Q4 2022 Carriage Services Inc Earnings Call

February 23, 2023

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France will begin shortly to raise and lower Johan during Q&A, you can dial star one one.

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Okay.

Good day, and thank you for standing by welcome to the carriage services fourth quarter and full year 2022 earnings webcast. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session you'll need to press.

Star one one on your telephone you will then hear an automated message advising us your hand is raised to withdraw your question. Please press star one one again please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Steve Metsker Executive Vice President Chief administrative officer.

And General Counsel. Please go ahead.

Thank you Catherine good morning, everyone and thank you for joining us to discuss our fourth quarter and year end results for 2022 on the call with me. This morning is Carlos Casado, our President and Chief operating Officer Mills currently recovering from knee surgery and will not be joining us on today's call.

Carrier 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 include supplemental financial information, including a reconciliation of differences between GAAP and non-GAAP financial measures.

Call will begin with formal remarks from Carlos on me and will be followed by a question and answer period before.

Before we begin I'd like to remind everyone that during this call. We will make some forward looking statements, including comments about our business and plans as well as 2023 guidance.

Looking statements inherently involve risks and uncertainties and only reflect our view 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 would like to turn the call over to Carlos.

Thank you Steve.

Morning, everyone.

We're excited to present, our solid financial results for the fourth quarter and full year of 2022, and our 2023 outlook.

Our team continues to execute our topline growth strategy through market share gains, while delivering unique customer experiences and improving our bottom line performance.

But before we dive into the numbers I would like to extend my sincere gratitude to everyone at carriage.

<unk> is a testament to the fact that even in death, we can show loving compassion to those who have passed away due to litigation and commitment service. A reminder, that life is ephemeral, but love and guidance are eternal. Thank you for your unwavering support.

Today, I will share our fourth quarter and full year performance and a brief update on our digital transformation journey.

Steve will provide an update on acquisitions financial performance and our 2023 outlook.

We're getting into the numbers as you may have noticed earnings release format is different from previous releases.

Last year, we have carefully considered the feedback from investors and analysts as a result, we have redesigned our format to share the carried success story and a concise and more traditional manner. We hope you find it informative and insightful.

Now onto the results.

The fourth quarter exceeded our internal expectations, especially after we held back from providing an outlook in Q3 2022 due to uncertainty regarding the post pandemic death rate in eastern monetization.

Our total revenue for the quarter of 2022 was $93 9 million, which represents a decrease of two 1% from the previous year for.

For the full year, our total revenue reached $370 2 million, representing a decrease of only one 5%. After a high comparison driven by the peak impact from Covid related deaths.

The impact of Covid into perspective for the fourth quarter of 2022, we had one 9% globally contracts against 13, 4% last year that is an 11% 11, 5% less contract than in Q4, 2022, and our revenue only decreased 1% and.

And for the full year 2022, we had four 6% COVID-19 related contracts compared to 11, 8% in 2021 that is 72% fewer contracts to add more perspective, our total revenue increased by $96 1 million compared to pre pandemic levels, representing 10, 5% compounded annual growth rates since 2019.

Our net income for the year was $41 4 million, representing a 24, 8% increase over the prior year and a compounded annual growth rate of 41, 7% from our 2019 base here.

Adjusted diluted EPS for the fourth quarter ended at 64.

With a decrease of <unk> 14 per share compared to the previous year and for the full year, our adjusted diluted EPS was $2 61.

Representing a decrease of 41 per share. However, we're proud to note that this number represents an increase of $1 35 per share on an annual compounded growth rate basis of 27, 8% over the $1 and 25.

Of our pre pandemic baseline of 2019.

Regarding our funeral home segment, we ended the fourth quarter with 11811 funeral contracts, representing a slight decrease of 5% or 622 contracts.

However, we're pleased to report that our fuel operating revenue was $64 million with a slight decrease of one four or two 1%. Our field team has worked hard to improve the sales average, which was up by $158 per contract over the prior year.

This led to a smaller variance in funeral operating revenue against the high comparable Covid impacted fourth quarter of 2022.

On the preneed funeral side I am pleased to report that we have been actively engaged in redefining our preneed funeral strategy over the past year.

Our objective is to streamline our operations and shift away from our previous approach of having multiple agreements with various insurance providers and marketers to instead focus on a single provider in one to three marketers with a national presence, we're committed to working diligently to identify the most suitable partnership for our organization and we are optimistic about the positive impact these new client wins.

Brain.

After carefully evaluating various potential partners. We're confident that there is a significant potential for growth in preneed funeral with projections, indicating 30% to 40% increase in insurance sales within the first year for launching these new strategy.

As we continue to finalize all the necessary details we're targeting the second quarter of these year for the lunch, we're confident that our new preneed funeral approach will prove to be a resounding success and help us better serve our client families and a more efficient and effective manner, while growing our preneed funeral backlog.

Now moving to cemetery operating revenue, we're delighted to report that we ended the fourth quarter with $23 2 million of revenue, representing an increase of 708000 or three 2%.

Our cemeteries continues to be an area of great opportunity for carriage, we're focused on building our sales organization and continue to see upside being realized through the successful integration of our recent acquisitions, our ongoing investment in new cemetery inventory will add to our value creation strategy in 2023 as many of these new cemetery projects are near completion.

As mentioned in our release from yesterday, we expect Preneed cemetery sales to grow above 2022 levels by low double digits, while continually building up and developing our sales leadership team.

Since launching our high performance sales strategy in 2019 cemetery operating revenue has grown by an impressive 22, 2% compounded annual growth rate. We're excited by the potential for our cemetery segment and are confident in our ability to deliver continued growth, particularly as we continue to add the premier cemeteries in large growing markets.

Our acquisition strategy.

Now, let me give you an update on our digital transformation journey.

The investment we have made in our new ERP customer facing platform known as Trinity is a strategic move that position carriage for exponential growth continuous innovation and scalability.

Our unique approach in the death care industry.

<unk> will be designed to deliver cutting edge technology that focuses on the three core pillars of our service goals families managing partners and support staff.

With Trinity, we can create personalized family experiences through online engagement, while offering additional revenue opportunities. Furthermore, leveraging our partnership with <unk> hundred 65, and Microsoft Azure cloud will enable us to maintain an edge for the foreseeable future when it comes to technology.

The investment in Trinity will provide several benefits for organizations, including increased efficiency in finance accounting and operational functions and automation of manual paper driven processes that will transform how we engage with families. These will decrease risk while delivering an elevated customer experiences for the families that we serve.

Our operation Partners will also have greater resources to provide inventory visibility and our staff scheduling and with many others.

