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What changed in CARRIAGE SERVICES INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CARRIAGE SERVICES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+260 added−249 removedSource: 10-K (2025-02-28) vs 10-K (2024-03-01)

Top changes in CARRIAGE SERVICES INC's 2024 10-K

260 paragraphs added · 249 removed · 184 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

32 edited+44 added−27 removed45 unchanged
Biggest changeAt December 31, 2023, we had a backlog of 69,930 preneed cemetery contracts to be delivered in the future. 5 Trust Funds and Insurance Contracts We have established a variety of trusts in connection with funeral home and cemetery operations as required under applicable state laws.
Biggest changeTrust Funds and Insurance Contracts We have established a variety of trusts in connection with funeral home and cemetery operations as required under applicable state laws. Such trusts include (i) preneed funeral trusts; (ii) preneed cemetery merchandise and service trusts; and (iii) cemetery perpetual care trusts. These trusts are typically administered by independent financial institutions that we select.
Although the FTC’s public workshop was completed, no further announcements related to the notice of proposed rulemaking on potential amendments to the Funeral Rule have been announced by the FTC. We cannot predict what changes, if any, may be made to the Funeral Rule or the impact of any such changes on our business. State Trust Laws.
Although the FTC’s public workshop was completed, no further announcements related to the notice of proposed rulemaking on potential 8 amendments to the Funeral Rule have been announced by the FTC. We cannot predict what changes, if any, may be made to the Funeral Rule or the impact of any such changes on our business. State Trust Laws.
Our cemeteries provide interment rights (primarily grave sites, lawn crypts, mausoleum spaces and niches), related cemetery merchandise (such as memorial markers, outer burial containers and monuments) and services (interments, inurnments and installation of cemetery merchandise). 4 Preneed Programs Funeral and cemetery arrangements sold prior to death occurring are referred to as preneed contracts.
Our cemeteries provide interment rights (primarily grave sites, lawn crypts, mausoleum spaces and niches), related cemetery merchandise (such as memorial markers, outer burial containers and monuments) and services (interments, inurnments and installation of cemetery merchandise). Preneed Programs Funeral and cemetery arrangements sold prior to death occurring are referred to as preneed contracts.
In addition to preneed funeral contracts, we also offer “pre-planned” funeral arrangements whereby a customer determines in advance substantially all of the details of a funeral service without any financial commitment or other obligation on the part of the client until the actual time of need.
In addition to preneed funeral contracts, we also offer “pre-planned” funeral arrangements whereby a customer determines in advance substantially all of the details of a funeral service without any financial commitment or other obligation on the part of the customer until the actual time of need.
Legislative bodies and regulatory agencies frequently propose new laws and regulations, some of which could have a material impact on our business. We cannot predict the impact of any future laws and regulations or changes to existing laws and regulations. 7 Federal Trade Commission.
Legislative bodies and regulatory agencies frequently propose new laws and regulations, some of which could have a material impact on our business. We cannot predict the impact of any future laws and regulations or changes to existing laws and regulations. Federal Trade Commission.
While we believe we are in compliance with existing environmental laws and regulations, we cannot assure that we will not incur substantial costs in the future. 8 Worker Health and Safety .
While we believe we are in compliance with existing environmental laws and regulations, we cannot assure that we will not incur substantial costs in the future. Worker Health and Safety .
Trust fund income earned, along with the receipt and recognition of any insurance benefits, are not reflected in our revenue until the service is performed or the merchandise is delivered. Trust fund holdings and deferred revenue are reflected on our Consolidated Balance Sheet, while our insurance funded contracts are not reflected on our Consolidated Balance Sheet.
Trust fund income earned, along with the receipt and recognition of any insurance benefits, are not reflected in our revenue until the service is performed or the merchandise is delivered. Trust fund holdings and deferred revenue are reflected on our Consolidated Balance Sheets, while our insurance funded contracts are not reflected on our Consolidated Balance Sheets.
Approximately 49% of our cemetery operating revenue is derived from preneed property sales. Our preneed cemetery strategy is to build family heritage in our cemeteries by selling property and interment rights prior to death through full time, highly motivated and entrepreneurial local sales teams.
Approximately 63% of our cemetery operating revenue is derived from preneed property sales. Our preneed cemetery strategy is to build family heritage in our cemeteries by selling property and interment rights prior to death through full time, highly motivated and entrepreneurial local sales teams.
Pre-planned funeral arrangements permit a family to avoid the burden of making deathcare plans at the time of need and enable a funeral home to establish relationships with a client that may eventually lead to an atneed sale.
Pre-planned funeral arrangements permit a family to avoid the burden of making deathcare plans at the time of need and enable a funeral home to establish relationships with a customer that may eventually lead to an atneed sale.
Seasonal fluctuations in the death rate may be further affected by epidemics and pandemics, like COVID-19, including any new or emerging public health threats. These unexpected fluctuations may not only increase death rates during the affected period, but also may subsequently decrease death rates following the affected period as a result of an acceleration of death rates.
Seasonal fluctuations in the death rate may be further affected by epidemics and pandemics, including any new or emerging public health threats. These unexpected fluctuations may not only increase death rates during the affected period, but also may subsequently decrease death rates following the affected period as a result of an acceleration of death rates.
The incentive payment is subject to partial claw-back if certain preneed funeral sales volumes are not met within the ten-year term of the agreement. As such, we will recognize the incentive payment in proportion to our achieved preneed funeral sales volume per the agreement at each reporting period.
The incentive payment is subject to partial claw-back if certain preneed funeral sales volumes are not met within the ten-year term of the agreement. As such, we recognize the incentive payment in proportion to our achieved preneed funeral sales volume per the agreement at each reporting period. We have recognized $0.4 million of this incentive payment to-date.
Code of Business Conduct and Ethics On February 22, 2023, our Board, on the recommendation of the Board’s Audit Committee, approved various amendments to the Company’s Code of Business Conduct and Ethics (the “Code”), which applies to all directors, officers and employees of the Company and its subsidiaries.
Code of Business Conduct and Ethics Effective October 30, 2024, our Board, on the recommendation of the Board’s Audit Committee, approved various amendments to the Company’s Code of Business Conduct and Ethics (the “Code”), which applies to all directors, officers and employees of the Company and its subsidiaries.
We operate in two business segments: Funeral Home Operations, which currently accounts for approximately 70% of our total revenue, and Cemetery Operations, which currently accounts for approximately 30% of our total revenue. At December 31, 2023, we operated 171 funeral homes in 26 states and 32 cemeteries in 11 states.
We operate in two business segments: Funeral Home Operations, which currently accounts for approximately 65% of our total revenue, and Cemetery Operations, which currently accounts for approximately 35% of our total revenue. At December 31, 2024, we operated 162 funeral homes in 26 states and 31 cemeteries in 11 states.
There has been increasing competition from providers specializing in specific services, such as cremations, who offer minimal service and low-end pricing. We also face competition from companies that market products and related merchandise over the internet and non-traditional casket stores in certain markets. These competitors have been successful in capturing a portion of the low-end market and product sales.
We also face competition from companies that market products and related merchandise over the internet and non-traditional casket stores in certain markets. These competitors have been successful in capturing a portion of the low-end market and product sales.
As of December 31, 2023, we and our subsidiaries employed 2,602 employees, of whom 1,249 were full-time and 1,353 were part-time. All of our funeral directors and embalmers possess licenses required by applicable regulatory agencies. None of our employees are represented by unions.
As of December 31, 2024, we and our subsidiaries employed 2,420 employees, of whom 1,200 were full-time and 1,220 were part-time. All of our funeral directors and embalmers possess licenses required by applicable regulatory agencies.
In addition to making certain technical and administrative updates, the amendments to the Code include, among other things, summarizing and clarifying the Company’s existing compliance requirements and also identifies and expands upon certain policies, including those related to bribery and kickbacks, antitrust, political activity and improper influence on auditors.
In addition to making certain technical and administrative updates, the amendments to the Code include, among other things, summarizing and clarifying the Company’s existing compliance requirements and also identifies and expands upon certain policies, including those related to suppliers and vendors, environmental, and discrimination, retaliation and harassment.
AVAILABLE INFORMATION We file annual, quarterly and other reports, and any amendments to those reports, and information with the United States Securities and Exchange Commission (“SEC”). The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. Our website address is www.carriageservices.com .
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. Our website address is www.carriageservices.com .
General consumer confidence and discretionary income may have a significant impact on our preneed sales success rate. Cemetery revenue that originated from preneed contracts represented approximately 67% and 78% of our total cemetery revenue for 2022 and 2023, respectively.
General consumer confidence and discretionary income may have a significant impact on our preneed sales success rate. Cemetery revenue that originated from preneed contracts represented approximately 69% and 63% of our total cemetery revenue for 2024 and 2023, respectively. At December 31, 2024, we had a backlog of 69,408 preneed cemetery contracts to be delivered in the future.
Divestitures During the year ended December 31, 2023, we sold two funeral homes and two cemeteries for an aggregate of $1.1 million and merged one funeral home with another business we own in a nearby market. OUR OPERATIONS See Part II, Item 8, Financial Statements and Supplementary Data, Note 21 for segment data related to our operations.
Divestitures During the year ended December 31, 2024, we sold six funeral homes, one cemetery and real property for an aggregate of $12.0 million for a net loss of $1.2 million. OUR OPERATIONS See Part II, Item 8, Financial Statements and Supplementary Data, Note 20 for segment data related to our operations.
As of December 31, 2023, CSV RIA provided these services to approximately 80% of our trust assets, for a fee based on the market value of trust assets.
Investment management and advisory services are provided either by our wholly owned registered investment advisory firm (“CSV RIA”) or by independent financial advisors. As of December 31, 2024, CSV RIA provided these services to approximately 80% of our trust assets, for a fee based on the market value of trust assets.
At December 31, 2023, we had a backlog of 104,834 preneed funeral contracts to be delivered in the future.
We sold 10,750 and 10,511 preneed funeral contracts, net of cancellations, during the years ended December 31, 2024 and 2023, respectively. At December 31, 2024, we had a backlog of 102,799 preneed funeral contracts to be delivered in the future.
We have observed new start-up competition in certain areas of the country, which may impact our profitability in certain markets. Market share for funeral homes and cemeteries is largely a function of reputation and heritage, although competitive pricing, professional service and attractive, well-maintained and conveniently located facilities are also important.
Market share for funeral homes and cemeteries is largely a function of reputation and heritage, although competitive pricing, professional service and attractive, well-maintained and conveniently located facilities are also important. Because of the importance of reputation and heritage, market share increases are usually gained over a long period of time.
On June 21, 2023, the Board elected Chad Fargason to serve as a Class II Director until the Company’s 2025 annual meeting of stockholders. Mr. Fargason was appointed to serve on the Audit Committee, along with being appointed Chairman of the Corporate Governance Committee.
On October 30, 2024, the Board elected Dr. Edmondo Robinson to serve as a Class II Director until the Company’s 2025 annual meeting of stockholders. Dr. Robinson was appointed to serve as a member of the Compensation, Audit and Corporate Governance Committees.
The income from these perpetual care trusts provides funds necessary to maintain cemetery property and memorials in perpetuity. For additional information with respect to our trusts, see Part II, Item 8, Financial Statements and Supplementary Data, Notes 8 and 9.
The income from these perpetual care trusts provides funds necessary to maintain cemetery property and memorials in perpetuity.
