Carriage Services' Q3 Net Income Dips Amid Divestiture Losses

TL;DR

**CSV's Q3 net income dropped due to divestiture losses, but year-to-date performance is strong, indicating a strategic portfolio reshuffle.**

AI Summary

CARRIAGE SERVICES, INC. (CSV) reported a net income of $6.57 million for the three months ended September 30, 2025, a decrease from $9.87 million in the same period of 2024. For the nine months ended September 30, 2025, net income significantly increased to $39.24 million from $23.10 million in 2024. Total revenue for the three months ended September 30, 2025, was $102.74 million, up from $100.69 million in 2024, driven by an increase in property and merchandise revenue to $48.63 million from $47.42 million. However, service revenue slightly decreased to $44.20 million from $44.92 million. For the nine-month period, total revenue rose to $311.96 million from $306.50 million. Operating income for the three months decreased to $17.51 million from $22.90 million, primarily due to a net loss on divestitures and impairment charges of $6.56 million in 2025, compared to $0.39 million in 2024. Cash provided by operating activities for the nine months increased to $46.57 million in 2025 from $42.72 million in 2024. The company made significant acquisitions of businesses and real property totaling $56.50 million during the nine months ended September 30, 2025, while also divesting assets for $37.31 million.

Why It Matters

This filing reveals a mixed financial picture for Carriage Services. While nine-month net income shows strong growth, the quarterly dip and significant divestiture losses could signal strategic shifts or challenges in managing its portfolio of funeral homes and cemeteries. Investors should scrutinize the impact of these divestitures on future profitability and cash flow, especially given the competitive landscape in the deathcare industry. Employees might face uncertainty if divestitures continue, while customers could see changes in service providers. The broader market will watch how CSV balances growth through acquisitions with optimizing its existing asset base.

Risk Assessment

Risk Level: medium — The company reported a net loss on divestitures and impairment charges of $6.56 million for the three months ended September 30, 2025, a substantial increase from $0.39 million in the prior year. This indicates potential challenges in asset valuation or strategic exits from underperforming businesses, which could impact future earnings stability. Additionally, significant acquisitions of $56.50 million in the nine-month period introduce integration risks.

Analyst Insight

Investors should monitor future filings for details on the profitability of recent acquisitions and the rationale behind the increased divestiture losses. Consider if the company's strategy of acquiring and divesting assets is effectively enhancing long-term shareholder value, or if it's masking underlying operational inefficiencies.

Financial Highlights

debt To Equity

4.55

revenue

$102.74M

total Assets

$1.34B

total Debt

$1.10B

net Income

$6.57M

cash Position

$1.25B

revenue Growth

+2.0%

Revenue Breakdown

Key Numbers

• $6.57M — Net Income (Q3 2025) (Decreased from $9.87M in Q3 2024, a 33.5% decline.)
• $39.24M — Net Income (YTD 2025) (Increased from $23.10M in YTD 2024, a 70% increase.)
• $102.74M — Total Revenue (Q3 2025) (Increased from $100.69M in Q3 2024, a 2.0% increase.)
• $311.96M — Total Revenue (YTD 2025) (Increased from $306.50M in YTD 2024, a 1.8% increase.)
• $6.56M — Net Loss on Divestitures & Impairment (Q3 2025) (Significantly higher than $0.39M in Q3 2024, indicating strategic portfolio adjustments.)
• $56.50M — Acquisitions of Businesses (YTD 2025) (Reflects substantial investment in growth compared to zero in YTD 2024.)
• $37.31M — Proceeds from Divestitures (YTD 2025) (Increased from $12.02M in YTD 2024, indicating active portfolio management.)
• $46.57M — Net Cash from Operating Activities (YTD 2025) (Increased from $42.72M in YTD 2024, showing improved operational cash generation.)