Additionally, inquiries that analytics will empower decision making process.

He will also ensure that personal information remains compliant with enhanced security and privacy controls provide an English protections for our client families.

Finally, I would like to share our theme for 2023 and 2024.

At carriage, we we believe anything is possible if we push ourselves beyond our limits and strive for excellence every single day.

This is the definition of our mission and vision of being the best at the same time possibilities are the fuel that drives progress and the foundation of high performance.

But to truly unleash the power of possibilities, we must combine it with high performance mindset. Therefore, our 2023 theme of creating high performance possibilities is about turning these opportunities into reality it means taking action to achieve our goals and pushing beyond our limits to move from good to great High performance is the art of pursuing excellence in everything we do.

It is about setting high standards challenging ourselves to being the best we can be and embracing continuous improvement.

At <unk>, we're committed to creating a high performance culture company full of possibilities and by setting ambitious goals embracing protiviti innovation and pushing ourselves to achieve things. We have never achieved we can create a culture where anything is possible.

In closing, we're pleased with our 2022 financial results, which is our testament to our team's hard work and dedication we remain committed to our growth strategy and providing the highest customer experience, while creating sustainable shareholder value by.

By creating high performance possibilities in the years to come now I will pass the call to Steve. Thanks, Carlos ill begin my comments. This morning by discussing our free cash flow for both the quarter and the full year as well as provide a brief overview of our capital investments for those same periods. I'll then provide an update on our M&A activity before discussing our full year Trust fund performed.

And finally, I'll wrap up my remarks by providing an overview of our 2023 outlook.

During the quarter, we generated $8 $9 million of adjusted free cash flow a decrease of 13, 6% as compared to our 2021 fourth quarter. This quarter over quarter decrease was primarily driven by higher interest payments and lower adjusted consolidated EBITDA.

For the full year of 2022, we generated $49 $8 million of adjusted free cash flow a decrease of 34, 2% versus 2021 again 2021 served as a high watermark comparable for us due to the COVID-19 related impact, which is driving the year over year decrease in cash flow.

We also paid approximately $8 million more in 2022 for incentive compensation that was earned for that peak 2021 performance. This number includes roughly $2 million for our good to great incentive award that will not be repeated in 2023.

During the fourth quarter, we also invested approximately $5 $7 million back into our businesses through both maintenance and growth capex with roughly 42% of that total investment allocated to cemetery development projects.

While we invested approximately 60% less in maintenance and growth Capex for the fourth quarter 2022, as compared to the fourth quarter of 'twenty, one our year over year capital investments increased by roughly $1 $2 million to a total of approximately $26 million for the year.

That year over year increase was primarily driven by investments in our cemetery development projects as we continue to focus on providing new high margin inventory to our recently acquired cemeteries as.

As we look ahead, we expect our capital investments to decrease this year when compared to both 'twenty, one and 'twenty, two and alignment with achieving our leverage ratio target.

As it relates to our growth through acquisition activity, we mentioned on our last call that we'd entered into a definitive agreement to acquire greenlawn funeral homes and cemeteries in Bakersfield, California, and we expect to close that transaction subject to regulatory approval within the next couple of weeks.

Greenlawn builds upon our growth strategy of acquiring larger businesses and growing markets. While we tend to do fewer transactions in some of our peers on an annual basis, our transactions tend to involve larger businesses with significant call volume and revenue.

To provide some context to our growth strategy you can simply look at the last three and a half years.

The time period during which we've added approximately $80 million in additional revenue through acquisition.

Almost evenly between our funeral home and cemetery segments.

So the businesses we've acquired in just the last three and a half years will account for more than 20% of the midpoint of our 2023 guidance for total revenue and we've done all of that while reducing our share count.

As we've said many times before we don't believe in our strategy of growing simply for the sake of getting bigger.

We focus on finding premier businesses that have the greatest growth potential located in strategic markets.

And while it's difficult to predict when those businesses will be available. It's a selective approach that we will continue to propel our high quality growth over the long term.

As it relates to our trust funds, while the markets ended 2022 on a negative note as concerns about inflation higher interest rates and the risk of a recession drove volatility throughout the year. The performance of our discretionary trust portfolio outperformed the major indices and finished the year with a positive return of <unk>, 6% as compared to the S&P 500, which was down.

<unk> 18, 1% for the year.

And to remind everyone. Our portfolio is allocated roughly 46% fixed income, 43% equities and 11% cash which makes that full year positive returns, even more impressive contributing to more than $22 million in financial revenue for the year.

This outperformance was driven by our equity portfolio, which largely consists of companies to generate solid free cash flow and reward investors with high and sustainable dividends.

Since the beginning of 2020, we've realized approximately $46 5 million and long term capital gains, including roughly $13 million in 2022.

Our portfolio is producing approximately $10 2 million and recurring annual income at the beginning of 2020 as of the end of 'twenty two we've more than doubled recurring annual income to roughly $28 million.

There's been a lot of good work by Mel and the team to reach this point and we believe that the portfolio is well positioned to continue generating solid capital gains and strong recurring annual income in the year ahead.

As Carlos mentioned earlier, we spent a lot of time listening to feedback from our shareholders and rethinking the way, we tell our story and how we message our results as part of that focus on continuous improvement we've not only updated the manner in which we present our earnings but we've also decided to begin providing full year guidance at the beginning of each year, we will update that guidance if necessary on a quarter.

Basis.

For 2023, we're forecasting total revenue in the range of $375 million to $385 million, which would be a high point in the companys nearly 32 year history.

We're also projecting year over year growth and adjusted consolidated EBITDA in the range of $110 million to $115 million.

We expect to generate free cash flow in the range of $50 million to $60 million. This year and adjusted earnings per share of between $2 25 to $2 40.

While our projected adjusted EPS for 2023 represents an impressive increase of more than 85% as compared to our pre COVID-19 benchmark in 2019, we're forecasting a decrease from last year, driven primarily by increased interest payments of approximately $7 million.

The increase in these interest payments is due to a combination of higher rates and higher debt balances and represents roughly <unk> 32 per share of earnings.

Our leverage ratio and increased interest expense will hit a peak when we closed the greenlawn transaction in a couple of weeks and then both will steadily trend downward as we focus our capital allocation efforts this year on paying down our debt.

Consistent with our high performance and credit profile restoration plan outlined in our December 12th release, we expect to finish 2023 with leverage of around four seven times net debt to EBITDA.

We'll then continue our focus on debt reduction next year, maintaining our target of finishing 2024 with a leverage range of four to four three times.