COMPETITION The funeral and cemetery industry has been, and remains, highly competitive. The largest publicly held operators, in terms of revenue, of both funeral homes and cemeteries with operations in the United States are Service Corporation International (“SCI”), Park Lawn Corporation (“Park Lawn”) and Carriage.
The largest publicly held operators, in terms of revenue, of both funeral homes and cemeteries with operations in the United States are Service Corporation International (“SCI”), and Carriage. We believe these two companies collectively represent approximately 23% of funeral and cemetery revenue in the United States. Independent businesses, along with other privately-owned consolidators, represent the remaining 77% of industry revenue.
In markets that depend on preneed sales for market share, we supplement the arrangements written by our local funeral directors with sales sourced by our own sales counselors and by third party sellers. We sold 9,111 and 10,511 preneed funeral contracts, net of cancellations, during the years ended December 31, 2022 and 2023, respectively.
The cash flow and earnings from insurance contracts are more stable, but are generally lower than traditional trust fund investments. In markets that depend on preneed sales for market share, we supplement the arrangements written by our local funeral directors with sales sourced by our own sales counselors and by third-party sellers.
Because of the importance of reputation and heritage, market share increases are usually gained over a long period of time. The sale of preneed funeral services and cemetery property has increasingly been used by many companies as a marketing tool to build market share.
The sale of preneed funeral services and cemetery property has increasingly been used by many companies as a marketing tool to build market share. There has been increasing competition from providers specializing in specific services, such as cremations, who offer minimal service and low-end pricing.
Trust funded contracts typically provide cash that is invested in various securities with the expectation that returns will exceed the growth factor in the insurance contracts. The cash flow and earnings from insurance contracts are more stable, but are generally lower than traditional trust fund investments.
We are projecting this partnership to help drive year-over-year growth in preneed funeral sales of 20% over the next five years. 5 Trust funded contracts typically provide cash that is invested in various securities with the expectation that returns will exceed the growth factor in the insurance contracts.
We believe these three companies collectively represent approximately 20% of funeral and cemetery revenue in the United States. Independent businesses, along with other privately-owned consolidators, represent the remaining 80% of industry revenue. Our funeral home and cemetery operations face competition in the markets that they serve. Our primary competition in most of our markets is from local independent operators.
Our funeral home and cemetery operations face competition in the markets that they serve. Our primary competition in most of our markets is from local independent operators. We have observed new start-up competition in certain areas of the country, which may impact our profitability in certain markets.
Payne ceased serving as Executive Chairman of the Board and began serving as a special advisor to the Board and senior management of the Company in a consulting role. For more information on this transition, see Part II, Item 8, Financial Statements and Supplementary Data, Note 24 (Subsequent Events).
Beginning on the Transition Date, Mr. Payne began serving as a special advisor to the Board and senior management in a consulting role. In connection with Mr.
Fingerhut’s resignation was not a result of any disagreement with the Company on any matter related to its operations, policies or practices. On July 25, 2023, the Board elected Julie Sanders to serve as a Class II Director until the Company’s 2025 annual meeting of stockholders. Ms.
To facilitate the class realignment, on March 7, 2024, Julie Sanders resigned from the Board as a Class II director (term expiring in 2025), and, effective as of March 7, 2024, was re-elected by the Board to serve as a Class I director until the Company’s 2024 annual meeting of shareholders. Ms.
Webb was appointed to serve as the Chair of the Compensation Committee and a member of the Audit and Corporate Governance Committees. On July 24, 2023, Barry Fingerhut, a member of the Board, provided notice of his resignation from the Board, effective on that date. Mr.
Sanders continued to serve on the Audit, Compensation and Corporate Governance Committees of the Board. On March 7, 2024, upon the recommendation of the Corporate Governance Committee of the Company, the Board elected Chad Fargason to serve as the Company’s first Non-Executive Chairman of the Board, effective on that date. The election of Mr.
Removed
COMPANY DEVELOPMENTS Executive Leadership Changes On January 2, 2023, the Company’s Board of Directors (the “Board”) appointed Adeola Olaniyan, the Company’s Corporate Controller (Principal Accounting Officer), as the Company’s interim Principal Financial Officer, effective on that date, to serve until a permanent replacement was identified. On March 13, 2023, the Board appointed L.
Added
COMPANY DEVELOPMENTS Board of Directors and Leadership Changes On February 22, 2024, the Board of Directors (the “Board”) of the Company announced the conclusion of the Company’s review of strategic alternatives following the Board’s vote on February 21, 2024, to bring the strategic review process to a close.
Removed
Kian Granmayeh to serve as the Company’s Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer), effective on that date. On June 21, 2023, the Board appointed Carlos R. Quezada, to serve as Chief Executive Officer (“CEO”), effective on that date, as part of a planned succession of Melvin C. Payne, founder and former CEO.
Added
The strategic review process was first announced on June 29, 2023, which was overseen by the Board with assistance from experienced financial advisors and legal counsel. The Board unanimously determined that continuing to execute on the Company’s strategic plan as an independent, public company was in the best interests of the Company and its stockholders at that time.
Removed
Concurrently with the appointment of Mr. Quezada as CEO, Mr. Payne stepped down as CEO and the Board approved his appointment as Executive Chairman of the Board, effective on that date. On February 24, 2024, Mr.
Added
February 22, 2024 (the “Transition Date”), the Company announced that Melvin C. Payne, the Company’s founder and former Chief Executive Officer, would cease to serve as Executive Chairman of the Board, but would remain on the Board until the Company’s 2024 annual meeting of stockholders, when the term for Class I directors is scheduled to expire.
Removed
Payne ceased serving as Executive Chairman of the Board and began serving as a special advisor to the Board and senior management of the Company in a consulting role. For more information on his transition, see Part II, Item 8, Financial Statements and Supplementary Data, Note 24 (Subsequent Events). On June 21, 2023, the Board appointed Steven D.
Added
Payne’s termination of employment, the employment-related provisions of his Employment Agreement with the Company, dated as of November 5, 2019, (as amended prior to the Transition Date, the “Employment Agreement”) terminated on the Transition Date. On February 21, 2024, the Company and Mr.
Removed
Metzger, to serve as President, along with remaining in his role as Secretary, effective on that date. Board of Directors - Resignation; Election; and Review of Potential Strategic Alternatives On February 22, 2023, the Board elected Mr.
Added
Payne entered into a Transition Agreement (the “Transition Agreement”), setting forth the terms of his severance benefits and his consulting arrangement. Under the Transition Agreement, Mr. Payne is entitled to receive certain benefits, subject to the timely execution and non-revocation by Mr.
Removed
Quezada, who was then the Company's President and Chief Operating Officer, to serve as a Class II director, effective that same date, until the Company’s 2025 annual meeting of stockholders. The Board also appointed Mr. Quezada to serve as Vice Chairman of the Board. Mr.
Added
Payne and his spouse of waiver and release agreements in connection with the Transition Date and the end of the 12-month consulting term set forth in the Transition Agreement (the “Releases”).
Removed
Quezada serves as a non-independent member of the Board, but was not appointed to any of its standing committees. On June 15, 2023, Dr. Achille Messac, a member of our Board, provided notice of his resignation from the Board, effective on that date. Dr.
Added
These payments and benefits include the following: • Salary continuation for 24 months of $2.0 million; • 2023 annual bonus of $1.25 million; • Prorated 2024 bonus of $181,500; • Prorated settlement of performance awards of $3.0 million payable in cash; • Consulting payments of $1.0 million; • Payments for maintaining health benefits for Mr.
Removed
Messac’s resignation was not a result of any disagreement with the Company on any matter related to its operations, policies or practices. On June 21, 2023, concurrently with Mr. Payne stepping down as CEO, the Board approved his appointment as Executive Chairman of the Board, effective on that date. On February 24, 2024, Mr.
Added
Payne and his spouse for up to 36 months; and • Reimbursement of legal expenses up to $35,000. All of the payments and benefits provided under the Transition Agreement are subject to Mr. Payne’s continued compliance with certain confidentiality, non-competition, non-solicitation and non-disparagement provisions of the Employment Agreement, as well as compliance by Mr.
Removed
On June 29, 2023, the Board announced it had initiated a process to explore potential strategic alternatives, possibly including a sale, merger or other potential strategic or financial transaction, to maximize stockholder value. On February 21, 2024, the Board voted to bring the review of potential strategic alternatives to a close.
Added
Payne and his spouse with their respective Releases. The Transition Agreement may be terminated by the Company upon the material breach of the Transition Agreement, the surviving provisions of the Employment Agreement or either of the Releases. Upon Mr.
Removed
For more information on this process and its conclusion, see Part II, Item 8, Financial Statements and Supplementary Data, Note 24 (Subsequent Events). 3 On July 5, 2023, the Board elected Somer Webb to serve as a Class I Director until the Company’s 2024 annual meeting of stockholders. Ms.
Added
Payne’s death, any consulting fee payments would be paid to his estate. 3 On March 7, 2024, upon the recommendation of the Corporate Governance Committee of the Company, the Board realigned the Company’s classes of directors to provide for equal apportionment among the three classes as a result of the previous announcement of Mr.
Removed
Sanders was appointed to serve on each of the Audit, Compensation and Corporate Governance Committees. On November 1, 2023, the Board appointed Mr. Fargason, an existing Class II Director, to serve on the Compensation Committee.
Added
Payne, a then Class I director, would remain on the Board until the Company’s 2024 annual meeting of stockholders, at which time his term would expire.
Removed
Strategic Partnership Agreement On May 16, 2023, we received a $6.0 million incentive payment from a national insurance provider for entering into a strategic partnership agreement to market and sell prearranged funeral services in the future, which is subject to partial claw-back if we do not meet certain preneed funeral sales volumes.
Added
Fargason as the Board’s Non-Executive Chairman was as a result of the previous announcement of Mr. Payne ceasing to serve as Executive Chairman of the Board of the Company, effective February 22, 2024. Effective March 25, 2024, Kathryn Shanley was appointed to serve as the Company’s Chief Accounting Officer (Principal Accounting Officer). In connection with the appointment of Ms.
Removed
A copy of the Code, as amended, is posted on our website under “Investors - Corporate Governance – Governance Documents.” Acquisitions On March 22, 2023, we acquired three funeral homes, two cemeteries and a cremation focused business in the Bakersfield, CA area for $44.0 million.
Added
Shanley as the Company’s Chief Accounting Officer (Principal Accounting Officer), effective March 25, 2024, L. Kian Granmayeh ceased serving as the Company’s Principal Accounting Officer. At that time, Mr. Granmayeh continued to serve as the Company’s Executive Vice President, Chief Financial Officer, and Treasurer (Principal Financial Officer).
Removed
Such trusts include (i) preneed funeral trusts; (ii) preneed cemetery merchandise and service trusts; and (iii) cemetery perpetual care trusts. These trusts are typically administered by independent financial institutions that we select. Investment management and advisory services are provided either by our wholly-owned registered investment advisory firm (“CSV RIA”) or by independent financial advisors.
Added
On April 2, 2024, the Board revised the Director Compensation Policy to provide that each independent director is entitled to a quarterly retainer of $37,500 payable in cash and/or unrestricted shares of our common stock at the end of each quarter.
Removed
BUSINESS STRATEGY Our operations and business strategy are founded on the shared values of our Guiding Principles and built upon the execution of our Standards Operating and Strategic Acquisition Models, aligned with our purpose of creating a premier experience through innovation, empowered partnership, and elevated service.
