carriage services, inc

Important disclosures appear on the last page of this report.

The Henry Fund Henry B. Tippie School of Management

Benjamin Martin [Benjamin‐[email protected]]

Carriage Services, Inc. (CSV) March 31, 2016

Consumer Discretionary – Deathcare Services Stock Rating HOLD

Investment Thesis Target Price $33 ‐ $39 The Henry Fund recommends a Hold rating for Carriage Services. While they appear to be slightly undervalued, the discount is not enough to counter the risks inherent in their business. A summary of the primary points of this thesis are as follows: Drivers of Thesis

High reliance on debt to grow – After losing 95% of their market value in the early 2000’s and 87% during the financial crisis, investors are wary of their stock. This has afforded them little access to equity capital and made debt their primary source of acquisition financing.

Risky business model – A significant portion of Carriage’s business relies on preneed funeral/cemetery sales, which are economically sensitive and cash flow negative at the outset. Given the reliance on debt, this has led to financial pressure and margin compression during economic downturns.

Recent management turnover – Management turnover is expected following a significant loss of market value. However, Carriage has had trouble keeping top managers, even in recent years. For example, the company has had four different CFOs since 2011.

Growth in cremations – Cremations are quickly replacing burials as the preferred method of disposition. This is important because Carriage generates about 1/3 the revenue per cremation contract vs burial.

Risks to Thesis

If the cremation rate increases less than expected or if Carriage is more successful than they have been in the past at cross selling additional services, they may be able to outperform expectations and grow their top line at a faster rate.

Carriage is able to regain access to equity capital and reduce their debt burden. This would help make them more resilient to economic downturns.

Henry Fund DCF $39.54Relative P/S $26.87Relative P/FCF $25.53Price Data Current Price $22.5052wk Range $19.03 – 25.96Consensus 1yr Target $27.67Key Statistics Market Cap (B) $358.1Shares Outstanding (M) $16.63Institutional Ownership 73.7%Five Year Beta 0.85Dividend Yield 0.44%Est. 5yr Growth 5.3%Price/Earnings (TTM) 19.4xPrice/Earnings (FY1) 18.5xPrice/Sales (TTM) 1.6xPrice/Book (mrq) 2.3xProfitability Operating Margin 20.1%Profit Margin 8.6%Return on Assets (TTM) 8.6%Return on Equity (TTM) 12.4%

Earnings Estimates Year 2013 2014 2015 2016E 2017E 2018E

EPS $0.83 $0.84 $1.16 $1.22 $1.32 $1.41

growth 29.7% 1.2% 38.1% 5.0% 8.6% 6.5%

12 Month Performance Company Description

Carriage Services is a leading provider of deathcare services in the United States. The company owns and operates 167 funeral homes and 32 cemeteries in 11 states. Funeral services include both traditional burial and cremation services. Cemetery operations include interment rights and various products (caskets, urns, etc.). Carriage markets their services on both an “at‐need” (time of death) and “preneed” (planned prior to death) basis.

19.4

12.4 11.1

21.718.3

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20.6

25.5

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15

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30

P/E ROE EV/EBITDA

CSV SCI Other Consumer Services

Source: FactSet

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A M J J A S O N D J F M

CSV S&P 500

Source: FactSet

EXECUTIVE SUMMARY

After their IPO in 1996, Carriage Services gained a name for themselves as one of the few consolidators in the deathcare industry. However, aggressive, debt‐fueled expansion led to a near bankruptcy and a 95% loss in market value following the market crash in early 2000. Carriage then spent the better part of the next decade struggling to regain their focus and rebuild the trust of shareholders.

Following the implementation of new operating standards and a framework for selective acquisitions, Carriage appears to have found their footing. However, this does not mean that they are without risk. As a result of their early missteps, the company has had very little access to equity markets as a source of capital. Thus, future growth relies primarily on debt to finance acquisitions. This risk is compounded by their reliance on preneed funeral/cemetery sales, which are sensitive to economic fluctuations. Also, the company has experienced some significant management turnover in recent years, which does not inspire confidence in their ability to execute. Finally, while the company appears to be undervalued, we feel our lack of trust in the management team warrants a Hold rating.

COMPANY DESCRIPTION

Carriage Services is a leading provider of deathcare products and services on both an at‐need (time of death) and preneed (planned prior to death) basis. Underlying demand is driven by total deaths in the United States, which typically grow at about 1% annually. Additional growth is generated through the acquisition of funeral homes and cemeteries. Carriage typically takes a hands‐of approach to the operation of their funeral homes and cemeteries, which allows them to capitalize on the reputation of the acquired businesses and provide them with the benefits of scale (better price on products, access to capital, etc).

Segment Revenue

Carriage Services’ total revenue can be broken down as follows:

As we can see, the majority of Carriage’s revenue comes from their funeral home operations. Additionally, financial revenue (trust earnings, commission revenue, and finance charges) has historically been about 8% of the total.

Funeral Home Operations

Carriage Services’ largest segment owns and operates 167 funeral homes in 27 states throughout the United States. This segment provides both traditional burial and cremation funeral services and sells funeral merchandise (urns, caskets, flowers, etc.). Some of the key factors affecting segment profitability include the demographic trends in key operating regions (eastern states typically have higher cremation rates), the reputation of acquired funeral homes, and the ability to successfully raise prices.

Funeral Operating Revenues

73%

Cemetery Operating Revenue19%

Funeral Financial Revenue

4%

Cemetery Financial Revenue

4%

CSV 2015 Revenue Breakdown

Source: CSV 2015 10‐k

The majority of funeral contracts are sold on an at‐need basis. However, 19% of contracts are sold on prior to the time of need. When these sales are made, one of two things happens. Proceeds are either recorded as deferred revenue or, more commonly, they are deposited into a trust fund that is invested in a diversified portfolio of fixed income, equities, and cash that is intended to offset any inflation in funeral costs. Revenue is not recognized until funeral services are provided and funds are withdrawn. Carriage earns a management fee on these assets and is allowed to withdraw a small percentage of trust earnings prior to providing the funeral but this depends on the regulations in the states where the contract was sold. In addition to depositing funds in trusts, Carriage generates a small portion of revenue by funding future funeral expenses with life insurance contracts on which they earn a commission.

The chart above shows the trend in Carriage’s cremation contract sales. Cremations are projected to reach 70% by 2025, slightly ahead of the overall projections for the industry give Carriage’s exposure to funeral homes on the East Coast, which typically have higher rates of cremation.

Average revenue for a burial contract has grown at approximately 2.3% per year since 2006. Going forward, average revenue is projected to grow in line with the CBO’s inflation projections12. Over the last 5 years, Carriage is has grown average revenue per cremation at approximately 0.8%. We expect this low growth will continue going forward given that Carriage has largely been unsuccessful reducing the number of direct cremations (just cremation, no service or viewing) and that cost is the primary motivator for consumers who choose this as an option9.

Preneed contracts

19%

Atneed contracts

81%

2015 Funeral Contract Distribution


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80%

2006

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Total cremation rate 2006 ‐ 2025


Historical

Projected

7% CAGR

ProjectedHistorical



Cemetery Operations

Carriage Services’ cemetery segment currently owns 32 cemeteries throughout the US. As businesses, cemeteries primarily sell interment rights for grave sites and mausoleum spaces and related merchandise (markers, etc.). Cemeteries are sales driven businesses so the size and success of Carriage’s sales force is a key aspect to their success.

Sales of cemetery interment rights are split pretty evenly between at‐need and preneed rights. Preneed rights are typically sold on an installment basis and revenue allowed to be recognized once 10% of the contract amount has been collected. Carriage earns a small amount of revenue from servicing these installment contracts. Proceeds from preneed sales are also deposited in a trust, just like preneed funeral sales. Finally, 10% of cemetery receipts are required to be deposited in a perpetual care trust fund. Income from the fund is used for maintenance and upkeep of cemetery facilities.

Similar to the average revenue per burial contract, the average revenue per interment has increased about 2% per year for the last 5 years. Future increases have been pegged to the CBO’s projected inflation.

Key Risks

Key risks to Carriage Services are as follows:

The deathcare business is based on trust and reputation. As a result, success is largely dependent on just a few individuals.

The company is highly leveraged. With approximately 80% debt‐to‐total capital, any contraction in their business puts them at risk for default. This happened in the early 2000’s and nearly happened again during the most recent recession.

Growth depends on the ability of management to identify and correctly value acquisition targets.

Financial revenue is highly dependent on current financial market conditions.

Gains in market share are largely dependent on preneed sales. However, because Carriage incurs costs when making these sales but is required to deposit proceeds in a trust fund, cash flow may be affected if preneed sales grow too quickly.

Increases in the rate of cremation will affect Carriage Service’s top line as these contracts only generate about one third the revenue of a traditional burial.

Atneed Interment Rights50%

Preneed Interment Rights51%

2015 Cemetery Interment Rights Distribution



ProjectedHistorical

2.3% CAGR

Management

Over the last 10 years one of the only consistent members of the executive team at Carriage Services has been their CEO and founder Melvin Payne. While the company has undergone some understandable management turnover in the past (near bankruptcy in 1999/2000), it is the recent turnover that is most concerning. Since 2011, Carriage has gone through four Chief Financial Officers: Terry Sanford (2011), Cliff Haigler (2012), William Heiligbrodt (2013/2014), and Viki Blinderman/Carl Brink (Co‐CFOs named in 2015). This is a troublesome trend given that this is a highly leveraged company and their success depends largely on their ability to manage their debt. A lack of consistency with their top financial managers does not garner much confidence in their ability to do so.

RECENT DEVELOPMENTS

FY 2015 Earnings

Full year 2015 sales and earnings both came up short of expectations, although just barely. Revenue of $242.5 M came up about $1 M short of consensus and earnings missed by $0.04. However, the reason for the miss was the larger than expected incentive compensation paid out to top funeral home directors, a positive performance indicator. Additionally, revenue and earnings guidance of $251M and $1.71/share was in‐line with expectations (although below our model) and the stock rallied 1.7% on the news. On their earnings call, questions from analysts were relatively limited as Carriage no longer answers questions regarding quarterly performance in an attempt to draw the attention of investors to the long‐term performance of the business13.

INDUSTRY TRENDS

The deathcare industry in the United States is an industry that is steeped in tradition. Underlying demand is driven by total deaths, which are expected to increase at a faster rate beginning in 2019 as the “Baby Boomer” generation begins to pass away. While generations past have traditionally chosen to be buried, cremation has increased in popularity, with long‐term implications for the profitability of the industry. The industry has historically been dominated by local funeral homes and cemetarians and competition has been low. While still highly

fragmented, the industry has begun to consolidate over the last several decades as large chains have entered the market. A major contributor to this trend is growth in demand for preneed arrangements, driven by the increase in information available to consumers.

Aging US Population

Following World War II, the United States experienced a population boom. Dubbed the “Baby Boomer” generation, this group includes individuals that are aged between 52 and 70.

In the decades following this post‐war population boom, the population of the United States has grown older and is expected to continue to do so. Currently, the percentage of the population that is 65 years old or older is projected to grow 3% annually through 2019 vs. growth in the total population of 1% over the same time period3. The year 2019 is an important date because this is the year that the Baby Boomer generation is expected to begin passing away, which will drive the total Y/Y growth in deaths to a peak of 1.8% in 20323.

Source: United States Census Bureau

2019 Baby Boomers begin to pass away

Burial & Cremation Rates

One of the biggest trends in the deathcare industry is the increase in cremations as a method of disposal. Based on the most recent data (2013), the national cremation rate is expected to hit 50% in 20186.

The biggest implication of this trend to the deathcare industry is that cremations typically generate less revenue for the funeral home. According to the latest industry statistics, the price of a typical cremation can range from $1,100 for a direct cremation7 (just the cremation, no service) to about $6,000 for a cremation with a funeral service and viewing6. This is in contrast to the median price of $7,2006 for a traditional funeral and burial. These cost savings are the primary motivation for the increased preference for cremation9.