With regard to how we see the year unfolding, we expect Q1 to be the last challenging COVID-19 impacted comparable as this period in 2021 continue to be significantly impacted by COVID-19 related deaths.

Following Q1, we expect more normalized comps throughout the rest of the year.

Looking ahead, there are three key areas of focus that we want to highlight for our shareholders. The first is paying down our debt.

As we've demonstrated in the past when we commit to aggressively paying down our debt, we're able to delever quickly and that's our plan for 2023.

Second is to continue our focus on integration and realizing the potential within our recent acquisitions.

We've invested close to a quarter of a $1 billion in acquisitions and just the last four years internally, we're focused on all of the opportunities within these acquisitions as there have been significant investments made for future growth by prior owners that we're currently in the process of developing.

Also as highlighted by Carlos earlier, we continue to have strong growth opportunities through our cemetery sales and preneed efforts to drive continued growth of the nearly $40 million in cemetery revenue that we've added since 2019.

The third area is our focus on organic growth driven by new tools being offered to our businesses ranging from service and guest experience investments enhanced marketing efforts and continued investment in technology is an accelerator for our growth to.

To focus on earning every call and winning market share as discussed on a daily basis throughout our businesses and we will continue to make sure our teams across the country have the best resources to achieve these goals.

As you can probably tell we're excited about our 2022 performance and the opportunities we have in front of US. This year as we continue to position the company for sustainable long term growth.

Finally to wrap up our prepared remarks I'd like to believe everyone enjoys when I talk about cash flows capital investments in full year guidance I am pleased to provide an update that we've made some good progress with our CFO search and hope to have more to report in the coming weeks.

Now Carlos and I have dedicated a lot of time to the search and have met with a number of great candidates.

While they all have impressive backgrounds, we've been laser focused on finding someone who can truly partner with the leadership team to execute on all the things we've discussed this morning.

One of those key areas is how we tell our story.

We know the carriage has a compelling story driven by one of the highest quality collection of businesses in the industry.

First class leaders are nearly 32 year history, and a well paved runway for significant growth in the future.

We like to say that despite the strength of the company today, we still don't believe we've hit our growth spurt and that's what we're building towards each day.

While our story is an intriguing one we're hard at work to make sure our storytelling is equally compelling net.

Net storytelling component involves everything from how we present, our earnings setting expectations with full year guidance and focusing on the important stuff. Those key drivers that are most important to our investors.

As we welcome our new CFO to the team rest assured it will be someone who can help lead that focus and helped drive the commitments we laid out in both our high performance and credit profile restoration plan and on our call. This morning.

And with that we'll open it up for questions.

Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

To withdraw your question Press Star one again, please standby, while we compile the Q&A roster.

Our first question comes from Liam Burke with B Riley Your line is open.

Thank you and good morning.

Good morning, Liam call Us could you give us some sense as to the progress youre, making on the direct cemetery sales team and where that stands and where you'd like it today.

Absolutely happy to do that so as you know we will launch our CRM for the first time a carriage.

Around February 2022, we call that sales edge that tool took a little bit of time to adapt but right now it's fully adopted by the whole sales organization and drove that now we're being able to actually get some interesting metrics as it relates to activity and the type of activity that actually driving.

Closing ratios and sales and so we're very excited about that that site also throughout the year, we have working.

Developing the sales leadership from a skill set perspective.

Is that inclusive counselors, but also growing as much as we can our sales force. We are also focused on making sure that we have all the <unk> sales leadership in the right seats in each one of our cemeteries that will continue to drive through technology and lead generation activities on the day to day basis, our strategy for a high performance growth in our cemeteries.

And so I do feel pretty good.

Before I still believe we're somewhere around 70% of optimization, where we should be as it relates to cemeteries.

But we will continue to do more and more I feel very.

Positive about 2023 more than anything because all the groundwork we have put US a foundation over the past year, but also because to back that up we have invested a significant amount of dollars into cemetery inventory and we will continue to do that to provide enhanced inventory options to the families that we serve and to give.

Those different tools to different cemeteries under leadership of the continuing to present the families.

If I looked at your results year over year, they were obviously down but on a sequential basis.

Made a significant step up in both cemetery and funeral home are you comfortable you can continue that momentum now that you have everything in place.

We do we're committing to low double digit growth Preneed cemetery sales had property sales that is.

We believe that some of the hurdles we have the hit throughout 2022 had two though with the adoption of ourselves.

H platform, our CRM, but also working on making sure we had everything everybody in place. We have made some changes from a sales leadership perspective, some cemeteries and we are probably two more.

That are going to be joining carriage in really premium cemetery is coming up pretty soon and once that happens, we're going to be 100% aligned with our goals and being able to really capitalize on our opportunity which is significant.

Great. Thank you very much.

One moment.

Our next question comes from Alex Paris, with Barrington Research. Your line is open.

Hi, guys.

Congrats on the better than expected finish to 2022.

I wanted to dive a little bit more into Q4.

By months if possible on the last conference call. The Q3 conference call you talked about the sudden and dramatic decline in same store funeral volumes and revenue in September when you did that mid quarter update in December you said that things had.

You noted a material improvement.

Suspect in October and November .

I just wonder if you can get a little bit more color.

And that and did that continue into December and January .

Same store fuel volumes.

Yes, so as we as we mentioned before we had a huge comparable in Q4 2022, and we were skeptical at the end of Q3 because of that significant drop more specifically in the month of September .

Recent why we didn't want to put out there and outlook for the remainder of the year and so as of October and November and then December started to Schwab, we're very optimistic about the volumes, especially as you compare the COVID-19 impact that I mentioned earlier when you have such a swing between.

Q4, 2021 from Covid impact that contracts versus each year, we're able to not only made up significant amount, but only have a total drop in fuel contracts with 5%.

And that makes.

I'm very very happy because it was just a very very big comparable month, and I think that's true throughout the industry.

Okay.

Great I appreciate that.

And then.

Thanks for the 2023 guidance, which in keeping with the better than expected fourth quarter results is generally above my estimates and consensus.

No.

Embedded within that guidance as you stated confidence that you can continue driving organic growth plus the contribution of acquisitions and then taking a proactive.

Taking proactive measures.

With regard to inflation inflationary cost pressures what are you doing there specifically with regard to inflation in offsetting.

So we continue to monitor that.

Month to month basis, we have created something that we call cost to operate which is basically ideal financial statement with all the controllable at the managing partner levels, which business have their own.

Set of metrics that are being tracked on a month to month basis to make sure that we have visibility to any minor changes that need to be made that that approach is allowing us to have really great conversations through our managing partners, who know better about their business their communities and their clientele. Then we will hear from the home office, but those conversations.

