Q3 2024 Carriage Services Inc Earnings Call
Carlos Quezada: We are proud of these results, and after reviewing our key operational metrics and forecasts, we are raising our 2024 guidance. We now expect to finish the year with total revenue in the range of $395 to $405 million. adjusted consolidated EBITDA of $120 to $125 million. and Adjusted Diluted EPS of $2.45 to $2.55. Adjusted free cash flow guidance will remain at $55 to $65 million.
We are proud of these results and after reviewing our key operational metrics and forecast we are raising our 'twenty 'twenty four guidance.
We now expect to finish the year with total revenue in the range of $395 million to $405 million.
Adjusted consolidated EBITDA of $120 million to $125 million and adjusted diluted EPS of $2 45 to $2 55.
Adjusted free cash flow guidance will remain at 55 to 65 million.
Carlos Quezada: Kathy will provide more details related to our revised guidance. We are fully steam ahead and fully committed to our strategic objectives while we continue to identify new ways to enhance our performance. creating long-term value for our shareholders. As part of this commitment, our competitive request for proposal process for Ernst & Kask is currently underway. marking an important milestone in our broader supply chain strategy. Our recent meetings with partner vendors were highly productive as we focused on refining our merchandise options and selling strategy to serve our clients better and enhance their experience. These initiatives are prime examples of our ongoing commitment to continuous improvement.
He will provide more details related to our revised guidance.
We are full as the market and fully committed to our strategic objectives, while we continue to identify new ways to enhance our performance.
We're adding long term value for our shareholders.
As part of this commitment our competitive request for proposal process for Earth and caskets is currently underway.
Marking an important milestone in our broader supply chain strategy.
Our recent meetings with partner Benders were highly productive as we focused on refining our merchandise options and selling strategy to serve our clients better and enhance their experience.
These initiatives are prime examples of our ongoing commitment to continuous improvement.
Carlos Quezada: They are designed to leverage our scale, leading to greater financial benefits that we expect to materialize in 2025. There's more to come from our supply chain strategy as we continue to identify both near-term and long-term opportunities.
They are designed to leverage our scale, leading to greater financial benefits that we expect to materialize in 2025.
There's more to come from our supply chain strategy as we continue to identify both near term and long term opportunities.
Carlos Quezada: Lastly, the search for our Chief Financial Officer continues with Delivered Care. This continues to be a thoughtful and detailed process during which we have seen several talented candidates. However, the search remains ongoing. We're committed to finding the ideal strategic partner with the right skills and experience that aligns with our values, culture, and long-term vision. This is a critical role for Carriage's future growth, and we are determined to make the right choice to ensure we have a leader who can help drive our financial success forward.
Lastly, the search for a chief financial Officer continues with deliberate care.
This continues to be a thoughtful and detailed process during which we have seen several talented candidates. However, the search remains ongoing.
We're committed to finding the ideal is strategic partner with the right skills and experience that aligns with our values culture and long term vision.
This is a critical role for garage future World and we're determined to make the right choice to ensure we have a leader who can help drive our financial success forward.
Carlos Quezada: We look forward to providing additional updates as we identify the best person for this critical Over the past two years, we have focused on building a strong foundation at Carriage. grounded in our values and centered around our three core strategic objectives. Discipline capital allocation, relentless improvement, and purposeful growth. These efforts align closely with our purpose of creating premier experiences through innovation, empowered partnerships, and elevated service. We are very proud of our significant progress. Our strong third quarter and year-to-date financial performance represents the hard work of many talented individuals driving this effort. And while we still have many opportunities in front of us, there is a clear sense of excitement across the carriage organization regarding what is to come on this journey.
We look forward to providing additional updates as we identify the best person for this critical position.
Over the past two years, we have focused on building a strong foundation of carriage grounded in our values in center around our three core strategic objectives.
Disciplined capital location relentless improvement and purposeful growth.
These efforts align closely with our purpose of creating premier experiences through innovation empower partnerships and elevated service.
We are very proud of our significant progress our strong third quarter and year to date financial performance represents the hard work of many talented individuals' driving these efforts in.
And while we still have many opportunities in front of US there is a clear sense of excitement of course the character organization regarding what is to come on this journey. Thank you and with that I will hand, it over to Kathy.
Operator: Thank you.
Operator: And with that, I will hand it over to Kathy.
Kathy Shanley: Thank you, Carlos, and thank you to everyone joining us today. As Carlos highlighted in his remarks, we increased our full-year guidance given our continued strong performance for several quarters. I will start by providing the cash flow and overhead highlights for the quarter, and then talk about what we can expect for the remainder of the year.
Thank you Carlos and thank you to everyone joining us today.
Carlos highlighted in his remarks, we increased our full year guidance given our continued strong performance for several quarters.
I will start by providing the cash flow and overhead highlights for the quarter and then talk about what we can expect for the remainder of the year Q3, 'twenty 'twenty. Four results included cash provided by operating activities for Q3, 2024 was $20 8 million, which was down $1 9 million from the prior year.
Kathy Shanley: Q3 2024 results included cash provided by operating activities for Q3 2024 was $20.8 million, which was down $1.9 million from the prior year quarter of $22.7 million. Adjusted free cash flow for Q3 2024 was $20 million, which was down $1.4 million from the prior year quarter of $21.4 million, primarily driven by the company's shift and revenue mix towards pre-need cemetery sales, which have a slower cash conversion cycle, and $813,000 of expense coming from Trinity. We paid $15 million towards our outstanding debt this quarter, as we continue to drive down our leverage ratio, which is now at 4.3 times, down from 5.3 times at Q3 of 2023.
Quarter of $22 7 million adjusted free cash flow for Q3, 2024 was $20 million, which was down 1.4 million from the prior year quarter of 21.4 million, primarily driven by the company's shift in revenue mix towards Preneed Cemetery sales, which had a slow.
Our cash conversion cycle.
And 813000 of expense coming from Trinity, we paid $15 million towards our outstanding debt. This quarter as we continue to drive down our leverage ratio, which is now at four three times down from five three times at Q3 F. 2023.
Kathy Shanley: This reduction in leverage illustrates our commitment to disciplined capital allocation, along with the impact of our strong performance. We experienced a reduction in interest expense for the quarter of $1.2 million as a result of a more favorable fee schedule provided by the amendment to our credit agreement and our continued focus on reducing our debt.
This reduction in leverage illustrates our commitment to disciplined capital allocation along with the impact of our strong performance.
We experienced a reduction in interest expense for the quarter of $1 2 million as a result of a more favorable fee schedule provided by the amendment to our credit agreement and our continued focus on reducing our debt.
Kathy Shanley: Turning to our progress as it relates to capital expenditures, year-to-date, we have invested $6.7 million for Growth Cap Act. $5 million for Maintenance CapEx and $2.2 million for Trinity.
Turning to our progress as it relates to capital expenditures year to date, we have invested $6 7 million for growth Capex.