Demand for Preneed Services

While the concept of selling a funeral service or burial plot prior to the time of need is not new, it has grown in popularity over the last two decades. In fact, according to a 1998 telephone survey conducted by the AARP, 43% of Americans age 50 or older had been contacted regarding the purchase of a funeral in advance10. By selling funeral/cemetery services in advance, chains like Carriage Services or Service Corporation International are able to ensure that they will have a demand for their services in the future. They are also able to invest the proceeds into a trust fund and generate additional revenue by charging management fees and keeping a certain percentage of trust earnings. At Service Corporation International (the largest funeral home chain in America), preneed revenue accounted for 49% of total revenue in 201511.

Industry Consolidation

In the past, funeral arrangements were typically made at the time of death and the local funeral home was the default choice, resulting in low competition among industry participants. However, with the advent of the internet, the amount of information available to consumers has increased dramatically and a growing number of consumers (18% according to an AARP survey)8 are shopping around to find the best prices. As a response to this increased competition, several companies have emerged as industry consolidators and are attempting to capitalize on economies of scale to secure market share and grow their businesses. The major publically‐traded players in the deathcare industry are as follows:

Despite the growth of these companies over the last 20+ years (10 for STON), the industry is still highly fragmented with 86% of funeral homes still privately owned by families or individuals6, representing a large opportunity for continued consolidation.

Regulatory Environment

The deathcare industry is lightly regulated at the federal level but state regulations can be more stringent and present a unique challenge to companies who act as consolidators. Federal oversight falls under the jurisdiction of the Federal Trade Commission’s (FTC) Funeral Rule. The rule prohibits certain practices that have been deemed unfair and requires companies to give their customers accurate, itemized pricing information.

At the state level regulations are more varied, the result of the historically fragmented nature of the industry. While there are currently 18 states that have adopted the FTC’s Funeral Rule, the rest have their own set of rules regulating the industry. Currently, state regulators have been focusing their efforts on the preneed market. Common issues addressed include: licensure requirements for preneed sales, requirements for placing funds in trusts, contract cancellation provisions, and consumer protection recovery funds8.

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2005 2010 2013 2014E 2015E 2020E 2030E

Cremation vs. Burial Rates2005 ‐ 2030

Cremation BurialSource: National Funeral Directors Association

Company Ticker % Market Share

Service Corp. Intl. SCI 12%

Carriage Services, Inc. CSV 1%

StoneMor Partners STON 1%

Source: National Funeral Directors Association

MARKETS AND COMPETITION

Due to the traditionally family‐owned nature of the deathcare industry, market share is primarily determined through the heritage and reputation of the funeral home/cemetery, although quality of service, competitive pricing and well maintained, conveniently located facilities are also important considerations.

The two most prominent companies in this industry, Service Corp. Intl. (SCI) and Carriage Services (CSV), have been public since the 1990’s and have followed a similar path to the present. Immediately following their IPO’s, both of these companies pursued aggressive consolidation strategies that were primarily financed with debt. While initially successful, the market crash in 1999 caused performance to stumble and both companies lost access to credit markets and underwent a painful deleveraging process while simultaneously shedding about 95% of their market capitalization.

Following some management turnover in the mid‐2000’s, both SCI and CSV refocused and began pursuing selective acquisition strategies. Currently, both companies operate decentralized businesses, preferring a hands‐off approach with regard to their acquired funeral homes and cemeteries. This allows them to benefit from the established reputations of the previous owners and still creating scale in their businesses. This is appealing to acquisition targets for two reasons. First, it allows owners to focus on providing the highest level of service to their clients without having to worry about the business side of their operation. Second, most funeral homes do not have a succession plan in place for when the funeral director

retires. Acquisition by a larger company allows the directors to cash out of their business while ensuring that their business will still survive.

While there is little to no differentiation between the products and services offered by industry participants (SCI has been attempting to establish a brand but still typically leaves the original name of acquired businesses unchanged), competition for market share is not as intense as one would expect. Again, the highly fragmented nature of the industry means that there are plenty of acquisition targets and only a few consolidators. While this will likely change in the future, the largest companies still rarely come into direct competition with each other. Instead, most of the competitive pressure comes from established local funeral homes/cemeteries. This is where companies like SCI and CSV have an advantage. While it is tough to compete in a new market against a competitor with a better reputation, the lower cost structure (and better prices) generated through the benefits of scale can provide a serious benefit.

As noted in Industry Trends, demand for deathcare services is driven by the total number of deaths. While the growth in total deaths in 2015 was relatively flat at 2.6 million, total deaths are expected to grow at a 1% CAGR over the next 3 years and then accelerate to a 1.6% CAGR from 2019 – 2032, the result of the passing of the Baby Boomer generation. This acceleration in demand bodes well for the industry and should allow well managed companies to achieve stable growth going forward.

Peer Comparisons

The table on the next page provides an overview of some of the operating statistics from the three public companies who operate in the deathcare industry. While there are many regional and local factors at play that may influence results in the short term, the companies who are likely to outperform are the ones who can responsibly manage their debt, continue to grow profitably, and return cash to shareholders.

Source: Yahoo Finance

Service Corp. Intl. – The largest funeral home consolidator in the US with approximately 14% market share. While the company has gotten into financial trouble in the past (near bankruptcy in early 2000’s), they now have the healthiest balance sheet and highest returns in the sector. Recently, SCI has been focusing on deleveraging the company further to protect against economic shocks. Furthermore, returning cash to shareholders is a high priority. SCI reinstated their dividend in 2005 and has raised it 8 times since. Additionally, the company has repurchased 41% of their outstanding shares since 2004. Going forward, it is likely that SCI will be the strongest performer.

StoneMor Partners LP (STON) – STON is the only one of the three companies presented here that is structured as an MLP. This gives them a very attractive dividend yield but also presents some unique risks. While CSV and SCI operate far more funeral homes than cemeteries, STON is the opposite, with 274 cemeteries and just 69 funeral homes. Because the cemetery business is highly reliant on preneed sales (60% of STON’s revenue is preneed), which are cash flow negative at the outset, their business mix has led to persistent concerns over the sustainability of their distributions. Additionally, the rising cremation trend is likely to hurt the cemetery business going forward. For these reasons, it is likely that STON will not be a strong performer going forward.


Carriage Services Service Corp. Intl. StoneMor Partners

Market Cap 358.1$ 4,829.0$ 83.5$

Enterprise Value 687.2$ 7,876.0$ 1,126.2$

Est.2016 Revenue Growth 0.9% 1.9% 12.6%

Est. 2016 EBITDA Growth 2.1% 2.3% 9.6%

Est. 2016 EBITDA Margin 25.9% 26.4% 31.3%

LT Debt/Total Capital 39.0% 27.0% 18.9%

# of Funeral Homes 167 1,535 105

Avg Rev per Service 5,441.0$ 5,188.0$ 3,076.3$

# of Cemeteries 32 469 307

Avg Rev per Interment 2,988.0$ Not reported 1,620.0$


ECONOMIC OUTLOOK

While the underlying source of demand is relatively stable and economically insensitive, the deathcare industry is more cyclical than first glance would suggest. This is largely due to the increasing importance of preneed sales, which have a tendency to be influenced by consumer spending. Also, due to the high percentage of fixed income products in their preneed trust portfolios, interest rates also play an important role.

Real GDP per Capita

While it has certainly displayed some volatility, real GDP per capita has grown at an average rate of 1.4% from 1990 through 2014. Growth picked up to 1.6% in 2015 and, according to the USDA, is set to rise 2.2% in 2016 before moderating to 1.7% by 2020. This relatively stable forecast is a positive for preneed funeral/cemetery sales.

Personal Consumption Expenditures

Due to their discretionary nature, personal consumption expenditures are an important economic driver of preneed funeral and cemetery contracts. While PCE dipped in 2015, the CBO expects it to return to a more normal 2% level over the next two years.

Interest Rates

Preneed trust fund accounts typically have a high percentage of fixed income products (70% for Carriage). Thus, interest rates play an important role in generating returns on these portfolios. While the CBO is forecasting the 10‐year Treasury bond yield to increase to about 3.5% by 2017, the Henry Fund team is less optimistic with a median expectation 2.3%. In either case, the rising yields are expected to have a positive effect on the income generated by these portfolios. However, this does not mean that rising rates do not also pose a risk. Because these assets are intended to fund future funeral/cemetery expenses, if rate increases cause asset values to decline below the expected cost of these services, then Carriage may take a serious hit to their operating cash flows. Given the largely cash flow negative nature of their business, this will likely have an adverse effect on the company’s financial position.

CATALYSTS FOR GROWTH

Higher than expected death rates – While total deaths in the US have historically been fairly predictable, were they to pick up for any reason (strong flu season, etc.) it will be positive for CSV shares.

Share repurchases – Currently CSV has a $25M authorization outstanding. They are opportunistic with their repurchases but it should be positive for

Source: Congressional Budget Office

Source: Congressional Budget Office

earnings if they are able to further reduce their share count. The model currently assumes $10M in share repurchased (3% reduction in share count) in 2016.

Earnings reports (est. 5/3 – 5/9) – Should be a positive catalyst if results are in‐line with guidance of $249 ‐ $253M and EPS of $1.69 ‐ $1.73.

INVESTMENT POSITIVES

Very stable demand business – Due to its nature, the deathcare industry is not going anywhere. There will always be demand for these services.

Opportunistic share repurchases – CSV authorized and repurchased $45M in their own stock in 2015. Their current $25M authorization could reduce their share count by an additional 5% ‐ 7%, depending on prices.

INVESTMENT NEGATIVES

High use of leverage to finance current acquisitions – Not necessarily a negative but it has been shown to put significant financial pressure on the company during recessions.

Preneed sales are initially cash flow negative – As preneed sales grow, it may become more difficult for Carriage to meet their financial obligations, particularly during economic downturns.

Management turnover – A lack of consistency among top finance managers is particularly concerning given the first two factors listed here.

Increasing demand for cremation – This trend puts negative pressure on the company’s revenue outlook as cremations generate about 1/3 the revenue of a traditional burial.

Financial revenue is subject to market fluctuations – Since a portion of the company’s revenue and financial position is tied to the future movements of financial markets, events outside of the company’s control may have a serious impact on their business.

VALUATION

The target price range of $33 ‐ $39 is based on a discounted cash flow model. Because free cash flow is the crucial driver of value, the assumptions underlying revenues, expenses, working capital, net PP&E, and other operating assets/liabilities are the most critical.

Revenue

Revenue is the most important factor in the estimation of FCF and is based on a number of factors. To arrive at a forecast, total revenue was divided into 3 segments: funeral home operations, cemetery operations, and financial revenue.

Funeral Home Operations

Total revenue from the operation of funeral homes is forecasted to grow at a compound rate of 2.7% to $231M by 2025. There are three major drivers underlying this estimate: total deaths in the United States, CPI inflation, and the 2025 cremation rate. Estimates for these variables were based on the following:

Total Deaths – In 2016, the total number of deaths are estimated to grow at a 1.3% CAGR to 2.65M by 2025 based on the US Census Bureau’s total deaths estimate in their 2013 (most recent) projections for the US population3.

CPI Inflation – The model assumes inflation between 1.3% and 2.4% out to 2020. This is based on the Congressional Budget Office’s (CBO) most recent Budget and Economic Outlook (published Jan 2016)12.

2025 Cremation Rate – The National Funeral Home Directors Association is expecting the national rate of cremations to exceed 70% by 2030. The model assumes that Carriage will hit this 70% mark by 2025 given their higher exposure to the eastern states, which tend to have higher rates of cremation. Furthermore, the model assumes this rate will grow in a linear fashion, giving Carriage a 51% cremation rate in 2016.