Added
The chair of the Board, so long as he or she is an independent director, and the chair of our Audit Committee shall be entitled to an additional annual retainer of $20,000, the chair of our Compensation Committee is entitled to an additional annual retainer of $15,000, and the chair of our Corporate Governance Committee is entitled to an additional annual retainer of $10,000, which are payable in quarterly installments at the end of each quarter.
Removed
Standards Operating Model Our Standards Operating Model is focused on growing local market share, providing personalized high-value services to our client families and guests, and operating financial metrics that drive long-term, sustainable revenue growth and improved earning power of our portfolio of businesses by employing leadership and entrepreneurial principles that fit the nature of our high-value personal service business.
Added
On May 14, 2024, the Board elected Julie Sanders to serve as chair of the Board’s Corporate Governance Committee, effective on that date, which was a result of the previous announcement of Chad Fargason, the prior chair of the Corporate Governance Committee, being elected to serve as the Company’s Non-Executive Chairman of the Board, effective March 7, 2024.
Removed
Standards Achievement is the measure by which we judge the success of each business and incentivize our local managers and their teams. Our Standards Operating Model is not designed to produce maximum short-term earnings because we believe such performance is unsustainable and will ultimately stress the business, which very often leads to declining market share, revenue and earnings.
Added
On June 6, 2024, L. Kian Granmayeh informed the Company that he would resign from his position as Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) effective July 1, 2024 and would serve as a consultant for the Company for six months thereafter. Mr.
Removed
Important elements of our Standards Operating Model include: • Balanced Operating Model – We believe a partially decentralized structure works best in the funeral and cemetery industry and for our Company.
Added
Granmayeh’s resignation was not the result of any disagreement with the Company on any matter relating to the Company's operations, policies, or practices, including any matters concerning the Company’s controls or any financial or accounting-related matters or disclosures. In connection with Mr.
Removed
Successful execution of our Standards Operating Model is highly dependent on strong local leadership, intelligent risk taking, entrepreneurial drive and corporate support aligned with the key drivers of a successful operation organized around three primary areas - market share, high-value services and operating financial metrics. • Incentives Aligned with Standards – Empowering local managers, who we call Managing Partners, to do the right things in their operations and local communities, and providing appropriate support with operating and financial practices, will enable long-term growth and sustainable profitability.
Added
Granmayeh’s resignation, the Company’s Board appointed Kathryn Shanley, the Company’s Chief Accounting Officer (Principal Accounting Officer) as the Company’s Interim Principal Financial Officer, effective June 6, 2024, until a permanent replacement was identified. No new compensatory arrangements were entered into with Ms. Shanley in connection with her appointment as the Company’s interim Principal Financial Officer.
Removed
Each Managing Partner participates in a variable bonus plan whereby he or she earns a percentage of his or her respective business’ earnings based upon the actual standards achieved as long as the performance exceeds our minimum standards. • The Right Local Leadership – Successful execution of our operating model is highly dependent on strong local leadership, intelligent risk taking and entrepreneurial empowerment.
Added
Effective January 2, 2025, John Enwright was appointed to serve as the Company’s Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer). In connection with the appointment of Mr.
Removed
A Managing Partner’s performance is judged according to achievement of the standards for that business. 6 Strategic Acquisition Model Our Standards Operating Model led to the development of our Strategic Acquisition Model, which guides our acquisition strategy. We believe that both models, when executed effectively, will drive long-term, sustainable increases in market share, revenue, earnings and cash flow.
Added
Enwright as the Company’s Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer), effective January 2, 2025, Kathryn Shanley ceased serving as the Company’s Interim Principal Financial Officer. Ms. Shanley continues to serve as the Company’s Chief Accounting Officer (Principal Accounting Officer).
Removed
We believe a primary driver of higher revenue and profits in the future will be the execution of our Strategic Acquisition Model using strategic ranking criteria to assess acquisition candidates. As we execute this strategy over time, we expect to acquire larger, higher margin strategic businesses.
Added
The approval of the amendments to the Code did not relate to or result in any waiver, whether explicit or implicit, of any provision of the prior version of the Code.
Removed
We have learned that the long-term growth or decline of a local branded funeral and cemetery business is reflected by several criteria that correlate strongly with five to ten year performance in volumes (market share), revenue and sustainable field-level earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins (a non-GAAP measure).
Added
A copy of the Code, as amended, is available on the Corporate Governance section of our website. 4 Credit Facility On July 31, 2024, the Company entered into a fourth amendment, (the “Credit Facility Amendment”), to our senior secured revolving credit facility (as amended, the “Credit Facility”), with the financial institutions party thereto, as lenders, and Bank of America, N.A., as administrative agent.
Removed
We use criteria such as cultural alignment, volume and price trends, size of business, size of market, competitive standing, demographics, strength of brand and barriers to entry to evaluate the strategic position of potential acquisition candidates.
Added
The Credit Facility Amendment provided, among other things, for (i) the extension of the maturity date of the Credit Facility to July 31, 2029, provided that, if the Senior Notes (as defined in the Credit Facility) have a stated maturity date that is prior to July 31, 2029, then the maturity date shall instead be the date that is 91 days prior to the stated maturity date of the Senior Notes; (ii) the establishment of Term Secured Overnight Financing Rate (“SOFR”) as a benchmark rate and the removal of BSBY from the Credit Facility, including conforming revisions to certain defined terms under the Credit Facility; (iii) the conversion of each existing BSBY Rate Loan (as defined in the Credit Facility prior to giving effect to the Credit Facility Amendment) to a Term SOFR Loan (as defined in the Credit Facility); (iv) modifications to the definitions of “Applicable Rate” and “Applicable Fee Rate” to change the applicable rates and pricing levels set forth in each pricing grid; (v) the removal of certain mandatory prepayments arising from the issuance of either Equity Interests or Debt (as both are defined by the Credit Facility); and (vi) modifications to the permitted investments covenant, relating to the Company’s ability to make certain acquisitions, subject to the satisfaction of certain conditions therein.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

39 edited+7 added−10 removed125 unchanged
Biggest changeMoreover, changes in environmental laws, regulations and enforcement policies occur frequently, and any changes that result in more stringent or costly emissions control or waste handling, storage, transport, disposal or cleanup requirements could require us to make significant expenditures to attain and maintain compliance and may otherwise have a material adverse effect on our results of operations, competitive position or financial condition.
Biggest changeMoreover, changes in environmental laws, regulations and enforcement policies occur frequently, and any changes that result in more stringent or costly emissions control or waste handling, storage, transport, disposal or cleanup requirements could require us to make significant expenditures to attain and maintain compliance and may otherwise have a material adverse effect on our results of operations, competitive position or financial condition. 15 RISKS RELATED TO OUR CREDIT FACILITY AND FINANCIAL ACTIVITIES Credit Facility and Debt Obligations Covenant restrictions in our debt instruments may limit our flexibility to operate and grow our business, and if we are not able to comply with such covenants, our lenders could accelerate our indebtedness, proceed against certain collateral or exercise other remedies, which could have a material adverse effect on us.
Our and our subsidiaries’ level of indebtedness could have important consequences to us, including: • continuing to require us and certain of our subsidiaries to dedicate a substantial portion of our cash flow from operations to the payment of our indebtedness, thereby reducing the funds available for operations and any future business opportunities; • limiting flexibility in planning for, or reacting to, changes in our business or the industry in which we operate; • placing us at a competitive disadvantage compared to our competitors that have less indebtedness; • increasing our vulnerability to adverse general economic or industry conditions; • making us and our subsidiaries more vulnerable to increases in interest rates, as borrowings under our Credit Facility are at variable rates; and • limiting our ability to obtain additional financing to fund working capital, capital expenditures, acquisitions or other general corporate requirements and increasing our cost of borrowing.
Our and our subsidiaries’ level of indebtedness could have important consequences to us, including: • continuing to require us and certain of our subsidiaries to dedicate a substantial portion of our cash flow from operations to the payment of our indebtedness, thereby reducing the funds available for operations and any future business opportunities; 16 • limiting flexibility in planning for, or reacting to, changes in our business or the industry in which we operate; • placing us at a competitive disadvantage compared to our competitors that have less indebtedness; • increasing our vulnerability to adverse general economic or industry conditions; • making us and our subsidiaries more vulnerable to increases in interest rates, as borrowings under our Credit Facility are at variable rates; and • limiting our ability to obtain additional financing to fund working capital, capital expenditures, acquisitions or other general corporate requirements and increasing our cost of borrowing.
The covenants in our Credit Facility and the Indenture governing our Senior Notes contain a number of provisions that impose operating and financial restrictions which, subject to certain exceptions, limit our ability and the ability of our subsidiaries to, among other things: incur additional indebtedness (including guarantees); pay dividends or make distributions or redeem or repurchase our common stock; make investments; grant liens on assets; make capital expenditures; enter into 15 transactions with affiliates; enter into sale-leaseback transactions; sell or dispose assets; and acquire the assets of, or merge or consolidate with, other companies.
The covenants in our Credit Facility and the Indenture governing our Senior Notes contain a number of provisions that impose operating and financial restrictions which, subject to certain exceptions, limit our ability and the ability of our subsidiaries to, among other things: incur additional indebtedness (including guarantees); pay dividends or make distributions or redeem or repurchase our common stock; make investments; grant liens on assets; make capital expenditures; enter into transactions with affiliates; enter into sale-leaseback transactions; sell or dispose assets; and acquire the assets of, or merge or consolidate with, other companies.
For example, on August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into law which includes a tax and spending package that introduced several tax-related provisions, including a 15% corporate alternative minimum tax (“CAMT”) on corporations that have an average of $1 billion adjusted financial statement income over a consecutive three-year period and a 1% excise tax on certain corporate stock repurchases.
For example, on August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into law which includes a tax and spending package that introduced several tax-related provisions, including a 15% corporate alternative minimum tax on corporations that have an average of $1 billion adjusted financial statement income over a consecutive three-year period and a 1% excise tax on certain corporate stock repurchases.
In the event of realized losses or market declines, we may be required to deposit portions or all of these amounts into the respective trusts in some future period. 12 Increasing death benefits related to preneed funeral contracts funded through life insurance contracts may not cover future increases in the cost of providing a price-guaranteed funeral service.
In the event of realized losses or market declines, we may be required to deposit portions or all of these amounts into the respective trusts in some future period. Increasing death benefits related to preneed funeral contracts funded through life insurance contracts may not cover future increases in the cost of providing a price-guaranteed funeral service.
For example, in November 2020, California voters approved Proposition 24 (Consumer Personal Information Law and Agency Initiative), which went into effect as of January 1, 2023 and has increased the data privacy requirements for our business. Despite our efforts, any noncompliance could result in our incurring substantial penalties and reputational damage.
For example, in November 2020, California voters 19 approved Proposition 24 (Consumer Personal Information Law and Agency Initiative), which went into effect as of January 1, 2023 and has increased the data privacy requirements for our business. Despite our efforts, any noncompliance could result in our incurring substantial penalties and reputational damage.
Because we cannot decrease these costs significantly or rapidly when we experience declines in sales, those declines can cause margins, profits and cash flow to decrease at a greater rate than the decline in revenue. 14 Regulatory Changes Changes or increases in, or failure to comply with, regulations applicable to our business could increase costs or decrease cash flows.
