Q4 2025 Carriage Services Inc Earnings Call

February 26, 2026

Speaker #3: I would now like to hand the conference over to your speaker today, Steve Metzger, President. Please go ahead, sir.

Steve Metzger: Good morning, everyone, thank you for joining us to discuss our Q4 and year-end results for 2025. In addition to myself, on the call this morning from management are Carlos Quesada, Chief Executive Officer and Vice Chairman of the Board of Directors, and John Enwright, Senior Vice President and Chief Financial Officer. On the Carriage Services website, you can find our earnings press release, which was issued yesterday after the market closed. Our press release is intended to supplement our remarks this morning and includes supplemental financial information, including the reconciliation of differences between GAAP and non-GAAP financial measures. Today's call will begin with formal remarks from Carlos and John. It will be followed by a question and answer period. Before we begin, I'd like to remind everyone that during this call, we'll make some forward-looking statements, including comments about our business, projections, and plans.

Speaker #2: Good morning, everyone, and thank you for joining us to discuss our fourth quarter and year-end results for 2025. In addition to myself, on the call this morning from management, are Carlos Quezada, Chief Executive Officer, and Vice Chairman of the Board of Directors, and John Enwright, Senior Vice President and Chief Financial Officer.

Speaker #2: On the CARRIAGE SERVICES website, you can find our earnings press release, which was issued yesterday after the market closed. Our press release is intended to supplement our remarks this morning and includes supplemental financial information, including the reconciliation of differences between GAAP and non-GAAP financial measures.

Speaker #2: Today's call will begin with formal remarks from Carlos and John, and will be followed by a question-and-answer period. Before we begin, I'd like to remind everyone that during this call, we'll make some forward-looking statements, including comments about our business, projections, and plans.

Speaker #2: Forward-looking statements inherently involve risks and uncertainties and only reflect our views as of today. These risks and uncertainties include, but are not limited to, factors identified in our earnings release, as well as in our SEC filings, all of which can be found on our website.

Steve Metzger: Forward-looking statements inherently involve risks and uncertainties and only reflect our views as of today. These risks and uncertainties include, but are not limited to, factors identified in our earnings release as well as in our SEC filings, all of which can be found on our website. Thank you all for joining us this morning, and now I'd like to turn the call over to Carlos.

Speaker #2: Thank you all for joining us this morning, and now I'd like to turn the call over to Carlos.

Speaker #3: Thank you, Steve. And welcome to everyone joining us for today's fourth quarter and full-year earnings call. As we close out 2025, I am incredibly proud of what our CARRIAGE team has accomplished.

Carlos Quesada: Thank you, Steve, welcome to everyone joining us for today's Q4 and full year Earnings Call. As we close out 2025, I am incredibly proud of what our Carriage team has accomplished. This year reflects disciplined execution, cultural alignment, and a relentless commitment to creating premier experiences for the families we serve. Before discussing our financial performance, I want to recognize every managing partner, every team member in the field, and every support member across our organization. You are the heartbeat of Carriage. Our results are not accidental. They are the result of a clear vision, high expectations, accountability, and a deep passion for this noble profession. Thank you for living our values and for delivering excellence to every family, every time.

Carlos Quezada: Thank you, Steve, welcome to everyone joining us for today's Q4 and full year Earnings Call. As we close out 2025, I am incredibly proud of what our Carriage team has accomplished. This year reflects disciplined execution, cultural alignment, and a relentless commitment to creating premier experiences for the families we serve. Before discussing our financial performance, I want to recognize every managing partner, every team member in the field, and every support member across our organization. You are the heartbeat of Carriage. Our results are not accidental. They are the result of a clear vision, high expectations, accountability, and a deep passion for this noble profession. Thank you for living our values and for delivering excellence to every family, every time.

Speaker #3: This year reflects disciplined execution, cultural alignment, and a relentless commitment to creating premier experiences for the families we serve. Before discussing our financial performance, I want to recognize every managing partner, every team member in the field, and every support member across our organization.

Speaker #3: You are the heartbeat of CARRIAGE. Our results are not accidental. They are the result of a clear vision, high expectations, accountability, and a deep passion for these noble professions.

Speaker #3: Thank you for living our values and for delivering excellence to every family, every time. Today, I will highlight our financial performance for the fourth quarter and the full year, and provide an update on the progress of some of our strategic objectives.

Carlos Quesada: Today, I will highlight our financial performance for the Q4 and the full year, and provide an update on the progress of some of our strategic objectives. John will then provide additional detail on our financial metrics, cash from operating activities, balance sheet strength, capital expenditures, overhead, and 2026 guidance. Now to my report. 2025 was a year of defined purpose and intentional value creation. We continued to build a more scalable operating framework, optimize our supply chain processes, enhance our passion for service mindset, and reactivated our disciplined growth strategy through high-quality acquisitions. At the same time, we further strengthened our balance sheet and reinforced our capital allocation discipline. We are no longer in the rebuilding phase. We are now firmly in the compounding phase. Let's begin with the numbers.

Carlos Quezada: Today, I will highlight our financial performance for the Q4 and the full year, and provide an update on the progress of some of our strategic objectives. John will then provide additional detail on our financial metrics, cash from operating activities, balance sheet strength, capital expenditures, overhead, and 2026 guidance. Now to my report. 2025 was a year of defined purpose and intentional value creation. We continued to build a more scalable operating framework, optimize our supply chain processes, enhance our passion for service mindset, and reactivated our disciplined growth strategy through high-quality acquisitions. At the same time, we further strengthened our balance sheet and reinforced our capital allocation discipline. We are no longer in the rebuilding phase. We are now firmly in the compounding phase. Let's begin with the numbers.

Speaker #3: John will then provide additional detail on our financial metrics, cash from operating activities, balance sheet strength, capital expenditures, overhead, and 2026 guidance. Now to my report.

Speaker #3: 2025 was a year of the fine purpose and intentional value creation. We continue to build a more scalable operating framework, optimize our supply chain processes, enhance our passion for service mindset, and reactivated our disciplined growth strategy through high-quality acquisitions.

Speaker #3: At the same time, we further strengthened our balance sheet and reinforced our capital allocation discipline. We are no longer in the rebuilding phase. We are now firmly in the compounding phase.

Speaker #3: Let's begin with the numbers. For the fourth quarter, we reported total revenue of $105.5 million. Representing a solid 8% increase compared to the same period last year.

Carlos Quesada: For Q4, we reported total revenue of $105.5 million, representing a solid 8% increase compared to the same period last year. When we look at each segment, total funeral operating revenue was $61.1 million, reflecting a 9.6% growth year-over-year. Funeral home operating volume was 10,571, an increase of 6.8% over the same period last year. While average revenue per contract was $5,777, an increase of 2.6% over the previous year's quarter. This performance reflects our continued focus on strategic pricing, new burial information offerings, service mix optimization, and steady execution in our businesses. As you may recall, December 2024 had lower than expected volumes due to a shift in the flu season that pushed volume to January.

Carlos Quezada: For Q4, we reported total revenue of $105.5 million, representing a solid 8% increase compared to the same period last year. When we look at each segment, total funeral operating revenue was $61.1 million, reflecting a 9.6% growth year-over-year. Funeral home operating volume was 10,571, an increase of 6.8% over the same period last year. While average revenue per contract was $5,777, an increase of 2.6% over the previous year's quarter. This performance reflects our continued focus on strategic pricing, new burial information offerings, service mix optimization, and steady execution in our businesses. As you may recall, December 2024 had lower than expected volumes due to a shift in the flu season that pushed volume to January.

Speaker #3: When we look at each segment, total funeral operating revenue was $61.1 million, reflecting a 9.6% growth year-over-year. Funeral home operating volume was $10,571, an increase of 6.8% over the same period last year.