<unk> may may lead to some decisions as it relates to pricing.

Pricing or expenses that are going out that needs to be offset.

Through either more market share gains or other revenue opportunities and so we do feel pretty confident and prepare as we move forward for 2023 that we will not have surprises because we are tracking that on a month to month basis business by business.

Got you that's helpful. And then I guess the last question from me for now is your 2024 goals now that you've put out 2023 guidance do you have any changes to communicate on your 2024 goals, which you also provided in mid December .

Yes, we remain committed to our goals that we put out there for high performance and great profile restoration plan.

We do believe that our goals on 2023 are very close to the midpoint of where 'twenty 'twenty four will be at the end of the year and so we remain committed to that goal and to achieve those metrics.

I got you.

The midpoint of 2023 guidance for four.

For revenue is three.

<unk> $380 million the midpoint for those 2024 goals would be $3 95, and it kind of goes down.

Relatively comfortable with those numbers that you had cloud in December on this completely.

Well, yes, because I mean, there will be still some small impact I mean, we mentioned that we had 110% of Kobe relate.

Advancing December December Q4, 'twenty two so it will be some impact in Q1, which is a huge comparable by the way. This will be the last really tough comparable for from a COVID-19 impact perspective, but we feel confident we'll be able to make that up throughout the remaining of the year.

But as we move through 2024, we do expect a more normalized centralized traditional year.

And so we don't want to be too aggressive on the forecast going now two years, we do want to be conservative to where we believe our integration of acquisitions will lead us in our internal organic growth.

May be able to allow us to get there and we'll adjust as we continue to grow throughout 2023 quarter, one quarter will adjust when we need to and give an update on our expectations.

Great very helpful. Thank you all and congratulations and keep up the good work.

Thank you very much.

Thank you.

Our next question comes from George Kelly with Ross Your line is open.

Hi, everybody. Thanks for taking my question.

So first one for you.

On your plans regarding some of these tech initiatives.

Thank you went through it.

During your prepared remarks, if I may have missed part of it.

But I think you laid out the major initiatives for this year and then I remember you mentioning that this should drive additional revenue opportunities. So just curious if you could be more specific.

About that.

Yes, so trinity.

Replacing our current contract management system, which is called <unk>, which is all technology. This is <unk>.

Very significant system change for carriage that will replace completely how we operate within that change we will be able to then.

<unk> provides a tremendous amount of efficiencies I mentioned, a little bit of this in the past with for example community will enable to deliver elevated customer experiences only because everything will be seamless through the computer and the screen in the arrangement conference contract will be painted brining year selections will be done during the year and so the conversation.

We will generate initial way to show families all of their options without having to walk away from their income conference room.

Typically we have noted is that that type of approach because we have a couple of business doing that as we speak is a spinal <unk>, although their systems and.

And the result is an increase of average just because families are able to now see all of whats possible as it relates to within a celebration of life of their loved one.

Additionally, we will have some opportunities to have more revenue just because the capacity of Trinity.

Type of product, we're putting in we'll have integrations easy integrations as it relates to operating flowers or other items are typically are more difficult to sell whether it's online.

Business websites or right there at the funeral home and so we do really very very.

Optimistic about what <unk> could do additionally, all the forecast we have done. This year does include all of the investment. So the forecast that you see our outlook for 2023 does have the investment for community is laid out it is a two year, while it's been a heavier investment, but the 2023 component of it is already baked in.

<unk>.

Two our outlook just to put things in perspective is really not a huge investment. It would represent for 2023 is about $2 $5 million, which represents around 70 basis points.

As a percentage of revenue for our forecast for 2023, however, the benefits coming from Trinity.

Or a little bit difficult to quantify that as we speak because efficiencies just from a labor perspective being able to have an immediate and real time numbers being able to process from an accounting perspective reconciliations of contracts right now we do mono contracts for cemetery all of that now will move to a digital form.

And so as we continue to move forward to the programming and creation of Trinity.

And run the pilots around November of this year, then we should be able to have more <unk>.

Specific numbers as it relates to the economic benefits that will come from from this investment.

Okay excellent.

Thank you.

Two other quick kind of modeling related questions. So.

For fiscal year 'twenty three revenue guidance.

I was curious if you could break it down at all by kind of what's the organic growth assumption within that.

Did you get comfortable building.

Volume and pricing like any other kind of key assumptions.

That helped to drive that number.

What do we expect to see a decrease mainly on our same store portfolio. Just from Q1 2023, and then been able on a normalized basis from a death rate perspective being able to then make up some of the those Q1 numbers. Because then we're really after the race is being able to compete for ourselves.

<unk>.

The field level business by business.

Our acquisition portfolio continues to integrate really really well and we don't expect huge drops in Q1 from that.

A view, but as we continue throughout the year, we do see some gains.

From a market share perspective on both same store and acquisition.

Go to the middle single digits, that's kind of like where we're looking at that's the expectation that we put out on our <unk>.

<unk> partners want to 3% and Thats really where we believe we will be at the end of the day.

Okay, Great and last one for me is on Capex.

I think I heard on the call. The disconnect has stepped down.

This year below where you were in the last couple of years.

Can you quantify that and how long I understand that.

Thats a real priority so kind of how long can you maintain capex at whatever level it will be this year.

So our target for Capex. This year is $20 million roughly around half two <unk>.

Growth Capex in half two maintenance Capex, we want to be very disciplined about that even though we spent $26 million last year, we Steve talk about your capital allocation and discipline focused stores paying down our debt. We believe the best return on investment right now is to really increase our leverage and significantly decreased interest expense.

And so we believe we are consistent to those expectations, we will not.

Slowdown our cemetery sales because most of that investment will go down to inventory development, but.

But also we will be able to keep up to the needs of our funeral businesses to continue to provide a mix of experience with the families and each one of those businesses.

Thank you.

Okay.

Thank you Ricky.

As a reminder to ask a question press Star one one on your telephone and wait for your name to be announced our next question comes from Robert Longnecker with Joseph Your line is open.

Hi, Good morning can you guys talk more about this new change in the preneed approach and what that might mean in terms of pricing in another.

And I guess I'd call it neighborhood or community relations.

Sure absolutely so.

Pre need funeral has never really been a huge focus on carriage and it's not like we want to make it a focus however by reorganizing some tiny little tweaks here and there. We believe we can really capitalize on significant opportunity.

Our submission on my remarks, the way, we havent structure right now we have multiple insurance providers with multiple multiple marketers and that makes it a little bit difficult to been able to then create a strategy nationwide strategy.

It is accretive to our Queen.