<unk> 5 million for maintenance, Capex, and $2 2 million for Trinity.
Kathy Shanley: Now shifting to overhead, overhead was $14.2 million for the quarter versus $12.8 million in the prior year quarter, resulting in just over a $1.3 million increase in overhead. The overhead variance was driven by $813,000 relating to Project Trinity costs as we prepare for our exciting implementation of this new ERP and customer experience platform early next year, and $400,000 of accrued expense for leadership and development opportunities as we focus on the continued education of our team to ensure the successful implementation of our various initiatives. Overhead as a percentage of revenue was 14.1% for the third quarter of 2024, which is down 10 basis points from the prior year quarter of 14.2%.
Now shifting to overhead overhead was $14 2 million for the quarter versus $12 8 million in the prior year quarter, resulting in just over a 1.3 million increase in overhead.
The overhead variance was driven by 813000 relating to project Trinity costs as we prepare for our exciting implementation and this new ERP and customer experience platform early next year and 400000 of accrued expense for leadership and development opportunities.
As we focus on the continued education of our team to ensure the successful implementation of our various initiatives.
Overhead as a percentage of revenue was 14, 1% for the third quarter of 'twenty 'twenty, four which is down 10 basis points from the prior year quarter, a 14, 2%.
Kathy Shanley: If you exclude costs associated with Project Trinity, overhead as a percent of revenue was 13.1% versus 14% in the prior year quarter, which is within our previously communicated range.
If you exclude costs associated with project Trinity overhead as a percent of revenue was 13, 1% versus 14% in the prior year quarter wishes within our previously communicated range.
Kathy Shanley: Now let's shift to what we can expect for the remainder of the year. Although we have increased our revenue guidance as we continue to grow our businesses organically, the growth is projected to be primarily driven by pre-need cemetery sales, which are collected over time. Additionally, the timing of certain payments for taxes, interest, and an additional payroll will also impact our adjusted free cash flow. For these reasons, adjusted free cash flow for the year will remain within the range of $55 to $65 million. For the full year, we expect to spend about $7 million for Growth CapEx, $8 million for Maintenance CapEx, and $3 million for Trinity, or roughly $18 million, which is slightly lower than our initial expectation of $20 million.
Now, let's shift to what we could expect for the remainder of the year.
Though we have increased our revenue guidance as we continue to grow our businesses organically. The growth is projected to be primarily driven by preneed cemetery sales, what's your collected overtime.
She only the timing of certain payments for taxes interest and an additional payroll will also impact our adjusted free cash flow.
For these reasons adjusted free cash flow for the year will remain within the range of $55 million to $65 million.
For the full year, we expect to spend about 7 million for growth Capex 8 million for maintenance Capex and $3 million for Trinity are roughly $18 million, which is slightly lower than our initial expectation of $20 million.
Kathy Shanley: For overhead, as we continue to focus on our strategic objectives, we expect to experience slightly elevated overhead costs, driven by Trinity. However, in the long term, as previously communicated, we anticipate overhead efficiencies after implementation is complete and in connection with other internal initiatives. For the full year, we expect adjusted overhead to finish within the 13 to 14 percent of revenue, which is within our expected range. We expect the leverage ratio to end the year in the 4.3 times to 4.6 times range, primarily due to the timing of our bond interest payment, cash tax payment, and the extra pay period previously mentioned.
Overhead as we continue to focus on our strategic objectives, we expect to experience slightly elevated overhead costs driven by Trinity.
However in the long term as previously communicated we anticipate overhead efficiencies after implementation is complete and in connection with other internal initiatives.
For the full year, we expect adjusted overhead to finish within the 13% to 14% of revenue, which is within our expected range.
We expect our leverage ratio to end the year in the 4.3 times to four six times range, primarily due to the timing of our bond interest payment.
Cash tax payments and the extra pay period previously mentioned.
Kathy Shanley: We expect to see a reduction in interest expense of approximately $1 million to $1.5 million in Q4 2024 as a result of a more favorable fee schedule provided by the amendment to our credit agreement and our continued focus on paying down our debt.
We expect to see a reduction in interest expense of approximately 1 million to $1.5 million in Q4, 'twenty 'twenty four as a result of a more favorable fee schedule provided by the amendment to our credit agreement and our continued focus on paying down our debt.
Kathy Shanley: That concludes my prepared remarks and I will turn it back over to the operator to open it up for questions.
That concludes my prepared remarks, and I will turn it back over to the operator to open it up for questions.
Operator: Thank you, ma'am.
Speaker Change: Thank you ma'am.
Operator: If you would like to ask a question, we are now going to conduct a question and answer session. Please press star 1 on your telephone keypad. Please make sure your mute function is turned off to allow your signal to reach our equipment. And again, please press star 1 to ask a question. And we'll pause for just a moment to allow everyone the opportunity to signal for a question.
If you would like to ask a question.
To conduct a question and answer session. Please press star one on your telephone keypad. If you could just a speaker phone. Please make sure. Your mute function is turned off to allow your signal.
Our equipment.
Speaker Change: And again, please press star one to ask a question.
And we'll pause for just a moment to allow everyone.
Speaker Change: To signal for questions.
Alex Paris: Our first question comes from Alex Paris with Barrington Research. Morning, everyone. Thanks for taking my questions and congratulations on the beat and raise in the quarter.
Our first question comes from Alex Paris, with Barrington Research.
Good morning, everyone and thanks for taking my questions and congratulations on the beat and raise in the quarter.
Kathy Shanley: Thank you very much, Alex. First off, I wanted to talk about the guidance. You had a super strong Q3 and you raised for your guidance.
Speaker Change: Thanks, very much Alex.
Speaker Change: First off site.
I wanted to talk about the guidance you had a super strong Q3, and you raised full year guidance given the results year to date.
Alex Paris: Given the results year-to-date and the updated guidance, consensus Q4 estimates at the midpoint will need to come down a bit again at the midpoint. A couple of questions. Why would revenue be down sequentially in the fourth quarter? Did Q3 borrow something from Q4? Perhaps related to pre-need, I suspect. Number two, what are the underlying assumptions? for the balance of the year. And then three, what would it take to be at the high end of the updated range, you know, because the revenue range is about $10 million, the EBITDA range is about $5 million, and the adjusted EPS range is about 10 cents.
Speaker Change: Uh huh.
And the updated guidance consensus Q4 estimates at the midpoint, we will need to come down a bit again at the midpoint.
Couple of questions.
Speaker Change: Why would revenue be down sequentially in the fourth quarter did Q3 borrow something from a Q4, perhaps related to preneed I suspect.
Number two what are the underlying assumptions are.
For the balance of the year and then three.
What would it take to be at the high end of the updated range you know because the revenue range is about $10 million. The EBITDA range is about $5 million and the adjusted EPS range is about 10 cents. So you know everything I. Just said was based on the midpoint, but what would it take to be at the high end.
Alex Paris: So, you know, everything I just said was based on the midpoint, but what would it take to be at the high end?