Speaker #3: While average revenue per contract was $5,777, an increase of 2.6% over the previous year's quarter. This performance reflects our continued focus on a strategic pricing, new burial and cremation offerings, service mix optimization, and steady execution in our businesses.

Speaker #3: As you may recall, December 2024 had lower-than-expected volumes due to a shift in the flu season that pushed volume to January. This December, we experienced a more typical flu season.

Carlos Quesada: This December, we experienced a more typical flu season. Moving to total cemetery operating revenue, we finished the Q4 at $33.8 million, an increase of $5.3 million, or 18.4% compared to the same quarter last year. This performance was primarily driven by a 25.5% increase in preneed cemetery sales production, a 15.6% increase in preneed interment right sold, and a 5.3% increase in the average sales per property contract. Our cemetery performance continues to highlight the power of diverse inventory development, strategic pricing, and focused preneed execution. Moving to total financial revenue, the company ended the quarter at $9.3 million, an increase of 15.3% compared to the same period last year, primarily driven by the strong performance of our trust fund investments.

Carlos Quezada: This December, we experienced a more typical flu season. Moving to total cemetery operating revenue, we finished the Q4 at $33.8 million, an increase of $5.3 million, or 18.4% compared to the same quarter last year. This performance was primarily driven by a 25.5% increase in preneed cemetery sales production, a 15.6% increase in preneed interment right sold, and a 5.3% increase in the average sales per property contract. Our cemetery performance continues to highlight the power of diverse inventory development, strategic pricing, and focused preneed execution. Moving to total financial revenue, the company ended the quarter at $9.3 million, an increase of 15.3% compared to the same period last year, primarily driven by the strong performance of our trust fund investments.

Speaker #3: Moving to total cemetery operating revenue, we finished the fourth quarter at $33.8 million, an increase of 5.3 million or 18.4% compared to the same quarter last year.

Speaker #3: This performance was primarily driven by a 25.5% increase in pre-needs cemetery sales production, a 15.6% increase in pre-need interment rights sold, and a 5.3% increase in the average sales per property contract.

Speaker #3: Our cemetery performance continues to highlight the power of diverse inventory development, strategic pricing, and focused pre-need execution. Moving to total financial revenue, the company ended the quarter at $9.3 million, an increase of 15.3% compared to the same period last year, primarily driven by the strong performance of our trust fund investments.

Carlos Quesada: Preneed insurance contracts sold increased by 33.8% compared with the same Q last year, reinforcing the continuous strength of our funeral preneed insurance sales strategy and the outstanding work of our sales teams, who continue to focus on the education of our families on the value of pre-planning. Turning to profitability, adjusted consolidated EBITDA for Q4 was $32.5 million, an increase of $3.2 million, or 11%, and adjusted consolidated EBITDA margin was 30.8%, an increase of 80 basis points when compared to the same Q the previous year. This margin expansion reflects the combined impact of our supply chain initiatives, strategic pricing, and capital allocation discipline.

Carlos Quezada: Preneed insurance contracts sold increased by 33.8% compared with the same Q last year, reinforcing the continuous strength of our funeral preneed insurance sales strategy and the outstanding work of our sales teams, who continue to focus on the education of our families on the value of pre-planning. Turning to profitability, adjusted consolidated EBITDA for Q4 was $32.5 million, an increase of $3.2 million, or 11%, and adjusted consolidated EBITDA margin was 30.8%, an increase of 80 basis points when compared to the same Q the previous year. This margin expansion reflects the combined impact of our supply chain initiatives, strategic pricing, and capital allocation discipline.

Speaker #3: Pre-need insurance contracts sold increased by 33.8% compared with the same quarter last year, reinforcing the continued strength of our funeral pre-need insurance sales strategy and the outstanding work of our sales teams, who continue to focus on the education of our families on the value of pre-planning.

Speaker #3: Turning to profitability, adjusted consolidated EBITDA for the fourth quarter was $32.5 million, an increase of 3.2 million or 11%, and adjusted consolidated EBITDA margin was $30.8%, an increase of 80 basis points, when compared to the same quarter the previous year.

Speaker #3: This margin expansion reflects the combined impact of our supply chain initiatives, a strategic pricing, and capital allocation discipline. Adjusted diluted EPS for the fourth quarter was $75 per share compared to $62 during the same quarter the previous year.

Carlos Quesada: Adjusted diluted EPS for Q4 was $0.75 per share, compared to $0.62 during the same Q4 the previous year, an increase of $0.13 per share or 21%. Our Q4 of 2025 delivered strong performance, and we're pleased with the progress made. Now, let's move to our full year performance. Total revenue was $417.4 million, up from $404.2 million in 2024, representing a 3.3% growth. While reported revenue growth of 3.3% may appear modest at first glance, it significantly understates the company's underlying performance in the context of our portfolio repositioning. In 2025, the divestiture of non-core businesses negatively impacted revenue by approximately $9 million, and we acquired strategically selected high-quality assets in September, which contributed about $4 million in revenue.

Carlos Quezada: Adjusted diluted EPS for Q4 was $0.75 per share, compared to $0.62 during the same Q4 the previous year, an increase of $0.13 per share or 21%. Our Q4 of 2025 delivered strong performance, and we're pleased with the progress made. Now, let's move to our full year performance. Total revenue was $417.4 million, up from $404.2 million in 2024, representing a 3.3% growth. While reported revenue growth of 3.3% may appear modest at first glance, it significantly understates the company's underlying performance in the context of our portfolio repositioning. In 2025, the divestiture of non-core businesses negatively impacted revenue by approximately $9 million, and we acquired strategically selected high-quality assets in September, which contributed about $4 million in revenue.

Speaker #3: An increase of 13 cents per share or 21%. Our fourth quarter of 2025 delivered strong performance and we are pleased with the progress made.

Speaker #3: Now let's move to our full-year performance. Total revenue was $417.4 million, up from $404.2 million in 2024, representing a 3.3% growth. While reported revenue growth of 3.3% may appear modest at first glance, it significantly understates the company's underlying performance in the context of our portfolio repositioning.

Speaker #3: In 2025, the divestiture of non-core businesses negatively impacted revenue by approximately $9 million, and we acquired strategically selected high-quality assets in September, which contributed about $4 million in revenue.

Speaker #3: We expect this new businesses to reach $16 million in revenue in 2026. Overall, what we felt the top-line impact of the divestitures of non-core businesses in 2025.

Carlos Quesada: We expect these new businesses to reach $16 million in revenue in 2026. Overall, while we felt the top-line impact of the divestitures of non-core businesses in 2025, this portfolio optimization will enhance our ability to grow revenue and margins in the future and showcase our commitment to disciplined capital allocation and return of invested capital. Moving to adjusted consolidated EBITDA, we ended the year at $130.7 million, an increase of $4.4 million or 3.5%, while adjusted consolidated EBITDA margin finished at 31.3%, an increase of 10 basis points, both compared to the prior year. Adjusted diluted EPS was $3.20 per share, compared to $2.65 per share, an increase of $0.55 or 20.8% compared to the prior year.

Carlos Quezada: We expect these new businesses to reach $16 million in revenue in 2026. Overall, while we felt the top-line impact of the divestitures of non-core businesses in 2025, this portfolio optimization will enhance our ability to grow revenue and margins in the future and showcase our commitment to disciplined capital allocation and return of invested capital. Moving to adjusted consolidated EBITDA, we ended the year at $130.7 million, an increase of $4.4 million or 3.5%, while adjusted consolidated EBITDA margin finished at 31.3%, an increase of 10 basis points, both compared to the prior year. Adjusted diluted EPS was $3.20 per share, compared to $2.65 per share, an increase of $0.55 or 20.8% compared to the prior year.

Speaker #3: This portfolio optimization will enhance our ability to grow revenue and margins in the future and showcase our commitment to disciplined capital allocation and return of invested capital.