In the funeral home segment, revenue is generated through the sale of both at‐need and preneed contracts. Furthermore, at‐need contracts can be divided into three categories: cremation contracts, traditional burial contracts, and “other” contracts (generally merchandise with no related services). To arrive at an estimate for total segment operating revenue, estimates for average revenue for each of these contracts is required as well.

Total At‐Need Funeral Contracts – Assuming one contract equals one death, the model forecasts total at‐need contracts growing in‐line with total deaths plus a marginal increase in share of .02 per year (in‐line with historical trend). This gives Carriage a total

of 34,109 at‐need contracts in 2025 (3.2% CAGR) which represents 0.97% of all deaths in the United States.

“Other” Revenue – Revenues generated form “other” contracts are estimated to come in at $4.5 M in 2016 and grow to $7.4M by 2025. Contracts classified as “other” have held fairly steady at 7.2% ‐ 7.7% of total at‐need contracts. By taking the average of the last 5 years (7.4%), we arrive at an estimate of 1,888 “other” contracts in 2016. Average revenue of $2,383 is pegged to the inflation rate assumption.

Cremation Revenue – The estimate of 13,086 cremation contracts is based on the total number of at‐need contracts in 2016 and the cremation rate of 51%. Average revenue per contract of $3,233 is assumed to increase at 0.8% per year, slightly lower than inflation. This assumption was made in light of Carriage’s lack of success in reducing the number of direct cremations over the last 5 years and because price is the most important factor to consumers when choosing cremation over burial. All together revenue from cremations is expected to come in around $42.3 million in 2016 which is forecasted to grow to grow at a 7.9% CAGR to $83.2M by 2025.

Burial Revenue – The remaining 10,680 contracts are all assumed to be burial contracts. Like the “other” contracts, average revenue per burial contract of $8,796 is benchmarked against the CBO’s inflation estimate. Given these assumptions, total revenue from burial contracts is forecasted to be $93.9 M in 2016 which declines at a 1.2% CAGR out to 2025 as burials move out of favor.

Total Preneed Revenue – A total of 8,498 preneed contracts are expected to be sold in 2016, consistent with the 5‐year average of preneed contracts as a percentage of total at‐need contracts (33.1%). When a preneed contract is sold, the proceeds from the sale are deposited into a preneed trust. However, as contracts mature and the service is performed revenue is recognized. To arrive at an estimate for the number of contracts recognized as revenue, we must first come up with an estimate for preneed backlog. The model assumes that the backlog will grow in line with total deaths in the United States. From here we can back into an estimate for the number of preneed funeral contracts that are recognized as revenue in each year (7,500 in 2016 and 9,882 in 2025). By assuming these contracts follow the same cremation/burial distribution as the at‐need

contracts and using the same average revenue estimates, we arrive at a total of $44.7M in preneed revenue in 2016 which grows to $56.4M by 2025.

Cemetery Operations

Cemetery operating revenues are anticipated to decline 11.1% in 2016. This estimate is based on the total number of interment rights sold, the distribution of at‐need and preneed interment rights, and the average revenue per right.

Total Interment Rights – Total interment rights sold in 2016 are expected to come in at 15,810. As of 2015, Carriage owned 32 cemeteries. Given that this number has never been higher than 33 over the last 10 years and Carriage’s stated preference for the funeral home business, this number is expected to remain constant. Interment rights per cemetery are expected to improve by 15 in each year out to 2025. This is in‐line with historical increases and consistent with the assumption that Carriage will keep growing their cemetery business without purchasing new cemeteries.

At‐need and Preneed Interment Rights – Each year Carriage disclosed the percentage of interment rights that can be classified as preneed. This percentage is anticipated to be 48.5%, a 1% reduction from 2015 but in‐line with the slight downward trend that this metric has exhibited over the last 5 years. Given this assumption, the model predicts that 7,668 preneed and 8,142 at‐need rights will be sold in 2016. Revenue from preneed sales is recognized once 10% of the contract value has been received by Carriage. In 2016, the model assumes 92.4% of total preneed interment revenue will be able to be recognized, in‐line with historical averages.

Average Revenue per Interment Right – Average revenue of $3,028 is pegged to the CBO’s inflation projection.

Financial Revenue

Financial revenue is expected to decline slightly to $17.3 million 2016 and grow at a 2.1% CAGR to $24.1M by 2025. There are four sources of revenue in this segment: preneed funeral commission income, preneed funeral trust earnings, preneed cemetery trust earnings, and preneed cemetery finance charges.

Preneed Funeral Commission Income – As previously mentioned, some of Carriage’s preneed funeral contracts are secured through life insurance contracts, on which the company earns a commission from the insurance broker. Due to a lack of data on the number of these types of arrangements, commission income is assumed to be a constant percentage (4.9%) of total preneed funeral revenue.

Preneed Funeral & Cemetery Trust Earnings – A certain portion of Carriage’s preneed trust investments are allowed to be withdrawn each year and recognized as income. However, the amount and circumstances of these withdrawals are regulated at the state level and each one is different. Due to this, the model forecasts preneed funeral/cemetery trust earnings to be in‐line with the 5‐year average of earnings as a % of prior year trust investments.

Preneed Cemetery Finance Charges – Preneed cemetery interment rights are typically sold on an installment basis which are classified as preneed cemetery receivables and Carriage earns a small fee for servicing these accounts. The model forecasts this source of revenue as 5.8% of preneed receivables, in‐line with the 5‐year average.

Expenses

Key expense assumptions include cost of goods sold, depreciation & amortization, and general & administrative expenses.

Cost of Goods Sold – This expense is broken down into smaller funeral and cemetery COGS and forecasted as a percentage of the respective segment revenue. Overall, this line item is expected to improve about 180 bps by 2025 as the company continues to gain scale.

Depreciation & Amortization – Depreciation is forecasted as a percentage of prior year net PP&E and amortization is forecasted as a percentage of deferred charges and other non‐current assets. Both metrics have held relatively stable over the last 5 years and this trend is expected to continue.

General and Administrative – Forecasted as a constant percentage of revenue. This metric has held fairly constant between 11% ‐ 12% over the

last 5 years. As a result, G&A is expected to be 11.7% of revenue in the forecast period.

Key Balance Sheet Accounts

To arrive at 2016 FCF, forecasts for several balance sheet accounts are needed. The most important of which are net working capital, net PP&E, and “other” long‐term operating assets and liabilities.

Net Working Capital – All working capital items are forecasted to remain in‐line with their 5‐year historical averages as a percentage of revenue (except inventory, which is based on COGS). Overall, NWC is forecasted to increase to $13.5M in 2016 and grow modestly to $17.6M in 2025.

Net PP&E & Cemetery Property – The forecast for net PP&E is derived from estimates for capital expenditures and depreciation. CapEx as a percentage of revenue is expected to decrease to 7% from the unusually high 12.5% in 2015. This is more in line with historical averages. After accounting for depreciation, net PP&E is expected to grow 1.5% in 2016. Cemetery property is forecasted to be $75.6 M, the same as 2015 given that no cemetery acquisitions have been modeled.

Other Long‐Term Operating Assets & Liabilities – These accounts include deferred charges/other non‐current assets, the present value of operating leases, deferred preneed funeral/cemetery revenue, and other LT liabilities. All of these accounts are forecasted to remain constant as a percentage of revenue. The exception is the PV of operating leases, which is expected to grow in line with net PP&E.

Results of Model & Sensitivity Testing

After all line items have been forecasted, 2016 free cash flow is expected to come in at $43.4 M and grow to $53.3 in 2025. This yields a substantial discount from the March 31, 2016 price of $22.50. However, we still recommend a Hold rating given the amount of risk we see at Carriage Services relating to their management and leverage.

After running sensitivity analyses on several of the key input variables, a target price range of $33 ‐ $39 seems reasonable. Overall, free cash flow is most sensitive to NOPLAT growth in the continuing value period, growth in the cremation rate, the 2016 inflation rate (as a proxy for the increase in average revenue per contract for several

inputs), the increase in average revenue per cremation contract, beta, and the equity risk premium.

Model vs. Consensus Estimates

Currently, the model predicts total 2016 revenue of $245.5M and EPS of $0.94 vs consensus of $251.1 M and $1.48/share. The majority of the differences are in the cemetery segment, where the model predicts a decline to $42.7 M and consensus is forecasting an increase to $49.9 M. While it is unclear exactly where the difference is, it is highly likely that analysts are forecasting future acquisitions of cemeteries in this segment.

Another difference between the street and the model is the share count. Currently, analysts are forecasting a lower share count vs the model. This is likely the result of higher share repurchases. The model assumes that Carriage will repurchase about $10 M in shares each year. However, it is worth noting that this is just a rough estimate given that the company has stated that they intend to repurchase stock but has given no real guidance as to the amount or timing.

KEYS TO MONITOR

To recap, Carriage Services is uniquely positioned to grow as an industry consolidator in a highly fragmented industry and appears to be slightly undervalued. However, the risk inherent to their business model warrants a larger discount than the 2% ‐ 15% implied by their valuation. Additionally, turnover in top level management does not inspire confidence in Carriage’s ability to manage their debt or grow responsibly. For this

Some factors that may cause a change of opinion include:

Increase in total deaths – This may be caused by the baby boomer generation passing away sooner than expected.

Disciplined acquisitions – If Carriage can demonstrate that they can be responsible in regards to the timing and financing of funeral home acquisitions, we might be a little more willing to accept the risk.

Pullback in share price – a pullback to around $20/share would yield a much more comfortable +40% discount, a more comfortable range for the risk we see in this stock.

REFERENCES

1. Bloomberg Terminal 2. FactSet 3. Census.gov Population Projections

http://www.census.gov/population/age/data/2013.html

4. Centers for Disease Control and Prevention. National Center for Health Statistics. VitalStats. Mortality Data.

5. http://www.cdc.gov/nchs/nvss/new_nvss.htm#new_mortality

6. National Funeral Directors Association http://nfda.org/about‐funeral‐service‐/trends‐and‐statistics.html

7. Cremation Resource http://www.cremationresource.org/cremation/what‐is‐the‐cost‐of‐human‐cremation.html

8. AARP Report on the Deathcare Industry http://www.aarp.org/money/estate‐planning/info‐2000/aresearch‐import‐197‐IB44.html

9. Wirthlin Worldwide: 2005 Study of American Attitudes Toward Ritualization and Memorialization http://sifuneralservices.com/common/cms/documents/2005Wirthlin_A.pdf

10. AARP: Older Americans and Preneed Funeral & Burial Arrangements http://assets.aarp.org/rgcenter/consume/d16999_national.pdf

11. Service Corporation International 2015 Earnings Press Release http://investors.scicorp.com/phoenix.zhtml?c=108068&p=irol‐newsArticle&ID=2137289

12. Congressional budget Office: The Budget & Economic Outlook 2016 – 2026 (Jan 2016) https://www.cbo.gov/publication/51129

13. Carriage Services 2015 Conference Call Transcript http://seekingalpha.com/article/3904206‐carriage‐services‐csv‐ceo‐mel‐payne‐q4‐2015‐results‐earnings‐call‐transcript?part=single

14. Service Corporation International 10‐k http://investors.sci‐corp.com/phoenix.zhtml?c=108068&p=irol‐sec

15. StoneMor Partners 10‐k http://www.stonemor.com/investors/default.aspx

IMPORTANT DISCLAIMER

Henry Fund reports are created by student enrolled in the Applied Securities Management (Henry Fund) program at the University of Iowa’s Tippie School of Management. These reports are intended to provide potential employers and other interested parties an example of the analytical skills, investment knowledge, and communication abilities of Henry Fund students. Henry Fund analysts are not registered investment advisors, brokers or officially licensed financial professionals. The investment opinion contained in this report does not represent an offer or solicitation to buy or sell any of the aforementioned securities. Unless otherwise noted, facts and figures included in this report are from publicly available sources. This report is not a complete compilation of data, and its accuracy is not guaranteed. From time to time, the University of Iowa, its faculty, staff, students, or the Henry Fund may hold a financial interest in the companies mentioned in this report.