Kathy Shanley: That's a great question, Alex. I appreciate it.
Speaker Change: That's a great question.
Speaker Change: Sure.
Kathy Shanley: You know, when you think about where we are, the third quarter, as you know, it's always been the lowest quarter of every year when you have a normalized and seasonalized year. I thought that would be the case. We had a few surprises on the third quarter, which includes large sales above our expectations from Preeney Cemetery. And so, as we were forecasting the fourth quarter, and we're pretty close, we, of course, got October in the books, and we know what that's looking like.
You know when you think about where we are the third quarter. As you know it's always been the lowest quarter of every year. When you have a normalized centralized year I thought that won't be the case, where you had a few surprises.
Speaker Change: Third quarter, which includes large sales above our expectations from Preneed Cemetery.
And so as we were forecasting the fourth quarter and we're pretty close we of course got the October in the books and we know what Thats looking like we wanted to be very cautious and optimistic about electricals are coming off just a couple of months you know economic.
Kathy Shanley: We wanted to be very cautious and optimistic about, you know, elections are coming up just a couple of months, you know, economic data coming up. You hear news, you know, about discretionary spending being decreasing, and we wanted to keep it somewhat, you know, within the, well, we wanted to increase our outlook, keep it within a reasonably expecting of achievement range. As it relates to what it takes to get to the higher end of our, you know, outlook, I truly believe that's really where we're going to end up at the end of the day. We could have tightened a little bit more of the range.
Economic data coming up you hear news about discretionary spending been decreasing and we wanted to keep it somewhat you know within the well we wanted to increase our outlook keep it with you.
Speaker Change: Reasonably expecting.
But you've mid range as it relates to what it takes to get to the higher end of our outlook.
Outlook I truly believe that's really where we're gonna be and even today, we could have tightened a little bit more of the range. We just wanted to keep it somewhat consistent but our expectation seems to be more on the higher side of the range than the middle point.
Kathy Shanley: We just wanted to keep it somewhat consistent, but our expectations is to be more on the higher side of the range than the middle.
Alex Paris: That's great. Thank you for that. And if you were at the higher end, fourth quarter revenue would not necessarily be a sequential line or a sequential decline.
That's great.
Thank you for that and if you were at the higher end fourth.
Fourth quarter revenue would not necessarily be a sequential lineup.
Speaker Change: Decline it would be flattish.
Sequentially, but.
Kathy Shanley: It would be flattish, sequentially. So, second question related, what were the monthly trends in Q3, particularly on the funeral side? I know cemeteries have been going gangbusters here. Last quarter, for example, you had said that July volumes, the first month of the third quarter, were up slightly, but you still expected it to be down for the full quarter. So, same question. What was the trend in volumes in funeral during Q3? And then since October is in the books, what does October look like?
So second question.
Related what were the monthly trends in Q3, particularly on the funeral side I know a cemetery has been going gangbusters here, but.
Speaker Change: Uh huh.
Last quarter. For example, you had said that July volumes, you know the first month of the third quarter were up slightly but you still expected it to be down for the full quarter. So same question what was the trend in volumes in funeral. During Q3 and then since October is in the books what is October looked like.
Kathy Shanley: Yeah, that's another great question. So we continue to see, as you remember, at the beginning of the year, our expectation was to have a declining decline of volume from a comparable perspective due to the pull-forward effect from COVID. And that has been the case from Q1, Q2, and actually Q3, Q3 being the lowest decline that we have seen for this year at 1.2% on total contract volume.
Yeah. That's a great question. So we continue to see as you remember at the beginning of the year, our expectation was to have a declining.
I am a volume from a comparable perspective due to the pull forward effect.
Speaker Change: From Kobe and that has been the case from Q1, Q2, and actually Q3 Q3 being the lowest the decline that we have seen for this year at one 2% on total contract volume of power.
Kathy Shanley: However, you know, you could see that same trend July, August, and September, but October ticked up a little bit more on the decline. So that's one of the reasons why we also wanted to be cautious, not too much, but enough to decide to not extend the range too much and to keep the numbers as tight as we could. We don't expect, you know, it's a little off, honestly, on October to have like a 2.5% or not need decline.
Speaker Change: You know you can see that same trend July August September October.
Speaker Change: Picked up a little bit more on the decline. So that's one of the reasons why we also wanted to be cautious not too much but enough to decide to not not extend the range too much and to keep the numbers as tight as we could but we don't expect a little off honestly on October two two.
Like a 2.5% or not need a decline however, there.
Kathy Shanley: However, there is two businesses we closed down, right? We closed down a cremation business out of Bakersfield. So that, from a comparison perspective, you see that volume going away. And then we have a business in Buffalo, New York that we also shut down that building. That building was not providing the business that we required, was not really giving any positive EBITDA. And so actually we got some savings while their volume is negative. So not that too concerned about that, to be honest with you.
There is two businesses, we closed down right, we closed down information business.
Speaker Change: Steel so that from a copper conversion perspective, you see that volume going away and then we have a business in Buffalo New York that we also showed that the building the building was not providing the business that we required.
Not really giving any positive EBITDA and so actually we've got some savings while the volume is negative so not too concerned about that to be honest with you and we continue to be very optimistic about being a more normalized year through 2025.
Kathy Shanley: And we continue to be very optimistic about, you know, being a more normalized year through 2025.
Speaker Change: Got you and then a related question to the shutdowns that you just talked about on the Q2 conference call. You had already closed a couple of divestitures for around $11 million in proceeds you talked about some excess real estate that that could be sold as well that doesn't have any EBITDA.
Operator: Gotcha.
Alex Paris: And then a related question to the shutdowns that you just talked about. On the Q2 conference call, you had already closed a couple of divestitures for around $11 million in proceeds. You talked about some excess real estate that could be sold as well that doesn't have any EBITDA associated with it. And then in total, this might have been on the Q&A, you had the opportunity to get to $20 to $30 million with a relatively minor impact on EBITDA. I'm wondering, did you close any other divestitures in the third quarter? And what are your expectations for the balance of the year?
Associated with it and then in total this would have been on the Q&A you had the opportunity to get to $20 million to $30 million and relatively with a relatively minor impact on EBITDA.
I'm wondering did you close any other divestitures in the third quarter and what are your expectations for the balance of the year.
Speaker Change: Hey, Good morning, Alex This is Steve So we did close.
Steve Metzger: Good morning, Alex. This is Steve. So, we did close a real estate-focused transaction in Q3, and we have a couple of opportunities here in Q4.
Our real estate focus transaction in Q3, and we have a couple of opportunities here in Q4. So the previously communicated range of 20 to 30 million, we're still on target for that.
Steve Metzger: So, the previously communicated range of $20 million to $30 million, we're still on target for that. And I think at the end of the day, when we're looking at total EBITDA that we give up with these transactions for full year 24, it's around probably $3.5 million, and we do anticipate the proceeds to be on the high end of the $20 million to $30 million range.