Because we cannot decrease these costs significantly or rapidly when we experience declines in sales, those declines can cause margins, profits and cash flow to decrease at a greater rate than the decline in revenue. Regulatory Changes Changes or increases in, or failure to comply with, regulations applicable to our business could increase costs or decrease cash flows.
Due in part to the presence of competitors who have been in certain markets longer than we have, such acquisitions or investments may be more difficult or expensive than we anticipate. 10 Divestitures could negatively impact our business and retained liabilities from businesses that we sell could adversely affect our financial results.
Due in part to the presence of competitors who have been in certain markets longer than we have, such acquisitions or investments may be more difficult or expensive than we anticipate. Divestitures could negatively impact our business and retained liabilities from businesses that we sell could adversely affect our financial results.
Failure to successfully implement our Standards Operating Model in our funeral and cemetery operations could have a material adverse effect on our financial condition, results of operations and cash flows. Our ability to execute our growth strategy is highly dependent upon our ability to successfully identify suitable acquisition candidates and negotiate transactions on favorable terms.
Failure to successfully implement our Standards Operating Model in our funeral and cemetery operations could have a material adverse effect on our financial condition, results of operations and cash flows. 10 Our ability to execute our growth strategy is highly dependent upon our ability to successfully identify suitable acquisition candidates and negotiate transactions on favorable terms.
In addition, economic conditions at the local or national level could cause declines in preneed sales either as a result of less discretionary income or lower consumer confidence. 11 Declines in preneed cemetery property sales reduces current revenue, and declines in other preneed sales would reduce our backlog and future revenue and could reduce future market share.
In addition, economic conditions at the local or national level could cause declines in preneed sales either as a result of less discretionary income or lower consumer confidence. Declines in preneed cemetery property sales reduces current revenue, and declines in other preneed sales would reduce our backlog and future revenue and could reduce future market share.
Increased price competition in the future could further reduce revenue, profits and our preneed backlog. Change in Preneed Sales Our ability to generate preneed sales depends on a number of factors, including sales incentives and local and general economic conditions. Significant declines in preneed sales would reduce our backlog and future revenue and could reduce our future market share.
Increased price competition in the future could further reduce revenue, profits and our preneed backlog. 11 Change in Preneed Sales Our ability to generate preneed sales depends on a number of factors, including sales incentives and local and general economic conditions. Significant declines in preneed sales would reduce our backlog and future revenue and could reduce our future market share.
For additional information, see Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Critical Accounting Estimates. Earnings from and principal of trust funds could be reduced by changes in financial markets and the mix of securities owned.
For additional information, see Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Critical Accounting Estimates. 12 Earnings from and principal of trust funds could be reduced by changes in financial markets and the mix of securities owned.
As a result of inflation, we have already experienced cost increases and surcharges from our vendors and suppliers on merchandise and goods and may continue to experience additional cost increases in the future, which could be of greater magnitude than those experienced to date.
As a result of inflation, we have already experienced cost increases and surcharges 17 from our vendors and suppliers on merchandise and goods and may continue to experience additional cost increases in the future, which could be of greater magnitude than those experienced to date.
Any of the foregoing could harm our business and we cannot anticipate all the ways in which future epidemics and pandemics, including any new or emerging public health threats, would affect financial market conditions that could adversely impact our business.
Any of the foregoing could harm our business and we cannot 18 anticipate all the ways in which future epidemics and pandemics, including any new or emerging public health threats, would affect financial market conditions that could adversely impact our business.
A severe or prolonged economic downturn from a pandemic or epidemic, including any new or emerging public health threats and the related adverse economic and health consequences, could result in a variety of risks to our business, financial condition or results from operations, including weakened demand from our client families, decreased preneed sales, increased preneed installment contract defaults, increased cremation rates, reduced access to capital and credit markets or delays in obtaining client family payments.
A severe or prolonged economic downturn from a pandemic or epidemic, including any new or emerging public health threats and the related adverse economic and health consequences, could result in a variety of risks to our business, financial condition or results from operations, including weakened demand from our customer families, decreased preneed sales, increased preneed installment contract defaults, increased cremation rates, reduced access to capital and credit markets or delays in obtaining customer family payments.
However, we may not correctly anticipate or identify trends in consumer preferences, or we may identify them later than our competitors. In addition, any strategies we may implement to address these trends may prove incorrect or ineffective.
However, we may not correctly anticipate or identify trends in consumer 14 preferences, or we may identify them later than our competitors. In addition, any strategies we may implement to address these trends may prove incorrect or ineffective.
We may not generate sufficient funds to 16 service our debt and meet our business needs, such as funding working capital or the expansion of our operations.
We may not generate sufficient funds to service our debt and meet our business needs, such as funding working capital or the expansion of our operations.
These factors could involve financial 17 institutions or financial services industry companies with which we, have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.
These factors could involve financial institutions or financial services industry companies with which we, have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.
Additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also do not prevent us or our subsidiaries from incurring obligations, such as trade payables, that do not constitute indebtedness as defined under our debt agreements. To the extent new debt is added to our current debt levels, the leverage risks associated with our indebtedness would increase.
Additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also do not prevent us or our subsidiaries from incurring obligations, such as trade payables, which do not constitute indebtedness as defined under our debt agreements. To the extent new debt is added to our current debt levels, the leverage risks associated with our indebtedness would increase.
Based on the results of our annual goodwill and intangible assets impairment test we performed as of August 31, 2023 and our annual review of long-lived assets and leases at December 31, 2023, we determined that there were factors that would indicate the need to perform an additional quantitative impairment test for tradenames for certain funeral home businesses.
Based on the results of our annual goodwill and intangible assets impairment test we performed as of August 31, 2024 and our annual review of long-lived assets and leases at December 31, 2024, we determined that there were factors that would indicate the need to perform an additional quantitative impairment test for tradenames for certain funeral home businesses.
Funeral home and cemetery businesses have built local heritage and tradition through successive generations, providing a foundation for ongoing business opportunities from established client family relationships and related referrals. We believe these relationships build trust in the community and are a key driver to market share.
Funeral home and cemetery businesses have built local heritage and tradition through successive generations, providing a foundation for ongoing business opportunities from established customer family relationships and related referrals. We believe these relationships build trust in the community and are a key driver to market share.
In addition, the impacts of inflation are also felt by consumers who face rising prices for a variety of goods and services, which could reduce the amount of discretionary spending that would otherwise be available to our client families and potential client families to spend on our services.
In addition, the impacts of inflation are also felt by consumers who face rising prices for a variety of goods and services, which could reduce the amount of discretionary spending that would otherwise be available to our customer families and potential customer families to spend on our services.
We intend to apply standards established under our Strategic Acquisition Model to evaluate acquisition candidates, and there is no assurance that we will continue to be successful in doing so or that we will find attractive candidates that satisfy these standards.
We intend to apply standards established under our strategic acquisition framework to evaluate acquisition candidates, and there is no assurance that we will continue to be successful in doing so or that we will find attractive candidates that satisfy these standards.
Significant weather events, natural disasters, or catastrophic events could adversely affect our business, financial condition or results of operations. Over forty percent of the businesses we operate are located in California, Texas and Florida, areas where natural disasters are more prevalent, including, for example, hurricanes, wild fires, flooding, earthquakes, tornadoes and droughts.
Significant weather events, natural disasters, or catastrophic events could adversely affect our business, financial condition or results of operations. Over forty percent of the businesses we operate are located in California, Texas and Florida, areas where natural disasters are more prevalent, including, for example, hurricanes, wildfires, flooding, earthquakes, tornadoes and droughts.
New or revised tax laws or regulations could have a material effect on our financial statements New tax laws or regulations could be enacted at any time, and existing tax laws or regulations could be interpreted, amended, or applied in a manner that has a material effect on us, which could materially impact our business and financial condition.
New tax laws or regulations could be enacted at any time, and existing tax laws or regulations could be interpreted, amended, or applied in a manner that has a material effect on us, which could materially impact our business and financial condition.
The following table summarizes our investment returns (realized and unrealized), excluding certain fees, on our trust funds for the years ended December 31, 2021, 2022 and 2023: 2021 2022 2023 Preneed funeral trust funds 16.0 % 1.0 % 17.3 % Preneed cemetery trust funds 19.3 % 0.7 % 19.1 % Perpetual care trust funds 19.1 % (0.2) % 20.2 % Generally, earnings or gains and losses on our preneed funeral and cemetery trust investments are recognized, and we withdraw cash, when the underlying service is performed, merchandise is delivered, or upon contract cancellation.
The following table summarizes our investment returns (realized and unrealized), excluding certain fees, on our trust funds for the years ended December 31, 2024, 2023 and 2022: 2024 2023 2022 Preneed funeral trust funds 11.1 % 17.3 % 1.0 % Preneed cemetery trust funds 12.7 % 19.1 % 0.7 % Perpetual care trust funds 13.2 % 20.2 % (0.2) % Generally, earnings or gains and losses on our preneed funeral and cemetery trust investments are recognized, and we withdraw cash, when the underlying service is performed, merchandise is delivered, or upon contract cancellation.
Seasonal fluctuations in the death rate may be further affected by epidemics and pandemics, like COVID-19, including any new or emerging public health threats.
Seasonal fluctuations in the death rate may be further affected by epidemics and pandemics, including any new or emerging public health threats.
GENERAL RISKS Economic Conditions and Natural Disasters We may be adversely affected by the effects of inflation. Inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost structure or by reducing the amount of discretionary income consumers have available to spend on our services.
We may be adversely affected by the effects of inflation. Inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost structure or by reducing the amount of discretionary income consumers have available to spend on our services.
Changes in federal, state, or local tax laws, adverse tax audit results, or adverse tax rulings on positions taken could have a material adverse effect on the results of our operations, financial condition, or cash flows.
Changes in federal, state, or local tax laws, adverse tax audit results, or adverse tax rulings on positions taken could have a material adverse effect on the results of our operations, financial condition, or cash flows. 13 New or revised tax laws or regulations could have a material effect on our financial statements.
As a result of this additional quantitative impairment test, we recorded an impairment to the tradenames for two of our funeral homes of $0.2 million, as the carrying amount of these tradenames exceeded the fair value. We concluded that there were no impairments of our goodwill or other long-lived assets and leases.
As a result of this additional quantitative impairment test, we recorded an impairment to the tradenames of certain funeral home businesses of $0.6 million, as the carrying amount of these tradenames exceeded their fair value. We concluded that there were no impairments of our goodwill or other long-lived assets and leases.
We will continue to evaluate the impact of the IRA, along with any other new or revised tax laws or regulations, as such information becomes available. 13 Litigation and Claims Unfavorable results of litigation could have a material adverse impact on our financial statements.
We will continue to evaluate the impact of the IRA, along with any other new or revised tax laws or regulations, as such information becomes available. Litigation and Claims Unfavorable results of litigation could have a material adverse impact on our financial statements. We are subject to a variety of claims and lawsuits in the ordinary course of our business.
As of December 31, 2023, we had $585.1 million of total debt (excluding debt issuance costs, debt discounts and lease obligations), consisting of $6.0 million of acquisition debt (consisting of deferred purchase price and promissory notes payable to sellers of businesses and real estate we purchased), $400.0 million of our Senior Notes and $179.1 million of outstanding borrowings under our Credit Facility, with $68.3 million of availability under our Credit Facility after giving effect to $2.6 million of outstanding letters of credit.