Key Players & Entities

• CARRIAGE SERVICES INC (company) — registrant
• CSV (company) — ticker symbol
• New York Stock Exchange (regulator) — exchange where common stock is registered
• $6.57 million (dollar_amount) — net income for three months ended September 30, 2025
• $9.87 million (dollar_amount) — net income for three months ended September 30, 2024
• $39.24 million (dollar_amount) — net income for nine months ended September 30, 2025
• $23.10 million (dollar_amount) — net income for nine months ended September 30, 2024
• $102.74 million (dollar_amount) — total revenue for three months ended September 30, 2025
• $6.56 million (dollar_amount) — net loss on divestitures and impairment charges for three months ended September 30, 2025
• $56.50 million (dollar_amount) — acquisitions of businesses and real property for nine months ended September 30, 2025

FAQ

Risk Factors

• Debt and Leverage [high — financial]: The company carries significant debt, including $133.55M on its credit facility and $397.14M in senior notes as of September 30, 2025. High leverage can increase financial risk, especially during economic downturns or if interest rates rise, impacting the ability to service debt obligations.
• Integration of Acquisitions [medium — operational]: Carriage Services made substantial acquisitions totaling $56.50M in YTD 2025. The successful integration of these businesses is critical for realizing expected synergies and achieving growth targets. Failure to integrate effectively could lead to operational inefficiencies and impact profitability.
• Competition and Market Saturation [medium — market]: The funeral and cemetery services industry can be competitive. Changes in consumer preferences, market saturation in certain areas, and the emergence of new service models could affect market share and pricing power.
• Impairment Charges and Divestitures [medium — financial]: The company incurred a net loss of $6.56M on divestitures and impairment charges in Q3 2025, a significant increase from $0.39M in Q3 2024. While indicating active portfolio management, these charges can negatively impact short-term profitability and signal potential overvaluation or underperformance of divested assets.
• Preneed Revenue Recognition [low — regulatory]: The company manages significant deferred revenue from preneed funeral and cemetery sales ($75.82M and $38.57M respectively as of Sept 30, 2025). Changes in regulations or accounting standards related to the recognition of this revenue could impact financial reporting.

Industry Context

The funeral and cemetery services industry is characterized by stable demand driven by demographic trends, but also faces evolving consumer preferences towards personalization and potentially lower-cost options. Companies like Carriage Services operate in a fragmented market, often consolidating smaller regional players. Key industry trends include the growth of preneed sales for services and merchandise, and the management of perpetual care trusts for cemetery maintenance.

Regulatory Implications

The industry is subject to various state and local regulations concerning funeral homes, cemeteries, and preneed sales. Compliance with regulations regarding trust fund management, service delivery standards, and consumer protection is critical. Changes in these regulations, particularly concerning preneed revenue recognition or trust fund investment rules, could impact financial reporting and operations.

What Investors Should Do

1. Monitor integration of recent acquisitions.
2. Analyze the impact of divestitures and impairment charges.
3. Assess the sustainability of operating cash flow.
4. Evaluate the growth drivers for service revenue.

Glossary

Preneed cemetery trust investments

Funds set aside and invested to cover future cemetery services and plots, often sold in advance to customers. (Represents a significant asset ($102.01M) and a deferred revenue liability, impacting cash flow and future revenue recognition.)

Preneed funeral trust investments

Funds set aside and invested to cover future funeral services, often sold in advance to customers. (A substantial asset ($121.85M) and deferred revenue, crucial for future service delivery and financial planning.)

Goodwill

An intangible asset representing the excess of the purchase price of an acquired company over the fair value of its identifiable net assets. (Carriage Services has significant goodwill ($433.48M), which is tested annually for impairment. Changes in its value can impact net income.)

Deferred preneed cemetery revenue

Revenue from cemetery services and plots sold in advance that has not yet been earned. (Represents future obligations and revenue that will be recognized as services are performed or plots are delivered. Totaling $75.82M.)

Deferred preneed funeral revenue

Revenue from funeral services sold in advance that has not yet been earned. (Represents future obligations and revenue to be recognized as services are rendered. Totaling $38.57M.)

Divestitures

The sale or disposal of a business unit or assets. (The company actively divested assets in YTD 2025, generating $37.31M, while also incurring losses on these sales, impacting net income.)

Impairment charges

A reduction in the carrying value of an asset when its fair value is less than its book value. (The company recorded $6.56M in impairment charges in Q3 2025, negatively affecting net income and indicating potential asset value erosion.)