Speaker Change: I think at the end of the day when we're looking at.
Speaker Change: Total EBITDA that we would give up with these transactions for full year 'twenty four it's around probably $3 5 million and we do anticipate the proceeds to be on the high end of the $20 million to $30 million range.
Alex Paris: Great.
Speaker Change: Great.
Steve Metzger: And that $20 million to $30 million range you expect at the high end, do you expect to complete that in 2024? Yeah, I'm sorry. Yeah, we do. We expect to close them in 2024.
And in that $20 million to $30 million range you expect at the high end do you expect to complete that in 2024.
Speaker Change: Hello.
Speaker Change: Yes, I'm sorry, yes, we do we expect some in 2024.
Alex Paris: Great. And then last question, you know, it seems to me you're a little ahead of schedule in your debt reduction.
Speaker Change: Great.
Speaker Change: And then the last question.
You know it seems to me you're a little ahead of schedule and your debt reduction you had previously communicated a.
Kathy Shanley: You had previously communicated a year-end target of 4.50 to 4.75 times, and now you're saying 4.30 to 4.60 by year-end. To what do you attribute that?
Our year end target of 4.50 to 4.75 times and now you're saying four three to four six by year end.
To what do you attribute that.
Kathy Shanley: two, you know, first off, and second off, when would you think you'd become more engaged in the M&A market? Thank you.
Two you know first off in second half.
Speaker Change: When when would you think you'd become become more engaged in the M&A market.
Thank you and thanks again for that question Alex is a very good question. So yes, we're a little bit ahead of where we thought we would be we have enable you know are our approach to disciplined capital allocation has been some very significant you know a successful results.
Kathy Shanley: Thanks again for that question. It's a very good question. So, yes, we're a little bit ahead of where we thought we would be. We have been able, you know, our approach to discipline capital allocation has been some very significant, you know, successful results. As a consequence to that, we have been able to allocate more cash to paying down our debt. And, of course, the amendment provided a much better result than expected as well.
Subsequent to that we have been able to allocate more cash to paying down our debt and of course the amendment.
<unk> provided a much better result than expected as well and please don't forget that we also need through the amendment as we reported on Q2 was the alignment between the adjusted.
Kathy Shanley: And please don't forget that what we also did through the amendment, as we reported on Q2, was the alignment between the adjusted numbers from the strategic review process and fees that were not fees, but, you know, separation agreement out in the first quarter of 2024. So that amendment also allows us to have a full financial leverage calculation ratio with the bank leverage calculation ratio. And so that decreased those numbers as well. So that's why it feels a little bit ahead than we expected. We do believe we will continue to be, other than the Q4, for the timing of those payments that we have to do with our bond and interest deals, the extra payroll and tax payments.
Numbers from the <unk> process, and and fees that will not fees, but you know our separation agreement.
Speaker Change: In the first quarter of 2024, so that will also allow us to have a full financial.
Labor's calculation ratio with our bank leverage calculation ratio and so that decrease those numbers as well. So that's why it feels that maybe the head than.
Speaker Change: And then we expected we.
We do believe we will continue to be other than the Q4 for the timing of those payments that we have to do with our bond and interest deals the extra payroll and tax payments. We truly believe we will continue to accelerate paying down our debt, especially as we close this drew that Steve just mentioned by the end of the call.
Kathy Shanley: We truly believe we will continue to accelerate paying down our debt, especially as we close the debentures that Steve just mentioned by the end of the quarter. We should be able to be in a very good spot as we, you know, kick off 2025. Our expectation, and we have verbally heard the support from the banks, that we will be able to go back to full M&A shape in 2025. So that's our goal, and that's the expectation.
We should be able to be in a very good spot as we you know.
Speaker Change: <unk> 2025.
Our expectation is.
We have barely heard the support from the banks that we will be able to go back to fool M&A. She being 2025. So that's that's our goal and thats the expectation.
Alex Paris: Great. Very helpful, guys.
Speaker Change: Great.
Operator: Thank you so much. I'll get back in the queue.
Very helpful guys. Thank you so much I'll get back in the queue.
Thanks, Alex Thank you Alex.
Operator: Thank you, Alex.
John Franzreb: And our next question comes from John Franzreb with Sidoti and Company. Good morning, everyone, and thanks for taking the questions. I'd like to go back to the pre-needs cemetery sales. I understand you collect some of the revenue over time, and I'm assuming some up front.
And our next question comes from John from 's, Webb with Sidoti and company.
Good morning, everyone and thanks for taking the questions.
I'd like to go back to the pre need cemetery sales.
Understand you collect some of the revenue over time and I'm, assuming some upfront.
John Franzreb: Should we be thinking about that business at an elevated level, the changes that you've made there sustainable so that you know that it can continue at this kind of a revenue run rate or is that an anomaly that we've seen in the last two quarters?
Should we be thinking about that business.
The level of the changes that you've made there sustainable so that you know that it can continue at this kind of a revenue run rate or is that an anomaly.
Seen in the last two quarters.
Kathy Shanley: Well, good morning, John. When you think about when we started with cemetery pre-need sales, that was back, you know, second half really of 2020. We put the structure, created the compensation plans, got the recording going, and we really kick off our cemetery pre-need strategy in 2021. It has been an evolution of performance through every quarter to quarter since then. What has happened since, you know, 2024, now we have, you know, more than two and a half years of, you know, CRM that is working better than, and it was still working on tweaking a few things.
Speaker Change: Well.
So good morning, John when you think about when we started with cemetery preneed sales. So that was back second half of 2020, we put this structure has greater compensation plans got the recruiting going and will really kick off our cemetery preneed strategy in 2021 and has been an evolution of our performance through every.
What are the water since then.
It has happened since you know 'twenty 'twenty four now we have you know more than two and a half years of a CRM that he's working better than and it wasn't working on tweaking a few things all of it is new.
Kathy Shanley: All of it is new when it comes to pre-need cemetery sales at Carriage, but it's working better than before. Marketing is doing an incredible job generating feeds that are now more efficient, more firm than ever before. And, of course, Shane Pudenz, our Senior Vice President of Cemetery Sales and Marketing.
When it comes to Preneed cemetery sales that Garrett is working better than before marketing is what any credible job generating leads that are now more efficient more.
Firm, then they never before and of course, <unk>, our senior Vice President of cemetery in cell.
Kathy Shanley: I'm sorry. continues to recruit the right people. We did make some changes.
Speaker Change: Sales and marketing I'm sorry.
Continues to recruit the right people Ive made some changes if you will.
Kathy Shanley: If you go back to our announcement in last summer, not last summer, but the summer of 2023, we had some overhead challenges and leadership challenges in some cemeteries. Since then, we have been able to recruit all the right leaders in the right cemeteries, all the right counselors and provide the training, the lead generation, and of course, the programs to sustain sales. We believe the growth we have received this year, it is sustainable from the point of view that we'll continue to grow, maybe not at the same rates. Keep in mind that since Carriage is somewhat new on the pre-need cemetery world, we had a lot to capture from.