CV NOPLAT Growth Beta

39.60$ ‐2% ‐1% 0% 1% 2% 3% 39.60$ 0.5 0.6 0.7 0.8 0.9 1 1.1 1.2

10% 29.27 31.07 33.51 37.03 42.53 52.32 1% 87.62 85.37 83.21 81.14 79.15 77.23 75.39 73.61

12% 28.38 30.56 33.51 37.77 44.41 56.24 2% 77.23 73.61 70.24 67.11 64.18 61.43 58.86 56.44

14% 27.75 30.19 33.51 38.29 45.75 59.04 3% 68.65 64.18 60.13 56.44 53.07 49.99 47.14 44.51

16% 27.28 29.92 33.51 38.68 46.76 61.14 4% 61.43 56.44 52.02 48.06 44.51 41.30 38.39 35.74

18% 26.91 29.71 33.51 38.99 47.54 62.78 5% 55.29 49.99 45.37 41.30 37.70 34.49 31.61 29.01

20% 26.61 29.54 33.51 39.23 48.17 64.09 6% 49.99 44.51 39.81 35.74 32.16 29.01 26.20 23.68

22% 26.37 29.40 33.51 39.44 48.68 65.16 7% 45.37 39.81 35.11 31.07 27.56 24.49 21.78 19.36

24% 26.17 29.28 33.51 39.60 49.11 66.05 8% 41.30 35.74 31.07 27.10 23.68 20.71 18.10 15.79

26% 26.00 29.18 33.51 39.74 49.47 66.80

28% 25.85 29.10 33.51 39.86 49.78 67.45

30% 25.73 29.03 33.51 39.97 50.05 68.01

Annual improvement in interment rights/cemetery

39.60$ ‐20 ‐16 ‐12 ‐8 ‐4 0 4 8 12 16 20

50% 43.23 43.94 44.65 45.35 46.06 46.76 47.46 48.16 48.87 49.57 50.27

55% 40.79 41.49 42.20 42.90 43.61 44.31 45.01 45.72 46.42 47.12 47.82

60% 38.34 39.04 39.75 40.46 41.16 41.86 42.56 43.27 43.97 44.67 45.37

65% 35.89 36.60 37.30 38.01 38.71 39.41 40.12 40.82 41.52 42.22 42.92

70% 33.44 34.15 34.85 35.56 36.26 36.97 37.67 38.37 39.07 39.77 40.47

75% 30.99 31.70 32.40 33.11 33.81 34.52 35.22 35.92 36.62 37.32 38.02

80% 28.54 29.25 29.96 30.66 31.36 32.07 32.77 33.47 34.17 34.87 35.57

85% 26.09 26.80 27.51 28.21 28.92 29.62 30.32 31.02 31.72 32.42 33.12

90% 23.65 24.35 25.06 25.76 26.47 27.17 27.87 28.57 29.28 29.98 30.68

2016 Inflation Rate

39.60$ ‐3.00% ‐2.50% ‐2.00% ‐1.50% ‐1.00% ‐0.50% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00%

‐3.00% 32.87 33.05 33.23 33.41 33.59 33.77 33.95 34.13 34.31 34.49 34.67 34.85 35.03

‐2.50% 33.46 33.64 33.82 34.00 34.18 34.36 34.54 34.72 34.90 35.08 35.26 35.44 35.62

‐2.00% 34.07 34.25 34.43 34.61 34.79 34.97 35.15 35.33 35.51 35.69 35.87 36.05 36.23

‐1.50% 34.72 34.90 35.08 35.26 35.44 35.62 35.80 35.98 36.16 36.34 36.52 36.70 36.88

‐1.00% 35.39 35.57 35.75 35.93 36.11 36.29 36.47 36.65 36.83 37.01 37.19 37.37 37.55

‐0.50% 36.09 36.27 36.45 36.63 36.81 36.99 37.17 37.35 37.53 37.71 37.89 38.07 38.25

0.00% 36.81 36.99 37.17 37.35 37.53 37.71 37.90 38.08 38.26 38.44 38.62 38.80 38.98

0.50% 37.58 37.76 37.94 38.12 38.30 38.48 38.66 38.84 39.02 39.20 39.38 39.56 39.74

1.00% 38.37 38.55 38.73 38.91 39.09 39.27 39.45 39.63 39.81 39.99 40.17 40.35 40.53

1.50% 39.20 39.38 39.56 39.74 39.92 40.10 40.28 40.46 40.64 40.82 41.00 41.18 41.36

2.00% 40.06 40.24 40.42 40.60 40.78 40.96 41.14 41.32 41.50 41.68 41.86 42.04 42.22

2.50% 40.96 41.14 41.32 41.50 41.68 41.86 42.04 42.22 42.40 42.58 42.76 42.94 43.12

3.00% 41.89 42.07 42.25 42.43 42.61 42.79 42.97 43.15 43.33 43.51 43.69 43.87 44.05

CV ROIC

Cremation Rate in 2025

Equity Risk

Premium

2016 Increase in Avg.

Revenue per Cremation

Carriage Services, Inc.

Revenue Decomposition

Fiscal Years Ending Dec. 31 2013 2014 2015 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

Note 22

Funeral Segment

Funeral operating revenues 153.9 164.3 176.4 185.6 191.3 196.9 202.4 207.4 212.7 217.4 222.2 226.9 231.0

Y/Y growth 5.11% 6.76% 7.38% 5.2% 3.1% 2.9% 2.8% 2.5% 2.6% 2.2% 2.2% 2.1% 1.8%

Total deaths in the United States 2,596,993 2,626,418 2,619,000 2,650,000 2,681,000 2,712,000 2,743,000 2,777,000 2,811,000 2,848,000 2,887,000 2,927,000 2,971,000

Y/Y growth in deaths 3.46% 1.13% ‐0.28% 1.18% 1.17% 1.16% 1.14% 1.24% 1.22% 1.32% 1.37% 1.39% 1.50%

Projected Y/Y inflation rate 1.3% 2.3% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%

Average Inflation Rate 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3%

Number of funeral homes 161 164 167

Total atneed funeral contracts 21,729 24,462 24,830 25,654 26,490 27,339 28,200 29,105 30,023 30,988 31,990 33,019 34,109

Atneed contracts % of total deaths 0.84% 0.93% 0.95% 0.97% 0.99% 1.01% 1.03% 1.05% 1.07% 1.09% 1.11% 1.13% 1.15%

Total cremation revenue 39.1 42.4 46.0 49.7 53.7 57.9 62.4 67.1 72.2 77.5 83.2

Total cremation rate 46.9% 47.3% 48.9% 51.0% 53.1% 55.2% 57.3% 59.5% 61.6% 63.7% 65.8% 67.9% 70.0%

Est. total cremation contracts 10,191 11,571 12,142 13,086 14,072 15,099 16,170 17,303 18,482 19,730 21,043 22,416 23,876

Y/Y growth in cremation contracts 4.7% 13.5% 4.9% 7.8% 7.5% 7.3% 7.1% 7.0% 6.8% 6.8% 6.7% 6.5% 6.5%

% direct cremations 67.1% 67.0% 65.8%

Avg. revenue per cremation 3,029 3,085 3,217 3,243 3,269 3,295 3,321 3,348 3,375 3,402 3,429 3,456 3,484

Y/Y growth in avg. revenue ‐1.78% 1.85% 4.28% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8%

0.84%

Revenue from burial contracts 94.6 93.9 94.2 94.2 93.9 93.3 92.3 91.0 89.2 86.8 84.1

% burial contracts 45.9% 45.3% 43.9% 41.6% 39.5% 37.4% 35.3% 33.2% 31.1% 29.0% 26.9% 24.8% 22.6%

Total burial contracts 9,974 11,081 10,900 10,680 10,469 10,227 9,955 9,660 9,331 8,977 8,593 8,172 7,722

Y/Y growth in burial contracts 1.8% 11.1% ‐1.6% ‐2.0% ‐2.0% ‐2.3% ‐2.7% ‐3.0% ‐3.4% ‐3.8% ‐4.3% ‐4.9% ‐5.5%

Avg. revenue per burial 8,350 8,581 8,681 8,794 8,999 9,213 9,433 9,661 9,895 10,134 10,377 10,627 10,885

Y/Y growth in avg. revenue 0.38% 2.77% 1.17% 1.3% 2.3% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%

Revenue from "other" contracts 4.5 4.8 5.0 5.3 5.6 5.9 6.3 6.6 7.0 7.4

% "other" contracts 7.2% 7.4% 7.2% 7.4% 7.4% 7.4% 7.4% 7.4% 7.4% 7.4% 7.4% 7.4% 7.4%

"Other" contracts 1,564 1,810 1,788 1,888 1,950 2,012 2,076 2,142 2,210 2,281 2,354 2,430 2,510

Y/Y growth in other contracts 1.7% 15.7% ‐1.2% 5.6% 3.3% 3.2% 3.1% 3.2% 3.2% 3.2% 3.2% 3.2% 3.3%

Avg. revenue for other contracts 2,246 2,116 2,352 2,383 2,438 2,496 2,556 2,618 2,681 2,746 2,811 2,879 2,949

Y/Y growth in avg. revenue 6.34% ‐5.79% 11.15% 1.3% 2.3% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%

Total preneed funeral contracts sold 8,125 6,940 7,797 8,498 8,775 9,056 9,341 9,641 9,945 10,265 10,597 10,938 11,299

Preneed contracts % of total atneed contracts 37.4% 28.4% 31.4% 33.1% 33.1% 33.1% 33.1% 33.1% 33.1% 33.1% 33.1% 33.1% 33.1%

Backlog of funeral contracts 80,714 82,842 84,353 85,351 86,350 87,348 88,347 89,442 90,537 91,729 92,985 94,273 95,690

Preneed funeral contracts recognized as revenue 8,996 4,812 6,286 7,500 7,777 8,058 8,343 8,546 8,850 9,073 9,341 9,649 9,882

Cremations 4,219 2,276 3,074 3,826 4,131 4,450 4,784 5,081 5,448 5,777 6,144 6,551 6,917

Burial 4,777 2,536 3,212 3,674 3,646 3,607 3,559 3,465 3,402 3,296 3,196 3,098 2,965

Total preneed revenue 52.7 28.8 37.8 44.7 46.3 47.9 49.5 50.5 52.0 53.1 54.2 55.6 56.4

Contracts for trust (871) 2,128 1,511 998 998 998 998 1,095 1,095 1,192 1,256 1,288 1,417

Cremations (408.50) 1,006.54 738.88 509.31 530.38 551.44 572.51 651.02 674.13 758.76 826.27 874.64 992.01

Burial (462.50) 1,121.46 772.12 489.14 468.07 447.01 425.94 444.05 420.95 432.94 429.84 413.68 425.15

Additions to trust (5.1) 12.7 9.1 6.0 5.9 5.9 5.9 6.5 6.4 7.0 7.3 7.4 8.1

Cemetary Segment

Operating revenues 40.5 42.9 46.7 42.7 45.0 47.5 50.0 52.6 55.3 58.1 61.0 64.0 67.1

Y/Y growth 1.0% 5.9% 8.9% ‐8.4% 5.4% 5.3% 5.3% 5.2% 5.1% 5.1% 5.0% 4.9% 4.9%

Total # of cemeteries 32 32 32 32 32 32 32 32 32 32 32 32 32

Total interment rights sold 14,400 15,170 15,615 16,296 16,782 17,268 17,754 18,240 18,726 19,212 19,698 20,184 20,670

Interment rights per cemetery 450 474 488 503 518 533 548 563 578 593 608 623 638

% of revenue from preneed interment rights 48.0% 48.0% 49.5% 48.5% 48.5% 48.5% 48.5% 48.5% 48.5% 48.5% 48.5% 48.5% 48.5%