As of December 31, 2024, we had $542.5 million of total debt (excluding debt issuance costs, debt discounts and lease obligations), consisting of $5.5 million of acquisition debt (consisting of deferred purchase price and promissory notes payable to sellers of businesses and real property we purchased), $400.0 million of our Senior Notes and $137.0 million of outstanding borrowings under our Credit Facility, with $110.8 million of availability under our Credit Facility after giving effect to $2.2 million of outstanding letters of credit.
Significant weather events, natural disasters or catastrophic events in these states or other key areas where our operations are concentrated could disrupt our business through injury to our employees or client families, physical damage, closure or destruction of one or more of our locations, data centers or office facilities, or disrupt the delivery of goods or services by one or more of our vendors, any or all of which could adversely impact our operations or increase our costs, which would adversely affect our financial results. 18 Information Technology and Internal Controls We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents could harm our ability to operate our business effectively.
Significant weather events, natural disasters or catastrophic events in these states or other key areas where our operations are concentrated could disrupt our business through injury to our employees or customer families, physical damage, closure or destruction of one or more of our locations, data centers or office facilities, or disrupt the delivery of goods or services by one or more of our vendors, any or all of which could adversely impact our operations or increase our costs, which would adversely affect our financial results.
We are subject to a variety of claims and lawsuits in the ordinary course of our business. Adverse outcomes in potential litigation related to our business may result in significant monetary damages or injunctive relief against us, as litigation and other claims are subject to inherent uncertainties.
Adverse outcomes in potential litigation related to our business may result in significant monetary damages or injunctive relief against us, as litigation and other claims are subject to inherent uncertainties. Any such adverse outcomes that may arise in the future, could have a material adverse impact on our financial position, results of operations, and cash flows.
Although the United States Bureau of the Census estimates that the number of deaths in the United States will increase in the future, longer life spans could reduce the rate of deaths.
Declines in the number of deaths could cause atneed sales of funeral and cemetery services, property and merchandise to decline, which could decrease revenue. Although the United States Bureau of the Census estimates that the number of deaths in the United States will increase in the future, longer life spans could reduce the rate of deaths.
Changes in the number of deaths are not predictable from market to market or over the short term. Declines in the number of deaths could cause atneed sales of funeral and cemetery services, property and merchandise to decline, which could decrease revenue.
RISKS RELATED TO THE FUNERAL AND CEMETERY INDUSTRY Changes in Death Rates and Consumer Preferences Declines in the number of deaths in our markets can cause a decrease in revenue. Changes in the number of deaths are not predictable from market to market or over the short term.
We have implemented our Standards Operating Model to improve and better measure performance in our funeral and cemetery operations. We developed standards according to criteria, each with a different weighting, designed around market share, high-value services and operational and financial metrics.
We developed these standards, which are updated from time to time, according to criteria, each with a different weighting, designed around market share, high-value services and operational and financial metrics.
At December 31, 2023, under such a scenario, a total of 892,045 shares of common stock would be awarded to participants under the program. We believe this incentive program will result in improved overall financial performance. Strategic Business Execution and Performance Improved performance in our funeral and cemetery segments is dependent upon successful execution of our Standards Operating Model.
We believe this incentive program will result in improved field-level margins, market share and overall financial performance. Strategic Business Execution and Performance Improved performance in our funeral and cemetery segments is dependent upon successful execution of our Standards Operating Model. We have implemented our Standards Operating Model to improve and better measure performance in our funeral and cemetery operations.
In addition, our stock price may experience periods of increased volatility as a result of such perceptions and speculation about the future of our business and operations. 9 Key Employees and Compensation The success of our businesses is typically dependent upon one or a few key employees for success because of the localized and personal nature of our business.
ITEM 1A. RISK FACTORS RISKS RELATED TO OUR BUSINESS Key Employees and Compensation The success of our businesses is typically dependent upon one or a few key employees for success because of the localized and personal nature of our business.
Removed
ITEM 1A. RISK FACTORS RISKS RELATED TO OUR BUSINESS Risks Related to Review of Strategic Alternatives Process and a Potential Strategic Transaction We recently announced the conclusion of our review of strategic alternatives and there can be no assurance that the announcement of the conclusion of that process will not have an adverse impact on our business.
Added
GENERAL RISKS Economic Conditions and Natural Disasters Changes in U.S. foreign trade policies, including the imposition of additional tariffs and other trade barriers, and efforts to withdraw from or materially modify international trade agreements, may materially and adversely affect our business, operations and financial condition.
Removed
On June 29, 2023, following an unsolicited bid, we announced our Board had initiated a process to explore potential strategic alternatives, possibly including, but not limited to, a sale, merger or other potential strategic or financial transaction, aimed at increasing stockholder value.
Added
Changes in U.S. foreign trade policies could lead to the imposition of additional trade barriers and tariffs on the foreign import of certain materials and products.
Removed
After engaging in discussions with a number of potential counter parties as part of the process, on February 21, 2024 the Board voted to bring its review of strategic alternatives to a close and determined that continuing to execute on our strategic plan as an independent public company was in the best interest of our Company and our stockholders at this time.
Added
For example, effective February 4, 2025, the U.S. government implemented an additional tariff on goods being imported from China and announced additional tariffs for goods imported into the United States from Mexico and Canada beginning in March 2025.
Removed
Our announcement on February 21, 2024 may result in a perception that there is uncertainty about the future of our business and operations, regardless of the actual circumstances. Such perceptions may negatively affect our business, disrupt our operations and divert the attention of our Board, management, and employees, all of which could materially and adversely affect our business and operations.
Added
We cannot predict what additional changes to trade policy will be made by the presidential administration or Congress, including whether existing tariff policies will be maintained or modified, what products may be subject to such policies or whether the entry into new bilateral or multilateral trade agreements will occur, nor can we predict the effects that any such changes would have on our business.
Removed
We believe this incentive program will result in improved field-level margins, market share and overall financial performance. Our “Good To Great II” incentive program could result in the issuance of a significant number of shares of common stock to certain critical employees.
Added
However, such steps, if adopted, could result in additional inflationary pressures on the U.S. economy and increase the costs of goods we offer our customers and may negatively impact the supply chain on which we depend to supply merchandise to our funeral home and cemetery locations.
Removed
Our Good To Great II incentive program rewards certain employees who are not Managing Partners in alignment with the incentive programs for our Managing Partners.
Added
Although we may take measures to mitigate the effects of these impacts, if these measures are not effective, there can be no assurance that such changes in U.S. trade policy or in laws and policies governing foreign trade would not materially and adversely affect our business, financial condition, results of operations and liquidity.
Removed
Specifically, the Good To Great II incentive program is tied to the future performance of the Company and requires the Company’s share price to reach one of five predetermined Common Stock Price Averages (as defined by the program) through a performance period ending December 31, 2024 in order for the award to be earned by the participants of the program.
Added
Information Technology and Internal Controls We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents could harm our ability to operate our business effectively.
Removed
While the program aligns our incentives with long-term value creation, there is a potential risk of dilution to our stockholders if we achieve the highest performance tier under the Good To Great II incentive program, which equals a Common Stock Price Average (as defined by the program) of $77.34 per share.
Removed
Any such adverse outcomes that may arise in the future, could have a material adverse impact on our financial position, results of operations, and cash flows. RISKS RELATED TO THE FUNERAL AND CEMETERY INDUSTRY Changes in Death Rates and Consumer Preferences Declines in the number of deaths in our markets can cause a decrease in revenue.
Removed
RISKS RELATED TO OUR CREDIT FACILITY AND FINANCIAL ACTIVITIES Credit Facility and Debt Obligations Covenant restrictions in our debt instruments may limit our flexibility to operate and grow our business, and if we are not able to comply with such covenants, our lenders could accelerate our indebtedness, proceed against certain collateral or exercise other remedies, which could have a material adverse effect on us.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+1 added−0 removed11 unchanged
Biggest changeIn addition, our CIO, who has more than 25 years of industry experience and over 10 years of experience with the development, training and controls of effective enterprise cybersecurity programs, oversees the implementation and compliance of our cybersecurity program and mitigation of information security related risks.
Biggest changeIn addition, our CIO, who has more than 25 years of industry experience and over 15 years of experience in designing and implementing cyber threat detection and mitigation strategies that adhere to NIST and ISO 27001 standards, along with the development, training and controls of effective enterprise cybersecurity programs.
Risk Factors - General Risks – Information Technology and Internal Controls - We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents could harm our ability to operate our business effectively.” GOVERNANCE We involve multiple levels of oversight as a part of our approach to cybersecurity risk management.
Risk Factors - General Risks – Information Technology and Internal Controls - We rely significantly on information technology and any failure, 20 inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents could harm our ability to operate our business effectively.” GOVERNANCE We involve multiple levels of oversight as a part of our approach to cybersecurity risk management.
Additionally, we maintain an experienced information technology team at the employee level that supports our CIO in implementing our cybersecurity program and internal reporting, security and mitigation functions.
We also maintain an experienced information technology team at the employee level that supports our CIO in implementing our cybersecurity program and internal reporting, security and mitigation functions.
Added
Additionally, our CIO oversees the implementation and compliance of our cybersecurity program and mitigation of information security related risks.

Item 2. Properties

Properties — owned and leased real estate

5 edited+1 added−1 removed0 unchanged
Biggest changeThe following table sets forth certain information as of December 31, 2023, regarding our properties used by the funeral home segment and by the cemetery segment identified by state: Number of Funeral Homes Number of Cemeteries State Owned Leased (1) Owned Managed California 23 5 7 — Connecticut 7 2 — — Florida 11 5 5 — Georgia 3 — — — Idaho 4 1 3 — Illinois 2 — 1 — Kansas 2 — — — Kentucky 6 1 — — Louisiana 3 1 1 — Massachusetts 7 — — — Michigan 2 — — — Montana 2 1 1 — Nevada 2 — 2 1 New Jersey 1 1 — — New Mexico 1 — — — New York 10 1 — — North Carolina 11 1 2 — Ohio 5 — — — Oklahoma 5 — 2 — Pennsylvania 2 — — — Rhode Island 4 — — — Tennessee 4 — — — Texas 22 1 6 — Virginia 8 1 1 — Washington 2 — — — Wisconsin 1 — — — Total 150 21 31 1 (1) The leases, with respect to these funeral homes, generally have remaining terms ranging from one to twenty years, and generally, we have the right to renew past the initial terms and have a right of first refusal on any proposed sale of the property where these funeral homes are located. 21 The following table sets forth the number of funeral homes and cemeteries owned and operated by us for the periods presented: Years Ended December 31, 2021 2022 2023 Funeral homes at beginning of period 178 170 171 Acquisitions — 6 3 Divestitures (2) (4) (2) Mergers of funeral homes (6) (1) (1) Funeral homes at end of period 170 171 171 Cemeteries at beginning of period 32 31 32 Acquisitions — 1 2 Divestitures (1) — (2) Cemeteries at end of period 31 32 32 ITEM 3.