Speaker #3: Moving to adjusted consolidated EBITDA, we ended the year at $130.7 million, an increase of 4.4 million or 3.5%, while adjusted consolidated EBITDA margin finished at $31.3%, an increase of 10 basis points, both compared to the prior year.

Speaker #3: Adjusted diluted EPS was $3 in 20 cents per share compared to $2.65 per share, an increase of 55 cents or 20.8% compared to the prior year.

Speaker #3: These results demonstrate the execution discipline of our operations and validate the effectiveness of our strategy to turn around the company. Over the past three years, we have rebuilt carriage with intention, purpose, and discipline execution, not simply to improve performance and build credibility, but to create a more sustainable, profitable, and predictable company.

Carlos Quesada: These results demonstrate the execution discipline of our operations and validate the effectiveness of our strategy to turn around the company. Over the past 3 years, we have rebuilt Carriage with intention, purpose, and discipline execution. Not simply to improve performance and build credibility, but to create a more sustainable, profitable, and predictable company. We have reshaped our revenue mix toward higher quality earnings, institutionalized rigor with our operating system to reduce volatility, and improve our margin profile through disciplined pricing, supply chain optimization, and a strategic capital allocation. These actions are designed to generate consistent cash flow, expand profitability over time, and enhance earnings visibility. Most importantly, our leadership teams are fully aligned and executing with accountability to deliver performance that we believe is repeatable and scalable. Moving to updates on our strategic initiatives.

Carlos Quezada: These results demonstrate the execution discipline of our operations and validate the effectiveness of our strategy to turn around the company. Over the past 3 years, we have rebuilt Carriage with intention, purpose, and discipline execution. Not simply to improve performance and build credibility, but to create a more sustainable, profitable, and predictable company. We have reshaped our revenue mix toward higher quality earnings, institutionalized rigor with our operating system to reduce volatility, and improve our margin profile through disciplined pricing, supply chain optimization, and a strategic capital allocation. These actions are designed to generate consistent cash flow, expand profitability over time, and enhance earnings visibility. Most importantly, our leadership teams are fully aligned and executing with accountability to deliver performance that we believe is repeatable and scalable. Moving to updates on our strategic initiatives.

Speaker #3: We have reshaped our revenue mix, toward higher quality earnings, institutionalized rigor with our operating system to reduce volatility, and improve our margin profile through disciplined pricing, supply chain optimization, and a strategic capital allocation.

Speaker #3: These actions are designed to generate consistent cash flow expand profitability over time, and enhance earnings visibility. Most importantly, our leadership teams are fully aligned and executing with accountability, to deliver performance that we believe is repeatable and scalable.

Speaker #3: Moving to updates on our strategic initiatives. We continue to invest in systems and infrastructure to support disciplined growth, advancing continuous improvement initiatives, modernized technology platforms, and enhanced reporting capabilities.

Carlos Quesada: We continue to invest in systems and infrastructure to support disciplined growth, advancing continuous improvement initiatives, modernized technology platforms, and enhanced reporting capabilities. These investments improve our reliability, visibility, and decision-making quality, converting effort into behaviors and repeatable outcomes. For example, we upgraded our sales infrastructure by deploying Sales Edge 2.0, our CRM, achieving approximately 80% adoption by year-end. The platform enhanced funnel visibility, campaign targeting, and reporting precision, contributing $2.6 million in Q4 preneed production. In parallel, we fully integrated our preneed funeral sales strategy across the sales organization. We expect Sales Edge 2.0 to become our preneed sales engine in 2026. At the same time, we develop our leadership capability and reinforce a meritocratic culture aligned with performance expectations. Culture at Carriage is a measurable economic asset that makes execution stronger, reduces risk, and supports sustainable profitability.

Carlos Quezada: We continue to invest in systems and infrastructure to support disciplined growth, advancing continuous improvement initiatives, modernized technology platforms, and enhanced reporting capabilities. These investments improve our reliability, visibility, and decision-making quality, converting effort into behaviors and repeatable outcomes. For example, we upgraded our sales infrastructure by deploying Sales Edge 2.0, our CRM, achieving approximately 80% adoption by year-end. The platform enhanced funnel visibility, campaign targeting, and reporting precision, contributing $2.6 million in Q4 preneed production. In parallel, we fully integrated our preneed funeral sales strategy across the sales organization. We expect Sales Edge 2.0 to become our preneed sales engine in 2026. At the same time, we develop our leadership capability and reinforce a meritocratic culture aligned with performance expectations. Culture at Carriage is a measurable economic asset that makes execution stronger, reduces risk, and supports sustainable profitability.

Speaker #3: These investments improve our reliability, visibility, and decision-making quality converting effort into behaviors and repeatable outcomes. For example, we upgraded our sales infrastructure by deploying sales-edge 2.0, our CRM, achieving approximately 80% adoption by year-end.

Speaker #3: The platform enhanced funnel visibility, campaign targeting, and reporting precision, contributing 2.6 million in fourth-quarter pre-need production. In parallel, we fully integrated our pre-need funeral sales strategy across the sales organization, we expect sales-edge 2.0 to become our pre-need sales engine in 2026.

Speaker #3: At the same time, we developed our leadership capability and reinforced a meritocratic culture aligned with performance expectations, culture at carriage is a measurable economic asset that makes execution stronger, reduces risk, and supports sustainable profitability.

Speaker #3: Our supply chain optimization strategy continues, with our earn and casket core line initiatives now fully embedded across our organization, this strategies are driving purchasing consistency, margin improvement, and a more curated presentation for families.

Carlos Quesada: Our supply chain optimization strategy continues, with our urn and casket core line initiatives now fully embedded across our organization. These strategies are driving purchasing consistency, margin improvement, and a more curated presentation for families. We expect future optimization opportunities and additional national partnerships will allow us to further reduce complexity and enhance our operating leverage. In closing, we're building a best-in-class death care company defined by premier experiences, a high-performance culture, meritocracy, and accountability. All align with our three strategic objectives: disciplined capital allocation, purposeful growth, and relentless improvement. Our performance in 2025 reflects disciplined execution, guided by a clear, consistent framework rooted in our purpose to create premier experiences through innovation, empowered partnerships, and elevated service. These are not aspirations, they are operating standards that guide capital deployment, operational decisions, and long-term value creation.

Carlos Quezada: Our supply chain optimization strategy continues, with our urn and casket core line initiatives now fully embedded across our organization. These strategies are driving purchasing consistency, margin improvement, and a more curated presentation for families. We expect future optimization opportunities and additional national partnerships will allow us to further reduce complexity and enhance our operating leverage. In closing, we're building a best-in-class death care company defined by premier experiences, a high-performance culture, meritocracy, and accountability. All align with our three strategic objectives: disciplined capital allocation, purposeful growth, and relentless improvement. Our performance in 2025 reflects disciplined execution, guided by a clear, consistent framework rooted in our purpose to create premier experiences through innovation, empowered partnerships, and elevated service. These are not aspirations, they are operating standards that guide capital deployment, operational decisions, and long-term value creation.

Speaker #3: We expect future optimization opportunities and additional national partnerships will allow us to further reduce complexity and enhance our operating leverage. In closing, we're building a best-in-class definite company defined by premier experiences, a high-performance culture, meritocracy, and accountability.

Speaker #3: All aligned with our three strategic objectives, disciplined capital allocation, purposeful growth, and relentless improvement. Our performance in 2025 reflects disciplined execution guided by a clear consistent framework rooted in our purpose, to create premier experiences through innovation, empower partnerships, and elevated service.

Speaker #3: These are not aspirations, they are operating standards that guide capital deployment, operational decisions, and long-term value creation. Our balance sheet is stronger, our systems are more robust, our acquisition engine is active and disciplined, and our culture is aligned with our 2030 vision.