Preneed funeral expectations from our insurance sales perspective.

So by.

Being able to partner with one insurance provider. The immediate benefit is that we get a better commission rate as a company, we expect to get a higher rate on commission or bonus or some of them call them, but also being able to then have a little more control over what type of product <unk> product is being offered to the customer.

You know insurance products that work in different ways sometimes.

Maybe the commission to the customer is significantly higher than the growth of the policy over time, which is where we don't like it because if you are selling it.

At a price today and you don't have any growth in that policy over time, you really selling your future discount price and so we're trying to but how big of a control over that but also by being able to partner with one insurance company and maybe to 1% to three marketers, we will be able to increase strategy that shows year over year growth.

Peer range from our perspective.

Based on our estimates we do believe that opportunity is somewhere around 30% to 40% within one year of a launch of the program.

And immediate gains from our recognized revenue perspective coming from those commissions.

From the insurance companies.

Okay that makes sense. Thank you and then.

I understand the desire to streamline your financials, what I'm surprised you're not reporting same store numbers. Obviously your biggest peer does that I think thats going to be particularly important in the next year or so you guys integrate these three big M&A deals. So can you talk about why you wouldn't be reporting same store numbers like you have in the past.

Yes, absolutely so in.

Internally and externally before these release we have tracked.

Same store separated from acquisition acquisition on a five year basis right. We keep it on the books for five years and up to five years and then moving to same store, we thought that was from a comparable basis with other public companies elevate unfair because.

When other companies keep it for a year when you when you keep it for five years, and you have tremendous growth and acquisitions and not at the same level of growth on same store. It may not be FERC comparison.

So when we decided to then move acquisitions to a one year comparison, however, because all of the businesses that we acquire most of the businesses. We acquire a warning at the end of 2019 at beginning of 2020 all of those we would move to same store and our acquisition for these year would only be San Juan.

And our heritage in the.

The recent acquisition, we just did in October .

October September and so it was so minimal that we didn't really make much sense to put it out there we are happy to provide those numbers, but that's really the main driver of why we did that.

Yes.

Is it going to be minimal going forward given that you guys are about to close several large transactions.

Once we get.

Greenlawn, our Bakersfield acquisition, we will pretty soon we can evaluate and see if it makes sense to split up and if it does we will I think that will probably be.

Important for all of you to see if that's the case, we'll show you that information.

Okay, Yeah, I think that'd be helpful. Thank you.

You bet.

Thank you and I'm showing no further questions in the queue I'd like to turn the call back to Mr. Carlos Casado for closing remarks.

Thank you very much and thank you for joining the call. We will continue to focus on execution excellence and disciplined capital allocation and we will look forward to report our progress when we report on the first quarter of 2023 until then thank you for your support and we look forward to see you then.

This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

The conference will begin shortly.

And lower Johan during Q&A, you can dial star one one.

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Session to ask a question. During this session you will need to press star one on your telephone.

Then here an automated message advising you. Your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Steve Metsker Executive Vice President Chief administrative Officer and General Counsel. Please go ahead.

Thank you Catherine good morning, everyone and thank you for joining us to discuss our fourth quarter and year end results for 2022 on the call with me. This morning is Carlos Cassata, our President and Chief operating Officer Mel's currently recovering from knee surgery and will not be joining us on today's call 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 include supplemental financial information, including a reconciliation of differences between GAAP and non-GAAP financial measures.

Today's call will begin with formal remarks from Carlos on me 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 and plans as well as 2023 guidance.

Looking statements inherently involve risks and uncertainties and only reflect our view 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 would like to turn the call over to Carlos.

Thank you Steve.

Good morning, everyone.

We're excited to present, our solid financial results for the fourth quarter and full year of 2022, and our 2023 outlook.

Our team continues to execute our topline growth strategy through market share gains, while delivering unique customer experiences and improving our bottom line performance.

But before we dive into the numbers I would like to extend my sincere gratitude to everyone at carriage.

Your work is a testament to the fact that even in death, we can show a loving compassion to those who have passed away due to litigation and commitment serve as a reminder, that life is ephemeral love and guidance are eternal. Thank you for your unwavering support.

Today, I will share our fourth quarter and full year performance and a brief update on our digital transformation journey.

Steve will provide an update on acquisitions financial performance and our 2023 outlook.

If we're getting into the numbers as you may have noticed earnings release format is different from previous releases.

Last year, we have carefully considered the feedback from investors and analysts.

As a result, we have redesigned our format to share the <unk> success story in a concise and more traditional manner. We hope you find it informative and insightful.

Now onto the results.

The fourth quarter exceeded our internal expectations, especially after we held back on providing an outlook in Q3 2022 due to uncertainty regarding the post pandemic death rate in eastern amortization.

Our total revenue for the quarter of 2022 was $93 9 million, which represents a decrease of two 1% from the previous year.

For the full year, our total revenue reached $370 2 million, representing a decrease of only one 5%. After a high comparison driven by the peak impact from Covid related deaths.

The impact of Covid into perspective for the fourth quarter of 2022, we had one 9% Colgate contracts against 13, 4% last year that is an 11% 11, 5% less contract than in Q4, 2022, and our revenue only decreased 1% and.

And for the full year 2022, we had four 6% COVID-19 related contracts compared to 11, 8% in 2021, <unk>, 72% fewer contracts.

More perspective, our total revenue increased by $96 1 million compared to pre pandemic levels, representing 10, 5% compounded annual growth rates since 2019 our.

Our net income for the year was $41 4 million, representing a 24, 8% increase over the prior year and a compounded annual growth rate of 41, 7% from our 2019 base here.

Adjusted diluted EPS for the fourth quarter ended at 64.

With a decrease of <unk> 14 per share compared to the previous year and for the full year, our adjusted diluted EPS was $2 61.

Our pre pandemic baseline of 2019.

Regarding our funeral home segment, we ended the fourth quarter with 11811 funeral contracts, representing a slight decrease of 5% or 622 contracts.

This led to a smaller variants in fuel operating revenue against the high comparable copied impacted fourth quarter of 2022.

On the preneed funeral side I am pleased to report that we have been actively engaged in redefining our preneed funeral strategy over the past year.

Objective is to streamline our operations and shift away from our previous approach of having multiple agreements with various insurance providers and marketers to instead focus on a single provider and 1% to three marketers with a national presence, we're committed to working diligently to identify the most suitable partnership for our organization and we are optimistic about the positive impact these new client wins.

<unk>.

After carefully evaluating various potential partners. We're confident that there is significant potential for growth in preneed funeral with projections, indicating 30% to 40% increase in insurance sales within the first year of launching these new strategy.

