Q2 2021 Carriage Services Inc Earnings Call
Yeah.
Ladies and gentlemen.
Please standby.
Youre at carriage services second quarter 2021 earnings results conference call will begin momentarily again. Please standby your conference will begin in a few minutes. Thank you.
[music].
Gentlemen.
[music].
Good day, ladies and gentlemen, and welcome to the carriage services second quarter of 'twenty.
2021earnings result conference call.
At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time, Inc.
And at wash of require assistance during the conference. Please press Star then zero on your Touchtone telephone.
As.
This conference call is being reported.
I would now like to turn the conference over to your host Mr. Steve Medicare Executive Vice President Chief Administrative Officer General Counsel you may begin.
Thank you Julie and good morning, everyone today, we'll be discussing our second quarter results our related earnings release was.
Was made public yesterday after the market close we have posted the release, including supplemental financial information on the investors page of our website. This audio conference is being recorded and an archive will be made available on our website later today.
Listen to myself on the call. This morning from management are Mel Payne, Chairman and Chief Executive Officer.
<unk> exactly.
Executive Vice President and Chief Financial Officer, Carlos <unk>, Executive Vice President and Chief operating Officer Nathan.
Today's call will begin with formal remarks from management, followed by a question and answer period.
Before we begin I'd like to remind everyone that during this call. We will make some forward looking statements and comments made by our management team at state our plans beliefs.
Expectations or projections for the future of forward looking these forward looking.
Statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such statements. These risks and uncertainties include but are not limited to both factors identified in our earnings release and in our filings with the SEC both of which are available on our website.
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During this call. We'll also discuss certain non-GAAP financial measures a reconciliation of these non-GAAP measures to the appropriate GAAP measures can also be found on our earnings release as well as our website.
Thank you for joining us this morning, and now I would like to turn the call over to Mel.
Thank you Steve.
At the very exciting time.
All of the rest.
Rest of us on the carriage good to great journey bus.
Record high second quarter earnings release and.
In this call.
So the first since we refinanced $400 million.
8 year unsecured senior notes.
Tom Brady bond pricing.
Of 4.
2.5%.
We are now turning our focus to attention.
2 the Rodney Dangerfield equity pricing.
Putting our money, where our mouth is Ben.
And on June 1 we celebrated the <unk> anniversary of our founding.
Mike.
And 3 other co founders.
After all replaced the traditional budget and control performance management system.
With a normal or north of docs and counterintuitive standards operating model at.
At the end of 2003.
The last 18 years of Dunnakin.
Using the scientific method.
On an evolutionary trial and error of learning journey.
Continually adapting.
From what wasn't working to those ideas that worked better.
Never being satisfied with simply good and always trying to.
To become great in every area of the company.
While there have been periods of underperformance over the last 18 years some longer than other shorter.
All of those periods when you reflect back on them were directly related to not having the right leaders in the right seats on the.
There have been turning points at various <unk>.
Times over the last 18 years in particular.
3 when the standards operating model was introduced effective January 1 of 4.
2006.
But when we realized it was more of a leadership model than of management model and adopted before a leadership model.
At the end of <unk> of 7 when we went back on a growth path using a new strategic acquisition model.
A new trend reports very transparent.
2008 of 9 when we took.
<unk> Trust Fund management, and then 2011 at the end of which we launched the first 5 year timeframe of good to great.
But the last 2 and 1 of half years of high performance transformation had been a function of 3 major changes.
Transformative.
Over a large strategic acquisitions 4 of them at the end of 19 in early 'twenty.
Updated high performance standards that emphasized compounded revenue growth at sustainable high field EBITDA margins for both our funeral and cemetery businesses at the end of 2018 and more recently in the cemeteries.
Dave.
And top grading the leadership in all areas of the company starting in October 18th.
What's led to the recent promotions have been Steve and Carlos who together with me now form the vision strategic vision and principles group of the 8 number.
Terry <unk> executive team.
The future leadership of carriage will at some point.
Emerge from this group of 3 leaders.
Although given our excellent health.
The passion and energy for our business and our people.
Plus the fact that I've never had so much fun.
Wow.
With our leadership across the company winning.
It's a time for carriage to win in this period of winning will last for years.
I can't imagine having a job.
And getting paid.
To be here with so many high performance people and leaders.
So.
I would like to.
In this call.
Well, it's something that Shane Heinz told me.
On the way up yesterday afternoon to our cars in the parking garage.
Shanghai.
As 1 of the superstar.
Senior.
Operations and acquisitions partners.
I guess you pose team.
She is 1 of 4.
And on the way out share.
And he said Mel.
I joined the company in 2012.
First year of the first 5 year of good to great journey.
It's been an incredible journey.
Those 5 years, we went from 60 to $38.64.
Scope than we had at a little of decline in 17 and 18, but then we got busy and look at where we are today.
He said Mel.
I know.
We've had really period.
Periods, where we celebrate.
But this is so unique and so different he said Mel we're good we're good everywhere, but don't don't take at the wrong way.
We can get better.
And we're working on specific.
Specific places, where we could get better specific businesses specific leaders.
Pacific markets.
I said I know Shane we always have to get better Pizza book Mill.
This is 1 of those special moments.
Journey, we need to celebrate it.
We will go back to work, but at least.
Let's take the moment.
And celebrate the moment.
So I agree with Shane.
After 30 years.
It's a moment to celebrate.
Wasn't easy to get here it was anything but.
But every moment of it.
<unk> year end.
Every quarter every year all of.
At Lowe's are now worth it.
Where we are and look where we're going so shane.
Oh dedicate this out to you our Pos is in the field.
For all of our wonderful businesses and all of the wonderful leaders managing partner sales managers employees in all of our Houston support leaders.
Hi, Les.
Celebrate the moment.
Carlos.
Thank you Mel.
Good morning, everyone. I Hope you are as excited as we are.
We have so much wonderful news to share with you I am so glad to be here and honored to have the privilege to represent all of our carriage family today.
When he joined carriage.
<unk> 26, 2020, I knew that it was coming into a high performance culture company.
I did not realize at being absolutely. The best is the norm every single day of carriage.
At the time, we're in the midst of the pandemic, which serve as an accelerator to technology adoption across our industry.
At current had already been diligently.
In June at a greener grid transformation of high performance journey since 2018.
High performance achievement is simply a result of our high performance here of partners and teams of carriage employees across our portfolio of businesses and our Houston support Center.
We have enabled to adapt David and drive significant positive change.
That is highly focused on superior service and guest experience, which is reflected in our market share growth and consistent high performance.
France over not only this year, but over the last 5 years.
Now that the pandemic is receding, even if new variants remained at a new normal where more of preparing rainy than ever before.
