Carriage Services (NYSE:CSV) lowered its full-year 2026 outlook after weaker cemetery preneed sales and trust-related taxes weighed on third-quarter earnings, offsetting a recovery in funeral contract volume.
Third-quarter revenue fell 2.4% to $100.3 million from $102.7 million a year earlier. Adjusted consolidated EBITDA declined to $27.7 million from $33 million, while adjusted diluted earnings per share fell to $0.59 from $0.75.
Chief Executive Officer Carlos Quezada said the results fell short of the company’s expectations, but pointed to improved funeral volumes and an acquisition pipeline as signs of progress. Management is also overhauling parts of its cemetery sales operation after performance failed to meet its standards.
Lower Outlook Reflects Cemetery Sales Weakness
Carriage now expects full-year revenue of $415 million to $420 million, down from its prior forecast of $435 million to $445 million. The company also reduced its adjusted EBITDA outlook to $125 million to $130 million from $135 million to $140 million and its adjusted diluted EPS forecast to $2.90 to $3.05 from $3.35 to $3.55.
The revised outlook calls for adjusted free cash flow of $40 million to $45 million, compared with the previous range of $40 million to $50 million. The capital expenditure forecast remains unchanged at $20 million to $25 million.
Chief Financial Officer John Enwright said the largest component of the revenue forecast reduction was cemetery sales performance. The outlook also reflects an unanticipated trust tax impact and later-than-expected acquisition closings, while the funeral forecast has not materially changed, he said.
The revised ranges imply fourth-quarter revenue of approximately $106 million to $111 million and adjusted EBITDA of $30 million to $35 million, according to Enwright.
California Drives Cemetery Shortfall
Comparable cemetery revenue fell 7.8% to $32.5 million in the third quarter, while comparable cemetery preneed sales production declined to $25.7 million from $27 million. Comparable cemetery EBITDA fell to $13.6 million from $17.1 million, and the segment’s margin narrowed to 41.8% from 48.3%.
Quezada said the weakness was concentrated in California, where year-to-date preneed cemetery property sales were down 7.1%, compared with growth of 10.1% elsewhere. In California, the largest deficits were in contracts priced below $20,000, he said.
The company is examining pricing, inventory and lead sources, while also addressing recruiting, training, sales leadership and conversion. Quezada said the need to improve sales execution extends beyond California, though the state faces additional pressure.
Carriage has not included meaningful cemetery preneed growth in its fourth-quarter guidance. Quezada said he expects the business to get back on track by the end of the quarter and to be fully back on track in the first quarter of 2027.
Funeral Volumes Recover
Same-store funeral contracts rose 2.3% in the third quarter after comparable contracts declined 4.7% in the first half of 2026, when lower-than-anticipated mortality pressured volumes. Consolidated funeral average revenue per contract increased $109, or 1.9%.
Comparable funeral revenue rose 3.6% to $56.8 million. Comparable funeral EBITDA was $20.4 million, essentially flat to slightly higher than a year earlier, while the margin slipped to 35.9% from 36.9%. Enwright attributed the margin pressure mainly to salaries and benefits and said it would persist into the fourth quarter.
For the fourth quarter, Enwright said the company expects funeral contract volume to be flat to up about 1% year over year, with higher average revenue per contract contributing to low-single-digit funeral revenue growth. Quezada said it was difficult to determine whether mortality had returned to normal and attributed the company’s third-quarter volume improvement partly to what he viewed as market-share gains.
Financial revenue fell by $2.8 million to $6.2 million, primarily because of additional trust taxes associated with sales of certain master limited partnership investments held in company trusts. Enwright said adjusted diluted EPS would have been $0.70 excluding the trust taxes and that the company did not expect the discrete tax impact to recur in the fourth quarter.
Acquisition Pipeline Expands
Carriage has acquisitions under contract or letters of intent representing more than $14 million in annual revenue, with closings anticipated later in 2026 and in early 2027, Quezada said.
President and Chief Operating Officer Steve Metzger said the pipeline comprises five expected transactions across five states, including funeral homes, cemeteries and crematories. The timing depends primarily on regulatory approvals, he said. Metzger added that most deals the company is examining are sourced through relationships with owners rather than competitive processes.
Enwright said Carriage plans to finance the transactions with fourth-quarter free cash flow and its credit facility. The company ended the quarter with a bank leverage ratio of 4.1 times and expects a year-end ratio of 4 to 4.1 times, including transactions that close this year.
Metzger also said the company has largely completed its divestiture focus, having sold no additional businesses this year and having no plans for further sales.
About Carriage Services (NYSE:CSV)
Carriage Services, Inc is a provider of funeral and cemetery services in the United States. The company operates funeral homes and cemeteries that serve families through arrangements for traditional funerals, cremation services, memorial ceremonies and related merchandise.
Its cemetery operations provide interment and memorialization services, including burial plots, mausoleums, cremation niches and other cemetery products. Carriage Services also offers advance-planning and prearrangement services, allowing individuals and families to make funeral and cemetery arrangements before they are needed.
Founded in 1991 and headquartered in Houston, Texas, Carriage Services operates through a network of funeral homes and cemeteries across multiple U.S.
