		7,575
Other segment expenses(3)	22,058		9,202		23,986		55,246
Operating income (loss)	$	49,866	$	29,682	$	(23,986)	$	55,562

Interest expense	$	684	$	6	$	13,642	$	14,332

Depreciation and amortization	$	5,661	$	5,018	$	895	$	11,574

Income (loss) before income taxes	$	51,867	$	31,078	$	(39,834)	$	43,111

Income tax expense (benefit)	$	12,567	$	7,530	$	(9,651)	$	10,446







Capital expenditures	$	1,258	$	3,701	$	1,049	$	6,008

Number of operating locations at year end	159		28		—		187


(1) Allocated overhead costs include: property insurance costs, property tax expenses, and corporate overhead fees allocated to the field, such as information technology, human resources, legal, and finance.
(2) General and administrative

CARRIAGE SERVICES INC 10-Q