4.
This is the primary reason why all of US at carriage are so thrilled and passionate about what we do end to be part of a company with such a prosperous future.
1 of our stock price continues to trade on an average discount to intrinsic value. We will continue to work very hard on our value creation platform and deliver high operating and financial.
1 of them for years to come.
Our second quarter and year to day operations results are as follows.
For our high performance funeral portfolio, our second quarter of 2021 funeral home same store volumes are maintaining at a healthy level compared to the elevated pandemic volumes of 2020.
What is more impressive is the increasingly sustaining.
Net portfolio growth of 11, 4% compared to pre pandemic second quarter of 2019 of them.
11, 4% increased $6.7 percentage of market share growth, while only 4.7% of increased income from COVID-19 related deaths.
At our managing partners continued to focus on 3 year compound.
<unk> net revenue growth of your primary standard day.
Together with a wonderful team of field director of Center Rangers passionately pursue every opportunity that comes through their doors to provide the best service and guest experience to every family their friends and their community.
Our mission of being the best Ms, creating incredible personalized moments and memories.
And at net where every family every time for that final goodbye without never forgetting that of lab named it's alive remembered.
On a comparative basis for the second quarter over 2020, our total funeral operating revenue grew to $55.8 million, an increase of $2.5 million or 4.7% over prior year.
And for the first half ending June 30th grew to $122.7 million, an increase of $13.8 million or 12, 6% over the same period last year.
Moreover, while we have recently experienced a more normalized pre pandemic volume behavior, we continue to grow market share of broadly as well as our average revenue per contract.
Murray's with an increase of 6.7% over Q2.2020.
Such pro forma should becomes consistent and sustainable as we continue to focus on cremation conversions servicing guest experience and they look at families on all of their available options for unique personalized services and life celebrations.
Our total funeral field.
Field EBITDA of $21.9 million for the second quarter is a decrease of 2.6% 1 of total funeral field EBITDA margin declined 290 basis points.
Decline is mainly due to our lower volumes of 9.4% in the eastern region as we had a tough comparable from 2020 with a huge COVID-19 searching the northeast.
The audience last year.
However, the east region higher revenue averages and continued growth in market share relative to normalized post pandemic volume.
Our clear sign that we will continue to deliver for all of the high performance throughout all geographic regions of our funeral portfolio.
We continue to see improvement in our information average was back.
<unk> and new pandemic levels.
Q2, 2020 of our average was $3075 versus Q2.2021, with a 3000 of weather and $16 of average an increase of $341 per contract or 11%.
This <unk> of the result of our efforts in cremation conversions driven by the partnership between director of services.
Support and our managing partners, who coach inspire and lead their teams to focus on spending time with each family while educating them on the value of funeral services when selecting formation at the final disposition.
On a few acquisition performance, we continue to grow our partnership with our 4 most recent acquisitions.
The funeral home of these acquisitions.
<unk> increased $1 million in net revenue for the first half and the June 30, an increase of 10, 1% and an increase of 979000 or 25, 3% and adjusted EBITDA.
I have a very aggressive travel agenda over the rest of these year to visit many of our amazing fuel businesses and meet our incredible.
And partners and their teams of employees.
I've already had the opportunity to visit many of our California funeral homes over the past several weeks and will continue to visit the remaining businesses in the upcoming months, where my main goal is to build relationships and establish partnerships understand the intricacies of individual businesses in their communities.
And help identify opportunity for potential growth.
Now moving to our transformational cemetery portfolio record breaking Q2 high performance.
It has been a little bit of a year since we started executing on our plan to create preneed property hyper form of sales teams across our cemetery portfolio to drive sales that are sustainable through.
Matt at capturing all available opportunities of higher operational margin.
That has worked much better than expected and after we first introduced our main sales high performance drivers, we have the lever of record breaking success through the partnership due to the partnership with all of our Houston support Center leaders and our awesome team of cemetery managing.
Time their sales leaders and sales counselors.
Prior to this amazing cemetery transformation carriage primary business segment was our funeral portfolio.
Certainly we were of funeral driven organization that happened to him cemetery.
Our cemetery performance east ratio flat to low growth over the years, mainly driven by our.
2 top cemeteries in fact, we became soap of dependence of the performance of these tough too that at 1 of the 2 businesses got the flu the whole cemetery portfolio will get sick in Salford and at 1 or both of these 2 cemeteries would perform well it would be a homerun for the whole theme regardless of the performance of the rest of the cemetery portfolio.
Partners of day, we're very excited to share their of cemetery portfolio is performing at an all time high.
Our total cemetery revenue for the full year of 2017 was $42.7 million in 2018, and $44.6 million.
19, $49.3 million in 2020, $69.1 million.
For quarter.
Ending June 30th 2021, 86 million a growth of an additional $43.3 million or at hydro, 1% over the 4 year period.
Our total cemetery field EBITDA in 2017 was $13.4 million in 2000, Eighteen's $13.8 million in <unk>.
19, $17.2 million.
In $2020.26.6.
And in 2021, Rolling 4 quarter is $39.6 million, an amazing 3 bagger from 2017.
And of our total cemetery field EBITDA margin in 2017 was 31, 4% in 2018, 31% in 2000.1930.
At 8% in 2000, 2038, 5% and our rolling 4 quarter ending June 2021 is $46.1 per cent.
I would like to thank all of our leaders and teams of Wright who's in the field and our Houston support center that from day, 1 of the creation of our aggressive and highly ambitious growth plan.
All supported.
<unk> very significant and uncomfortable change.
How has completely reshape our cemetery portfolio with record breaking her performance over the last 8 months.
We initially started this transformation with 14 selected cemeteries.
Ever today, we have consistent performance on average 23 of 431 cemeteries.
Of the lever over target type performance and at 1 of the previously mentioned top 2 cemeteries get their flu today. The other cemetery show up to the plate and hit a homerun, giving the carriage team of huge win.
The cemetery portfolio transformation has been remarkable while theres still great things happening and so name of few we have recruited David Bailey of Sarnia.
New community relationships partner.
The main goal will be the development of our seminars program, which will focus on educating the consumer on the value of protecting their family through pre planning, while creating new leads for our sales cost centers and generate future sales.
It comes with years of experience and we look forward to the success.
We're in.
Of stages of implementation of Microsoft dynamics 3 at.
365 CRM.
We will launch with a pilot in 5 of our cemeteries in September at fully adopted across the portfolio of by January of 'twenty 'twenty 2.
We also added marketing through our new CRM, which will enable the intentional savvy and measure robust digital.
The financing campaigns, increasing our marketing return on investment.