Speaker Change: Back to our announcement.
Nonetheless, somewhere but somewhere else 2023 we have some overhead charges.
Immunity challenges seen some cemeteries. Since then we have been able to recruit all the right leaders in the right cemeteries all of the right customers and provide the training.
Speaker Change: Nation and of course.
Speaker Change: Programs to sustain sales we believe the growth. We have received these year E sustainable from the point of view that we will continue to grow maybe not at the same rates keep in mind that since scared she somewhat new on the Preneed Cemetery World. We had a lot to capture from I do think we will continue to grow and I've always been talking about.
John Franzreb: I do think we will continue to grow, and I've always been talking about low, double digits, so between 10 to 20% on a year-to-year basis over the next probably four to five years. And that has... been true for since we started. Impressive number of calls. It's very impressive. And then when we think about the sequential outlook in the quarter, as Alex pointed out, it's kind of muted relative to historical patterns, which typically the start of the winter and maybe more seasonality kicks in. Is there any reason that you see that not playing out other than the anomaly that you said that October was?
Speaker Change: <unk>.
Speaker Change: Low double digits, so between 10% to 20% on a year over year basis over the next probably four to five years and that has been.
Being true for so if we started.
Speaker Change: Impressive number constitutes very impressive.
And then where do we think about the sequential outlook in the quarter.
Pointed out.
Kind of muted relative to historical patterns, which typically.
Speaker Change: The start of the winter and maybe more seasonality kicks in.
Speaker Change: Is there any reason that you see that not playing out other than the anomaly that you said that October was.
Kathy Shanley: No, I do think there will be seasonality in 2025. I think, you know, depending on the winter for Q4, you know, what happens with that. And it's been interesting to see how in some areas the winter starts late, in some others it starts early. So that's very difficult to predict. However, at the end of the day, once you put all the fourth quarter together, we end up being somewhere around the same trends. And so I continue to expect first quarter of the year being the highest quarter, fourth quarter being the second highest quarter for a full year, second quarter being the third, and third quarter being the fourth.
No I do think there will be seasonality in 2025 I think.
Speaker Change: I think on the winter for Q4, you know what happens with that and it's been interesting to see how.
So Mary US the winter starts late in <unk>.
Speaker Change: Some others start early.
That's very difficult to predict however.
Speaker Change: The end of the day once you put all of that fourth quarter. Together. We ended up we ended up being somewhere around the same trends and so I continue to expect a first quarter of the year being the highest quarter.
Fourth quarter being the second highest quarter for a full year second quarter being the third third quarter before this quarter is really an exception because of the large deals I mentioned, but we do expect to have normalized seasonality in 2025.
Kathy Shanley: This other quarter is really an exception because of the large shelves I mentioned, but I do expect to have a normalized seasonality in 2025.
Kathy Shanley: Fair enough. And you highlighted the contract volume was down 1.2%. Do you think like when we start to hit the fourth quarter that we've anniversary to all the COVID impacts? I think we'll experience a decline in the fourth quarter, maybe not aligned to the 1.2% in the third quarter. I'm hoping that it is less. But it's also, you know, for us a little bit more analytical than just the pull-forward effect, because we're in the process of reviewing pricing throughout the funeral homes. And this is a quarterly, you know, meeting that happens. I shared some of that in our last call.
Fair enough and you highlighted the contract volume was down.
One, 2% so you'd be correct when we start to hit the fourth quarter that we've anniversaried all the COVID-19 impacts.
Speaker Change:
We will experience a decline in the fourth quarter, maybe maybe not aligned to the one 2% in the third quarter, hoping Debbie these less but he's also you know unfortunately with more.
Analytical than just the pull forward effect because we are in the process of reviewing pricing throughout the funeral homes and this is a quarterly.
Meeting that happens I shared some of that in our last call.
Kathy Shanley: And what happens is that we're, you know, improving pricing by evaluating through a data, if that's right pricing for that specific business in that specific community, and with the competition around it, and based on our market share gains or losses. And so we're adjusting, right? In some cases, we increase prices. In some cases, we leave the price flat. In some cases, we decrease price because we may be losing volume. So some of those, you know, volume losses may be blended within the pull-forward effect as we continue to adjust and maximize and find the perfect balance between price and volume growth.
And what happens is that where you're improving pricing by evaluating through what data. If that's the right pricing for that specific business in that specific community and with the competition around it and based on our market share gains or losses.
Speaker Change: So we're adjusting rates in some cases, we increased prices in some cases in some cases, we knew the price flat in some cases, we've increased price because we may be losing volume. So some of those you know volume losses may be blended within the pull forward effect as we continue to adjust and maximizing find the perfect balance between pricing and volume growth now.
Kathy Shanley: Now we're focusing on more volume growth and pricing because I believe we've been able to, you know, do some pretty significant progress in getting the price to where it is absorbing most of the inflationary costs we have experienced over the last probably two years. And so now it's the business-by-business making sure that we're not leaving any family behind, that we are able to keep those families and continue to grow market share business-by-business.
Speaker Change: Now, we're focusing on more volume growth and pricing because I believe we've been able to do some pretty significant progress in getting the price to worries are absorbing most of the especially because we have experienced over the last probably two years.
So now is the business may be this is making sure that we're not leaving any following behind but we were able to keep those families and continue to grow market share of business by business.
Okay, and one last question I'll get back into queue something to Kathy said.
Kathy Shanley: And one last question I got back into queue, something that Kathy said that caught my attention about overhead costs being 13 to 14 percent. I guess two things about it. Is that a full year number or fourth quarter number and is that a gap on a gap basis on an adjusted? I would say it's on an adjusted basis. We are taking out the unique items. more specifically with regard to Trinity. and what we're looking for is a more normalized. 13 to 14 percent in 2025. And John, just to add on that, our purpose statement in the three strategic objectives call for a few additional positions, right?
Speaker Change: Caught my attention about overhead cost.
13% to 14% I guess two things about it is that a full year number or a fourth quarter number and is that.
Speaker Change: GAAP on a GAAP basis on an adjusted basis.
I would say its on an adjusted basis, we are taking out the unique items.
More specifically with regard to Trinity.
Speaker Change: And when we're looking for is a more normalized.
Speaker Change: 13% to 14% in 2025.
Speaker Change: Okay.
Yes, Sir.
I'll just.
That you know, we our purpose statement and the three strategic objectives goal for a few additional positions right. We created a continuous improvement department would encourage we created a supply chain department and when they send department is really one person in each one of these so we create supply chain.
Kathy Shanley: We created a continuous improvement department within Carriage. We created a supply chain department, and when I say department, it's really one person in each one. So we create a supply chain, and we're really, really, and customer care, I apologize for that, I skipped that one. So there's an additional overhead compared to what we had in 2023, but you could see on the results that the focus on experience, the focus on improvement, the focus on growing with purpose, and, you know, showing organic growth in this industry is not easy, it's quite challenging, and we're able to show that we can.