As we continue to finalize all the necessary details we're targeting the second quarter of this year for the lunch, we're confident that our new preneed funeral approach will prove to be a resounding success and help us better serve our client families and a more efficient and effective manner, while growing our preneed funeral backlog.

Now moving to cemetery operating revenue, we're delighted to report that we ended the fourth quarter with $23 2 million of revenue, representing an increase of 708000 or three 2%.

Our cemeteries continues to be an area of great opportunity for carriage, we're focused on building our sales organization and continue to see upside being realized through the successful integration of our recent acquisitions, our ongoing investments in new cemetery inventory will add to our value creation strategy in 2023 as many of these new cemetery projects are near completion.

As mentioned in our release from yesterday, we expect Preneed cemetery sales to grow above 2022 levels by low double digits, while continually building up and developing our sales leadership team.

Since launching our high performance sales strategy in 2019 cemetery operating revenue has grown by an impressive 22, 2% compounded annual growth rate.

We're excited by the potential for our cemetery segment and are confident in our ability to deliver continued growth, particularly as we continue to add the premier cemeteries in large growing markets for our acquisition strategy.

Now, let me give you an update on our digital transformation journey.

The investment we have made in our new ERP customer facing platform known as Trinity is a strategic move that position carriage for exponential growth continuous innovation and scalability.

Our unique approach in the death care industry.

Judy will be designed to deliver cutting edge technology that focuses on the three core pillars of our service goals families managing partners and support staff.

With Trinity, we can create personalized family experiences through online engagement, while offering additional revenue opportunities.

Furthermore, leveraging our partnership with 365, and Microsoft Azure cloud will enable us to maintain an edge for the foreseeable future when it comes to technology.

The investment in Trinity will provide several benefits for organization, including increased efficiency in finance accounting and operational functions and automation of manual paper driven processes that will transform how we engage with families. These will decrease risk while delivering an elevated customer experiences for the families that we serve.

Our operation Partners will also have greater resources to provide inventory visibility and staff scheduling among many others.

Additionally, inquiries that analytics will empower decision making process.

He will also ensure that personal information remains compliant with enhanced security and privacy controls provide an English protections for our client families find.

Finally, I would like to share our theme for 2023 and 2024.

At carriage we leave.

We believe anything is possible if we push ourselves beyond our limits and strive for excellence every single day.

This is the definition of our mission and vision of being the best at the same time possibilities are the fuel that drives progress and the foundation of high performance.

<unk> taken actions to achieve our goals and pushing beyond our limits to move from good to great High performance is the art of pursuing excellence in everything we do is about setting high standards challenging ourselves to being divest we can be and embracing continuous improvement.

At carriage, we're committed to creating a high performance culture company full of possibilities and by setting ambitious goals embracing creativity innovation and pushing ourselves to achieve things. We have never achieved we can create a culture where anything is possible.

By creating high performance possibilities in the years to come now I will pass the call to Steve. Thanks, Carlos I'll begin my comments. This morning by discussing our free cash flow for both the quarter and the full year as well as provide a brief overview of our capital investments for those same periods. I'll then provide an update on our M&A activity before discussing our full year Trust fund perform.

Vince and finally, I'll wrap up my remarks by providing an overview of our 2023 outlook.

For the full year of 2022, we generated $49 $8 million of adjusted free cash flow a decrease of 34, 2% versus 2021.

Again, 2021 served as a high watermark comparable for us due to the Covid related impact, which is driving the year over year decrease in cash flow.

As we look ahead, we expect our capital investments to decrease this year when compared to both 'twenty, one and 'twenty, two and alignment with achieving our leverage ratio target.

As it relates to our growth through acquisition activity you mentioned on our last call that we'd entered into a definitive agreement to acquire greenlawn funeral homes and cemeteries in Bakersfield, California, and we expect to close that transaction subject to regulatory approval within the next couple of weeks.

To provide some context to our growth strategy you can simply look at the last three and a half years.

The time period during which we've added approximately $80 million in additional revenue through acquisition.

Almost evenly between our funeral home and cemetery segments.

The businesses, we've acquired in just the last three and a half years will account for more than 20% of the midpoint of our 2023 guidance for total revenue and we've done all of that while reducing our share count.

As we've said many times before we don't believe in our strategy of growing simply for the sake of getting bigger rather we focused on finding premier businesses that have the greatest growth potential located in strategic markets.

And while it's difficult to predict when those businesses will be available if the selective approach that we will continue to propel our high quality growth over the long term.

18, 1% for the year.

And to remind everyone. Our portfolio is allocated roughly 46% fixed income, 43% equities and 11% cash which makes that full year positive return, even more impressive contributing to more than $22 million in financial revenue for the year.

This outperformance was driven by our equity portfolio, which largely consists of companies to generate solid free cash flow and reward investors with high and sustainable dividends.

Since the beginning of 2020, we've realized approximately $46 $5 million in long term capital gains, including roughly $13 million in 2022.

There's been a lot of good work by metal and the team to reach this point and we believe that the portfolio is well positioned to continue generating solid capital gains and strong recurring annual income in the year ahead.

Basis.

For 2023, we're forecasting total revenue in the range of $375 million to $385 million, which would be a high point in the companys nearly 32 year history.

We're also projecting year over year growth and adjusted consolidated EBITDA in the range of $110 million to $115 million.

We expect to generate free cash flow in the range of $50 million to $60 million. This year and adjusted earnings per share of between $2 25 to $2 40.

And higher debt balances and represents roughly <unk> 32 per share of earnings.

Consistent with our high performance and credit profile restoration plan outlined in our December 12th release, we expect to finish 2023 with leverage of around four seven times net debt to EBITDA.

I'll then continue our focus on debt reduction next year, maintaining our target of finishing 2024 with a leverage range of four to four three times.

Following Q1, we expect more normalized comps throughout the rest of the year.

Looking ahead, there are three key areas of focus that we want to highlight for our shareholders. The first is paying down our debt.

As we've demonstrated in the past when we commit to aggressively paying down our debt, we're able to delever quickly and that's our plan for 2023.

Second is to continue our focus on integration and realizing the potential within our recent acquisitions we've.

We've invested close to a quarter of a $1 billion in acquisitions and just the last four years internally, we're focused on all the opportunities within these acquisitions as there have been significant investments made for future growth by prior owners that we're currently in the process of developing.

The focus on earning every call and winning market share as discussed on a daily basis throughout our businesses and we will continue to make sure our teams across the country have the best resources to achieve these goals.

Yes.