We have partnered with Gulfstream for the launch of our new and unique probably memorial day strategy, which is aimed to generate the mind of high end and exclusive proud of muscle volume.
We are deploying more capital at the high growth cemetery development to create new and innovative inventory.
At Walmart and continue increasing sales velocity.
Whereas sales quarter record cemetery high performance I will start with our same store comparison, which is as follows.
The material operating revenue in the second quarter of 2020 was $11.5 million compared to $60.5 million in 2021, an increase of $5 million or <unk> 42.
30% of.
Field EBITDA in 2020 was $3.7 million versus $7.6 million in 2021, an increase of $3.9 million or 106, 7%.
And our field EBITDA margin in 2020 was 31, 7% against 45, 9% in 2021 an increase.
Increase of 1420 basis points over prior year.
Moreover for our same store first half comparison, and then you June 30th.
Cemetery operating revenue in 2020 was $22.4 million compared to $31.1 million year to date, an increase of $8.6 million or 38.5.
5% our field EBITDA last year was $6.8 million versus a stunning $13.3 million easier and increase of 6.4%.
I'm, sorry, and 94, 3% average.
Field EBITDA margin in 2020 of 35% against 42.7% easier.
An increase of 1220 basis points.
4 of cemetery acquisition comparison for the second quarter on operating revenue in 2000.24 million compared to $8.2 million in 2021.
So of $4.1 million or 801, 6%.
<unk> EBITDA last year was $1.4 million.
And in 2021 with an impressive $4.7 million, an increase of $3.3 million or 231 per cent.
In field EBITDA margin in 2020 was 35, 4% against 57, 9% in 2021, an increase of 2250 basis points.
The first half of.
The year acquisition of cemetery opener in revenue in 2020 was $6.9 million compared to 15 million in 2021 lease of $8.3 million or 121, 1 per cent.
Field EBITDA last year was $2.3 million versus $8.8 million in 2021, an increase of $6.6 million or 290.
88% and field EBITDA margin in 2020 was 33% against 58, 3% from 2021, an increase of 2000 and 530 basis points.
The material impact of this performance of our financial statements is not impressed not only impressive but he has transformed our mix between funeral and cemetery.
Terry.
What is coming into perspective, Inc.
Everyone. Please standby the call will begin momentarily everyone. Please standby the call will begin momentarily. Thank you.
VP of financial dynamic has changed the cemetery and funeral EBITDA contribution mix whenever.
For the first half ending June 30th on total combined operating field EBITDA is as follows in 2020 fuel EBITDA contribution was 82, 8%.
717.2 per cent for cemetery compared to 2021.
EBITDA of 70, 572% and 29, 8% for cemetery and increase of 12, 6% for cemetery, but even more amazing is at the growth compared to prior year on total combined operational field force imagery is a remarkable 68 per cent of incremental EBITDA.
These transformational cemetery outperformance at I'd just share with you our estimation is 60% related to COVID-19, Vince to Abbvie and <unk> 85 per cent is correlated to our freemium strategy and execution of our transformational cemetery plan or the creation of sustainable high performance sales teams across our portfolio of businesses and as previously mentioned.
We're still in execution mode with more to come.
In closing.
Carriage has a unique and special DNA meda for north of that out of the book Stinky concepts and ideas that are so creative sophisticated and on traditional there are simply not felt in the death care industry and hardly outside of it.
With our 5 guiding.
Net and principles, which lead us toward through north of successful decentralized model our standards of their model that continue to bring the best in class entrepreneurs. Our flywheel framework are good of great journey, along with our 4 key leadership model and our continued focus on first who then what talent acquisition program.
Together.
Create what we call our high performance culture that is now the foundation of all of things carriage and the launching pad for a high performance rocket on its way to space and beyond fueled by sustainable and record breaking results over the next 5 to 10 years.
We still have incredible opportunity in both of our cemetery and funeral portfolio and certainly.
More positive change is on its way as we continue accelerating of Friday wheel and gained tremendous momentum and reach higher altitudes like we never had before.
All of these while keeping a very unique carriage DNA are the entity and what set us apart from everyone else intact. Thank you and follow us closely because it is of great them to.
To be with carriage and the best is yet to come novel bus at it to Steve.
Carlos you know as we look back at the last 2 and a half years here at carriage, it's easy and it's important to focus on the numbers that represent the transformative process. We continue to talk about on our earnings calls.
More importantly, and in my opinion more impressive in those numbers.
As the energy and all of the developments occurring across the company that combined to drive. These results. There has been and remains a significant focus throughout carriage on relentless improvement and there's not an opportunity for incremental growth that is too small for our team.
The details matter and discussions focused on those details are taking place every day.
It truly is this.
So at the drives the high performance flywheel effect, we referred to so often.
It's also this mindset along with new balance sheet. Following our refinancing efforts earlier. This year that has positioned us to have a number of opportunities related to the strategic allocation of our capital they have not before been present in the company's 30 year history.
From being prepared to secure clothes and.
Minds fully integrate for large strategic acquisitions in late 2019 early 2022 aggressively paying down our debt to a level that now serves as our internal benchmark. While also increasing our dividend twice last year to our current capital allocation focus of internal growth projects share repurchases and identifying the best remaining independent businesses to.
Joined the carriage family disciplined allocation of capital allocation is the driver of every decision we make.
Our senior leadership team appreciates the unique position, we're in and the heavy lifting at is taken at reach this point as we remain focused on making capital investments that will maximize value for our shareholders. Our leadership team has worked together to build of capital allocation of.
<unk> framework, which will now serve as the foundation for these critical decisions.
We referenced the substance of this valuation framework and our allocation philosophy in our earnings release, which we encourage everyone to read.
What you will see in this structure are clear guideposts for each of our primary allocation opportunities. For example, we're focused on maintaining our current leverage.
Average ratio of approximately 4 times, which allows our total debt to remain relatively flat, while our free cash flow was allocated to higher return on invested capital growth opportunities.
We've also announced an annual dividend target equal to approximately 10% of our adjusted free cash flow and 1 per cent dividend equity yield at carriage shares. This is also of target we've met.
We have defined internal growth priorities subject to a return on invested capital target of at least 15%.
We have also defined what we believe serves as a material discount to the intrinsic value of our stock and we will continue to focus on share repurchases when our stock trades at that discount.
While this framework is intended to be flexible given potential opportunities that may be.
To predict it is the foundation, we will reference as we continue to focus on being good stewards of our capital and maximizing value for our shareholders.
1 of the capital allocation opportunities, we're particularly excited about these acquisitions as mentioned earlier after significant activity at the end of 2019 and beginning of 2020, we turned our focus immediately to paint.
Difficult at over the remainder of 2020 and beginning of 2021.