Biggest changeOur support center is located in Houston, Texas, where we lease approximately 48,000 square feet of office space. 21 The following table sets forth certain information as of December 31, 2024, regarding our properties used by the funeral home segment and by the cemetery segment identified by state: Number of Funeral Homes Number of Cemeteries State Owned Leased (1) Owned Managed California 22 6 7 — Connecticut 7 2 — — Florida 11 5 5 — Georgia 3 — — — Idaho 4 1 3 — Illinois 2 — 1 — Kansas 2 — — — Kentucky 5 1 — — Louisiana 3 1 1 — Massachusetts 7 — — — Michigan 2 — — — Montana 2 1 1 — Nevada 2 — 2 1 New Jersey 1 1 — — New Mexico 1 — — — New York 10 1 — — North Carolina 11 1 2 — Ohio 4 — — — Oklahoma 5 — 2 — Pennsylvania 2 — — — Rhode Island 4 — — — Tennessee 4 — — — Texas 15 1 5 — Virginia 8 1 1 — Washington 2 — — — Wisconsin 1 — — — Total 140 22 30 1 (1) The leases, with respect to these funeral homes, generally have remaining terms ranging from one to twenty years, and generally, we have the right to renew past the initial terms and have a right of first refusal on any proposed sale of the property where these funeral homes are located.
LEGAL PROCEEDINGS. For more information regarding legal proceedings see Part II, Item 8, Financial Statements and Supplementary Data, Note 16. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. PART II
LEGAL PROCEEDINGS. For more information regarding legal proceedings see Part II, Item 8, Financial Statements and Supplementary Data, Note 15. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 22 PART II
ITEM 2. PROPERTIES. At December 31, 2023, we operated 171 funeral homes in 26 states and 32 cemeteries in 11 states. We own the real estate and buildings for 150 of our funeral homes and lease 21 facilities.
ITEM 2. PROPERTIES. At December 31, 2024, we operated 162 funeral homes in 26 states and 31 cemeteries in 11 states. We own the real property and buildings for 140 of our funeral homes and lease 22 facilities.
We own 31 cemeteries and operate one cemetery under a long-term contract with a municipality, which we refer to as a managed property.
We own 30 cemeteries and operate one cemetery under a long-term contract with a municipality, which we refer to as a managed property. We operate 18 funeral homes in combination with cemeteries as these locations are physically located on the same property or in very close proximity and are under the same leadership.
In addition, we own approximately 500 acres that are available for future development or sale. We anticipate having a sufficient inventory of lots to maintain our property sales for the foreseeable future. Our support center is located in Houston, Texas, where we lease approximately 48,000 square feet of office space.
The 31 cemeteries that we operate have developed cemetery property of approximately 142,000 and 162,000 units available-for-sale at December 31, 2024 and 2023, respectively. In addition, we own approximately 496 acres that are available for future development or sale. We anticipate having a sufficient inventory of lots to maintain our property sales for the foreseeable future.
Removed
We operate 20 funeral homes in combination with cemeteries as these locations are physically located on the same property or in very close proximity and are under the same leadership. 20 The 32 cemeteries that we operate have developed cemetery property of approximately 143,000 and 162,000 units available-for-sale at December 31, 2022 and 2023, respectively.
Added
The following table sets forth the number of funeral homes and cemeteries owned and operated by us for the periods presented: Years Ended December 31, 2024 2023 2022 Funeral homes at beginning of period 171 171 170 Acquisitions — 3 6 Divestitures (7) (2) (4) Mergers of funeral homes (2) (1) (1) Funeral homes at end of period 162 171 171 Cemeteries at beginning of period 32 32 31 Acquisitions — 2 1 Divestitures (1) (2) — Cemeteries at end of period 31 32 32 ITEM 3.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

13 edited+3 added−1 removed2 unchanged
Biggest changeThe following table sets forth certain information with respect to repurchases of our common stock during the quarter ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Dollar Value of Shares That May Yet Be Purchased Under the Program (1) October 1, 2023 - October 31, 2023 — $ — — $ 48,898,769 November 1, 2023 - November 30, 2023 — $ — — $ 48,898,769 December 1, 2023 - December 31, 2023 — $ — — $ 48,898,769 Total for quarter ended December 31, 2023 — — (1) See the first paragraph under the caption “ Purchases of Equity Securities by the Issuer ” for more information on our publicly announced share repurchase program. 23 STOCKHOLDER RETURN PERFORMANCE GRAPH The following line graph below compares the yearly change in cumulative total stockholder return over a 5-year period on our common stock relative to the cumulative total returns of the Russell 3000 Index (the “Russell 3000”), a peer group selected by the Company comprising SCI, Matthews International Corp.
Biggest changeAt December 31, 2024, our share repurchase program had $48.9 million authorized for repurchases. 23 The following table sets forth certain information with respect to repurchases of our common stock during the quarter ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Dollar Value of Shares That May Yet Be Purchased Under the Program (1) October 1, 2024 - October 31, 2024 — $ — — $ 48,898,769 November 1, 2024 - November 30, 2024 — $ — — $ 48,898,769 December 1, 2024 - December 31, 2024 — $ — — $ 48,898,769 Total for quarter ended December 31, 2024 — — (1) See the first paragraph under the caption “ Purchases of Equity Securities by the Issuer ” for more information on our publicly announced share repurchase program. 24 STOCKHOLDER RETURN PERFORMANCE GRAPH The following line graph below compares the yearly change in cumulative total stockholder return over a 5-year period on our common stock relative to the cumulative total returns of the Russell 3000 Index (the “Russell 3000”), the peer group shown in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Peer Group”), which comprised of SCI, Matthews International Corp.
On February 23, 2022, our Board authorized an increase in our share repurchase program to permit us to purchase up to an additional $75.0 million under our share repurchase program, in addition to amounts previously authorized and outstanding in accordance with Rule 10b-18 of the Securities Exchange Act, which totaled up to $265.0 million in share repurchase authorizations.
On February 23, 2022, our Board authorized an increase in our share repurchase program to permit us to purchase up to an additional $75.0 million under our share repurchase program, in addition to amounts previously authorized and outstanding in accordance with Rule 10b-18 of the Exchange Act, which totaled up to $265.0 million in share repurchase authorizations.
Performance data for Carriage, the Russell 3000 Index and the Peer Group is provided as of the last trading day of each of our last five fiscal years.
Performance data for Carriage, the Russell 3000 Index and the 2024 Peer Group is provided as of the last trading day of each of our last five fiscal years.
RECENT SALES OF UNREGISTERED SECURITIES During the year ended December 31, 2023, we did not have any sales of securities in transactions that were not registered under the Securities Act of 1933 (as amended, the “Securities Act”) that have not been reported in a Form 8-K or Form 10-Q.
RECENT SALES OF UNREGISTERED SECURITIES During the year ended December 31, 2024, we did not have any sales of securities in transactions that were not registered under the Securities Act of 1933 (as amended, the “Securities Act”) that have not been reported in a Form 8-K or Form 10-Q.
The stock price performance included in this graph is not necessarily indicative of future stock price performance. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Carriage, the Russell 3000 Index and the Peer Group ITEM 6. [RESERVED] 24
The stock price performance included in this graph is not necessarily indicative of future stock price performance. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Carriage, the Russell 3000 Index, the 2023 Peer Group and the 2024 Peer Group ITEM 6. [RESERVED] 25
The graph assumes that the value of the investment in our common stock, the Russell 3000 Index and the Peer Group was $100 on the last trading day of December 2018, and that all dividends were reinvested.
The graph assumes that the value of the investment in our common stock, the Russell 3000 Index, the 2023 Peer Group and the 2024 Peer Group was $100 on the last trading day of December 2019, and that all dividends were reinvested.
The returns of each member of the Peer Group are weighted according to their respective stock market capitalization as of the beginning of each period measured.
The returns of each member of the 2023 Peer Group and 2024 Peer Group are weighted according to their respective stock market capitalization as of the beginning of each period measured.
Each share is entitled to one vote on matters requiring the vote of stockholders. We believe there are approximately 8,100 beneficial owners of our common stock.
Each share is entitled to one vote on matters requiring the vote of stockholders. We believe there are approximately 6,900 beneficial owners of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. MARKET INFORMATION Our common stock is traded on the New York Stock Exchange under the symbol “CSV.” At February 23, 2024, there were 15,141,435 shares of our common stock outstanding. The shares of common stock outstanding are held by approximately 300 stockholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. MARKET INFORMATION Our common stock is traded on the New York Stock Exchange under the symbol “CSV.” At February 24, 2025, there were 15,649,702 shares of our common stock outstanding. The shares of common stock outstanding are held by approximately 300 stockholders of record.
(“Matthews”) and Park Lawn (the “Peer Group”). We use a peer group index, as we believe there is no relevant published industry or line-of-business index that reflects the companies against which we compete in our industry.
(“Matthews”) and Park Lawn Corporation (“Park Lawn”), and our new peer group consisting of SCI and Matthews (the “2024 Peer Group”). We use a peer group index, as we believe there is no relevant published industry or line-of-business index that reflects the companies against which we compete in our industry.
EQUITY PLANS For information regarding securities authorized for issuance under our equity compensation plans, see Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 22 PURCHASES OF EQUITY SECURITIES BY THE ISSUER Subject to market conditions, normal trading restrictions and satisfying certain financial covenants in our Credit Facility, and in the Indenture governing our Senior Notes, we may make purchases in the open market or through privately negotiated transactions under our Board authorized share repurchase program, in accordance with Rule 10b-18 of the Securities Exchange Act, as amended (the “Exchange Act”).
PURCHASES OF EQUITY SECURITIES BY THE ISSUER Subject to market conditions, normal trading restrictions and satisfying certain financial covenants in our Credit Facility, and in the Indenture governing our Senior Notes, we may make purchases in the open market or through privately negotiated transactions under our Board authorized share repurchase program, in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Shares purchased pursuant to the repurchase program are currently held as treasury stock. At December 31, 2023, our share repurchase program had $48.9 million authorized for repurchases.
Shares purchased pursuant to the repurchase program are currently held as treasury stock.
In December 2021, we repurchased 37,408 shares for $2.4 million, the settlement of which occurred in January 2022. Our shares were purchased in the open market at times and in amounts as management determined appropriate based on factors such as market conditions, legal requirements and other business considerations.
Share repurchase activity is as follows (dollar value in thousands): Years Ended December 31, 2024 2023 2022 Number of Shares Repurchased — — 695,496 Average Price Paid Per Share $ — $ — $ 49.22 Dollar Value of Shares Repurchased $ — $ — $ 34,234 Our shares were purchased in the open market at times and in amounts as management determined appropriate based on factors such as market conditions, legal requirements and other business considerations.
Removed
Share repurchase activity is as follows (dollar value of shares repurchased in thousands): Years Ended December 31, 2021 2022 2023 Number of Shares Repurchased (1) 2,906,983 695,496 — Average Price Paid Per Share $ 49.01 $ 49.22 $ — Dollar Value of Shares Repurchased (1) $ 142,469 $ 34,234 $ — (1) These amounts may differ from the repurchases of common stock amounts in the consolidated statements of cash flows due to unsettled share repurchases at the end of a period.
Added
EQUITY PLANS For information regarding securities authorized for issuance under our equity compensation plans, see Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Added
We removed Park Lawn from our 2024 Peer Group as a result of Park Lawn’s going private transaction and related delisting from the Toronto Stock Exchange as of August 12, 2024.