Carlos Quesada: Our balance sheet is stronger, our systems are more robust, our acquisition engine is active and disciplined, and our culture is aligned with our 2030 vision. We're not chasing growth, we're building durable, predictable, and compounding long-term shareholder value. As we enter 2026, we do so with confidence, clarity, and intention. Thank you for your continued trust and belief in Carriage. I will now turn the call over to John.

Carlos Quezada: Our balance sheet is stronger, our systems are more robust, our acquisition engine is active and disciplined, and our culture is aligned with our 2030 vision. We're not chasing growth, we're building durable, predictable, and compounding long-term shareholder value. As we enter 2026, we do so with confidence, clarity, and intention. Thank you for your continued trust and belief in Carriage. I will now turn the call over to John.

Speaker #3: We're not chasing growth, we're building durable, predictable, and compounding long-term shareholder value. As we enter 2026, we do so with confidence, clarity, and intention.

Speaker #3: Thank you for your continued trust and belief in carriage. I will now turn the call over to John.

Speaker #1: Thank you, Carlos, and thanks everyone for joining us today. Before I start, I'd like to look back on my first year at carriage services.

John Enwright: Thanks everyone for joining us today. Before I start, I'd like to look back on my first year at Carriage Services. I knew stepping into a new industry would bring professional growth, but what stood out most was the dedication and commitment throughout the organization. Our teams are truly unmatched in their focus on enhancing the care and service we provide for the families who choose us. I appreciate both our field and support center teams for everything you do each day. My comments today will primarily focus on performance in the Q4 of 2025, compared to the Q4 of 2024. After that, I will share our outlook for 2026.

Speaker #1: I knew stepping into a new industry would bring professional growth, but what stood out most was the dedication and commitment throughout the organization. Our teams are truly unmatched in their focus on enhancing the care and service we provide for the families who choose us.

Speaker #1: I appreciate both our field and support center teams for everything you do each day. My comments today will primarily focus on performance in the fourth quarter of 2025 compared to the fourth quarter of 2024.

Speaker #1: After that, I will share our outlook for 2026. We reported consolidated adjusted EBITDA of $32.5 million, representing 30.8% of revenue and increase from 29.3 million or 30% of revenue in the fourth quarter of last year.

John Enwright: We reported consolidated adjusted EBITDA of $32.5 million, representing 30.8% of revenue, an increase from $29.3 million or 30% of revenue in Q4 of last year. The increase, both in absolute terms and percentage, were driven by improved performance across our field operations, resulting in a $5.5 million increase in Field EBITDA. However, this progress was partially offset by an unanticipated employee benefit expense of approximately $1.2 million, which stemmed from a few high-cost claimants during the quarter, as well as higher volume of medical insurance claims filed in December of this year compared to previous year. Additionally, overhead expenses rose, which I'll discuss further shortly. For Q4 2025, our adjusted diluted EPS rose to $0.75, representing a 21% increase from $0.62 in the prior year.

Speaker #1: The increase both in absolute terms and percentage were driven by improved performance across our field operations, resulting in a 5.5 million increase in field EBITDA.

Speaker #1: However, this progress was partially offset by an unanticipated employee benefit expense of approximately $1.2 million, which stemmed from a few high-cost claimants during the quarter, as well as a higher volume of medical insurance claims filed in December of this year compared to the previous year.

Speaker #1: Additionally, overhead expenses rose, which I'll discuss further shortly. For the fourth quarter of 2025, our adjusted diluted EPS rose to $75, representing a 21% increase from $62 in the prior year.

Speaker #1: The previously mentioned unanticipated employee benefit expense in the fourth quarter of 2025 impacted diluted EPS by approximately 5 to 6 cents. On a gap basis, diluted EPS for the fourth quarter was $77, compared to $62 in the same period last year.

John Enwright: The previously mentioned unanticipated employee benefit expense in Q4 2025 impacted diluted EPS by approximately $0.05 to $0.06. On a GAAP basis, diluted EPS for Q4 was $0.77, compared to $0.62 in the same period last year. For the full year, GAAP diluted EPS increased by $1.15 or 54.8%, while adjusted diluted EPS grew by $0.55 or 20.8%. Moving to cash from operating activities, we saw an increase of $4.8 million over the prior year Q4 or a 52.2% increase, primarily a result of year-over-year improvement in operating results. Adjusted free cash flow in Q4 was down $400,000 or 5.4% from the prior year Q4, primarily due to higher capital expenditures.

Speaker #1: For the full year, gap diluted EPS increased by $1.15 or 54.8%. While adjusted diluted EPS grew by 55 cents or 20.8%. Moving to cash from operating activities, we saw an increase of 4.8 million over the prior year quarter or a 52.2% increase.

Speaker #1: Primarily a result of year-over-year improvement in operating results. Adjusted free cash flow in the quarter was down $400,000 or 5.4% from the prior year, fourth quarter, primarily due to higher capital expenditures.

Speaker #1: Due to our ongoing commitment to disciplined capital allocation, our bank leverage ratio decreased to four times from 4.3 times at the close of the fourth quarter of 2024.

John Enwright: Due to our ongoing commitment to disciplined capital allocation, our bank leverage ratio decreased to 4x from 4.3x at the close of Q4 2024. In recent years, we've concentrated on enhancing operations and deploying capital efficiently. We're pleased to finish the year within our long-term leverage ratio of target of 3.5x to 4x. Capital expenditures for the quarter totaled $7.9 million in Q4 2025, compared to $4.4 million in the prior year's Q4. The $3.5 million increase was predominantly associated with growth capital, specifically investment in cemetery development, which allows us to continue to drive strong preneed cemetery sales production. For the quarter, we spent $5.2 million on growth capital and $2.7 million on maintenance capital.

Speaker #1: In recent years, we've concentrated on enhancing operations and deploying capital efficiently. We're pleased to finish the year within our long-term leverage ratio target of 3.5 to 4 times.

Speaker #1: Capital expenditures for the quarter totaled $7.9 million in the fourth quarter of 2025 compared to $4.4 million in the prior year's fourth quarter. The $3.5 million increase was predominantly associated with growth capital, specifically investment in cemetery development, which allows us to continue to drive strong pre-need cemetery sales production.

Speaker #1: For the quarter, we spent $5.2 million on growth capital and $2.7 million on maintenance capital. Overhead expenditures for the quarter totaled $15.2 million or 14.4% of revenues compared to $12.9 million or 13.2% of revenues in the fourth quarter of 2024.

John Enwright: Overhead expenditures for Q4 totaled $15.2 million or 14.4% of revenues, compared to $12.9 million or 13.2% of revenues in Q4 2024. The increase was predominantly associated with higher incentive pay for the field based on performance for the year. On a full year basis, overhead expenses totaled $56.6 million or 13.6% of revenues, which aligns with our long-term target. Moving on to our 2026 outlook. In forming an outlook for the upcoming year, we have shifted toward a growth-oriented approach, along with incorporating the projected full-year benefits from our 2025 acquisitions. Additionally, we have factored in the expectation of certain potential acquisitions that we believe may be completed in 2026.

Speaker #1: The increase was predominantly associated with higher incentive pay for the field based on performance for the year. On a full-year basis, overhead expenses totaled $56.6 million or 13.6% of revenues which aligns with our long-term target.

Speaker #1: Moving on to our 2026 outlook. In forming an outlook for the upcoming year, we have shifted toward a growth-oriented approach. Along with incorporating the projected full-year benefits from our 2025 acquisitions.

Speaker #1: Additionally, we have factored in the expectation of certain potential acquisitions that we believe may be completed in 2026. Revenues are planned to be in the $440 to $450 million range, compared to $417.4 million in 2025.