We are now positioned and excited to get back to identifying the bigger better independent businesses, who are ready to join the carriage team.
In addition to building out of more structured capital allocation framework. We also recently completed a detailed review and refresh of our strategic acquisition model inspire.
Downturn and driven by the success of our most recent acquisitions the performance of those 4 acquisitions is broken down by business in our 2020 shareholder letter and it is this performance and profile, which serves as the model for our acquisition strategy moving forward.
In addition to more specifically defining the profile of of business primed to be successful within the carriage portfolio.
We are also focused on strategic markets have both organic growth potential and present opportunities for competitive advantages.
We're excited to see more activity within the current pipeline of acquisition candidates and true to our model, we will remain selective and focused on only the best remaining independent businesses.
Our approach to acquisitions does not simply involved.
Aspire to find the right multiple for a business at <unk>.
Fluids inviting owners to visit with our managing partners to talk with former owners, who previously joined our team and to take a trip down to Houston to spend time with the support center leaders, who will ultimately provide guidance to their business.
Our people and culture are of greatest assets and we believe the veteran acquisition candidates.
All of identity, the larger carriage team the more excited there'll be to join our company.
When it comes to our acquisition philosophy, adding businesses simply for the sake of growth is not our goal rather the quality of the business and future growth opportunities within particular markets or the drivers for that.
Said, we're involved in ongoing conversations with candidates and look forward to providing.
Riding more updates on acquisition activity in the coming quarters.
As I mentioned at the beginning of my remarks, it's truly exciting to see the focus on relentless improvement and identification of incremental growth opportunities throughout our team as evidenced by the comment from Shanghai and spinel referenced earlier and has gone at.
Not just in the crucial areas of capital allocation and acquisition strategy.
<unk>, but throughout the field and within our support teams.
<unk> work of so many over the past 3 years has helped place carriage at an exciting and critical inflection point and we will continue to identify and focus on opportunities for continuous improvement while building a thoughtful and disciplined structure to support our high performance flywheel driven approach to growth with that I'll turn it over.
Ben to provide more detail on our current capital allocation focus thank.
Thank you Steve.
As we reported record second quarter, and first half operating and financial results is incredible to reflect on the truly high performance transformation that has occurred here at carriage over just the past 2.2 and a half years over the.
<unk> time, we have increased annual adjusted consolidated EBITDA by 69, 9% or $49.1 million to $119.3 million increased adjusted consolidated EBITDA margin by 700 basis points to 33, 2% of.
Adjusted consolidated EBIT adjusted free cash flow has increased.
Kris 85, 2% or $36.3 million to $78.9 million and adjusted diluted EPS has increased 116, 2% to $2.53 over the past 12 months the.
Of the impressive growth in our reported financial numbers of the result of evolutionary and transformative.
Of change that's occurred across our entire company.
And as evidenced by our record second quarter results and consistent with our 2021 theme. The high performance flywheel has only just begun to accelerate here at carriage.
Now on some of the results for the second quarter total revenue increased 13, 9%.
Or $10.8 million to $88.3 million adjusted consolidated EBITDA increased $3.3 million or 12, 9% of $28.7 million at.
Adjusted consolidated EBITDA margin decreased 30 basis points of 32, 5% and adjusted diluted earnings per share increased 42.2.
2% to <unk> 64 per share.
For the first half of 2021 total revenue increased $29.9 million or 19, 3% to $184.9 million adjusted consolidated EBITDA increased 31, 3% or $15.1 million to $63.4 million.
Adjusted consolidated EBITDA margin increased 310 basis points to a record 34, 3% and adjusted diluted earnings per share increased 83, 5% to $1.45 per share.
On may 13th we completed the refinancing of our 8 year of 400 million dollar unsecured senior notes and entered into.
2 of new $150 million 5 year revolving credit facility, the new coupon rate of $4..2 5% is a reduction of $2.3 7% compared to our existing senior notes and represented a spread of 270.276 basis points to 8 year Treasury notes at the time of issuance or as we like.
The call Tom Brady price.
The lower coupon rate will translate into a reduction of annual cash interest cost of $9.5 million and be accretive to adjusted diluted earnings per share by approximately 36 cents annually.
On a pro forma basis, assuming the refinancing transaction would've occurred on January 1.2021 of.
Our pro forma second quarter adjusted diluted earnings per share was <unk> 70.
While our year to date pro forma adjusted diluting earnings per share was $1.60.
Representing increases of 55, 6% at 102, 5%, respectively. The full impact from our lower interest expense will be apparent in our third quarter results.
And moving forward.
<unk> lower cash interest costs from our successful seeing a refinancing transaction resulted in at a 100 basis point decrease in our weighted average cost of capital of 6.4%.
Total overhead in the second quarter increased $1.9 million to $11.4 million has increased $7.6 million.
<unk> of 43, 8% to $25 million for the first half of the year.
Overhead as a percentage of revenue has increased 230 basis points of 13, 5% in the first half of this year as well the primary driver of the increase in overhead expenses of $4.7 million increase in our variable field and corporate incentive compensation.
<unk> rules in the first and the first 2 quarters of this year as compared to 2020.
With the uncertainty that was brought on by the early onset of the COVID-19 pandemic, we dramatically reduced both our incentive compensation accruals in the first and second quarter of last year as we detailed in the press release, our operating performance for the second half of last year.
And continue with the record performance of the first half of 2021 has caused us to significantly increase the amount of field incentive compensation at more of our managing partners and their teams reach even higher levels of standards achievement. In 2020. This resulted in us having to accrue almost $5.5 million more incentive compensation second half of the year.
<unk> as compared to the first we believe that we have a more balanced approach to our incentive compensation accruals. So far this year and we anticipate the variable overhead in the second half of this year to approximate what we have booked these past 2 quarters.
Our second quarter and year to day results benefited from a 250 basis point reduction in our GAAP effective.
<unk> tax rate from 31% in the first quarter to 28, 5%. Currently this translated into a 4 cents of accretion to adjusted diluted earnings per share in the quarter and of 28, 5% tax rate has been included in our updated and increased raw rolling 4 quarter outlook and roughly right 2 year scenarios.
We continue to work to find additional incremental decreases in our effective tax rate irrespective of what may happen with federal tax policy in the near term.
The strong performance from our discretionary Trust fund continued in the second quarter with a 14, 2% total return for our portfolio through the first half of the year.
Execution of.
Of our Trust fund repositioning strategy during the coronavirus market crisis, just over 1 year ago has positioned our portfolio to generate a significantly higher amount of recurring investment income and realized capital gains.
As a result, our recurring annual income within the portfolio has increased almost $8 million to currently 17.