Added
For the 2023 Peer Group, as a result of Park Lawn’s delisting on August 12, 2024, the stock performance data as of December 31, 2024, reflects SCI’s and Matthews’ total cumulative return only.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

84 edited+20 added−25 removed43 unchanged
Biggest changeThe following table sets forth the elements of cash flow (in thousands): Years Ended December 31, 2021 2022 2023 Cash at beginning of year $ 889 $ 1,148 $ 1,170 Net cash provided by operating activities 84,246 61,024 75,590 Acquisitions of businesses and real estate (3,285) (33,876) (44,500) Proceeds from divestitures and sale of other assets 7,875 5,027 4,132 Proceeds from insurance claims 7,758 2,440 1,403 Capital expenditures (24,883) (26,081) (18,039) Net cash used in investing activities (12,535) (52,490) (57,004) Net borrowings (payments) on our Credit Facility, acquisition debt and finance lease obligations 106,869 34,418 (12,767) Payment to redeem the 6.625% senior notes due 2026 (400,000) — — Payment of call premium related to the 6.625% senior notes due 2026 (19,876) — — Proceeds from the issuance of the 4.25% senior notes due 2029 395,500 — — Payment of debt issuance costs for the Credit Facility and 4.25% senior notes due 2029 (2,197) (922) — Conversions and maturity of the Convertible Notes (3,980) — — Net proceeds from employee equity plans (3) 1,418 1,242 Dividends paid on common stock (7,264) (6,763) (6,708) Purchase of treasury stock (140,040) (36,663) — Other financing costs (461) — — Net cash used in financing activities (71,452) (8,512) (18,233) Cash at end of year $ 1,148 $ 1,170 $ 1,523 26 Operating Activities For the year ended December 31, 2023, cash provided by operating activities was $75.6 million compared to $61.0 million for the year ended December 31, 2022 and $84.2 million for the year ended December 31, 2021.
Biggest changeThe following table sets forth the elements of cash flow (in thousands): Years Ended December 31, 2024 2023 2022 Cash and cash equivalents at beginning of year $ 1,523 $ 1,170 $ 1,148 Net cash provided by operating activities 51,996 75,590 61,024 Acquisitions of businesses and real property — (44,500) (33,876) Proceeds from divestitures and sale of other assets 12,057 4,132 5,027 Proceeds from insurance claims 403 1,403 2,440 Capital expenditures (16,098) (18,039) (26,081) Net cash used in investing activities (3,638) (57,004) (52,490) Net (payments) borrowings on our credit facility, acquisition debt and finance lease obligations (43,161) (12,767) 34,418 Payment of debt issuance costs for the credit facility (781) — (922) Net proceeds from employee equity plans 2,033 1,242 1,418 Dividends paid on common stock (6,807) (6,708) (6,763) Purchase of treasury stock — — (36,663) Net cash used in financing activities (48,716) (18,233) (8,512) Cash and cash equivalents at end of year $ 1,165 $ 1,523 $ 1,170 27 Operating Activities For the year ended December 31, 2024, cash provided by operating activities was $52.0 million compared to $75.6 million for the year ended December 31, 2023 and $61.0 million for the year ended December 31, 2022.
Letter of credit - We have one letter of credit for $2.6 million under the Credit Facility, which secures our obligations under our various self-insurance policies in the event we are unable to meet the self-insurance portion of our claim payment obligations. As we already have reserves recorded for our self-insurance claims costs, these do not represent additional liabilities.
Letter of credit - We have one letter of credit for $2.2 million under the Credit Facility, which secures our obligations under our various self-insurance policies in the event we are unable to meet the self-insurance portion of our claim payment obligations. As we already have reserves recorded for our self-insurance claims costs, these do not represent additional liabilities.
For the year ended December 31, 2022, we had net borrowings on our Credit Facility, acquisition debt and finance leases of $34.4 million, offset by the following payments: i) $36.7 million for the purchase of treasury stock; ii) $6.8 million in dividends; and iii) $0.9 million for debt issuance and transactions costs related to our Credit Facility.
For the year ended December 31, 2022, we had net borrowings on our Credit Facility, acquisition debt and finance leases of $34.4 million, offset by the following payments: i) $36.7 million for the purchase of treasury stock; ii) $6.8 million in dividends; and iii) $0.9 million for debt issuance and transition costs related to our Credit Facility.
Our obligations under the Credit Facility are unconditionally guaranteed on a joint and several basis by the same subsidiaries which guarantee the Senior Notes (as defined in Note 14 to our Consolidated Financial Statements in Part II, Item 8, Financial Statements and Supplementary Data) and certain of our subsequently acquired or organized domestic subsidiaries (collectively, the “Subsidiary Guarantors”).
Our obligations under the Credit Facility are unconditionally guaranteed on a joint and several basis by the same subsidiaries which guarantee the Senior Notes (as defined in Note 13 to our Consolidated Financial Statements in Part II, Item 8, Financial Statements and Supplementary Data) and certain of our subsequently acquired or organized domestic subsidiaries (collectively, the “Subsidiary Guarantors”).
Senior Notes At December 31, 2023, we had $400.0 million in aggregate principal amount of 4.25% Senior Notes due 2029 (the “Senior Notes”) and related guarantees by the Subsidiary Guarantors, which were issued in a private offering under Rule 144A and Regulation S of the Securities Act.
Senior Notes At December 31, 2024, we had $400.0 million in aggregate principal amount of 4.25% Senior Notes due 2029 (the “Senior Notes”) and related guarantees by the Subsidiary Guarantors, which were issued in a private offering under Rule 144A and Regulation S of the Securities Act.
During the year ended December 31, 2023, we recorded a $1.4 million gain on the sale of other real estate not used in business operations. We did not record any gain or loss activity during the year ended December 31, 2022. Income taxes.
During the year ended December 31, 2023, we recorded a $1.4 million gain on the sale of other real estate not used in business operations. We did not record any gain or loss activity during the year ended December 31, 2024. Income taxes.
See Part II, Item 8, Financial Statements and Supplementary Data, Note 15 to our Consolidated Financial Statements for further detail of our lease payments. Acquisition Debt Acquisition debt consists of deferred purchase price and promissory notes payable to sellers.
See Part II, Item 8, Financial Statements and Supplementary Data, Note 14 to our Consolidated Financial Statements for further detail of our lease payments. Acquisition Debt Acquisition debt consists of deferred purchase price and promissory notes payable to sellers.
A majority of the deferred purchase price and notes bear no interest and are discounted at imputed interest rates ranging from 6.5% to 7.3%. Original maturities typically range from five to twenty years.
A majority of the deferred purchase price and notes bear no interest and are discounted at imputed interest rates ranging from 6.5% to 7.3%. Original maturities typically range from nine to twenty years.
At December 31, 2023, we were subject to the following financial covenants under our Credit Facility: (A) a Total Leverage Ratio not to exceed 5.75 to 1.00 and (B) a Fixed Charge Coverage Ratio (as defined in the Credit Facility) of not less than 1.20 to 1.00 as of the end of any period of four consecutive fiscal quarters.
At December 31, 2024, we were subject to the following financial covenants under our Credit Facility: (A) a Total Leverage Ratio not to exceed 5.00 to 1.00 and (B) a Fixed Charge Coverage Ratio (as defined in the Credit Facility) of not less than 1.20 to 1.00 as of the end of any period of four consecutive fiscal quarters.
Regardless of these fluctuations in the death rate, we continue to focus on expanding market share, cost management and executing on our strategic operational plans. 25 LIQUIDITY AND CAPITAL RESOURCES Overview Our primary sources of liquidity and capital resources are internally generated cash flows from operating activities and availability under our Credit Facility (defined below).
Regardless of these fluctuations in the death rate, we continue to focus on expanding market share, cost management and executing on our strategic operational plans. LIQUIDITY AND CAPITAL RESOURCES Overview Our primary sources of liquidity and capital resources are internally generated cash flows from operating activities and availability under our Credit Facility.
The Indenture also contains customary events of default. The debt discount and the debt issuance costs are being amortized using the effective interest method over the remaining term of 65 months of the Senior Notes.
The Indenture also contains customary events of default. The debt discount and the debt issuance costs are being amortized using the effective interest method over the remaining term of 53 months of the Senior Notes.
Shares purchased pursuant to the repurchase program are currently held as treasury stock. At December 31, 2023, our share repurchase program had $48.9 million authorized for repurchases.
Shares purchased pursuant to the repurchase program are currently held as treasury stock. At December 31, 2024, our share repurchase program had $48.9 million authorized for repurchases.
Many leases include one or more options to renew, some of which include options to extend the leases for up to forty years. We lease certain funeral homes, vehicles and equipment under finance leases with original terms ranging from three and a half to forty years.
Many leases include one or more options to renew, some of which include options to extend the leases for up to forty years. In addition, we lease certain other funeral homes, vehicles and equipment under finance leases with original terms ranging from three and a half to forty years.
See Part II, Item 8, Financial Statements and Supplementary Data, Note 14 to our Consolidated Financial Statements for further detail of our debt and interest payments. Off-Balance Sheet Arrangements At December 31, 2023, our off-balance sheet arrangements were as follows: Non-compete agreements - We have various non-compete agreements with former owners and employees of businesses we have acquired.
See Part II, Item 8, Financial Statements and Supplementary Data, Note 13 to our Consolidated Financial Statements for further detail of our debt and interest payments. Off-Balance Sheet Arrangements At December 31, 2024, our off-balance sheet arrangements were as follows: Non-compete agreements - We have various non-compete agreements with former owners and employees of businesses we have acquired.
The letter of credit will expire on November 27, 2024 and is expected to automatically renew annually. The obligations related to our off-balance sheet arrangements are significant to our future liquidity; however, although we can provide no assurances, we anticipate that these obligations will be funded from cash provided from our operating activities.
The letter of credit will expire on November 25, 2025 and is expected to automatically renew annually. The obligations related to our off-balance sheet arrangements are significant to our future liquidity; however, although we can provide no assurances, we anticipate that these obligations will be funded from cash provided from our operating activities.
Further discussion of operating profit for our funeral home and cemetery segments is presented under “Results of Operations.” YEAR ENDED DECEMBER 31, 2023 COMPARED TO YEAR ENDED DECEMBER 31, 2022 Results of Operations The following is a discussion of our results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Further discussion of adjusted operating profit for our funeral home and cemetery segments is presented under “Results of Operations.” YEAR ENDED DECEMBER 31, 2024 COMPARED TO YEAR ENDED DECEMBER 31, 2023 Results of Operations The following is a discussion of our results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023.
The weighted average interest rate on our Credit Facility was 4.0% and 8.6% for the years ended December 31, 2022 and 2023, respectively. 29 We have no material assets or operations independent of the Subsidiary Guarantors, as all of our assets and operations are held and conducted by the Subsidiary Guarantors.
The weighted average interest rate on our Credit Facility was 8.4% and 8.6% for the years ended December 31, 2024 and 2023, respectively. We have no material assets or operations independent of the Subsidiary Guarantors, as all of our assets and operations are held and conducted by the Subsidiary Guarantors.
For the year ended December 31, 2023, we had net payments on our Credit Facility, acquisition debt and finance leases of $12.8 million and paid dividends of $6.7 million.
For the year ended December 31, 2024, we had net payments on our Credit Facility, acquisition debt and finance leases of $43.2 million and paid dividends of $6.8 million. For the year ended December 31, 2023, we had net payments on our Credit Facility, acquisition debt and finance leases of $12.8 million and paid dividends of $6.7 million.
More broadly, the U.S. economy continues to experience higher rates of inflation, which has impacted a wide variety of industries and sectors, with consumers facing rising prices.
More broadly, the U.S. economy continues to experience the impact of several years of higher rates of inflation, which has impacted a wide variety of industries and sectors, with consumers facing rising prices.
In addition, we sold two funeral homes and two cemeteries for an aggregate of $1.1 million and real estate for $3.1 million.
In addition, we sold two funeral homes and two cemeteries for an aggregate of $1.1 million and real property for $3.1 million.