John Enwright: Revenues are planned to be in the $440 to $450 million range, compared to $417.4 million in 2025, which represents a growth rate of approximately 5.5% to 8%. We expect same-store funeral growth in the low single digits and cemetery growth in the high single digits. Pre-need cemetery sales production should remain within our 10% to 20% target range. Adjusted consolidated EBITDA is forecasted at $135 to $140 million for 2026, up from $130.7 million in 2025. Margins are expected to range between 30.5% and 31.5%, compared to 2025 margin of 31.3%.

Speaker #1: Which represents a growth rate of approximately 5.5 to 8%. We expect thames store funeral growth in the low single digits and cemetery growth in the high single digits.

Speaker #1: Pre-need cemetery sales production should remain within our 10 to 20% target range. Adjusted consolidated EBITDA is forecasted at $135 to $140 million. For 2026, up from $130.7 million in 2025.

Speaker #1: Margins are expected to range between 30.5 to 31.5% compared to 2025 margin of 31.3%. Overhead is projected to be 13.5 to 14.5%. A bit higher than our long-term goal of 13 to 14%, mainly due to expected increases in IT investments ongoing project Trinity rollout expenses and continued investment in talent.

John Enwright: Overhead is projected to be 13.5% to 14.5%, a bit higher than our long-term goal of 13% to 14%, mainly due to expected increases in IT investments, ongoing Project Trinity rollout expenses, and continued investment in talent. Based on these targets, we anticipate adjusted diluted EPS of $3.35 to $3.55, compared to $3.20 in 2025. Our adjusted diluted EPS will be somewhat impacted by our expected full-year effective tax rate, moving to a range of 28.5% to 29%, compared to 26.7% in 2025.

Speaker #1: Based on these targets, we anticipate adjusted diluted EPS of $3.35 to $3.55. Compared to $3.20 in 2025. Our adjusted diluted EPS will be somewhat impacted by our expected full-year effective tax rate moving to a range of 28.5 to 29% compared to 26.7% in 2025.

Speaker #1: Finally, we anticipate our adjusted free cash flow to be in the range of $40 to $50 million which assumes total capital expenditures in 2026 of $25 to $30 million reflective of the continued investment in our core business.

John Enwright: Finally, we anticipate our adjusted free cash flow to be in the range of $40 to $50 million, which assumes total capital expenditures in 2026 of $25 to $30 million, reflective of the continued investment in our core business. That concludes our prepared remarks. I will turn it over to the operator to open it up for questions.

Speaker #1: That concludes our prepared remarks, and I will turn it over to the operator to open it up for questions.

Operator: Thank you. We will now conduct a question-and-answer session. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Again, you may press star one to ask a question. We will pause for just a moment to allow everyone an opportunity to signal. We will take our first question from Alex Paris with Barrington Research.

Speaker #2: Thank you. We will now conduct a question-and-answer session. If you would like to ask a question, please signal by pressing star one on your telephone keypad.

Speaker #2: If you are using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Again, you may press star one to ask a question.

Speaker #2: We'll pause for just a moment to allow everyone an opportunity to signal. We'll take our first question from Alex Parris with Barrington Research.

Speaker #3: Hi guys. Thanks for taking my question and congrats on the strong finish to the year and the guide. My questions aren't three parts. First, on the quarter, you beat on revenue.

Alex Paris: Hi, guys. Thanks for taking my question, and congrats on the strong finish to the year and the guide. My questions are in 3 parts. First, on the quarter, you beat on revenue pretty handily. I think you said the acquisitions of Q3 added around $4 million for the year. How much for Q4 did they add?

Speaker #3: Pretty handily. And I think you said the acquisitions of the third quarter added around $4 million for the year. How much for the fourth quarter did they add?

John Enwright: They added about $3 million, generally speaking.

Speaker #4: They added about $3 million, generally speaking.

John Enwright: They added about $3 million, generally speaking.

Speaker #3: Okay. Adjusted EBITDA was in line. Despite that increase in overhead that you mentioned, and that unanticipated insurance cost, are those insurance costs included in overhead or no?

Alex Paris: Okay. adjusted EBITDA was in line, despite that increase in overhead that you mentioned, and that unanticipated insurance cost. Are those insurance costs included in overhead or no?

Speaker #4: So they are spread between overhead as well as field margins. So predominantly, they're in field margins, but yes, there's an impact to overhead as well as we allocate.

John Enwright: They're spread between overhead as well as field margin. Predominantly, they're in field margin, but yes, there's an impact to overhead as well as we allocate.

Speaker #3: Okay. And then adjusted EPS was a little bit lower than our expectations, but versus my model, you had higher interest expense and a higher tax rate than I had modeled.

Alex Paris: Okay. Adjusted EPS was a little bit lower than our expectations, versus my model, you had higher interest expense and a higher tax rate than I had modeled. Anything else in there?

Speaker #3: Anything else in there?

John Enwright: No, that's, I mean, if you think about our expectations and how we guided to, really, if we didn't have that unanticipated employee benefit expense, we would have fallen right within where we expected.

Speaker #4: No, no. I mean, as you think about our expectations and how we guided to really, if we didn't have that unanticipated employee benefit expense, we would have fallen right within where we expected.

Alex Paris: That's true. Okay. Thank you on that.

Speaker #3: That's true. Okay. Thank you on that. And then moving to guidance, revenue growth 5 to 8 percent, adjusted EBITDA 3 to 7 percent, adjusted EPS growth 5 to 11 percent.

John Enwright: Yes.

Alex Paris: Then, moving to guidance, revenue growth 5% to 8%, adjusted EBITDA 3% to 7%, adjusted EPS growth 5% to 11%. My question is, what are the underlying assumptions for the low end and the high end? You know, in other words, what would it take to get to the high end of guidance?

Speaker #3: My question is, what are the underlying assumptions for the low end and the high end? In other words, what would it take to get to the high end of guidance?

Speaker #4: So from a high end of guidance, you would need to the impact of the new acquisitions would have to be at our high end.

John Enwright: From a high end of guidance, you would need to, you know, the impact of the new acquisitions would have to be at our high end. We're estimating the acquisitions to be between $5 million and $10 million of impact to performance in 2026. We'd be at the high end of that. We would be at a little bit of higher end of our impact. If you think about our funeral business, you know, we expect low single-digit growth. That could be between 1% to 3%. We'd be at the high end of that. In cemetery, really between 6% and 8%, we'd be the high end of that.

Speaker #4: So we're estimating that the acquisitions be between 5 and 10 million dollars of impact. To performance in 2026. So we would be at the high end of that.

Speaker #4: We would be at a little bit of higher end of the our impact. So if you think about our funeral business, we expect low single-digit growth.

Speaker #4: That could be between 1 to 3 percent. We'd be at the high end of that. And then in cemetery, really between 6 and 8 percent, we'd be at the high end of that.

Speaker #3: Gotcha. That's helpful. And then you said that that guidance included an assumption for acquisitions that have not yet been announced. Can you quantify it?

Alex Paris: Gotcha. That's helpful. You said that that guidance included an assumption for acquisitions that have not yet been announced. Can you quantify? Perhaps you did in the prepared comments, but I missed it. What's the methodology for including or not including, you know, for example, are you at LO, you know, letter of intent stage by the time you increase it? What's the methodology for factoring in future acquisitions?

Speaker #3: Perhaps you did in the prepared comments, but I missed it. And what's the methodology for including or not including? For example, are you at letter of intent stage by the time you increase it?

Speaker #3: What's the methodology for factoring in future acquisitions?

Speaker #4: Yeah, so the acquisitions, the impact to the guide is about $5 or $10 million. We expect it to range within that. I can let Steve speak to kind of the perspective, but both Carlos and I spoke in our prepared remarks to being more focused on growth and being growth-oriented.