Speaker Change: And.
We're really really in customer here I apologize for that I skipped that one so there are some additional overhead compared to what we had in 2023, but you could see on the results that the focus on experience focus on improvements the focus on growing with purpose and.
We're showing organic growth in this industry is not easy it's quite challenging and we've been able to show that we can it is a result of some of those additional team members and of course, the vocals that everybody else up carriage has in making this happen.
Kathy Shanley: It is a result of some of those additional, you know, team members, and, of course, the focus that everybody else at Carriage has in making this happen.
John Franzreb: Fair enough.
Speaker Change: Fair enough. Thank you for the additional color I appreciate it.
John Franzreb: Thank you for the additional call. I appreciate it.
Operator: Thank you, John.
Speaker Change: Thank you Jonathan.
Liam Burke: And our next question comes from Liam Burke with B. Reilly. Thank you.
And our next question comes from Liam Burke with B Riley.
Thank you good morning, Carlos Good morning, Steve and Kathy.
Liam Burke: Good morning, Carlos. Good morning, Steve and Kathy. Morning, Liam.
Speaker Change: Sure.
Speaker Change: Yes.
Liam Burke: Can we go back to funeral home and margins? There are a couple of things in your discussion, both in the Q&A and prepared statements, in terms of working with vendors to get down costs, and also your pricing strategy being, you know, market-specific and where you sit in terms of volumes.
Can we go back to funeral home in margins. There are a couple of things in your discussion both in the Q&A and prepared statements in terms of working.
Working with vendors to get down costs.
And also your pricing strategy being market specific and where you sit in terms of volumes.
Kathy Shanley: Could you give me a sense, is using this quarter's EBITDA margin of 37% as a benchmark, do you think you can move off up from that level, or is this just to maintain the steady state of the high 30s EBITDA? That's a great question, Liam. You know... When you think about it, Carriage model has always been very decentralized, right? They will continue to be somewhat decentralized, but more to a central-led operation, especially as it relates to supply chain. And while we're not going to be choosing the vendor for each one of the businesses, we are creating agreements that are beneficial, more beneficial than ever before, between the largest vendors of gaskets and urns across the United States.
Could you give me a sense as using this quarter's EBITDA margin of 37% as a benchmark do you think you can move off of up from that level or is this just to maintain the steady state of the high Thirty's EBITDA.
That's a great question Liam you know.
When you think path.
Carriage model, that's always been very decentralized right then we will continue to be.
Somewhat decentralized, but more to a centrally led operations, especially as it relates to supply chain and while we're not gonna be choosing the vendor for each one of the businesses. We are creating agreements that are beneficial more beneficial than every before between the largest vendors of gaskets and Earth's across the United States.
Kathy Shanley: When we did our analysis, we realized that that provides a significant opportunity to expand our margins, but not just focus on expanding the margins. It's also a focus on generating more volume by making sure we provide better pricing to those families and keep those families in our funerals. And so it's not just about expanding margins, it's also about what tools can we create to maximize the number of people that visit our businesses in each one of the markets. So I wouldn't commit yet to say this is something to expand our current funeral home margins, but I would say that the margins we have today on the funeral home side are within our range of sustainability for 2025.
When we did our analysis, we realize that that provides a significant opportunity to expand our margins, but not just focus on expanding the margins is also a focus on generating more volume by making sure we provide better pricing for those families and keep those families anr funerals and so it is not just about expanding margins is also about what tools can we create.
To maximize the <unk>.
Speaker Change: Number of people that visit our businesses in each one of the markets and so I wouldn't commit yet to say this is something to expand our current view on margins, but I would say that the margins. We have today are on the field home site or within a range of sustainability for 2025.
Great. Thank you Carlos and just going back to pre need.
Kathy Shanley: Great. Thank you, Carlos. And just going back to pre-need. Is this a function of a larger sales or the growth in the prenatal sales? Is this a function of a larger sales force or a more productive sales? It's a function of three things, both of which you mentioned. So it is a larger sales force, it is a more efficient and productive sales force, but we also had two off-cycle or, you know, not normal large sales. You know, for us, large sales are not as big as other, you know, competitors. But we did have a 1.0, almost $1.5 million sale in one cemetery, and this is probably the largest sale the cemetery ever had.
Is this a function of a larger sale the growth from the pre need sales. This is a function of a larger sales force or a more productive sales force.
Speaker Change: It's a function of three things both of which you mentioned so it is a larger sales force. It is a more efficient and productive sales force, but we also have to off cycle or not.
Not normal large sales force our sales are not as big as other competitors, but we've had a one point and almost $1 5 million that are selling one cemetery and this is probably the largest sale the cemetery you've ever had.
And we had another one another cemetery or 400000. So combined that is just shy of $2 million. So $2 million are pretty much not normal and difficult to repeat or predict from a large sale perspective, we do have a very strong strategy for large sales within the range of let's call. It 100000 to half a million.
Kathy Shanley: And we had another one in another cemetery of 400,000, so combined that is just shy of $2 million. So $2 million are pretty much not normal and difficult to repeat or predict from a large-sale perspective. We do have a very strong strategy for large sales within the range of, you know, let's call it $100,000 to half a million. But when you go above the half a million, it's more challenging to say we're going to be able to repeat that.
Speaker Change: But when you go above the half a million it's more challenging to say, we're going to be able to repeat that that's one of the reasons why the strength of the performance of the cemetery sales teams in the third quarter came out that impressive and so just keep that in mind for your numbers.
Kathy Shanley: That's one of the reasons why the strength of the performance of the cemetery sales teams in the third quarter came out that impressive. And so just keep that in mind for your notes.
Great. Thank.
Liam Burke: Great. Thank you, Carlos.
Carlos: Thank you Carlos.
Operator: Thank you, Liam.
Carlos: Thank you Liam.
George Kelly: And our next question comes from George Kelly with Roth's Capital Partners. Hey everybody, thanks for taking my question. So, maybe to start a follow-up on one of the prior questions, you mentioned that in 2025 you expect to have the financial flexibility again to be able to contemplate getting back in the M&A market. So, I'm just curious, what does the market look like right now? What have you seen with respect to multiples and just any kind of commentary on the M&A environment would be helpful? Thank you.
And our next question comes from George Kelly with Roth Capital Partners.
Everybody. Thanks for taking my questions.
So maybe to start a follow up on one of the prior questions you mentioned.
George Kelly: In 2025, do you expect to have the financial flexibility again to be able to contemplate.
Speaker Change: Getting back in the M&A market. So I'm just curious what does the market look like right now what have you seen with respect to multiples.
Just any kind of commentary on the M&A.
M&A environment would be helpful.
Speaker Change: Yeah. Good morning, George So yes, it's we've.