$4 million annually, while we have recognized approximately $25 million of long term capital gains over the past 12 months, the majority of which we recognized just this past quarter.
This incremental $33 million of trust earnings over the past year will provide long term benefits to our reported financial revenue.
And financial EBITDA through higher reoccurring earnings through our cemetery perpetual care trust at higher values of maturing preneed funeral and cemetery contracts over.
We're at 95 per cent of the $25 million of realized capital gains will accrue to the underlying preneed funeral and cemetery merchandise and service contracts, which will be recognized as an increase.
Kris in financial revenue and EBITDA at those as those contracts mature over the course of the next 10 to 12 years on average we of an additional $20 million of unrealized capital gains currently within our portfolio at <unk>.
The portfolio to be positioned for higher capital appreciation as we move forward.
Total revenue increased.
Increased 23, 5% to $11 million and financial EBITDA increased 24, 1% at $10.1 million for the first 2 quarters of the year. We currently expect pro forma annual financial revenue to be at the high end of our previous range of $23 million with of financial EBITDA margin above 94 per cent.
For the first 6 months of 2021, our adjusted free cash flow has increased 38, 7% or $9 million of $39.5 million, while adjusted free cash flow margin has increased 320 basis points to 22, 9%.
Our adjusted free cash flow margin metric is defined as the amount per dollar of revenue.
Available of cash equity available to grow the intrinsic value of carriage for the past 12 months, our adjusted free cash flow was $78.9 million and our adjusted free cash flow margin was 22%.
Our adjusted free cash flow in the quarter was lower year over year by approximately $5.6 million due to cash tax payments at slightly higher amount.
Out of maintenance capital expenditures in the quarter compared to previous year.
Remember carriage at a cash taxpayer this year as compared to last year when we werent.
Our net debt to adjusted consolidate EBITDA ratio ended the quarter at 3.9 times, an increase from the first quarter due to the $19.9 million premium payment, we made the call at 6.
65% senior notes offset by an increase in our trailing 12 month adjusted consolidated EBITDA of $119.3 million.
Pro forma of the benefits of lower cash interest costs are roughly right range for normalized adjusted free cash flow of between 75 and $79 million in 2022.
The midpoint of that range $77 million of adjusted free cash flow equates to approximately $4.20.
Of adjusted free cash flow per share we're at free cash flow equity yield on carriage shares of 11, 5%, which we view as incredibly attractive and of current continued low yield environment.
Based on the sustainability of and the continued growth of our free cash flow. We believe it is appropriate to calculate of roughly right range of equity intrinsic value by applying of free cash flow equity yield range of 6.4%. Our current weighted average cost of capital to 7.4% our cost of capital prior to the refinancing transaction.
To that $77 million or 22022 midpoint estimate.
This equals of carriage equity market capitalization range of 1 to $1.2 billion and at S. In an updated estimated of carriage equity intrinsic value of 55 to $65 per share.
As Steve detailed in his comments, our formalized capital allocation framework will be how we make capital allocation decisions going forward in order to drive an accelerated growth in our return on invested capital and.
And at higher organic growth rates with the completion of our senior notes refinancing, we believe the high sustainable and reoccurring.
It was $80 million annual free cash flow provides us the necessary financial flexibility to allocate capital towards shareholder value creation opportunities, including investing in high return projects across our existing portfolio selective and accretive high quality acquisitions, and opportunistic share repurchase repurchases and steady increases.
All of them in our annual dividend.
We view the $19.9 million premium payment, we made the call our existing $6.65 senior notes at the greatest use of our capital. This year as it allows us to facilitate the refinancing transaction that lowered our annual interest expense by $9.5 million an increase of our annual adjusted diluted EPS by.
As of <unk>.
Additionally, in the <unk> in the quarter, we allocated $12.3 million to repurchase almost 325000 of carriage shares at an average cost of 35 or $38.
With the continued disconnect between our current equity valuation and the conservative view of carriage.
Conservative view of carriage as current intrinsic.
At <unk>, which at this point stands at almost 65% discount to the midpoint of our range at $60 per share. We believe the best use of our capital. This time is prioritize more rapid pace of share repurchases, our enhanced financial flexibility underpinned by our lower cost of capital and record operating performance will allow us to prioritize execution.
<unk> of our share repurchase program. In addition to investing in our businesses and making selective high quality acquisitions, all while maintaining a more moderate net debt to adjusted consolidated EBITDA profile of 4 times or less.
Once again, we are excited to announce an increase of both are roughly right 2021 and 2020.
To forecast at an updated rolling 4 quarter outlook. These estimates of our future performance are intended to provide the investment community with a realistic expectation of results based on current operational trends and conservative estimates of capital allocation activities. As we have continued to provide these updated forecasts over the past 18 months we were.
Peter being dollars, while the effects of the COVID-19 pandemic will provide unknown variables and short term results. We believe we have a number of known drivers for improved performance, including growth in our average revenue per funeral contract increased local market share gains accelerating preneed cemetery property sales and income.
Rental growth.
Growth in financial revenue higher and sustainable field, EBITDA margins and expanding high return on invested capital allocation opportunities.
Like our previous roughly right scenarios. We havent include that of only include of the capital allocation scenario of debt repayment. This forecast includes a conservative outlook for shares outstanding where the majority.
Rap of allocation is geared towards the execution of our share repurchase program in the near term, while maintaining our leverage ratio of 4 times or below as a matter of policy.
For 2021, we now expect total revenue to be between 345 at $355 million adjusted consolidated EBITDA of between 117.
Any of arc at $21 million.
Thanks to all of the EBITDA between 32, and a half at 33.5 per cent.
Adjusted free cash flow of $72 million to $75 million.
And adjusted diluted earnings per share of $2.65 for 2 hours of 75 cents.
For 2022 weeks.
And Hunter now expect total revenue to be at $3.55 at $365 million.
Total adjusted consolidate EBITDA at $119 million to $123 million.
Just consolidate EBITDA margin at the high end of that 33, 5% range of adjusted diluted earnings per share at $3.10 of $3.20.
<unk>.
Adjusted free cash flow between $75 million and $79 million.
Thank you all for joining us on the call today and with that I'll turn it over to Mike. Thank.
Thank you Ben.
I think anyone listening in all of the skull of can see why I'm, having so much fun.
The reason I'm, having so much fun as the company is as good.
Net Shanghai and said it was.
At the Best News for me is I'm not doing the heavy lifting anymore.
Just 2 or 3 leaders that are doing all of the heavy lifting of explaining what all of the other leaders and employees are doing well there.
They're heavy lifting and so everybody is pushing on the carriage good to great flywheel.
Good at what I would like to do.