John Enwright: Yeah. The acquisitions, you know, the impact to the guide is about $5 or $10 million. We expect it to range within that. You know, I can let Steve speak to kind of the perspective. Both Carlos and I spoke in our prepared remarks, be more focused on growth and being growth-oriented. Ultimately, based on that, as we are more proactive in our M&A program, we felt it appropriate to apply something this year.

Speaker #4: And ultimately, based on that, as we are more proactive in our M&A program, we felt it appropriate to apply something this year.

Speaker #5: Yeah.

Carlos Quesada: Yeah, Alex-

Carlos Quezada: Yeah, Alex-

Alex Paris: Just for...

Speaker #3: Just to put it clearly. Go ahead.

Carlos Quesada: Good morning.

Carlos Quezada: Good morning.

Alex Paris: Go ahead.

Carlos Quesada: This is Carlos. I just want to, you know, reinforce. As you remember, we spent, you know, the most part of the last 3 years trying to get all the systems, you know, updated, the foundation for growth for the company, and really focusing on paying down our debt to a range that we feel comfortable, which is that 3.5 to 4 times. We achieved the 4 times as we closed 2025, and we truly believe now as, you know, Carriage at its core is a consolidation company. Really trying to advance and make some rapid moves on growth from an M&A perspective and organically speaking.

Speaker #5: This is Carlos. I just want to reinforce. So as you remember, we spent the most part of the last three years trying to get all the systems updated, the foundation for growth for the company.

Carlos Quezada: This is Carlos. I just want to, you know, reinforce. As you remember, we spent, you know, the most part of the last 3 years trying to get all the systems, you know, updated, the foundation for growth for the company, and really focusing on paying down our debt to a range that we feel comfortable, which is that 3.5 to 4 times. We achieved the 4 times as we closed 2025, and we truly believe now as, you know, Carriage at its core is a consolidation company. Really trying to advance and make some rapid moves on growth from an M&A perspective and organically speaking.

Speaker #5: And really focusing on paying down our debt to a range that we feel comfortable with, which is that 3.5 to 4 times. We achieved the 4 times as we closed 2025, and we truly believe now, at its core, Carriage is a consolidation company.

Speaker #5: So really trying to advance and make some rapid moves on growth from an M&A perspective in organically speaking. And I truly believe this is why we want to signal to our investors that within the guidance that we're ready for that.

Carlos Quesada: I truly believe this is why we want to signal to our investors that within the guidance, that we're ready for that.

Carlos Quezada: I truly believe this is why we want to signal to our investors that within the guidance, that we're ready for that.

Speaker #3: And that's great. The point of clarification, though, the high-end of guidance includes a 5 to 10 million impact year over year from, I assume, the third quarter acquisitions.

Alex Paris: That's great. The point of clarification, though, the high end of guidance includes a $5 to 10 million impact year-over-year from, I assume, the Q3 acquisitions. Then you're saying there's potentially another $5 to 10 million in acquisitions that you expect to make in 2026.

Speaker #3: And then you're saying there's potentially another 5 to 10 million in acquisitions that you expect to make in 2026.

Speaker #4: Yeah. So that's great clarification. So for 2026 results, we expect the acquisitions that happened in 2025 to generate about 16 million dollars worth of revenue.

John Enwright: Well, that's great clarification. For 2026 results, we expect the acquisitions that happened in 2025 to generate about $16 million worth of revenue. You have to net that against, you know, the $4 million that they had in 2025, as well as the divested revenue that we had.

Speaker #4: You have to net that against the 4 million that they had in 2025, as well as the divested revenue that we had in 2025 of about 9.7 million dollars.

John Franzreb: ... in 2025 of about $9.7 million. The impact of just that program is probably an increment of about $4 million, right? Roughly. 2026, we're estimating new acquisitions that we believe will have $5 to 10 million of impact to the revenue.

John Enwright: ... in 2025 of about $9.7 million. The impact of just that program is probably an increment of about $4 million, right? Roughly. 2026, we're estimating new acquisitions that we believe will have $5 to 10 million of impact to the revenue.

Speaker #4: So the impact of just that program is probably an increment of about 4 million dollars, right? Roughly. In 2026, we're estimating new acquisitions that we believe will have 5 to 10 million dollars of impact to the revenue.

Speaker #3: Okay. Good. Thank you for that. And then in terms of new acquisitions, I don't know if I fully heard the answer. Are these specific acquisitions that you're talking about are just a methodology to include some sort of number for acquisitions since you're a consolidator?

Alex Paris: Okay, good. Thank you for that. In terms of new acquisitions, I don't know if I fully heard the answer. Are these specific acquisitions that you're talking about, or just a methodology to include some sort of number for acquisitions since you're a consolidator?

Speaker #4: Yeah. Good morning, Alex, Steve. So it's a combination of both. So at this point, last year, we talked a little bit about investing in more resources internally to make sure we could be more proactive on sourcing deals.

Steve Metzger: Yeah, good morning, Alex, it's Steve. It's a combination of both. At this point, we Last year, we talked a little bit about investing in more resources internally to make sure we could be more proactive on sourcing deals. We are talking to more owners, quite frankly, than at any time during my eight years at Carriage. We still balance that with looking for a very particular type of business. At this point, you know, we've got more that we will be able to report next quarter on some ongoing discussions with owners who are ready. We're excited to talk about that when the time is appropriate. Parallel to that, we're talking with a number of owners who are getting comfortable, and we're getting comfortable with them with some potential opportunities this year.

Speaker #4: And so we are talking to more owners quite frankly than at any time during my eight years at Carriage. We still balance that with looking for a very particular type of business.

Speaker #4: So at this point, we've got more that we will be able to report next quarter on some ongoing discussions with owners who are ready and so we're excited to talk about that when the time is appropriate.

Speaker #4: But parallel to that, we're talking with a number of owners who are getting comfortable and we're getting comfortable with them with some potential opportunities this year.

Speaker #4: So it's a little bit of it's a little bit of both. We've got some that are closer to call it seventh or eighth inning and then some that are earlier innings.

Steve Metzger: It's a little bit of both. We've got some that are closer to, you know, call it seventh or eighth inning, and then some that are, you know, earlier innings.

Speaker #3: Gotcha. Okay. Helpful. And then the last question is, I'm wondering if we can get an update on the Q3 acquisitions. They had roughly 15 million in revenue in 2024.

Alex Paris: Gotcha. Okay, helpful.

Steve Metzger: Gotcha.

Alex Paris: The last question is, I wonder if we can get an update on the Q3 acquisitions. They had roughly $15 million in revenue in 2024. That's what you had announced at the time of the acquisition. You're saying that they're gonna be $16 million in 2026, after having contributed a partial year of $4 million in 2025. Now that we're back in the M&A business after the hiatus, what is the integration process for acquisitions once closed? You know, what is step 1, step 2, step 3, and where are we on the integration process for those Orlando-based acquisitions?

Speaker #3: That's what you had announced at the time of the acquisition. You're saying that they're going to be a 16 million in 2026. After having contributed a partial year of 4 million in 2025, so now that we're back in the M&A business after the hiatus, what is the integration process for acquisitions once closed?

Speaker #3: What is step one, step two, step three? And where are we on the integration process for those Orlando-based acquisitions?

Steve Metzger: It's a great question, and I'd reframe it a little bit. The integration process really for us begins before close. You know, we've dialed in with our continuous improvement team, a more structured management approach to systems, employment, onboarding, policies, and procedures. We begin all of that before close, obviously in partnership with the sellers, so we can hit the ground running on day one. As it relates to these two acquisitions, very different acquisitions, although both in really strong markets. Starting with Osceola, as we talked about before, Osceola is unique in that it allows for a holistic operation in the Kissimmee market. Between the cemetery and the opportunities on cemetery development, I think we're really excited there.