Steve Metzger: Good morning, George. So yeah, it's we've the past year, while we've been focused on paying down debt, we've been really working to continue our relationships, you know, with the different partners that we are looking to, to work with next year. So we think it looks good for 2025. We've got a group of businesses that we are focused on as we get back to growth for next year. And we do think that as interest rates come down, the environment becomes a little bit more friendly for folks, that we'll see more and more folks out there looking to execute on their succession plans.
The past year, while we've been focused on paying down debt, we've been really working to continue our relationships.
Speaker Change: With the different partners that we are looking to work with next year. So.
We think it looks good for 2025, we've got a group of businesses that we are focused on as we get back to growth for next year.
And we do think that as interest rates come down the environment becomes a little bit more friendly for folks that will see more and more folks out there looking to.
Speaker Change: Execute on their succession plans. So what we've also been doing this year is really preparing to accelerate growth over the next five years. So Carlos has alluded to this but from systems to people to teams to approach, we're making sure that the integration playbook is really refined so that we can grow at an accelerated rate I think the other thing.
Steve Metzger: So what we've also been doing this year is really preparing to accelerate growth over the next five years. So Carlos has alluded to this, but from systems to people to teams to approach, we're making sure that the integration playbook is really refined so that we can grow at an accelerated rate. I think the other thing that, you know, we've talked about that we're excited about is, you know, the call it a little under four years right before we got back to paying down debt. We only did seven transactions, but those seven transactions today account for 25% of all the company's revenue and about 38% of all of the company's So we did that in a very short period of time with very few transactions.
We've talked about that we're excited about it.
Speaker Change: Yes.
Speaker Change: Call It little under four years right before we got back to paying down debt.
Only did seven transactions, but those seven transactions today account for 25% of all of the company's revenue and about 38% of all of the Companys EBITDA. So we did that in a very short period of time with very few transactions and that blueprint is the one that we're going to follow as we get back to growth next year or so.
Steve Metzger: And that blueprint is the one that we're gonna follow as we get back to growth next year. So like I said, we're just, as Carlos mentioned in his opening remarks, it's kind of full steam ahead for us and we're excited to get out of the gate.
Like I said, we're just as Carlos mentioned in his opening remarks, it's kind of full steam ahead for us and we're excited to get out of the gate next year.
Steve Metzger: That's really helpful. So what I'm hearing is, you've been kind of building the pipeline, even while you over the last couple years, where you've been focused on debt pay down. And, and the assets you're looking at are are meaningful. They're large, you're kind of focused on larger assets. Is that a fair characterization? That's right.
That's really helpful. So what I'm hearing is.
You've been kind of building the pipeline even over the last couple of years, where <unk> been focused on debt pay down and and the assets Youre looking at or are meaningful there. They're large you're kind of focused on larger assets is that a fair characterization.
That's right if you kind of like I say, if you look at what we've done from 19 to greenlawn in 'twenty three everything we're focused on will fit into those.
Steve Metzger: If you kind of, like I said, if you look at what we've done from 19 to Greenlawn in 23, everything we're focused on will fit into those, you know, a couple different categories, very, very large with a Fairfax or Greenlawn, then really nice combos like what we have in Charlotte and up outside of Dallas. And then there'll be some smaller tuck-in businesses that make a lot of sense for us based on, you know, significant presence in certain markets. That's kind of, that's going to be our focus.
Speaker Change: Couple of different categories, very very large with a fairfax or greenlawn, then really nice combos like what we have in Charlotte.
Outside of Dallas, and there'll be some smaller tuck in businesses that make a lot of sense for us based on <unk>.
Speaker Change: Significant presence in certain markets.
Speaker Change: Going to be our focus moving forward.
George Kelly: Okay, that's great.
Okay, that's great and then second question.
George Kelly: And then second question, Also, kind of a follow-up, I guess, to one of the prior questions that Carlos, you mentioned, I'm thinking high level here for 2025. And you mentioned your expectation that you can continue on the pre-need cemetery side. You can keep doing kind of low double-digit growth for the foreseeable future.
Speaker Change:
Also kind of a follow up I guess to one of the prior questions. Carlos you mentioned I'm thinking high level here for 2025.
And you mentioned your expectation that you can continue on the Preneed Cemetery side, you can keep doing kind of low double digit growth for the foreseeable future.
George Kelly: I'm curious about in 2025, just, you know, sticking to that kind of high level, how should we think about the funeral business? Is there more pricing tailwind to be realized next year? And do you anticipate like volumes to grow next year?
I'm curious about in 2025, just sticking to that kind of high level. How should we think about the funeral business is there more pricing tailwind to be realized next year and do you anticipate like volumes.
Speaker Change: To grow next year.
Kathy Shanley: That's a very good question, George. So, when you think about the funeral home side business... If the volumes go flat just from a comparison perspective related to the pull-forth effect, that will be a phenomenal thing, right? Because now we have a good baseline. The pricing will make a significant difference as it has continued to be a significant difference. It may cut revenue that we lost through that 1.2 percent, for example, in the third quarter on volume loss.
That's a that's a very good question George So when you when you think about the funeral home side.
Speaker Change: <unk>.
Speaker Change: If the volumes.
Go flat just from a comparison perspective related to the pull forward effect that'll be a phenomenal thing right because now we have a good baseline.
I think we will make a significant difference as it has continues to be.
<unk> significantly differentiate make up revenue that we lost through that one 2% for example in the third quarter on volume loss.
Kathy Shanley: However, I do think where the strategy is more compelling is our Passion for Service program is going to be rolled out in the first quarter of 2025. That's an experienced approach to elevating service for families. That's going to be a significant piece to gaining market share in every business and business by business. Of course, it's going to be a rollout throughout the year. It's not going to be everybody on first quarter, but we should be able to see the impact as we continue to grow that.
However, I do think where the where the strategy is more compelling is.
Speaker Change: Our passion for service program is going to be rolled out through the first quarter of 2025 that's.
Serious approach to elevating service for families that is going to be a significant piece to gaining market share in every business and business by business of course is going to be.
Speaker Change: A rollout throughout the year is that I've gotta be everybody on the first quarter, but we will we should be able to see the impact as we continue to grow that the second thing we have been testing one.
Kathy Shanley: The second thing, we have been testing, I won't share too much about it, but we've been testing ways to enhance our website visits and improve our e-commerce strategy. I do believe for funeral homes, and I believe that's going to be significant. The results we have seen over a 60-day period is compelling enough for us to do a full rollout for 2025. And so that's going to be another significant story.
Share too much about it but we've been testing ways too and he has our website visits and improve our E Commerce strategy I do believe for funeral homes.
That's going to be significant the results we have seen over a 60 day period is compelling enough for us to do.
Do a full rollout for 2025, and so that's gonna be a another significant story and the therapies to these one George is be arranged funeral sales that strategy continues to be on the early stages of performance. When you think about it even though we signed the agreement in May of 2023.