In this call as in by all of you.
It might have an interest.
As a shareholder bondholder for end of the family of I don't care, what your level of interest.
Some of the Houston.
Come to our offices come see how of high performance.
But for our company looks in the flesh.
We just moved into new space.
Third floor I'm here with our board for the midst of a board meeting with the entire executive team. So many of our employees are listening to the call from across the country. Because this is their company there.
Their destiny.
Some of its cost tied to what they do.
Our destiny is tied to what they ordered.
Couple of the branding on the World is different you will never know what business. We're in if you come here.
What you will find is aware of in the high performance culture business leadership people.
Denis going to somewhere at great being the best operations consolidation value creation capital allocation.
This is not your normal company.
That's why I have never sold a lot of shares and have no diversification.
Come here.
We'll roll out the Red carpet I promise you you will not be disappointed.
When we had a fantastic acquisition candidate here, a week or so ago.
I've been trying to get this guy for 15 years.
Teen years June of <unk>.
That's business remaining at each.
<unk> may be the best business remaining in his region.
You never would come.
He came with his wife he was blown away.
And when he left he said Mellon I had no idea.
Carriage has evolved into.
Had no idea.
And I bring all of my people down here.
State I can see.
Okay.
You beat me to the idea.
That's our company.
So don't go to the filings read about our company Gulf of start February 19th of 'twenty read every quarter because there are lots of chapter in our book.
This is real.
And it's not going to get worse, it's going to get better.
Sort of all of the reasons why.
And with that I'd like to I'd like to memorialize.
And of 30 years.
Of carriage.
I started the company at 48 years old.
I was doing.
Fantastic, turning around and restructure and companies, making a lot of money.
Last company that turned around with GE capital.
Oh that would go and build out of Chicago.
I started.
4 year turnaround and became the owner of the business and.
In January of 19.
1.
1.
So I entered into a contract for years.
Bring me a lot of money.
The 1 I want to start my own company, while I do this.
But I've been looking at this industry for 3 or 4 years net.
<unk> record of sugar.
Because I wasn't sure death.
<unk> of business.
I can put all of my skills and vision of ideas and concepts to work at.
Which I learned in my career.
And then my brother Commie in early January 91 at <unk>.
Brother, 2 and a half years younger lives in Gulfport, Mississippi.
I hope he is on this call I think he is.
You said brother.
Hey, Jay at the oldest son 18 years old Tal good looking at.
At the potential just killed himself as the driver.
Best friend in the passenger seat.
And the worst part is.
The kind of.
Kill the mother of 3 small kids and the other car.
Lawrenceville, Georgia, which was of growing suburb of Atlanta.
Please come I'm desperate I don't know what to do.
I went.
And it was an incredible experience that can never be forgotten.
Oh.
<unk> is at <unk>.
We're at the same night at the same funeral home, Tom wages funeral home Lawrenceville, Georgia.
Total director was Valerie wages.
2 of later become our chief trainer service trainer.
Our so stunned by the noble work and how she pulled this off.
My brother came to me and he said I cannot live with of guilt of JJ.
The mother of 3 small kids can you ask the funeral director. Please let me talk to the father.
It openly with all of the families here.
So I ask and she said this is very unusual.
It.
It's a community tragedy at our all in the same school the whole community was 1 big bedroom community.
Like you said I'll ask.
It did and I will never forget it's close in my brain I can see it as if it were 5 minutes ago.
Big funeral home doing about 600 funeral big reception area of the father coming the kids.
On his legs.
They're coming with me and his family.
My brother hugging him and telling them at we're sorry.
I'll, probably save my brothers financial life.
There was no lawsuit.
He had a cash flow and his leg of troubled kid in some ways.
And.
And on the on the way to the airport.
I told my brother Bobby.
Bobby.
Bobby you didn't know this but I've been looking at this industry for 3 years.
I've been holding back.
Because of my career was going so well.
And yet I cannot go back and not start at.
Yeah.
So here's what I'm going to do it.
I didn't go back and start of company already have alone.
That's been offered to me for the last 3 years.
<unk> raised some equity.
We're gonna start of company that will consolidate and operate our funeral and cemetery industry and I promise you in the name of J.
Jay and his honor I don't know how long it will take me, but I'll learn the business and we will become the best in the history of doing this.
Bobby.
It might have taken longer than I thought.
But we're their brother.
In honor of J J. Thank.
Thank you and stay tuned.
Let's open it up for questions.
Ladies and gentlemen, if you have a question at this time. Please press the star of the number 1 key on your Touchtone telephone.
Question has been answered or you wish to remove yourself from the queue.
Please press the pound key.
Your first question comes from Alex Paris with.
With Barrington research.
Thank you.
And thanks for taking my question.
Well, thank you for that story.
I really.
Really appreciate it.
The background on company leaders is especially important to investing.
With the right people that I know the right people are you is sort of your.
Clarion call at carriage services. So thank you again for that.
<unk>.
Congratulations as well on the beat and raise in the and I. Appreciate the very thorough comments in terms of your prepared comments on the call my takeaway.
Is well.
Well comps are tough and getting tougher and volumes are matter and moderate.
As COVID-19 deaths subside.
You are overcoming that headwind through higher funeral and cremation averages local market share gains Preneed cemetery sales higher financial revenues and a significantly lower interest expense as a result of the debt repayment and research.
Recent refi.
I think you've talked about these in great detail.
But I guess I wanted to focus on the increases in average is in both funeral and cemetery.
And what's been driving that I realized to some extent theres, an easy comp because of funeral and funeral and cemetery average.
Moderate packed at negatively last year.
And can they continue what's driving the burial average is what's driving the cremation averages at even a greater rate.
Thank you Alex This is current as Hal answer your question and also when I apologize.
Moving to pick it up.
Right back.
So there's a couple of things driving that.
First thing is that.
The pandemic hit at the end of <unk>.
February 2020, and we're not able to conduct a lot of services that we were.
It used to serving families and net manner and so that decreased our average a little of it they know that.
With the current EVP and innovation.
Of all of our managing partners and all the things at the feed through their female directors like our tech services in visitations and opening up without fear.
You know and really hero work at <unk>, we're able to we're starting to use the average is back to pre pandemic levels. The second piece of that is the cremation conversion.
Program more of our efforts.
Managing I'm sorry of the original.
Partners in our.
Operation support have been working really really hard.
Along with the managing partners and making sure that information that comes through the door. They really explain the value of funeral services by doing so the family is really.
Get educated as to what's possible when it comes to the life celebrations rather than choosing.
Direct cremation over what could be a celebration of life that program, which actually is.
Getting some gaining some tremendous momentum it is 1 of the main drivers for 4 of our cremation average so.