Speaker #4: Just a great question. And I would reframe it a little bit. So the integration process really for us begins before close. So we've dialed in with our continuous improvement team a more structured management approach to systems, employment, onboarding, policies, and procedures.

Speaker #4: And we begin all of that before close. Obviously, in partnership with the sellers. So that we can hit the ground running on day one.

Speaker #4: As it relates to these two acquisitions, very different acquisitions, although both in really strong markets. So starting with Osceola, as we talked about before, Osceola is unique in that it allows for a holistic operation in the Kasemi market.

Speaker #4: So, between the cemetery and the opportunities on cemetery development, I think we're really excited there. So we will have some new development, significant development available for the folks in Kasemi here in just a few months.

Steve Metzger: We will have some new development, significant development available for the folks in Kissimmee here in just a few months. We had been working on that development before close. The preneed opportunity for both Kissimmee and then Faith Chapel in Pensacola is significant. We've got our preneed teams ramped up there to try and take advantage of that as well. I would say, you know, both businesses are pretty mature, but both have a lot of opportunity. We're seeing steady progress from, call it, day one back in late September to where we are now. January was the strongest month by far for both businesses. We're seeing kind of that pre-planning on the integration side paying off for us based on kind of historical approach, and look forward to seeing what they'll do this year.

Speaker #4: We had been working on that development before close. The pre-need opportunity for both Kasemi and then Faith Chapel in Pensacola is significant. So we've got our pre-need teams ramped up there to try and take advantage of that as well.

Speaker #4: But I would say both businesses are pretty mature, but both have a lot of opportunity. And we're seeing steady progress from, call it, day one, back in late September, to where we are now.

Speaker #4: January was the strongest month by far for both businesses, so we're seeing kind of that pre-planning on the integration side paying off for us based on kind of historical approach.

Speaker #4: And look forward to seeing what they'll do this year.

Speaker #3: Thank you. That'll do it for me. I'll get back into the queue.

Alex Paris: Thank you. That'll do it for me. I'll go back into the queue.

Speaker #4: Thank you, Alex.

Steve Metzger: Thank you, Alex.

John Franzreb: Bye.

Speaker #5: Alex.

Operator: We'll take our next question from John Franzreb with Sidoti & Company.

Speaker #6: We'll take our next question from John Frantrep with Sidonia and Company.

Speaker #7: Good morning, everyone. And congratulations on the good year. And thanks for taking the questions. I actually like to start with the fourth quarter. Carlos, you mentioned that flu activity returned to normalcy, if you will, in the December period.

John Franzreb: Good morning, everyone. Congratulations on the good year, and thanks for taking the questions. I'd actually like to start with the Q4. Carlos, you mentioned that flu activity returned to normalcy, if you will, in the December period. Specifically in December, in and of itself, was very active. I'm curious what you saw in January. We're seeing a secondary resurgence of the flu. I'm curious about the comps on a year-over-year basis and how they could play out, considering last year was so particularly strong.

Speaker #7: Specifically in December in and of itself was very active. I'm curious, what you saw in January? We're seeing a secondary resurgence of the flu.

Speaker #7: I'm curious about the comps on the year-over-year basis and how they could play out considering last year was so particularly strong.

Speaker #5: That's a great question, John. Thank you for the question and good morning. And so as you know, and I mentioned on my preferred remarks, December 2024 came pretty light as a consequence.

Steve Metzger: That's a great question, John. Thank you for the question, and good morning. As you know, and I mentioned on my prepared remarks, December 2024 came, you know, pretty light, as a consequence, we believe, to the push of the flu season into January of 2025. This last year, 2025, December came as a normal flu season, so we saw that activity volume increase on a comparable basis, December 25 to 24. January, it came out, you know, quite light on a comparable basis on volume.

Speaker #5: We believe to the push of the flu season into January of 2025. These last year, 2025, December came as a normal flu season. So we saw that activity, volume increase on a comparable basis December 25 to 24.

Speaker #5: And then January, it came out quite light on a comparable basis on volume. However, I still feel pretty strong of our performance because we're able to make up that loss of volume on a comparable basis because the flu season came earlier.

Steve Metzger: you know, I still feel pretty strong about our performance because we're able to make up that loss of volume on a comparable basis, because the flu season came earlier, and we still ended up, you know, having a pretty decent... I don't want to disclose too much, but January looks good, even after the, let's call it realignment of the flu season between December and January over the, you know, past year.

Speaker #5: And we still end up having a pretty decent night. I don't want to disclose too much, but January looks good. Even after the let's call it realignment of the flu season between December and January, over the past year.

Speaker #3: And what are the prospects for the year-over-year?

John Franzreb: What are the prospects for year-over-year growth in Q1 versus last year's Q1, given the tough comp?

Speaker #7: Growth in the first quarter versus last year's first quarter, given the tough comp?

Steve Metzger: The question was on volume?

Speaker #5: The question wasn't volume?

Steve Metzger: The question was on volume?

John Franzreb: Yeah, I think Q1 will be a little bit tougher this year from a comparable perspective, because Q1 was strong throughout the whole quarter.

Speaker #4: Yeah. Yeah. I think the first quarter will be a little bit tougher this year from a comparable perspective because the first quarter was strong throughout the whole quarter because the flu season moved January, February, and a little bit into March.

Steve Metzger: Right.

John Franzreb: flu season...

Steve Metzger: Right

John Franzreb: moved January, February, and a little bit into March.

John Enwright: To Carlos's earlier point, you know, we're not gonna disclose exactly how we're performing, but we're happy with the performance, but it'll be a tougher comp.

Speaker #4: So to Carlos, his earlier point, we're not going to disclose exactly how we're performing, but we're happy with the performance. But it'll be a tougher comp comp.

John Enwright: To Carlos's earlier point, you know, we're not gonna disclose exactly how we're performing, but we're happy with the performance, but it'll be a tougher comp.

Speaker #3: Got it. Got it.

Lucy: Got it. Got it. Where do you stand in the supply chain optimization process at this point? You know, can you give us an update there?

John Franzreb: Got it. Got it. Where do you stand in the supply chain optimization process at this point? You know, can you give us an update there?

Speaker #5: Got it.

Speaker #3: And where do you stand in the supply chain optimization process at this point? Can you give us an update there?

Speaker #4: Yeah, I would say—and then, please jump in if you have anything different to say—I would say we're still in the early innings of that program.

John Enwright: Yeah, I would say, and then, Lucy, please jump in if you have anything different to say. I would say we're still in the early innings of that program. We really started in 2024 with one individual kind of running that program, and in 2025, we got the program up to a little bit more speed. I would say we still have opportunity there, and we'll see some more opportunity as we see 2026 results and into 2027 results.

Speaker #4: We really started in 2024 with one individual kind of running that program. And in '25, we've got the program up to a little bit more speed.

Speaker #4: But I would say we still have opportunity there, and we'll see some more opportunity as we see 2026 results and into 27 results.

Speaker #3: John, it's also a great question. I want to give you a little more context to that. It's a new department we started. Probably about two years ago, at the beginning of two years ago.

Carlos Quesada: John, it's also a good question. I want to give you a little more context to that. You know, it's a new department we started probably about 2 years ago, or the beginning of 2 years ago. A slow start, just to be honest with you. We were able to deliver the caskets, the urns, a couple of other things, but there's so much opportunity. Part of the challenge was that we're trying to change a lot of things operationally and system-wide at Carriage. At the time, as you may remember, it was really just from a senior leadership perspective, Steve and me driving those initiatives. This year, we have realigned with the changes we made and the promotions we made to allow for more focused work.