Kathy Shanley: And the third piece to this one, George, is prearranged funeral sales. That strategy continues to be on the early stages of performance. And when you think about it, even though we signed the agreement in May of 2023, the launch started within September, slow rollout business by business in September of 2023. And it's just been over a little full year of fully being rolled out. We still have a lot of counselors to hire for selling prearranged funeral. We still need to find funeral directors that have a license, of course, to sell prearranged funeral in some states that have regulation around prearranged funeral with the license.
Speaker Change: The launch started in September slow rollout business by business in September of 2023, and he's just been over a little full year of fully being rolled out we still have a lot of call centers to hire four four semi be arranged funeral, we still need to find field directors that.
Have a license of course to sell bearings funeral in some states that have regulation around re arrange for you all with the license.
Kathy Shanley: And still have some other strategies related to lead duration. And our partnership with RICOA and NGL continues to grow, continues to be, to know each other better, to continue to partnership growth and collaborate in such a way that I have high expectations from that point of view.
Speaker Change: And.
Still have some other strategies related to.
Speaker Change: And the duration.
Speaker Change: And our partnership with <unk> and NGL continues to grow continues to be to know each other better to continuous to partnership you know growth and collaborate in such a way that I have high expectations from that point of view I believe you know if you would use a.
Kathy Shanley: I believe, you know, if we would use, you know, baseball as a metaphor for this one, I know Mel used to like to use those metaphors and it's probably appropriate after last night's game. We're probably on the fifth inning of prearranged funeral.
Baseball metaphor.
Metaphor for this one I know Mel used to like to use those metaphors any firm to appropriate after last night's game, we're probably on the fifth inning of PRA funeral.
Kathy Shanley: Okay, that's great. And then last question for me is kind of similar. Curious, again, high level for 2025. What are the most significant headwinds and tailwinds with respect to margin? You've been, this year, fairly consistent above that kind of 30% consolidated EBITDA margin. And I know you've got, I don't think you brought it up on this quarter's conference call, but that $2 million of cost savings that you've articulated before for next year.
Okay. That's great and then last question for me is kind of similar but curious again high level for 2025.
What are the headwinds most significant headwinds and <unk> with respect to margin.
You've been this year.
Fairly consistent above that kind of 30% consolidated EBITDA margin and I know you've got.
I don't think he brought it up on this quarter's conference call, but that $2 million of cost savings that you've articulated before.
Speaker Change: For next year any other kind of major.
Kathy Shanley: Any other kind of major headwinds or tailwinds for margin next year? Nothing that we could forecast other than unexpected black swan events or things from an economical perspective that we have no control over. We believe the 30% is sustainable. We certainly are upgrading the systems process and management of cost to that performance and I feel pretty positive about that.
Headwinds or tailwind for margin next year.
Nothing that we could forecast other than unexpected.
<unk> events or things from an economic perspective.
I have no control over we believe the 70% is sustainable we certainly are operating the systems process and.
Speaker Change: Management of cost to that.
Speaker Change: All of us.
Speaker Change: And I feel pretty positive about that.
George Kelly: Okay, thank you.
Speaker Change: Okay. Thank you.
Alex Paris: And we'll move to our next question from Alex Paris with Barrington Research. Hey guys, sorry just one more question and point of clarification. Kathy, you said adjusted overhead in the range of 13 to 14 percent of revenue for this year. I think you also said for next year. What are you excluding from overhead in terms of the adjusted overhead projection? For example, Trinity. You said Trinity will be $3 million for the full year, so that gets excluded also.
And we will move to our next question from Alex Paris with Barrington Research.
Alex Paris: Hey, guys, sorry, just one more question and point of clarification.
Alex Paris: Kathy you said adjusted overhead in the range of 13% to 14% of revenue.
Alex Paris: For this year I think you also said for next year.
What are you excluding from overhead in terms of the adjusted overhead projection for example.
Trinity You said Trinity will be $3 million for the full year, so that gets excluded.
Kathy Shanley: And then just a related question. I'm just trying to get to a fourth quarter estimate. What was adjusted overhead as a percentage of revenue year-to-date for the nine months? So other things that were excluded for the full year include things like severance expenses and Project Kirby. Those would be the things that would be excluded from a full year. which we do not expect to reoccur in 2025. Gotcha, and how much was? Severance and Project Kirby for fiscal 2024. You know, you said that Trinity would be about three million dollar impact for the full year. What was the severance impact and what was the Project Kirby impact?
Speaker Change: And then just a related question I'm, just trying to get to our fourth quarter estimate.
What was adjusted overhead as a percentage of revenue year to date for the nine months.
Okay. So other things that were excluded for the full year include things like severance expenses and project Kirby.
Those would be the things that would be excluded from a full year perspective.
Which we do not expect to reoccur in 2025.
Gotcha, and and and how much was it.
Severance and project Kirby.
Speaker Change: For fiscal 2024.
<unk> said that Trinity will be about $3 million impact for the full year.
What was the severance impact and what was the project Kirby impact.
Kathy Shanley: combined, they're about 11.5 million. So Trinity, Severance, and Kirby is about $11.5 million. No, Trinity is by itself, Project Trinity through... Gotcha.
And there are about $11 5 million.
So <unk>.
Speaker Change: Trinity severance and Kirby is about $11 5 million.
I know Trinity is by itself.
Speaker Change: Project through.
Alex Paris: Yes.
Got you.
Alex Paris: Okay, that's helpful.
Okay. That's helpful. Thank you.
Alex Paris: Thank you.
Operator: Thank you, Alex. And ladies and gentlemen, there are no further questions in queue at this time.
Alex Paris: Thank you Alex.
Speaker Change: And ladies and gentlemen, there are no further questions in queue. At this time I'd like now to turn the conference back to Carlos for any additional or closing remarks.
Carlos Quezada: I'd like now to turn the conference back to Carlos for any additional or closing remarks. Thank you, O'Briener. This quarter's performance reflects the hard work, the commitment to our purpose statement, our strong partnerships, and the dedication of every Carriage team member. We are proud of our progress and we are energized by what lies ahead as we continue to elevate our services, grow with purpose, and deliver meaningful experiences to those we serve. We're building on our legacy and unlocking new potential every day.
Carlos: Thank you operator.
Carlos: This quarter's performance reflects the hard work and commitment to our purpose statement, our strong partnerships and the litigation of every carriage team member.
Speaker Change: We are proud of our progress and we are energized about what lies ahead as we continue to elevate our services grow with purpose and deliver meaningful experiences to those we serve.
We're building on our legacy and unlocking new potential everyday.
Operator: Thank you for your trust in Carriage, and we look forward to sharing more success with you when we report our fourth quarter in the full year. Have a great day, everyone.
Thank you for your trust in carriage and we look forward to sharing more success with you when we report our fourth quarter and full year have a great day everyone.
Operator: And ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect and have a great day.
Speaker Change: And ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect and have a great day.
Carlos: [music].
Carlos: Yeah.
Carlos: [music].
Carlos: Yeah.