Est. preneed interment rights sold 6,912 7,282 7,729 7,904 8,139 8,375 8,611 8,846 9,082 9,318 9,554 9,789 10,025

Est. atneed interment rights sold 7,488 7,889 7,885 8,392 8,643 8,893 9,143 9,394 9,644 9,894 10,144 10,395 10,645

Avg. price per interment 2,811 2,825 2,988 3,027 3,097 3,171 3,247 3,325 3,406 3,488 3,572 3,658 3,747

Y/Y Growth 1.0% 0.5% 5.8% 1.3% 2.3% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%

% of rights recognized as revenue 93.0% 91.3% 91.0% 92.4% 92.4% 92.4% 92.4% 92.4% 92.4% 92.4% 92.4% 92.4% 92.4%

Total preneed revenue prior to trust deposit 18.1 18.8 21.0 22.1 23.3 24.5 25.8 27.2 28.6 30.0 31.5 33.1 34.7

Deposits in perpetual care trust (10% of receipts) 1.81 1.88 2.10 2.21 2.33 2.45 2.58 2.72 2.86 3.00 3.15 3.31 3.47

Total preneed cemetery revenue recognized 16.3 16.9 18.9 19.9 21.0 22.1 23.2 24.5 25.7 27.0 28.4 29.8 31.2

Total atneed receipts 21.0 22.3 23.6 25.4 26.8 28.2 29.7 31.2 32.8 34.5 36.2 38.0 39.9

Deposits in perpetual care trust (10% of receipts) 2.10 2.23 2.36 2.54 2.68 2.82 2.97 3.12 3.28 3.45 3.62 3.80 3.99

Total atneed revenue recognized 18.9 20.1 21.2 22.9 24.1 25.4 26.7 28.1 29.6 31.1 32.6 34.2 35.9

Preneed contracts not recognized as revenue 605 623 641 659 677 695 713 731 749 767

Preneed additions to perpetual trust 2.2 1.9 2.0 2.1 2.3 2.4 2.5 2.6 2.7 2.9

Atneed additions to perpetual trust 2.5 2.7 2.8 3.0 3.1 3.3 3.5 3.6 3.8 4.0

Total additions to perpetual trust 4.7 4.6 4.9 5.1 5.4 5.7 5.9 6.2 6.5 6.9

Financial Revenue

Preneed funeral commission income 1.9 2.0 1.5 2.2 2.3 2.3 2.4 2.5 2.5 2.6 2.7 2.7 2.8

Preneed funeral trust earnings 7.4 7.4 8.0 6.9 7.6 8.3 9.1 9.8 10.6 11.5 12.4 13.3 14.3

Cemetery trust earnings 8.1 8.1 8.4 6.8 6.5 6.2 5.9 5.7 5.5 5.3 5.2 5.1 5.0

Preneed cemetery finance charges 1.4 1.4 1.6 1.3 1.3 1.4 1.5 1.6 1.6 1.7 1.8 1.9 2.0

Total preneed funeral contracts 8,125 6,940 7,797 8,498 8,775 9,056 9,341 9,641 9,945 10,265 10,597 10,938 11,299

Total preneed funeral revenue 52.7 28.8 37.8 44.7 46.3 47.9 49.5 50.5 52.0 53.1 54.2 55.6 56.4

Preneed funeral commission income

% preneed funeral revenue 3.5% 7.1% 3.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9%

Preneed cemetery receivables 24.5 26.3 28.0 21.9 23.1 24.4 25.6 27.0 28.4 29.8 31.3 32.8 34.4

Preneed cemetery finance charges

% of preneed cemetery receivables 5.8% 5.4% 5.7% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8%

Preneed funeral trust earnings % of prior year

funeral trust investments 8.9% 7.7% 8.2% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1%

Preneed cemetery trust earnings % of prior year

cemetery trust investments 11.4% 11.9% 11.7% 10.7% 10.7% 10.7% 10.7% 10.7% 10.7% 10.7% 10.7% 10.7% 10.7%


Income Statement

$ in Millions except per share data


Funeral 163.1 173.7 185.8 194.7 201.1 207.6 213.9 219.6 225.9 231.5 237.2 242.9 248.1

Cemetery 50.0 52.4 56.7 50.8 52.9 55.1 57.4 59.8 62.4 65.1 68.0 70.9 74.1

Total Sales 213.1 226.1 242.5 245.5 254.0 262.6 271.2 279.5 288.3 296.6 305.2 313.9 322.2

Funeral (99.7) (104.9) (109.2) (112.9) (115.7) (118.3) (121.9) (125.2) (128.7) (131.9) (135.2) (138.5) (141.4)

Cemetery (28.9) (30.9) (31.8) (28.4) (29.3) (30.3) (31.6) (32.9) (34.3) (35.8) (37.4) (39.0) (40.7)

Regional and unallocated funeral and cemetery costs (10.0) (9.8) (12.0) (11.6) (12.0) (12.4) (12.8) (13.2) (13.6) (14.0) (14.4) (14.9) (15.2)

COGS ex. depreciation and amortization (138.6) (145.6) (153.0) (153.0) (157.0) (161.0) (166.3) (171.3) (176.7) (181.8) (187.0) (192.4) (197.4)

Depreciation (8.8) (9.2) (10.4) (12.2) (12.4) (12.6) (12.8) (13.1) (13.4) (13.6) (13.9) (14.2) (14.6)

Amortization (1.4) (1.3) (1.6) (2.0) (1.6) (1.7) (1.7) (1.8) (1.8) (1.9) (2.0) (2.0) (2.1)

Gross Profit 64.3 70.0 77.5 78.3 83.0 87.3 90.4 93.2 96.4 99.3 102.2 105.3 108.1

General, administrative and other (25.9) (28.9) (27.1) (28.8) (29.8) (30.8) (31.9) (32.8) (33.9) (34.8) (35.8) (36.9) (37.8)

Home office depreciation and amortization (1.5) (1.4) (1.7) (1.8) (1.9) (1.9) (1.9) (2.0) (2.0) (2.0) (2.1) (2.1) (2.2)

Operating Income 36.9 39.7 48.6 47.6 51.3 54.6 56.6 58.5 60.5 62.4 64.3 66.3 68.1

Interest expense (12.6) (10.3) (10.6) (17.4) (17.0) (17.3) (17.8) (18.3) (24.5) (19.1) (19.6) (20.2) (20.8)

Other, net 0.1 (6.7) (3.5) (2.5) (2.5) (2.6) (2.7) (2.8) (2.9) (3.0) (3.1) (3.1) (3.2)

Income before taxes 24.4 22.7 34.6 27.7 31.8 34.6 36.1 37.4 33.1 40.3 41.7 43.0 44.1

Provision for income taxes (9.2) (7.3) (13.7) (11.1) (12.7) (13.8) (14.4) (15.0) (13.2) (16.1) (16.7) (17.2) (17.6)

Net income from continuing operations 15.1 15.4 20.9 16.6 19.1 20.8 21.7 22.4 19.8 24.2 25.0 25.8 26.5

Income / loss from discontinued operations, net of tax 4.2 0.4 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Preferred stock dividend (0.0) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Net income available to common stockholders 19.3 15.8 20.9 16.6 19.1 20.8 21.7 22.4 19.8 24.2 25.0 25.8 26.5

EPS (from continuing operations) 0.83 0.84 1.16 0.94 1.08 1.18 1.24 1.28 1.13 1.37 1.41 1.45 1.48

EPS (Discontinued operations) 0.23 0.02 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

EPS, net of discontinued operations 1.06 0.86 1.16 0.94 1.08 1.18 1.24 1.28 1.13 1.37 1.41 1.45 1.48

Basic Shares Outstanding 17.8 18.1 17.8 17.7 17.6 17.5 17.5 17.5 17.5 17.6 17.7 17.8 17.9

Dividends per Share 0.10 0.10 0.10 0.10 0.13 0.14 0.15 0.15 0.15 0.18 0.18 0.19 0.19

Total Dividends 1.8 1.8 1.8 1.8 2.3 2.5 2.6 2.7 2.6 3.1 3.2 3.4 3.4


Balance Sheet

$ in MillionsFiscal Years Ending Dec. 31 2013 2014 2015 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

Assets

Cash and cash equivalents 1.4 0.4 0.5 11.8 26.3 44.6 64.0 84.6 10.6 28.2 46.8 64.9 83.5

Accounts receivable, net 18.0 19.3 18.2 20.6 21.3 22.1 22.8 23.5 24.2 24.9 25.6 26.4 27.1

Assets held for sale 3.5 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Inventories 5.3 5.3 5.7 5.8 6.0 6.1 6.3 6.5 6.7 6.9 7.1 7.3 7.5

Prepaid expenses 4.4 4.6 4.7 5.4 5.6 5.8 6.0 6.2 6.3 6.5 6.7 6.9 7.1

Other current assets 3.5 7.1 4.7 4.8 4.9 5.1 5.3 5.4 5.6 5.8 5.9 6.1 6.3

Total Current Assets 36.1 36.7 33.8 48.5 64.2 83.7 104.4 126.2 53.5 72.3 92.2 111.6 131.4

Preneed cemetery trust investments 68.3 72.0 63.3 60.6 57.9 55.4 53.3 51.4 49.8 48.5 47.3 46.4 45.7

Preneed funeral trust investments 97.1 97.6 85.6 94.1 102.8 111.9 121.1 131.2 141.6 152.8 164.7 177.1 190.5

Preneed cemetery receivables, net 24.5 26.3 28.0 21.9 23.1 24.4 25.6 27.0 28.4 29.8 31.3 32.8 34.4

Receivables from preneed trusts, net 11.2 12.8 13.5 17.3 18.0 18.7 19.5 20.5 21.5 22.6 23.8 25.0 26.5

PP&E, gross 249.3 281.5 318.2 335.4 353.3 371.8 390.9 410.5 430.8 451.7 473.2 495.2 517.9

Accumulated depreciation (88.6) (95.2) (103.3) (117.4) (131.6) (146.1) (160.9) (175.9) (191.3) (207.0) (223.0) (239.3) (256.1)

PP&E, net 160.7 186.2 214.9 218.1 221.7 225.7 230.0 234.6 239.5 244.7 250.2 255.9 261.8

Cemetery property 72.9 75.6 75.6 75.6 75.6 75.6 75.6 75.6 75.6 75.6 75.6 75.6 75.6

Goodwill 221.1 257.4 264.4 264.4 264.4 264.4 264.4 264.4 264.4 264.4 264.4 264.4 264.4

Deferred charges and other non‐current assets 12.3 14.3 15.2 12.0 12.9 13.3 13.7 14.1 14.6 15.0 15.4 15.9 16.3

Cemetery perpetual care trust investments 42.3 48.7 43.1 49.2 55.3 61.8 68.7 76.2 84.1 92.6 101.6 111.2 121.3

Total Assets 746.6 827.5 837.4 861.7 895.9 934.8 976.4 1,021.2 973.0 1,018.3 1,066.5 1,115.9 1,168.0

Liabilities and Stockholders' Equity

Current portion of long‐term debt and capital lease obligations 13.4 9.8 12.2 13.5 15.2 167.2 0.4 142.6 0.0 0.0 0.0 0.0 ‐

Accounts payable 7.0 6.5 7.9 7.4 7.6 7.9 8.1 8.4 8.6 8.9 9.2 9.4 9.7

Other liabilities 9.9 1.4 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.6

Accrued liabilities 12.9 15.2 16.5 15.7 16.3 16.8 17.4 17.9 18.4 19.0 19.5 20.1 20.6

Liabilities associated with assets held for sale 4.4 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Total Current Liabilities 47.6 33.0 37.2 37.1 39.6 192.4 26.4 169.4 27.7 28.5 29.3 30.2 30.9

Long‐term debt, net of current portion 142.5 152.4 196.5 187.3 188.8 41.5 213.3 218.9 280.9 288.7 297.0 305.9 315.3