As you can probably tell we're excited about our 2022 performance and the opportunities we have in front of US. This year as we continue to position the company for sustainable long term growth.

Now Carlos and I have dedicated a lot of time to the search and have met with a number of great candidates while.

While they all have impressive backgrounds, we've been laser focused on finding someone who can truly partner with the leadership team to execute on all the things we've discussed this morning.

One of those key areas is how we tell our story.

We know that carriage has a compelling story driven by one of the highest quality collection of businesses in the industry.

First class leaders are nearly 32 year history, and a well paved runway for significant growth in the future.

We like to say that despite the strength of the company today, we still don't believe we've hit our growth spurt and that's what we're building towards each day.

While our story is an intriguing one we're hard at work to make sure our storytelling is equally compelling.

Storytelling component involves everything from how we present, our earnings setting expectations with full year guidance and focusing on the important stuff. Those key drivers that are most important to our investors.

That will open it up for questions.

Thank you as a reminder to ask a question you would need.

Please press star one on your telephone and wait for your name to be announced to withdraw your question Press Star One again, please standby, while we compile the Q&A roster.

Our first question comes from Liam Burke with B Riley Your line is open.

Thank you and good morning.

Good morning Liam.

Could you give us some sense as to the progress youre, making on the direct cemetery sales team.

Where that stands and where you'd like it to be.

Absolutely happy to do that so as you know we will launch our CRM for the first time a carriage around February 2022, we call that sales edge that tool took a little bit of fast to adapt but right now it's fully adopted by the whole sales organization and drove that now we're being.

To actually get some interesting metrics as it relates to activity and the type of activity that actually driving.

Closing ratios and sales and so we're very excited about that that site also throughout the year, we have working.

Helping the sales leadership from a skill set perspective is that inclusive catheters, but also growing as much as we can our sales force. We are also focused on making sure that we have all the right home sales leadership in the right seats in each one of our cemeteries that will continue to drive through technology and lead generation activities on a day to day basis.

Our strategy for a high performance growth on our cemeteries.

So I do feel pretty good.

Say before I still believe we're somewhere around 70% of optimization, where we should be as it relates to cemeteries.

But we will continue to do more and more I feel very.

Those different tools to different cemeteries and their leadership is the continued as a percent of families.

If I looked at your results year over year, there were obviously down but on a sequential basis.

Made a significant step up in both cemetery and funeral home are you comfortable you can continue that momentum now that you have everything in place.

What we do we're committing to low double digit growth Preneed cemetery sales had a property sale that is.

We believe that some of the hurdles we had the hit throughout 2022 had two though with the adoption of ourselves.

H platform, our CRM, but also working on making sure we had everything everybody in place. We have made some changes from a sales leadership perspective in some cemeteries and we have probably two more.

Great. Thank you very much.

One moment.

Our next question comes from Alex Paris, with Barrington Research. Your line is open.

Hi, guys.

Congrats on the better than expected finish to 2022.

I wanted to dive a little bit more into Q4.

By month, if possible on the last conference call. The Q3 conference call you talked about the sudden and dramatic decline in same store funeral volumes and revenue in September when you did that mid quarter update in December you said that things had.

You noted a material improvement.

Suspect in October and November .

I just wonder if you can get a little bit more color.

And that and did that continue into December and January .

Same store fuel volumes.

Yes, so as we as we mentioned before we had a huge comparable in Q4 2022, and we were skeptical at the end of Q3 because of that significant drop more specifically in the month of September .

The reason why we didn't want to put out there and outlook for the remainder of the year and so as of October and November and then December started to Schwab, we're very optimistic about the volumes, especially as you compare the COVID-19 impact that I mentioned earlier when you have such a swing between.

Q4, 2021 from Covid impact that contracts versus this year, we're able to not only made up significant amount, but only have a total drop in fuel contracts with 5%.

And that makes.

Very very happy because it was just a very very big comparable months and I think that's true throughout the industry.

Okay.

Great I appreciate that.

And then.

Thanks for the 2023 guidance, which in keeping with the better than expected fourth quarter results is generally above my estimates and consensus.

No.

Embedded within that guidance as you stated confidence that you can continue driving organic growth plus the contribution of acquisitions and then taking a proactive.

Taking proactive measures.

With regard to inflation inflationary cost pressures what are you doing there specifically with regard to inflation in offsetting.

So we continue to monitor that.

Month to month basis, we have created something that we call cost to operate which is basic level financial statement with all the controllable at the managing partner levels, which business have their own.

Set of metrics that are being tracked on a month to month basis to make sure that we have visibility to any minor changes that need to be made that that approach is allowing us to have really great conversations to our managing partners, who know better about their business their communities and their clientele. Then we will hear from the home office, but those conversation.

<unk> may may lead to some decisions as it relates to.

Our pricing or expenses that are going out that needs to be offset.

Through either more market share gains or other revenue opportunities and so we do feel pretty confident prepare as we move forward for 2023 that we will not have surprises because we are tracking that on a month to month basis business by business.

Got you that's helpful. And then I guess the last question from me for now is your 2024 goals now that you've put out 2023 guidance.

Do you have any changes to communicate on your 2024 goals, which you also provided in mid December .

Yes, we remain committed to our goals that we put out there for high performance and great profile restoration plan.

Do believe that our goals on 2023 are very close to the midpoint of where 'twenty 'twenty four will be at the end of the year and so we remain committed to that goal and to achieve those those metrics.

Okay got you so the midpoint of 2023 guidance for four.

For revenue is.

383 hundred $80 million the midpoint for those 2024 goals would be $3 95, and it kind of goes down.

Relatively comfortable with those numbers that you had cloud in December almost completely.

Well, yes, because I mean, there will be still some small impact I mean, we mentioned that we had one 9% of COVID-19 related events in December while not December Q4, 2022, so it will be some impact in Q1, which is a huge comparable by the way. This will be the last really tough comparable for from a COVID-19 impact perspective.

But we feel confident we'll be able to make that up throughout the remaining of the year.

But as we move through 2024, we do expect a more normalized system analyze traditional year.

And so we don't want to be too aggressive on the forecast going out two years, we do want to be conservative to where we believe our integration of acquisitions will lead us in our internal organic growth.

May be able to allow us to get there and we'll adjust as we continue to grow throughout 2023 quarter, one quarter will adjust when we need to and give an update on our expectations.

Great very helpful. Thank you all and congratulations and keep up the good work.

Thank you very much.

Thank you.

Our next question comes from George Kelly with Ralph Your line is open.

Hi, everybody. Thanks for taking my question.

So first one for you.

On your plans regarding some of these tech initiatives.

Thank you went through it.