Carlos Quezada: John, it's also a good question. I want to give you a little more context to that. You know, it's a new department we started probably about 2 years ago, or the beginning of 2 years ago. A slow start, just to be honest with you. We were able to deliver the caskets, the urns, a couple of other things, but there's so much opportunity. Part of the challenge was that we're trying to change a lot of things operationally and system-wide at Carriage. At the time, as you may remember, it was really just from a senior leadership perspective, Steve and me driving those initiatives. This year, we have realigned with the changes we made and the promotions we made to allow for more focused work.

Speaker #3: And as a low start, just to be honest with you, we were able to deliver the caskets earns a couple of other things. But there's so much opportunity.

Speaker #3: And part of the challenge was that we're trying to change a lot of things operationally and system-wise at carriage. And at the time, as you may remember, it was really just from a senior leadership perspective, Steven, me driving those initiatives.

Speaker #3: And so this year, we have realigned with the changes we made and the promotions we made to allow for more focused work. So now supply chain actually reports to John.

Carlos Quesada: Now supply chain actually reports to John can place a more, you know, specific emphasis to supply chain and accelerate the journey on that side. At the same time, Steve can put more focus on the operational side moving forward and continue to grow our organic strategy through M&A activity.

Carlos Quezada: Now supply chain actually reports to John can place a more, you know, specific emphasis to supply chain and accelerate the journey on that side. At the same time, Steve can put more focus on the operational side moving forward and continue to grow our organic strategy through M&A activity.

Speaker #3: And John can place a more specific emphasis to supply chain and accelerate the journey on that side. At the same time, then Steve can put more focus on the operational side moving forward.

Speaker #3: And continue to grow our organic strategy through M&A activity. Got it. Makes sense.

Lucy: Got it. Makes sense.

John Franzreb: Got it. Makes sense.

Carlos Quesada: Got it. Makes sense.

Carlos Quezada: Got it. Makes sense.

Speaker #5: Got it. Makes sense.

Lucy: One last question on the M&A. It seemed like last conference call that the expectation was there's going to be a lot of closure activity in Q1. Reading between the lines, it sounds like now that that's been extended maybe a little bit. Is that a function of multiples have gone up, or is there something else that, you know, we should be aware of?

John Franzreb: One last question on the M&A. It seemed like last conference call that the expectation was there's going to be a lot of closure activity in Q1. Reading between the lines, it sounds like now that that's been extended maybe a little bit. Is that a function of multiples have gone up, or is there something else that, you know, we should be aware of?

Speaker #3: One last question on the M&A. It seemed like last conference call that the expectation was there's going to be a lot of closure activity in the first quarter.

Speaker #3: Reading between the lines, it sounds like now that that's been extended maybe a little bit. Is that a function of multiples have gone up, or is there something else that we should be aware of?

Speaker #5: Yeah, John, I don't think it's a product of multiples going up. I think we're seeing those remain pretty steady. And obviously, we remain disciplined in how we approach it.

John Enwright: Yeah, John, I don't think it's a product of multiples going up. You know, I think we're seeing those remain pretty steady, and obviously, we remain disciplined in how we approach it. It really is a matter of sellers, you know, being ready and, you know, us respecting their timelines, but also us being pretty selective. You know, again, the type of business we're looking for, it's a smaller group of businesses that are gonna fit that profile. There's a number of folks out there, but their timeline is just as important as ours.

Speaker #5: It really is a matter of sellers being ready and us respecting their timelines. But also us being pretty selective. So again, the type of business we're looking for, it's a smaller group of businesses that are going to fit that profile.

Speaker #5: So there's a number of folks out there, but their timeline is just as important as ours.

Speaker #3: Got it. Understood. Thanks for taking the questions. I'll get back into the queue.

Lucy: Got it. Understood. Thanks for taking the questions. I'll get back in the queue.

John Franzreb: Got it. Understood. Thanks for taking the questions. I'll get back in the queue.

Speaker #4: Thanks, John.

John Enwright: Thanks, John.

Speaker #5: Thanks, John.

Carlos Quesada: Hey, John.

Carlos Quezada: Hey, John.

Speaker #6: We'll take our next question from George Kelly with Roth Capital Partners.

Operator: We'll take our next question from George Kelly with ROTH Capital Partners.

George Kelly: Hey, everyone. Thanks for taking my questions. First one on your guide for 2026. There's a CapEx step up versus what you've been doing in recent years. I was wondering if that's related to a specific project or more maintenance related, or just any kind of context around your CapEx guide?

Speaker #4: Hey, everyone. Thanks for taking my questions. First one—on your guide for 2026, there's a capex step-up versus what you've been doing in recent years.

Speaker #4: So I was wondering if that's related to a specific project or more maintenance-related or just any kind of context around your capex guide.

John Enwright: Yeah. Over the last couple of years, as we've been very disciplined in our capital allocation, we've pulled back on a little bit of maintenance. There's gonna be more maintenance in 2026 than there was in 2025 and 2024. We're thoughtful on what we're gonna do, but there's some just needed to be done. Also, there is still some additional growth capital, right? For us to continue to deliver 10% to 20% in preneed cemetery sales, we have to develop some cemeteries, and there's also some incremental capital associated with that.

Speaker #7: Yeah. So over the last couple of years, as we've been very disciplined in our capital, allocation, we've pulled back in a little bit of maintenance.

Speaker #7: So, there's going to be more maintenance in 2026 than there was in '25 and '24. And we were thoughtful on what we're going to do, but there's some just needed to be done.

Speaker #7: Also, there is still some additional growth capital, right, for us to continue to deliver 10 to 20 percent in pre-need temperature sales. We have to develop some cemeteries, and there's also some incremental capital associated with that.

George Kelly: Is that 25 to 30? I'm hearing feedback. Is that a good sort of go-forward number to use beyond 26, or is this kind of a one-year maintenance catch-up?

Speaker #5: And is that 25 to 30? I'm hearing feedback. But is that a good sort of go-forward number to use beyond '26, or? Is this kind of a one-year maintenance catch-up?

George Kelly: Is that 25 to 30? I'm hearing feedback. Is that a good sort of go-forward number to use beyond 26, or is this kind of a one-year maintenance catch-up?

Speaker #7: Yeah. I always use, I think, a I would use, yeah, 25 to 30 is probably a good going-forward number.

John Enwright: Yeah, I think I would use, yeah, 25 to 30 is probably a good going forward number. Yeah.

Speaker #5: Yep. Yeah, George, if you remember, even you'll go back to 2021, '22, we're doing 22, 24, 26 million just maintenance and growth capex. At the time, and we did ask our managing partners to give us an opportunity to use some of that to so we can pay down our debt.

Carlos Quesada: Yeah, George, if you remember, even you go back to 20, 2021, 2022, we're doing $22 million, $24 million, $26 million on just maintenance and growth CapEx at the time, we did ask our managing partners to give us an opportunity to use some of that so we can, you know, pay down our debt. They did. They were very patient for a little bit over 3 years, now it is really time to give back to them some of that, I think the $25 to 30 million is really the right range going forward.

Carlos Quezada: Yeah, George, if you remember, even you go back to 20, 2021, 2022, we're doing $22 million, $24 million, $26 million on just maintenance and growth CapEx at the time, we did ask our managing partners to give us an opportunity to use some of that so we can, you know, pay down our debt. They did. They were very patient for a little bit over 3 years, now it is really time to give back to them some of that, I think the $25 to 30 million is really the right range going forward.

Speaker #5: And they did. They were very patient for a little bit over three years. And now it is really time to get back to them.

Speaker #5: So some of that. And I think the 25 to 30 is really the right range going forward.

Speaker #3: Okay. Sounds good. And then just to a couple other ones for you. On Trinity, can you walk through the expectations for the year, the rollout, testing, what you're most excited about?

George Kelly: Okay. Sounds good.

Carlos Quesada: Okay.

Carlos Quezada: Okay.

George Kelly: Just a couple other notes for you. On Trinity, can you walk through the expectations for the year, the rollout testing, what you're most excited about?

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