Year-Over-Year Comparison

Carriage Services Inc. reported mixed results compared to the prior year. While total revenue saw modest growth of 2.0% in Q3 2025 ($102.74M vs $100.69M) and 1.8% year-to-date ($311.96M vs $306.50M), net income for the quarter declined significantly by 33.5% ($6.57M vs $9.87M). This decline was largely attributed to a substantial increase in net loss on divestitures and impairment charges ($6.56M vs $0.39M). However, year-to-date net income showed a strong increase of 70% ($39.24M vs $23.10M), bolstered by significant acquisitions and improved operating cash flow ($46.57M vs $42.72M).

Key Financial Figures

• $23.3 million — s ended September 30, 2025, we acquired $23.3 million of property, plant and equipment relate

Filing Documents

• csv-20250930.htm (10-Q) — 2243KB
• csv-ex311.htm (EX-31.1) — 11KB
• csv-ex312.htm (EX-31.2) — 11KB
• csv-ex32.htm (EX-32) — 9KB
• 0001016281-25-000128.txt ( ) — 12849KB
• csv-20250930.xsd (EX-101.SCH) — 91KB
• csv-20250930_cal.xml (EX-101.CAL) — 124KB
• csv-20250930_def.xml (EX-101.DEF) — 461KB
• csv-20250930_lab.xml (EX-101.LAB) — 818KB
• csv-20250930_pre.xml (EX-101.PRE) — 701KB
• csv-20250930_htm.xml (XML) — 2608KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements 3 Unaudited Condense d Consolidated Balance Sheets as of S eptember 30, 2025 and December 31, 2024 3 Unaudited Condensed Consolidated Statements of Operations for the Three and N ine Months ended S eptember 30, 2025 and 2024 4 Unaudited Condensed Consolidated Statements of Cash Flows for the N ine Months ended S eptember 30, 2025 and 2024 5 Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and N ine Months ended S eptember 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 12 3. Business Combinations 13 4. Goodwill 13 5. Divested Operations 14 6. Receivables 14 7. Fair Value Measurements 16 8. Trust Investments 17 9. Receivables from Preneed Trusts 26 10. Credit Facility and Acquisition Debt 26 11. Senior Notes 28 12. Earnings Per Share 29 13. Segment Reporting 29 Cautionary Statement on Forward–Looking Statements 34

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 36

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 46

Controls and Procedures

Item 4. Controls and Procedures 46

– OTHER INFORMATION

PART II – OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 47

Risk Factors

Item 1A. Risk Factors 47

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 48

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 48

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 48

Other Information

Item 5. Other Information 48

Exhibits

Item 6. Exhibits 48 SIGNATURE 49 INDEX OF EXHIBITS 50 2

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. CARRIAGE SERVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited and in thousands, except share data) September 30, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 1,248 $ 1,165 Accounts receivable, net 37,515 30,193 Inventories 7,556 7,920 Prepaid and other current assets 4,396 4,123 Current assets held for sale 98 1,135 Total current assets 50,813 44,536 Preneed cemetery trust investments 102,011 98,120 Preneed funeral trust investments 121,849 106,219 Preneed cemetery receivables, net 63,312 50,958 Receivables from preneed funeral trusts, net 16,403 22,372 Property, plant, and equipment, net 284,480 273,004 Cemetery property, net 116,555 109,576 Goodwill 433,484 414,859 Intangible and other non-current assets, net 42,687 40,427 Operating lease right-of-use assets 12,946 14,953 Cemetery perpetual care trust investments 93,154 85,103 Non-current assets held for sale 5,056 19,453 Total assets $ 1,342,750 $ 1,279,580 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of debt and lease obligations $ 4,181 $ 3,914 Accounts payable 17,247 15,427 Accrued and other liabilities 35,962 38,460 Current liabilities held for sale 144 240 Total current liabilities 57,534 58,041 Acquisition debt, net of current portion 6,069 4,895 Long-term liabilities held for sale 4,725 13,842 Credit facility 133,546 135,382 Senior notes 397,136 396,597 Obligations under finance leases, net of current portion 9,046 6,045 Obligations under operating leases, net of current portion 11,941 14,035 Deferred preneed cemetery revenue 75,821 61,767 Deferred preneed funeral revenue 38,566 39,261 Deferred tax liability 54,251 51,429 Other long-term liabilities 1,482 1,179 Deferred preneed cemetery receipts held in trust 102,011 98,120 Deferred preneed funeral receipts held in trust 117,155 106,219 Care trusts' corpus 91,383 84,218 Total liabilities 1,100,666 1,071,030 Co