So on the girls side is really being able to go back to having more families going into of chapels at being able to celebrate the lab at Leer and automation side because of commission conversions that are helping US you know of getting that average up.
The smell look we talked about this during COVID-19.
And we've.
We've had discussions about this with our standards Council members.
We went through this past year and a half end and.
More than 1.
And also a member of where they have huge terrible outbreaks.
In California.
No it's amazing.
When.
When people are total.
They can't grieve or celebrate a loved 1.
With others and there are things that you just can't do.
They began to appreciate the value.
Of the service and the ceremony of the Greif recovery process.
Everyone of them, please hold and standby everyone. Please hold on standby the speaker line will be conducted in a moment.
You may resume.
I don't know where I got cut off but.
The answer to the average improvement is.
The human species.
Learned over the last year and a half of value.
1 of <unk>.
Dies.
Service 3 of the celebrate agreed.
With other humans that of friends or family they learned the value of it when they were told what they couldnt do.
Our people waiver at overcome what couldnt be done all across the country by doing things at work.
We're not normal.
But we're.
Possible.
And I think as we open up the country across the country, we're hearing that more and more of that people are more of our open to choice of isn't creativity and the value of the service.
The value of programming.
So I think frankly, our novel professional zone for a grateful.
Right right.
Over the next 5 or 10 years I don't know what the death rate will do I don't think it will go down it could go up at <unk>.
As a matter to us where we want to get whatever there is out there by just being the best in each market and I think that's why the averages are growing up.
Great.
That's very helpful and I appreciate at all.
That answers my question and I'll get back of the kit.
Thanks, Alex.
Your next question is from Liam Burke with B Riley.
Yes, Thank you and good morning.
Yeah.
<unk> had strong cemetery sales.
On your renewed selling efforts, which are of seem to be getting great deal traction was there any benefit from deferred cemetery sales from a year ago. When there was restricted access due to COVID-19 for loved ones.
2 of tend to services at the cemetery.
Thank you very much. This is Carlos I mean, there may be a little bit of freedom.
Thank you there may be a little bit of preneed backlog that could be different revenue from you know.
As you know we recognize revenue from.
2 of irrespective of when it reaches 10 per cent nonpayment.
But as a company, we don't really do much of less than 10% and so we recognize most of it there may be something in there, but not material to my estimation. However at the efforts and focus on generating new sales teams in developing.
Services skill set of the current ones and really having an activity plan, that's very aggressive to capturing leads and generate new sales.
Really the main driver of our success on ourselves Preneed program.
Great and.
Also much at all of the funeral home side the.
Relevant.
More illustration of the step up at Memorial day shift or loved ones that are of cremated how much runway do you anticipate being there to help grow their funeral home sales.
So.
As you know at <unk>.
<unk> conversion is.
Yes conversation that at that he takes place during the regiment conference through our funeral directors in the family.
As they continue to educate the family on all of their options. They have on unique personalized services as well as solutions of life, that's really what the what the driver of that average and ultimately our.
Our revenue comes from that's a program that's been in the works really for the past year year, and a half and as we continue to grow more and more and have more focus on really getting those conversations and those significant.
Added value and what he means to celebrate someone's.
Life, rather than choosing the reclamation is you know that we're gonna be able to continue growing to calculate that it's a little bit difficult, but based on the trend that we have I can tell you theres a lot more to come from that end.
At this smell.
I've been doing this now of 30 years.
Only.
30 years ago.
And our cremation average mix would be into 50 per cent range I don't know if at mid.
Mid fifties Nike.
And our burial mix would be in the 30% range I'm not sure I would have carried on the mission.
But it hasnt it hasnt posed a challenge.
Posed a challenge, but it hasn't been something that we couldn't overcome over all of the last 30 years of increasing cremations, but.
But I'll tell you what has happened and I've seen of difference over the last.
18 months, particularly with the Covid pandemic crisis.
There is some of our older.
Manhattan really season funeral managers leaders and employees.
I'll retire.
This was very hard on.
And.
I see a trend toward younger.
Funeral directors and Arrangers.
With a different mindset about cremation.
If you if you start with a different mindset about what the possibilities are versus an old school mindset of.
How it was.
Then the upside is tremendous so I think 1 of the 2 great upside opportunities for carriage over the next.
10 years is on the cremation side growing that and.
In the cemetery sales and revenue side.
Plus market share gains because you just you know the whole of the whole point of being the best at.
It is as you're hungry to go get more.
And you're good enough to go get it you want to win.
Fiber at a market share game of locally against your competition by just.
Being better and coming up with more ways for more people to use you versus of them. This is not.
So adding back taking orders that kind of thing. This is about building winning teams at.
And every business across America.
Whether it's a funeral business or of cemetery business or copper.
On the notion of business.
No different than of Sports League.
And we want to build winning teams high performance teams at make place.
They grow market share of the <unk> grow revenue and they grow margins and they get.
Compensated huge.
To do it.
Great.
Thank you Mel and thank you Carlos.
Your next question comes from Chris Mcginnis with Sidoti <unk> Company.
Good morning, Thanks for taking my questions. Thank.
Thanks, Kevin of quarter can.
Can you maybe just explain the confidence behind the market share gains and the ability of the sustain them and maybe what youre seeing given now how much you guys crunch the data can.
Can you just give a little bit of both.
Okay.
Yeah.
Chris I will look.
When I first started the company going around on was on the funeral side.
And I've made owners in.
I would say.
As of for our financial statement.
You wouldn't get 1 kick you out they wouldn't even give you a bad cup of.
But if you're asking for a history of their business.
Like what's your call of history, what's your funeral volume history over the last 5.
1 of her 10 years, how about 40.
Very often they had at downer drawer or in some cases, they're their shirt pocket Arthur coat pocket and they were.
Of course, we're very proud to show you.
And there we're keeping up with all of the obs on the market of all of our direct competitors and they know what the trends were over long periods of time.
And so we can.
Picked up on that right away.
And so we've been doing that for the last 30 years for every business now it has become a little more difficult.
US obituaries now not all in print.
Local paper.
But we track market share.
By month by competitor by year end the trends in market share.
And we've been doing that for 30 years.
1 of the ratio as we.
<unk> operating model and <unk> 3 is I never could find a business model because of the trends to go up broadly in market share.
And then you were trying to manage outcomes at never were broadly high so that was the that was the.
That was the reason why we switch.
Switched.
And here we are now we have great people that know their market, we know at too.
Thank you team knows everything going on in the market.
They know the individual employees they know what's going on at I know that they know what's going up it's not like we're sitting back here in the Pentagon, we don't know what's going on.