Convertible junior subordinated debentures due in 2029 to an affiliate 89.8 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Convertible subordinated notes due 2021 ‐ 114.5 118.0 121.9 126.2 131.0 136.5 ‐ ‐ ‐ ‐ ‐ ‐

Obligations under capital leases, net of current portion 3.8 3.1 2.9 2.9 3.0 3.0 3.1 3.1 3.2 3.3 3.3 3.4 3.5

Deferred preneed cemetery revenue 55.5 56.9 56.7 67.7 70.0 72.4 74.8 77.1 79.5 81.8 84.1 86.5 88.8

Deferred preneed funeral revenue 30.6 31.3 31.7 33.1 35.6 38.1 40.7 43.3 46.1 48.9 51.9 53.4 54.8

Deferred tax liability 11.9 36.4 40.0 36.0 32.0 28.0 24.0 20.0 16.0 12.0 8.0 4.0 ‐

Other long‐term liabilities 1.5 2.4 5.5 3.3 3.4 3.6 3.7 3.8 3.9 4.0 4.1 4.3 4.4

Deferred preneed cemetery receipts held in trust 68.3 72.0 63.3 60.6 57.9 55.4 53.3 51.4 49.8 48.5 47.3 46.4 45.7

Deferred preneed funeral receipts held in trust 97.1 97.6 85.6 94.1 102.8 111.9 121.1 131.2 141.6 152.8 164.7 177.1 190.5

Care trusts’ corpus 41.9 48.1 42.4 49.2 55.3 61.8 68.7 76.2 84.1 92.6 101.6 111.2 121.3

Redeemable preferred stock ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Total Liabilities 590.6 647.7 679.8 693.1 714.5 739.0 765.5 794.4 732.9 761.1 791.4 822.3 855.3

Common stock & APIC 204.5 212.6 214.5 220.6 226.7 232.7 238.8 244.9 251.0 257.1 263.2 269.3 275.4

Retained earnings / accumulated deficit (33.3) (17.5) 3.4 18.3 35.0 53.3 72.4 92.1 109.4 130.4 152.2 174.6 197.6

Treasury stock, at cost (15.3) (15.3) (60.3) (70.3) (80.3) (90.3) (100.3) (110.3) (120.3) (130.3) (140.3) (150.3) (160.3)

Total Stockholders' Equity 156.0 179.9 157.6 168.6 181.4 195.8 210.9 226.8 240.1 257.3 275.1 293.6 312.7

Total Liabilities & Stockholders' Equity 746.6 827.5 837.4 861.7 895.9 934.8 976.4 1,021.2 973.0 1,018.3 1,066.5 1,115.9 1,168.0


Cash Flow Statement

$ in Millions

Fiscal Years Ending Dec. 31 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

Operating Activities

Net income 16.6 19.1 20.8 21.7 22.4 19.8 24.2 25.0 25.8 26.5

Depreciation 16.0 15.8 16.2 16.5 16.8 17.2 17.6 18.0 18.4 18.8

Impairment of goodwill ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Accretion of discount on convertible subordinated notes 3.9 4.3 4.8 5.4 6.1 1.2 ‐ ‐ ‐ ‐

Change in deferred taxes (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0)

Accounts receivable (2.4) (0.7) (0.7) (0.7) (0.7) (0.7) (0.7) (0.7) (0.7) (0.7)

Preneed receivables 2.3 (1.9) (2.0) (2.1) (2.3) (2.4) (2.5) (2.7) (2.8) (3.0)

Inventories (0.2) (0.2) (0.2) (0.2) (0.2) (0.2) (0.2) (0.2) (0.2) (0.2)

Other current assets (0.1) (0.2) (0.2) (0.2) (0.2) (0.2) (0.2) (0.2) (0.2) (0.2)

Prepaid expenses (0.7) (0.2) (0.2) (0.2) (0.2) (0.2) (0.2) (0.2) (0.2) (0.2)

Deferred charges and other 1.2 (2.5) (2.1) (2.2) (2.2) (2.3) (2.3) (2.4) (2.5) (2.5)

Preneed/perpetual funeral and cemetery trust investments (11.9) (12.1) (13.1) (14.1) (15.7) (16.7) (18.3) (19.8) (21.0) (22.9)

Accounts payable (0.6) 0.3 0.3 0.3 0.2 0.3 0.2 0.3 0.3 0.2

Accrued liabilities (0.8) 0.5 0.6 0.6 0.5 0.6 0.5 0.5 0.6 0.5

Other current & LT liabilities (2.2) 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Deferred preneed funeral and cemetery revenue 12.4 4.8 4.9 5.0 4.9 5.2 5.1 5.3 3.9 3.7

Deferred preneed receipts held in trust/care trusts corpus 12.6 12.1 13.1 14.1 15.7 16.7 18.3 19.8 21.0 22.9

Net Cash Provided by Operating Activities 42.1 35.4 38.4 40.0 41.5 34.5 37.7 38.8 38.4 39.1

Investing Activities

Capital expenditures (17.3) (17.9) (18.5) (19.1) (19.7) (20.3) (20.9) (21.5) (22.1) (22.7)

(Purchase)/sale of cemetery property ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Net Cash Used in Investing Activities (17.3) (17.9) (18.5) (19.1) (19.7) (20.3) (20.9) (21.5) (22.1) (22.7)

Financing Activities

Change in current debt 1.3 1.7 152.0 (166.8) 142.2 (142.5) ‐ ‐ ‐ (0.0)

Issuance/(redemption) of long‐term debt (9.1) 1.4 (147.3) 171.7 5.7 62.0 7.7 8.3 8.9 9.4

Change in obligations under capital leases 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Proceeds from ESOP 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1

Dividends on common stock (1.8) (2.3) (2.5) (2.6) (2.7) (2.6) (3.1) (3.2) (3.4) (3.4)

Issuance/(redemption) of convertible junior subordinated debentures ‐ ‐ ‐ ‐ (142.5) ‐ ‐ ‐ ‐ ‐

Purchase of treasury stock (10.0) (10.0) (10.0) (10.0) (10.0) (10.0) (10.0) (10.0) (10.0) (10.0)

Net Cash Provided/(Used) by Financing Activities (13.5) (3.0) (1.6) (1.5) (1.2) (86.9) 0.7 1.2 1.7 2.1

Net increase / decrease in cash and cash equivalents 11.3 14.5 18.3 19.4 20.6 (72.7) 17.6 18.6 18.0 18.6

Cash and cash equivalents at beginning of period 0.5 11.8 26.3 44.6 64.0 84.6 11.9 29.4 48.0 66.1

Cash and cash equivalents at end of period 11.8 26.3 44.6 64.0 84.6 11.9 29.4 48.0 66.1 84.7


Common Size Income Statement


Funeral 76.5% 76.8% 76.6% 79.3% 79.2% 79.0% 78.8% 78.6% 78.3% 78.0% 77.7% 77.4% 77.0%

Cemetery 23.5% 23.2% 23.4% 20.7% 20.8% 21.0% 21.2% 21.4% 21.7% 22.0% 22.3% 22.6% 23.0%

Total Sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Funeral ‐46.8% ‐46.4% ‐45.0% ‐46.0% ‐45.5% ‐45.1% ‐44.9% ‐44.8% ‐44.7% ‐44.5% ‐44.3% ‐44.1% ‐43.9%

Cemetery ‐13.6% ‐13.6% ‐13.1% ‐11.6% ‐11.6% ‐11.5% ‐11.6% ‐11.8% ‐11.9% ‐12.1% ‐12.2% ‐12.4% ‐12.6%

Regional and unallocated funeral and cemetery costs ‐4.7% ‐4.3% ‐4.9% ‐4.7% ‐4.7% ‐4.7% ‐4.7% ‐4.7% ‐4.7% ‐4.7% ‐4.7% ‐4.7% ‐4.7%

COGS ex. depreciation and amortization ‐65.1% ‐64.4% ‐63.1% ‐62.3% ‐61.8% ‐61.3% ‐61.3% ‐61.3% ‐61.3% ‐61.3% ‐61.3% ‐61.3% ‐61.3%

Depreciation ‐4.1% ‐4.1% ‐4.3% ‐5.0% ‐4.9% ‐4.8% ‐4.7% ‐4.7% ‐4.6% ‐4.6% ‐4.6% ‐4.5% ‐4.5%

Amortization ‐0.6% ‐0.6% ‐0.7% ‐0.8% ‐0.6% ‐0.6% ‐0.6% ‐0.6% ‐0.6% ‐0.6% ‐0.6% ‐0.6% ‐0.6%

Gross Profit 30.2% 31.0% 32.0% 31.9% 32.7% 33.2% 33.3% 33.4% 33.4% 33.5% 33.5% 33.5% 33.6%

General, administrative and other ‐12.2% ‐12.8% ‐11.2% ‐11.7% ‐11.7% ‐11.7% ‐11.7% ‐11.7% ‐11.7% ‐11.7% ‐11.7% ‐11.7% ‐11.7%

Home office depreciation and amortization ‐0.7% ‐0.6% ‐0.7% ‐0.7% ‐0.7% ‐0.7% ‐0.7% ‐0.7% ‐0.7% ‐0.7% ‐0.7% ‐0.7% ‐0.7%

Operating Income 17.3% 17.6% 20.1% 19.4% 20.2% 20.8% 20.9% 20.9% 21.0% 21.0% 21.1% 21.1% 21.1%

Interest expense ‐5.9% ‐4.6% ‐4.4% ‐7.1% ‐6.7% ‐6.6% ‐6.6% ‐6.5% ‐8.5% ‐6.4% ‐6.4% ‐6.4% ‐6.4%

Other, net 0.0% ‐3.0% ‐1.4% ‐1.0% ‐1.0% ‐1.0% ‐1.0% ‐1.0% ‐1.0% ‐1.0% ‐1.0% ‐1.0% ‐1.0%

Income before taxes 11.4% 10.0% 14.3% 11.3% 12.5% 13.2% 13.3% 13.4% 11.5% 13.6% 13.6% 13.7% 13.7%

Provision for income taxes ‐4.3% ‐3.2% ‐5.7% ‐4.5% ‐5.0% ‐5.3% ‐5.3% ‐5.4% ‐4.6% ‐5.4% ‐5.5% ‐5.5% ‐5.5%

Net income from continuing operations 7.1% 6.8% 8.6% 6.8% 7.5% 7.9% 8.0% 8.0% 6.9% 8.2% 8.2% 8.2% 8.2%

Income / loss from discontinued operations, net of tax 2.0% 0.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Preferred stock dividend 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Net income available to common stockholders 9.1% 7.0% 8.6% 6.8% 7.5% 7.9% 8.0% 8.0% 6.9% 8.2% 8.2% 8.2% 8.2%


Common Size Balance Sheet


Assets

Cash and cash equivalents 0.6% 0.2% 0.2% 4.8% 10.4% 17.0% 23.6% 30.3% 4.1% 9.9% 15.7% 21.1% 26.3%

Accounts receivable, net 8.4% 8.5% 7.5% 8.4% 8.4% 8.4% 8.4% 8.4% 8.4% 8.4% 8.4% 8.4% 8.4%

Assets held for sale 1.7% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Inventories 2.5% 2.3% 2.3% 2.4% 2.4% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3%

Prepaid expenses 2.1% 2.0% 1.9% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2%

Other current assets 1.7% 3.2% 1.9% 1.9% 1.9% 1.9% 1.9% 1.9% 1.9% 1.9% 1.9% 1.9% 1.9%

Total Current Assets 17.0% 16.2% 13.9% 19.7% 25.3% 31.9% 38.5% 45.1% 19.0% 24.8% 30.6% 35.9% 41.2%

Preneed cemetery trust investments 32.1% 31.8% 26.1% 24.7% 22.8% 21.1% 19.7% 18.4% 17.3% 16.3% 15.5% 14.8% 14.2%