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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): September 30, 2025 December 31, 2024 Accounts receivable, net $ 81 $ 833 Inventories 17 302 Current assets held for sale $ 98 $ 1,135 Preneed cemetery trust investments $ — $ 4,876 Preneed funeral trust investments — 2,197 Preneed cemetery receivables, net — 1,671 Receivables from funeral preneed trusts, net 4,695 — Property, plant, and equipment, net 322 4,898 Cemetery property, net — 3,362 Intangible and other non-current assets, net — 215 Operating lease right-of-use assets 39 — Cemetery perpetual care trust investments — 2,234 Non-current assets held for sale $ 5,056 $ 19,453 Current portion of operating lease obligations $ 9 $ — Accounts payable 51 94 Accrued and other liabilities 84 146 Current liabilities held for sale $ 144 $ 240 Obligations under operating leases, net of current portion $ 30 $ — Deferred preneed cemetery revenue — 3,517 Deferred preneed funeral revenue 4,695 1,018 Deferred preneed cemetery receipts held in trust — 4,876 Deferred preneed funeral receipts held in trust — 2,197 Care trusts' corpus — 2,234 Long-term liabilities held for sale $ 4,725 $ 13,842 Goodwill The excess of the purchase price over the fair value of identifiable net assets of funeral home businesses and cemeteries we acquire is recorded as goodwill. Goodwill has an indefinite life and is not subject to amortization. As such, we test goodwill for impairment on an annual basis as of August 31st each year. Under current guidance, we are permitted to first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. We performed our most recent annual goodwill impairment t

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) of comparable companies operating in the same industry as the individual reporting units. Our second market approach methodology utilizes the guideline transaction method, in which transaction multiples are derived from acquisitions of controlling interests in companies engaged in the same or similar lines of business as the reporting units. In accordance with the guidance, if the fair value of the reporting unit is less than its carrying amount an impairment charge is recorded in an amount equal to the difference. When we divest a portion of a reporting unit that constitutes a business in accordance with United States generally accepted accounting principles ("GAAP"), we allocate goodwill associated with that business to be included in the gain or loss on divestiture. The goodwill allocated is based on the relative fair value of the business being divested and the portion of the reporting unit that will be retained. Additionally, after each divestiture, we will test the goodwill remaining in the portion of the reporting unit to be retained for impairment using a qualitative assessment unless we deem a quantitative assessment to be appropriate to ensure the fair value of our reporting units is greater than their carrying value. For the nine months ended September 30, 2025 and 2024, after each divestiture, we concluded that it was more-likely-than not that the fair value of our reporting units was greater than their carrying value and thus there was no impairment to goodwill. See Note 4 to the Condensed Consolidated Financial Statements included herein for additional information related to our goodwill. Intangible Assets Our intangible assets include tradenames resulting from acquisitions and are included in Intangible and other non-current assets , net on our Condensed Consolidated Balance Sheets. Our tradenames are considered to have an indefinite life and are not subject to amortization. As such, we te

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Property, Plant, and Equipment Property, plant, and equipment is comprised of the following (in thousands): September 30, 2025 December 31, 2024 Land $ 92,739 $ 86,609 Buildings and improvements 266,089 265,231 Furniture, equipment and vehicles 69,244 72,052 Property, plant, and equipment, at cost 428,072 423,892 Less: accumulated depreciation ( 143,270 ) ( 145,990 ) Property, plant, and equipment, net $ 284,802 $ 277,902 Less: Held for sale ( 322 ) ( 4,898 ) Property, plant, and equipment, net $ 284,480 $ 273,004 During the nine months ended September 30, 2025, we acquired $23.3 million of property, plant and equipment related to our business combinations, described in Note 3 to the Consolidated Financial Statements. We sold nine funeral homes and four cemeteries that had a carrying value of property, plant, and equipment of $ 10.7 million, and we sold real property for $ 4.1 million, with a carrying value of $ 2.6 million, resulting in a $ 1.1 million gain on the sale.

View Full Filing

View this 10-Q filing on SEC EDGAR