And the insurgency.
We know at <unk>.
Our people.
We're calling us and telling us at during Covid, you can't believe what's happening.
So I sort of competitor is sending us business, because they won't and bomb.
At the end mom I have no idea.
Or sort of Robert got infections.
<unk> and <unk>.
The families came to us I can tell you at Corpus Christi, if you want to find out how much market share. We grew at Corpus Christi crowd of managing partner, but at Ewing talked at Yeah I did.
I couldn't believe what was going on including with other consolidators.
In San Jose same here same in Florida at the same there.
This was coming back to us broadly on a continuous basis.
We're growing market share because of the other people cant get supported.
By somebody like carriage, who have world class support teams and their Fox up.
We know we were growing market share.
<unk> of where we were growing market share and we know who we were getting it from.
If you wanted to really know none of the list of the standards Council members and call them.
And they will tell you.
I hate to do that myself at goes on we'll talk about anybody.
We know there is a hallmark I invite anybody to call our standards Council and I ask them that question.
I appreciate that and I don't know line.
[laughter].
When you're good.
And getting better this is how you can talk.
I appreciate it guys.
I guess just obviously.
The the new scenario for the roughly right and the <unk>.
Capital allocation changed there.
Is that more of an indication of where do you think of the stock is versus the M&A environment and the opportunity of there can you just give a little bit about that I don't spend a lot of at a time.
I have on the prepared remarks, but.
Just the outlook for M&A versus the share repurchases at these levels.
Yes.
Chris based on where we're at.
The stock is trading and where we believe intrinsic value is we believe the best use of our capital at this time is to accelerate the pace.
Share repurchase program like I said, while maintaining that 4 times or below leverage ratio given.
Given the financial flexibility, we have and the amount of free cash flow regenerating that shouldn't preclude us from doing a really smart flux of acquisitions or continuing to invest in our business.
And believe we will continue to have.
Have those great conversations with leading independent owners out in the country.
So it was not at the kind of 1 of the other I think we can do all of it but certainly this scenario of pretends the majority of our capital allocation in the near term going towards a share repurchase program. So Chris.
Just think would mean very simply for a minute.
Pace of our I signed up for another 7 or 8 years, I forget which.
And I had options granted to me the vest on price.
The first 155 or so it's 1 of our good to great..2 vesting points are our compounded share return categories nobody paid that much attention we've gotten very few.
Since about it I can promise you shouldnt pay more attention at anybody listening sort of paid a lot of attention to that.
I didn't put it out there.
Trying to promote the stock I'll put it out there because that's what we intend to do.
Now here, we are mid thirties.
Okay.
Good question, we bounced off of 15, that's nothing now.
We're in a position to create a lot of value.
What I want to own more of the company.
Even though.
Got invest on price.
I want all of more of the company. Many of my 2 kids why would I want to not all of them more of the company.
Your line.
By buying it from Rodney.
Who doesn't see the same value in the future ownership than I do.
This is not complicated.
This is not complicated it's a very simple way of thinking.
It's not an either or it's why wouldn't we want to own more of this company.
You've just heard the best is yet to come.
I want all of more of at 11, 5% free cash flow of equity Elana I'm of professional investor is.
Is ridiculous.
I want to buy that from whoever owns it.
At ridiculous.
Yeah.
Any day.
Thanks for taking my questions I completely understand.
I did write about that.
And a number of my notes so I did understand at this time of when you put up there how many other companies have of 11, 5% free cash flow equity of the name of 1 and we will go back but first I will do the analysis.
Yes.
Okay.
Okay.
Call Me back end, let me now of the name of Okay why don't I.
5%.
Thanks for your line and your last question comes from George Kelly with Roth Capital Partners.
Hey, everybody thanks for.
Quick question.
And melt of follow up on your last comment businesses with 11, 5% yields are usually not so sort of high quality. So I think.
That's what I've seen at least.
So my question for you is clearly there's a lot of momentum.
In your business.
All of a bunch of different areas.
But I'm curious aside from Covid.
What are the biggest risks that you see where are there places where you have some uncertainty, especially with respect to the numbers that you've put out for the next couple of years.
You know frankly, George I think when we put out for the next couple of years is a very conservative and realistic outlook of our performance I don't see any real risk in us being able to achieve the goals that we've set out before US right. There is certainly some of those known unknowns about COVID-19 and the variance.
Vaccination rates and the effects on that may have in death rates and volumes in the short term, but to your point of what we've shown in the first half of this year in the second quarter and we've talked about this entire call theres. So many known drivers that we have here of accelerating high performance, but I don't see any of any real risk of being able to achieve.
What we've laid out there so george.
Let's go back to the point you made to start off I agree with you.
11, 5% free cash flow of equity deal is normally companies that are of low quality unreliable as far as what they will do in the future. So nobody is believing it will continue.
That is the opposite.
Of where we are.
And that's why we're buying in our shares and I want to own more of it I don't want to get the skeptical of shareholders and.
And if you went back to February 19th of 'twenty.
When we put out for the first time of.
February 19th of 3 year, roughly right range scenario that was transformative.
Pre COVID-19.
And then you go to May 19th.
We're in the midst of Covid.
Brought down at the scenario of little bit everybody else got rid of of their entire at guidance.
Except for a handful of companies we never did we never did.
Now as that of local.
Formative company are of high quality company and ever since then.
If you want the July of 28.
Second quarter released October 27, third quarter release, and then we had the full year release than I had my shareholder letter and then we have the.
The financing memorable memorandum and Tom Brady pricing on the bonds.
Quality of new Janesville pricing all of the equity then we had the June 2nd.
Promotions.
There is a book here on why carriage is high quality and nothing less.
And the free cash flow yield of 11, 5% is ridiculous I think we need to find higher quality investors.
I don't understand it.
Yeah.
If they do what kind of I under shares and take it private.
This is not complicated.
Yes.
Fair enough. Thank you for the Covid.
And best of luck.
Thanks Jordan.
Well that kind of all of the luck, but we'll take if it shows up.
Well, we put it out there.
Can either like it or not but it's real and it's going to get better. We do appreciate all of the attention.
You can tell I'm passionate about where we are and I get to be my best here.
But the.
Best is yet to come for carriage over the next 5 or 10 years, we are where we always wanted to get to and we're never going to go back to where we came from never I have the right team the right people in the right seats at the right balance sheet, the right model the right vision.
Alright ideas alright standard.
At <unk>.
And the rights of free cash flow to used flexibly to create more value for you.
And for US Thank you very much.
And Im showing no further questions at this time line.
I'd like to turn the conference back to Mel Payne.
Standard I'm done.
I think I've had much thank you.
Thank you.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.
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