Preneed funeral trust investments 45.6% 43.2% 35.3% 38.3% 40.5% 42.6% 44.7% 47.0% 49.1% 51.5% 54.0% 56.4% 59.1%

Preneed receivables, net 11.5% 11.6% 11.5% 8.9% 9.1% 9.3% 9.5% 9.7% 9.8% 10.0% 10.3% 10.5% 10.7%

Receivables from preneed trusts, net 5.2% 5.7% 5.6% 7.1% 7.1% 7.1% 7.2% 7.3% 7.4% 7.6% 7.8% 8.0% 8.2%

PP&E, gross 117.0% 124.5% 131.2% 136.7% 139.1% 141.6% 144.1% 146.9% 149.5% 152.3% 155.0% 157.8% 160.8%

Acumulated depreciation ‐41.6% ‐42.1% ‐42.6% ‐47.8% ‐51.8% ‐55.6% ‐59.3% ‐63.0% ‐66.4% ‐69.8% ‐73.1% ‐76.2% ‐79.5%

PP&E, net 75.4% 82.3% 88.6% 88.8% 87.3% 85.9% 84.8% 83.9% 83.1% 82.5% 82.0% 81.5% 81.3%

Cemetery property, net 34.2% 33.4% 31.2% 30.8% 29.8% 28.8% 27.9% 27.1% 26.2% 25.5% 24.8% 24.1% 23.5%

Goodwill 103.8% 113.8% 109.0% 107.7% 104.1% 100.7% 97.5% 94.6% 91.7% 89.2% 86.6% 84.2% 82.1%

Deferred charges and other non‐current assets 5.8% 6.3% 6.3% 4.9% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1%

Cemetery perpetual care trust investments 19.9% 21.5% 17.8% 20.0% 21.8% 23.5% 25.3% 27.3% 29.2% 31.2% 33.3% 35.4% 37.7%

Total Assets 350.4% 366.0% 345.3% 351.0% 352.7% 356.0% 360.0% 365.4% 338.0% 343.7% 349.9% 355.9% 362.9%

Liabilities and Stockholders' Equity 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Current portion of long‐term debt and capital lease obligations 6.3% 4.4% 5.0% 5.5% 6.0% 63.7% 0.1% 51.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Accounts payable 3.3% 2.9% 3.3% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

Other liabilities 4.7% 0.6% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%

Accrued liabilities 6.0% 6.7% 6.8% 6.4% 6.4% 6.4% 6.4% 6.4% 6.4% 6.4% 6.4% 6.4% 6.4%

Liabilities associated with assets held for sale 2.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Total Current Liabilities 22.3% 14.6% 15.3% 15.1% 15.6% 73.3% 9.7% 60.6% 9.6% 9.6% 9.6% 9.6% 9.6%

Long‐term debt, net of current portion 66.9% 67.4% 81.0% 76.3% 74.3% 15.8% 78.6% 78.3% 97.5% 97.3% 97.3% 97.4% 97.9%

Convertible junior subordinated debentures due in 2029 to an affiliate 42.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Convertible subordinated notes due 2021 0.0% 50.7% 48.7% 49.6% 49.7% 49.9% 50.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Obligations under capital leases, net of current portion 1.8% 1.4% 1.2% 1.2% 1.2% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1%

Deferred preneed cemetery revenue 26.0% 25.2% 23.4% 27.6% 27.6% 27.6% 27.6% 27.6% 27.6% 27.6% 27.6% 27.6% 27.6%

Deferred preneed funeral revenue 14.4% 13.8% 13.1% 13.5% 14.0% 14.5% 15.0% 15.5% 16.0% 16.5% 17.0% 17.0% 17.0%

Deferred tax liability 5.6% 16.1% 16.5% 14.6% 12.6% 10.6% 8.8% 7.1% 5.5% 4.0% 2.6% 1.3% 0.0%

Other long‐term liabilities 0.7% 1.1% 2.3% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4%

Deferred preneed cemetery receipts held in trust 32.1% 31.8% 26.1% 24.7% 22.8% 21.1% 19.7% 18.4% 17.3% 16.3% 15.5% 14.8% 14.2%

Deferred preneed funeral receipts held in trust 45.6% 43.2% 35.3% 38.3% 40.5% 42.6% 44.7% 47.0% 49.1% 51.5% 54.0% 56.4% 59.1%

Care trusts’ corpus 19.7% 21.3% 17.5% 20.0% 21.8% 23.5% 25.3% 27.3% 29.2% 31.2% 33.3% 35.4% 37.7%

Redeemable preferred stock 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Total Liabilities 277.2% 286.4% 280.3% 282.4% 281.3% 281.4% 282.2% 284.3% 254.2% 256.6% 259.3% 262.0% 265.5%

Common stock & APIC 96.0% 94.0% 88.4% 89.9% 89.2% 88.6% 88.1% 87.6% 87.1% 86.7% 86.2% 85.8% 85.5%

Retained earnings / accumulated deficit ‐15.6% ‐7.7% 1.4% 7.4% 13.8% 20.3% 26.7% 33.0% 37.9% 44.0% 49.9% 55.6% 61.3%

Treasury stock, at cost ‐7.2% ‐6.8% ‐24.9% ‐28.6% ‐31.6% ‐34.4% ‐37.0% ‐39.5% ‐41.7% ‐43.9% ‐46.0% ‐47.9% ‐49.7%

Total Stockholders' Equity 73.2% 79.5% 65.0% 68.7% 71.4% 74.5% 77.8% 81.1% 83.3% 86.7% 90.1% 93.5% 97.1%

Total Liabilities & Stockholders' Equity 350.4% 366.0% 345.3% 351.0% 352.7% 356.0% 360.0% 365.4% 337.5% 343.3% 349.5% 355.5% 362.5%


Value Driver Estimation


Marginal tax rate calculation

Pre‐tax income 24.4 22.7 34.6

Tax at US statutory rate 8.3 7.7 12.1

State taxes 1.5 0.8 1.6

Total taxes 9.7 8.6 13.7

Marginal Tax Rate 40.0% 37.7% 39.7% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0%

NOPLAT Calculation

Net revenue 213.1 226.1 242.5 245.5 254.0 262.6 271.2 279.5 288.3 296.6 305.2 313.9 322.2

‐COGS ex. D&A (138.6) (145.6) (153.0) (153.0) (157.0) (161.0) (166.3) (171.3) (176.7) (181.8) (187.0) (192.4) (197.4)

‐General & administrative (25.9) (28.9) (27.1) (28.8) (29.8) (30.8) (31.9) (32.8) (33.9) (34.8) (35.8) (36.9) (37.8)

‐Other, net 0.1 (6.7) (3.5) (2.5) (2.5) (2.6) (2.7) (2.8) (2.9) (3.0) (3.1) (3.1) (3.2)

+Implied interest on operating leases 1.0 0.9 1.1 1.1 1.1 1.1 1.1 1.2 1.2 1.2 1.2 1.3 1.3

EBITA 49.6 45.9 60.0 62.3 65.7 69.2 71.5 73.7 76.0 78.2 80.5 82.8 85.0

Less: Adjusted taxes

Income tax provision 9.2 7.3 13.7 11.1 12.7 13.8 14.4 15.0 13.2 16.1 16.7 17.2 17.6

+Tax shield on interest expense 5.0 3.9 4.2 7.0 6.8 6.9 7.1 7.3 9.8 7.6 7.8 8.1 8.3

+Tax shield on implied interest on op Leases 0.4 0.3 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.5

+Tax shield on litigation settlement - - - ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

+Tax shield on accretion of discount - 0.9 1.4 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐Tax from gain on repurchase of debentures - - - ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

+Tax shield on loss relating to early extinguishment of d - 0.4 - ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

+Tax shield on loss from redemption of convertible deb - 1.4 - ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐Tax on other (0.0) (0.2) 0.0 1.0 1.0 1.1 1.1 1.1 1.2 1.2 1.2 1.3 1.3

Adjusted Taxes 14.7 14.0 19.7 19.5 21.0 22.3 23.1 23.8 24.7 25.4 26.2 27.0 27.8

Plus: Change in Deferred Tax Liabilities

Deferred tax assets 27.2 23.9 24.2 21.8 19.8 17.8 15.8 13.8 11.8 9.8 7.8 5.8 ‐

Deferred tax liabilities 36.3 56.6 59.9 53.9 48.0 42.0 36.0 30.0 24.0 18.0 12.0 6.0 ‐

Net deferred tax liabilities 9.1 32.7 35.7 32.1 28.1 24.1 20.1 16.1 12.2 8.2 4.2 0.2 ‐

Change in deferred tax liabilities 12.6 23.5 3.0 (3.6) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (0.2)

NOPLAT 47.5 55.4 43.3 39.2 40.7 43.0 44.4 45.8 47.3 48.8 50.2 51.8 57.1

Invested Capital Calculation

Operating Current Assets

"Normal" cash 1.4 0.4 0.5 0.2 0.5 0.9 1.3 1.7 0.2 0.6 1.0 1.3 1.7

Accounts receivable 18.0 19.3 18.2 20.6 21.3 22.1 22.8 23.5 24.2 24.9 25.6 26.4 27.1

Inventories 5.3 5.3 5.7 5.8 6.0 6.1 6.3 6.5 6.7 6.9 7.1 7.3 7.5

Prepaid Expenses 4.4 4.6 4.7 5.4 5.6 5.8 6.0 6.2 6.3 6.5 6.7 6.9 7.1

Other current assets 3.5 7.1 4.7 4.8 4.9 5.1 5.3 5.4 5.6 5.8 5.9 6.1 6.3

Total operating current assets 32.6 36.7 33.8 36.9 38.4 40.0 41.6 43.3 43.1 44.7 46.4 48.0 49.6

Operating Current Liabilities

Accounts payable 7.0 6.5 7.9 7.4 7.6 7.9 8.1 8.4 8.6 8.9 9.2 9.4 9.7

Accrued liabilities 12.9 15.2 16.5 15.7 16.3 16.8 17.4 17.9 18.4 19.0 19.5 20.1 20.6

Other liabilities 9.9 1.4 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.6

Total operating current liabilities 29.8 23.1 25.0 23.6 24.4 25.2 26.0 26.8 27.7 28.5 29.3 30.1 30.9

Net Operating Working Capital 2.7 13.6 8.8 13.3 14.0 14.8 15.6 16.5 15.5 16.3 17.1 17.9 18.7

Plus: Net P,P,&E

Gross P,P,&E 249.3 281.5 318.2 335.4 353.3 371.8 390.9 410.5 430.8 451.7 473.2 495.2 517.9

Accumulated depreciation (88.6) (95.2) (103.3) (117.4) (131.6) (146.1) (160.9) (175.9) (191.3) (207.0) (223.0) (239.3) (256.1)

Net P,P,&E 160.7 186.2 214.9 218.1 221.7 225.7 230.0 234.6 239.5 244.7 250.2 255.9 261.8

Plus: Cemetery Property 72.9 75.6 75.6 75.6 75.6 75.6 75.6 75.6 75.6 75.6 75.6 75.6 75.6

Plus: Other LT Operating Assets

Deferred charges & other non‐current assets 12.3 14.3 15.2 12.0 12.9 13.3 13.7 14.1 14.6 15.0 15.4 15.9 16.3

Present value of operating leases 14.8 13.5 15.6 15.8 16.0 16.3 16.6 17.0 17.3 17.7 18.1 18.5 19.0

Total LT operating assets 27.1 27.8 30.7 27.8 29.0 29.6 30.4 31.1 31.9 32.7 33.6 34.4 35.3

Less: Other LT Operating Liabilities

Other long‐term liabilities 1.5 2.4 5.5 3.3 3.4 3.6 3.7 3.8 3.9 4.0 4.1 4.3 4.4

Deferred preneed cemetery revenue 55.5 56.9 56.7 67.7 70.0 72.4 74.8 77.1 79.5 81.8 84.1 86.5 88.8