On and off during your prepared remarks, if I may have missed part of it.

But I think you laid out the major initiatives for this year and then I remember you mentioning that this should drive additional revenue opportunities. So just curious if you could be more specific.

About that.

Yes, so trinity.

Replacing our current contract management system, which is called <unk>, which is all technology. This is.

Very significant system change for carriage that will replace completely how we operate within that change we will be able to then.

Ill provide a tremendous amount of fee efficiencies I mentioned, a little bit of this in the past, but for example, Trinity will enable to deliver elevated customer experiences only because everything will be seamless to the computer and the screen in the arrangement conference contract will be painted brightening air selections will be done right at year end so the conversation.

We will generate initial way to show families all of their options without having to walk away from their income conference room tips.

Typically we have noted that that type of approach because we have a couple of business doing that as we speak us us pilot not with Trinity, although their systems and.

And the result is an increase of average just because families are able to now see all of whats possible as it relates to the incineration of life of their loved one.

Additionally, we will have some opportunities to have more revenue just because the capacity of Trinity.

Barack were putting in will have integrations easy integrations as it relates to upgrading flowers or other items are typically are more difficult to sell whether it's online.

Business websites or right there at the funeral home and so we do really very very.

Domestic above what <unk> could do additionally, all the forecast we have done. This year does include all of the investment. So the forecast that you see our outlook for 2023 does have the investment for community is laid out it is a two year, while it's been a heavier investment for the 2023 component of it is already baked in.

Two.

Two our outlook just a bit things in perspective is really not a huge investment. It represents for 2023 is about $2 $5 million, which represents around 70 basis points.

As a percentage of revenue for our forecast for 2023, however, the benefits coming from Trinity.

Or a little bit difficult to quantify as we speak because efficiencies just from a labor perspective being able to have an immediate and real time numbers being able to process from an accounting perspective reconciliations of contracts right now we do mono contracts for cemetery all of that now will move to a digital form.

And so as we continue to move forward to the programming and creation of Trinity.

<unk> run the pilot around November of this year, then we should be able to have a little bit more <unk>.

Specific numbers as it relates to the economic benefits that will come from from this investment.

Okay excellent.

Thank you.

Two other quick kind of modeling related questions.

Fiscal year 'twenty three revenue guidance.

I was curious if you could break it down at all by kind of what would see organic growth assumption within that.

Did you get comfortable building.

Volume and pricing like any other kind of key assumptions.

That helped to drive that number.

<unk>.

The field level business by business, our acquisition portfolio continues to integrate really really well and we don't expect huge drops in Q1 from that point of view, but as we continue throughout the year, we do see some gains from a market share perspective on both same store and acquisition low too.

Middle single digits, that's kind of like where we're looking at that's the expectation that we put out on our owner.

Managing partners want to 3% and Thats, when we where we believe we will be at the end of <unk>.

Good day.

Okay, Great and last one for me is on Capex.

I think I heard on the call the disconnect stepped down.

This year below where you were in the last couple of years can.

Can you quantify that and how long I understand that.

Thats a real priority. So how long can you maintain capex whatever level it will be this year.

So our target for Capex. This year is $20 million roughly around half two.

Growth capex in half to maintenance Capex, we want to be very disciplined about that even though we spent 26 million last year, we Steve talk about your capital allocation and discipline focused stores paying down our debt. We believe the best return on investment right now is to really increase our leverage and significantly decreased interest expense.

Pence.

And so we believe we are consistent to those expectations, we will not.

Slowdown our cemetery sales because most of that investment will go down to inventory development.

But also we will be able to keep up to the needs of our funeral businesses to continue to provide an excellent experience with the families and each one of those businesses.

Thank you.

Okay.

Thank you Ricky.

Thank you as a reminder to ask a question press Star one one on your telephone and wait for your name to be announced our next question comes from Robert Longnecker with Joseph Your line is open.

Hi, Good morning can you guys talk more about this new change in the preneed approach and what that might mean in terms of pricing and other.

I guess I'd call it neighborhood or community relations.

Sure absolutely so.

Preneed funeral has never really been a huge focus on carriage and it's not like we want to make it a focus however by reorganizing some tiny little tweaks here and there. We believe we can really capitalize on significant opportunity.

As I mentioned in my remarks, the way, we havent structure right now we have multiple insurance providers with multiple multiple marketers and that makes it a little bit difficult to being able to then create a strategy nationwide strategy.

That is accretive to our Queen.

Preneed funeral expectations from our insurance sales perspective.

So by.

Being able to partner with one insurance provider. The immediate benefit is that we get a better commission rate as a company, we expect to get a higher rate on commission or bonus or some of them call them, but also being able to then have a living more control over what type of product insurance product is being offered to the customer.

So you know insurance products that work in different ways sometimes.

Maybe the commission to the customer is significantly higher than the growth of the policy over time, which is where we don't like it because if you are selling it.

Peer range from our perspective.

Based on our estimates we do believe that opportunity is somewhere around 30% to 30% within one year of a launch of the program.

And immediate gains from our recognize revenue perspective coming from those commissions.

From the insurance companies.

Okay.

Thank you and then.

I understand the desire to streamline your financials, what I'm surprised you're not reporting same store numbers. Obviously your biggest peer does that I think thats going to be particularly important in the next year or so you guys integrate these pretty big M&A deal. So can you talk about why you wouldn't be reporting same store numbers like you have in the past.

Yes, absolutely so.

Currently and externally before these release, we have track same store separated from acquisition acquisition on a five year basis right. We keep it on the books for five years and up to five years and then moving to same store, we thought that was from a comparable basis with other public companies elevate unfair because we're.

When other companies keep it for a year when you when you keep it for five years, and you have tremendous growth and acquisitions and not the same level of growth on same store. It may not be FERC comparison.

And heritage in.

The recent acquisition, we just did in the October September .

So it was so minimal that didn't really make much sense to put it out there.

We are happy to provide those numbers, but that's really the main driver of why we did that.

Okay.

Is it going to be minimal going forward given that you guys are about to close several large transactions.

Once we get.

No.

Greenlawn, our Bakersfield acquisition, we will pretty soon we can evaluate and see if it makes sense to split up and if it does we will I think that will probably be.

Important for all of you to see and if that's the case, we'll show you that information.

Okay, Yeah, I think that'd be helpful. Thank you.

You bet.

Thank you and I'm showing no further questions in the queue I'd like to turn the call back to Mr. Carlos Casado for closing remarks.

This concludes today's conference call. Thank you for participating you may now disconnect.

Q4 2022 Carriage Services Inc Earnings Call

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