Deferred preneed funeral revenue 30.6 31.3 31.7 33.1 35.6 38.1 40.7 43.3 46.1 48.9 51.9 53.4 54.8

Total LT operating liabilities 87.6 90.5 94.0 104.2 109.0 114.1 119.1 124.2 129.5 134.7 140.2 144.2 148.0

Invested Capital 175.8 212.6 236.0 230.6 231.2 231.6 232.4 233.6 233.0 234.6 236.3 239.6 243.4

Return on Invested Capital

NOPLAT 47.5 55.4 43.3 39.2 40.7 43.0 44.4 45.8 47.3 48.8 50.2 51.8 57.1

Beg. Invested Capital 149.8 175.8 212.6 236.0 230.6 231.2 231.6 232.4 233.6 233.0 234.6 236.3 239.6

ROIC 31.7% 31.5% 20.4% 16.6% 17.7% 18.6% 19.2% 19.7% 20.3% 20.9% 21.4% 21.9% 23.8%

Free Cash Flow

NOPLAT 47.5 55.4 43.3 39.2 40.7 43.0 44.4 45.8 47.3 48.8 50.2 51.8 57.1

Change in Invested Capital 26.1 36.8 23.4 (5.4) 0.6 0.4 0.8 1.2 (0.6) 1.6 1.7 3.4 3.8

Free Cash Flow 21.5 18.6 19.9 44.6 40.2 42.6 43.6 44.6 47.9 47.2 48.6 48.4 53.3

Economic Profit

Beg. Invested Capital 149.8 175.8 212.6 236.0 230.6 231.2 231.6 232.4 233.6 233.0 234.6 236.3 239.6

ROIC 31.7% 31.5% 20.4% 16.6% 17.7% 18.6% 19.2% 19.7% 20.3% 20.9% 21.4% 21.9% 23.8%

WACC 1348.98% 0.00% 0.00% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6%

Economic Profit (1,972.9) 55.4 43.3 26.1 27.9 30.1 31.5 32.9 34.3 35.8 37.2 38.6 43.7


Discounted Cash Flow (DCF) and Economic Profit (EP) Valuation Models

Key Inputs:

CV Growth 1.0%

CV ROIC 23.8%

WACC 5.6%

Cost of Equity 6.8%


DCF Model 1 2 3 4 5 6 7 8 9 10

NOPLAT $ 39.2 $ 40.7 $ 43.0 $ 44.4 $ 45.8 $ 47.3 $ 48.8 $ 50.2 $ 51.8 $ 57.1

Beginning invested capital 236.0 230.6 231.2 231.6 232.4 233.6 233.0 234.6 236.3 239.6

Ending invested capital 230.6 231.2 231.6 232.4 233.6 233.0 234.6 236.3 239.6 243.4

∆ Invested capital (5.4) 0.6 0.4 0.8 1.2 (0.6) 1.6 1.7 3.4 3.8

ROIC 16.6% 17.7% 18.6% 19.2% 19.7% 20.3% 20.9% 21.4% 21.9% 23.8%

Free cash flow 44.6 40.2 42.6 43.6 44.6 47.9 47.2 48.6 48.4 53.3

Continuing value 1,198.9

PV of free cash flow 42.2 36.1 36.2 35.1 34.0 34.6 32.3 31.5 29.7 736.8

Value of operating assets 1,048.6$

‐ Total debt (329.6)

‐ ESOP (13.1)

‐ PV of operating leases (15.6)

Value of equity 690.4

Shares outstanding 17.8

Intrinsic value per share 38.80$

Intrinsic Value (adj. for fraction of year) 39.54$

EP Model

Beginning invested capital 236.0$ 230.6$ 231.2$ 231.6$ 232.4$ 233.6$ 233.0$ 234.6$ 236.3$ 239.6$

ROIC 16.6% 17.7% 18.6% 19.2% 19.7% 20.3% 20.9% 21.4% 21.9% 23.8%

WACC 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6%

Economic profit 26.1 27.9 30.1 31.5 32.9 34.3 35.8 37.2 38.6 43.7

Continuing value 959.28$

PV of economic profit 24.7 25.1 25.6 25.4 25.1 24.8 24.5 24.1 23.7 589.5

PV of economic profit 812.6$

+ Beginning invested capital 236.0

Value of operating assets 1,048.6

‐ Total debt (329.6)

‐ ESOP (13.1)

‐ PV of operating leases (15.6)

Value of equity 690.4


Intrinsic value per share 38.80$



Dividend Discount Model (DDM) or Fundamental P/E Valuation Model


EPS 0.94$ 1.08$ 1.18$ 1.24$ 1.28$ 1.13$ 1.37$ 1.41$ 1.45$ 1.48$

Key Assumptions

CV growth 1.0%

CV ROE 8.7%

Cost of Equity 6.8%

Future Cash Flows

P/E Multiple (CV Year) 15.2 x

EPS (CV Year) 1.48$

Future Stock Price 22.42$

Dividends Per Share 0.10 0.13 0.14 0.15 0.15 0.15 0.18 0.18 0.19

Future Cash Flows 0.10 0.13 0.14 0.15 0.15 0.15 0.18 0.18 0.19 22.42

Discount Period 1 2 3 4 5 6 7 8 9 9

Discounted Cash Flows 0.09 0.11 0.12 0.11 0.11 0.10 0.11 0.11 0.10 12.36

Intrinsic Value 13.24$


Carriage Services, Inc.Relative Valuation Models

Market Enterprise Sales Sales FCF FCF EBITDA EBITDA EV/ EV/Ticker Company Cap Value 2016E 2017E P/S 16 P/S 17 2016E 2017E P/FCF 16 P/FCF 17 2016E 2017E EBITDA 16 EBITDA 17

STON StonMor Partners L.P. $797 $1,105 $344.0 $356.9 2.3 x 2.2 x 81.6 85.2 9.8 x 9.3 x $107.60 $120.30 10.3 x 9.2 xSCI Service Corporation International $4,805 $7,897 $3,043.2 $3,159.7 1.6 x 1.5 x 453.0 488.0 10.6 x 9.8 x $804.10 $843.00 9.8 x 9.4 x

Average 1.9 x 1.9 x 10.2 x 9.6 x Average 10.0 x 9.3 x

CSV Carriage Services, Inc. $400.30 $695.10 245.47 254.02 1.6 x 1.6 x 44.6 40.2 9.0 x 10.0 x 62.3 65.7 11.2 x 10.6 x

Implied Value:

Relative P/S (EPS16) $ 26.87

Relative P/S (EPS17) 26.79$

Relative P/FCF (FCF16) $ 25.53

Relative P/FCF (FCF17) $ 21.67

Relative EV/EBITDA (EPS16) 35.16$

Relative EV/EBITDA (EPS17) 34.26$


Weighted Average Cost of Capital (WACC) Estimation

Data as of: 3/31/2016 Beta Estimates (As of 2/25/2016 via Bloomberg)

Current price: $22.50 Time Period Weekly Monthly

1 Yr 0.784 0.686

Risk free rate 2.61% 2 Yr 0.741 0.893

Equity risk premium 5.00% 3 Yr 0.869 0.836

Beta (avg. of monthly betas) 0.85 4 Yr 0.835 0.993

Cost of equity 6.84% 5 Yr 0.749 0.822

Average 0.796 0.846

30‐Yr T‐bond 2.61%

BB Credit spread 4.18%

Marginal tax rate 40.00%

After‐tax cost of debt 4.07%


Current price/share $22.50

MV of equity (E) 400.30$

Current portion of LT debt 12.2

Long‐term debt 196.5

Convertible notes 118.0

Capital leases 2.9

PV of operating leases 15.6

Total BV of debt (D) 345.12$

MV of equity 400.30$

BV of debt 345.12$

Total value of firm (V) 745.41$

WACC Calculation

Cost of equity 6.84%

*(E/V) 53.70%

+

After‐tax cost of debt 4.07%

*(D/V) 46.30%

WACC 5.56%


Key Management Ratios


Liquidity Ratios

Current Ratio

Current Assets/Current Liabilities 0.8 1.1 0.9 1.3 1.6 0.4 4.0 0.7 2.0 2.6 3.2 3.7 4.3

Quick Ratio

(Current Assets‐Inventory)/Current Liabilities 0.6 1.0 0.8 1.2 1.5 0.4 3.7 0.7 1.7 2.3 2.9 3.5 4.0

Cash Ratio

Cash/Current Liabilities 0.0 0.0 0.0 0.3 0.7 0.2 2.4 0.5 0.4 1.0 1.6 2.2 2.7

Activity or Asset‐Management Ratios

Receivables Turnover

Total Revenue/Average Accounts Receivable 11.9 12.2 13.0 12.7 12.1 12.1 12.1 12.1 12.1 12.1 12.1 12.1 12.1

Average Collection Period

365/Receivables Turnover 30.6 30.0 28.2 28.9 30.2 30.2 30.2 30.2 30.2 30.2 30.2 30.2 30.3

Inventory Turnover

COGS/Average Inventory 26.6 27.5 27.9 26.7 26.6 26.6 26.7 26.7 26.7 26.7 26.7 26.6 26.6

Days in Inventory (DIO)

365/Inventory Turnover 13.7 13.3 13.1 13.7 13.7 13.7 13.7 13.7 13.7 13.7 13.7 13.7 13.7

Payables Turnover

COGS/Average Trade Payables 22.6 21.5 21.3 20.0 21.0 20.8 20.8 20.7 20.7 20.7 20.7 20.7 20.7

Days Payables Outstanding (DPO)

365/Payables Turnover 16.2 16.9 17.2 18.2 17.4 17.6 17.6 17.6 17.6 17.6 17.6 17.6 17.6

Cash Conversion Cycle

Avg. Collection Period + DIO ‐ DPO 28.2 26.4 24.1 24.3 26.4 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3

Financial Leverage Ratios

Debt‐to‐Equity

Total Liabilities/Total Equity 3.8 3.6 4.3 4.1 3.9 3.8 3.6 3.5 3.1 3.0 2.9 2.8 2.7

Debt‐to‐Total Capital

Total Debt/(Total Debt+Total Equity) 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.7 0.7 0.7 0.7

Interest Coverage

Operating Income/Interest Expense 2.9 3.9 4.6 2.7 3.0 3.2 3.2 3.2 2.5 3.3 3.3 3.3 3.3

Profitability Ratios

Gross Margin

Gross Income/ Total Revenue 30.2% 31.0% 32.0% 31.9% 32.7% 33.2% 33.3% 33.4% 33.4% 33.5% 33.5% 33.5% 33.6%

Operating Margin

Operating Income/Total Revenue 17.3% 17.6% 20.1% 19.4% 20.2% 20.8% 20.9% 20.9% 21.0% 21.0% 21.1% 21.1% 21.1%

Return on Average Equity (ROE)

Net Income/Average Total Equity 13.3% 9.4% 12.4% 10.2% 10.9% 11.0% 10.6% 10.3% 8.5% 9.7% 9.4% 9.1% 8.7%

Return on Average Assets (ROA)

Net Income/Average Total Assets 9.1% 7.0% 8.6% 6.8% 7.5% 7.9% 8.0% 8.0% 6.9% 8.2% 8.2% 8.2% 8.2%

Payout Policy Ratios

Current Dividend Yield

Current Per Share Dividends/Current Price 0.44%

Dividend Payout Ratio

Total Dividends/Net Income 9.2% 11.4% 8.5% 10.7% 12.0% 12.0% 12.0% 12.0% 13.0% 13.0% 13.0% 13.0% 13.0%

Total Payout Ratio

(Total Dividends+Share Repurchases)/Net Income 9.2% 11.4% 224.3% 70.8% 64.4% 60.2% 58.2% 56.6% 63.4% 54.3% 53.0% 51.8% 50.8%

carriage services, inc

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