Acquisition and Divestiture Activity During the year ended December 31, 2023, we acquired a business consisting of three funeral homes, two cemeteries and one cremation focused business for $44.0 million and real estate for $3.1 million of which $0.5 million was paid in cash and the remainder financed over fifteen years.
During the year ended December 31, 2023, we acquired a business consisting of three funeral homes, two cemeteries and one cremation focused business for $44.0 million and real property for $3.1 million of which $0.5 million was paid in cash and the remainder financed over fifteen years.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW General We operate in two business segments: Funeral Home Operations, which currently accounts for approximately 70% of our total revenue and Cemetery Operations, which currently accounts for approximately 30% of our total revenue.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW General We operate in two business segments: Funeral Home Operations, which currently accounts for approximately 65% of our total revenue and Cemetery Operations, which currently accounts for approximately 35% of our total revenue.
These agreements are generally for one to ten years and provide for periodic payments over the term of the agreements. We have future payments on our non-compete agreements of $7.7 million, with $2.3 million payable within 12 months. Consulting agreements - We have various consulting agreements with former owners of businesses we have acquired.
These agreements are generally for one to ten years and provide for periodic payments over the term of the agreements. We have future payments on our non-compete agreements of $5.2 million, with $1.9 million payable within 12 months. Consulting agreements - We have various consulting agreements with former owners of businesses we have acquired.
At December 31, 2023, we operated 171 funeral homes in 26 states and 32 cemeteries in 11 states. Our funeral home operations are principally service businesses that generate revenue from sales of burial and cremation services and related merchandise, such as caskets and urns.
At December 31, 2024, we operated 162 funeral homes in 26 states and 31 cemeteries in 11 states. Our funeral home operations are principally service businesses that generate revenue from sales of burial and cremation services and related merchandise, such as caskets and urns.
The imputed interest expense related to our acquisition debt is as follows (in thousands): Years Ended December 31, 2021 2022 2023 Acquisition debt imputed interest expense $ 364 $ 311 $ 291 At December 31, 2023, acquisition debt obligations were $9.3 million, with $0.9 million payable within 12 months.
The imputed interest expense related to our acquisition debt is as follows (in thousands): Years Ended December 31, 2024 2023 2022 Acquisition debt imputed interest expense $ 406 $ 291 $ 311 31 At December 31, 2024, acquisition debt obligations were $8.3 million, with $0.9 million payable within 12 months.
Our unrecognized tax benefit reserve for the years ended December 31, 2023 and 2022 was $3.4 million and $3.3 million, respectively. See Part II, Item 8, Financial Statements and Supplementary Data, Notes 1 and 17 for additional information regarding income taxes.
Our unrecognized tax benefit reserve for the years ended December 31, 2024 and 2023 was $3.5 million and $3.4 million, respectively. See Part II, Item 8, Financial Statements and Supplementary Data, Notes 1 and 16 for additional information regarding income taxes.
The interest expense and amortization of debt issuance costs related to our Credit Facility are as follows (in thousands): Years Ended December 31, 2021 2022 2023 Credit Facility interest expense $ 1,820 $ 7,105 $ 17,251 Credit Facility amortization of debt issuance costs 380 412 552 The interest payments on our remaining borrowings under the Credit Facility will be determined based on the average outstanding balance of our borrowings and the prevailing interest rate during that time.
The interest expense and amortization of debt issuance costs related to our Credit Facility are as follows (in thousands): Years Ended December 31, 2024 2023 2022 Credit Facility interest expense $ 13,390 $ 17,251 $ 7,105 Credit Facility amortization of debt issuance costs 469 552 412 The interest payments on our remaining borrowings under the Credit Facility will be determined based on the average outstanding balance of our borrowings and the prevailing interest rate during that time.
The following tables present our growth and maintenance capital expenditures (in thousands): Years Ended December 31, 2021 2022 2023 Growth Cemetery development $ 5,845 $ 7,679 $ 7,143 Renovations at certain businesses (1) 4,541 5,048 1,504 Crematory projects 495 788 1,206 Other 687 782 110 Total Growth $ 11,568 $ 14,297 $ 9,963 (1) During the year ended December 31, 2023, we spent $0.8 million for renovations to two businesses that were affected by Hurricane Ian, which occurred during the third quarter of 2022 and $0.4 million for renovations to one business that was damaged by a fire, which occurred during the first quarter of 2023, all of which was reimbursed by our property insurance.
The following tables present our growth and maintenance capital expenditures (in thousands): Years Ended December 31, 2024 2023 2022 Growth Cemetery development $ 7,007 $ 7,143 $ 7,679 Renovations at certain businesses (1) 1,701 1,504 5,048 Cemetery projects — 1,206 788 Other 78 110 782 Total Growth $ 8,786 $ 9,963 $ 14,297 (1) During the year ended December 31, 2023, we spent $0.8 million for renovations to two businesses that were affected by Hurricane Ian, which occurred during the third quarter of 2022 and $0.4 million for renovations to one business that was damaged by a fire, which occurred during the first quarter of 2023, all of which was reimbursed by our property insurance.
Investing Activities Our investing activities resulted in a net cash outflow of $57.0 million f or the year ended December 31, 2023 compared to $52.5 million for the year ended December 31, 2022 and $12.5 million for the year ended December 31, 2021.
Investing Activities Our investing activities resulted in a net cash outflow of $3.6 million f or the year ended December 31, 2024 compared to $57.0 million for the year ended December 31, 2023 and $52.5 million for the year ended December 31, 2022.
Ancillary revenue, which represents revenue from our flower shop, monument business, pet cremation business and online cremation businesses increased $0.4 million, while ancillary operating profit decreased $0.4 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Ancillary revenue, which represents revenue from our flower shop, monument business, pet cremation business and online cremation businesses decreased $0.3 million, while ancillary adjusted operating profit increased $0.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Capital Expenditures For the year ended December 31, 2023, our capital expenditures (comprised of growth and maintenance spend) totaled $18.0 million compared to $26.1 million for the year ended December 31, 2022, and $24.9 million for the year ended December 31, 2021.
Capital Expenditures For the year ended December 31, 2024, our capital expenditures (comprised of growth and maintenance spend) totaled $16.1 million compared to $18.0 million for the year ended December 31, 2023, and $26.1 million for the year ended December 31, 2022.
These financial maintenance covenants are calculated for the Company and its subsidiaries on a consolidated basis. We were in compliance with all of the covenants contained in our Credit Facility at December 31, 2023. At December 31, 2023, we had outstanding borrowings under the Credit Facility of $179.1 million.
These financial 30 maintenance covenants are calculated for the Company and its subsidiaries on a consolidated basis. We were in compliance with all of the covenants contained in our Credit Facility at December 31, 2024. At December 31, 2024, we had outstanding borrowings under the Credit Facility of $137.0 million.
Dividends Our Board declared the following dividends payable on the dates below (in thousands, except per share amounts): 2023 Per Share Dollar Value March 1st $ 0.1125 $ 1,661 June 1st $ 0.1125 $ 1,679 September 1st $ 0.1125 $ 1,683 December 1st $ 0.1125 $ 1,685 2022 Per Share Dollar Value March 1st $ 0.1125 $ 1,725 June 1st $ 0.1125 $ 1,730 September 1st $ 0.1125 $ 1,653 December 1st $ 0.1125 $ 1,655 2021 Per Share Dollar Value March 1st $ 0.1000 $ 1,799 June 1st $ 0.1000 $ 1,808 September 1st $ 0.1000 $ 1,783 December 1st $ 0.1125 $ 1,873 Share Repurchases Subject to market conditions, normal trading restrictions and satisfying certain financial covenants in our Credit Facility, and in the Indenture governing our Senior Notes, we may make purchases in the open market or through privately negotiated transactions under our Board authorized share repurchase program, in accordance with Rule 10b-18 of the Securities Exchange Act, as amended (the “Exchange Act”).
Dividends Our Board declared the following dividends payable on the dates below (in thousands, except per share amounts): 2024 Per Share Dollar Value March 1st $ 0.1125 $ 1,686 June 1st $ 0.1125 $ 1,704 September 1st $ 0.1125 $ 1,708 December 1st $ 0.1125 $ 1,709 2023 Per Share Dollar Value March 1st $ 0.1125 $ 1,661 June 1st $ 0.1125 $ 1,679 September 1st $ 0.1125 $ 1,683 December 1st $ 0.1125 $ 1,685 2022 Per Share Dollar Value March 1st $ 0.1125 $ 1,725 June 1st $ 0.1125 $ 1,730 September 1st $ 0.1125 $ 1,653 December 1st $ 0.1125 $ 1,655 Share Repurchases Subject to market conditions, normal trading restrictions and satisfying certain financial covenants in our Credit Facility, and in the Indenture governing our Senior Notes, we may make purchases in the open market or through privately negotiated transactions under our Board authorized share repurchase program, in accordance with Rule 10b-18 of the Exchange Act.
Payments for such agreements are generally not made in advance. These agreements are generally for one to five years and provide for bi-weekly or monthly payments. We have future payments on our consulting agreements of $2.2 million, with $0.9 million payable within 12 months. Employment agreements - We have employment agreements with our executive officers.
Payments for such agreements are generally not made in advance. These agreements are generally for one to ten years and 32 provide for bi-weekly or monthly payments. We have future payments on our consulting agreements of $2.5 million, with $1.3 million payable within 12 months. Employment agreements - We have employment agreements with our executive officers.
Cash Flows We began 2023 with $1.2 million in cash and ended the year with $1.5 million in cash. At December 31, 2023, we had borrowings of $179.1 million outstanding on our Credit Facility compared to $190.7 million as of December 31, 2022 and $155.4 million as of December 31, 2021.
Cash Flows We began 2024 with $1.5 million in cash and ended the year with $1.2 million in cash. At December 31, 2024, we had borrowings of $137.0 million outstanding on our Credit Facility compared to $179.1 million at December 31, 2023 and $190.7 million at December 31, 2022.
During 2023, we experienced lower volumes as compared to prior years due to fluctuations in the death rate, although overall financial performance remains at or above prior reporting periods. Although we expect fluctuations in the death rate to continue, we are unable to predict or forecast the duration or variation of the death rate with any certainty.
Throughout 2024, we continued to experience lower volumes as compared to prior years due to fluctuations in the death rate, although overall financial performance remains at or above prior reporting periods. Although we expect fluctuations in the 26 death rate to continue, we are unable to predict or forecast the duration or variation of the death rate with any certainty.
These agreements are generally for three to six years and provide for participation in various incentive compensation arrangements. These agreements generally renew automatically on an annual basis after their initial term has expired. We have future payments on our employment agreements of $13.3 million, with $5.5 million payable within 12 months. In connection with Mr.
These agreements are generally for two to five years and provide for participation in various incentive compensation arrangements. These agreements generally renew automatically on an annual basis after their initial term has expired. We have future payments on our employment agreements of $10.0 million, with $5.5 million payable within 12 months.
The components of Net gain on property damage, net of insurance claims are as follows (in thousands): Years Ended December 31, 2022 2023 Gain on property damaged by Hurricane Ida $ (3,455) $ (28) Gain on property damaged by Hurricane Ian — (379) (Gain) loss on other property damage (16) 64 Total $ (3,471) $ (343) Other, net.
The components of Net gain on property damage, net of insurance claims are as follows (in thousands): Years Ended December 31, 2024 2023 Gain on property damage by Hurricane Ian $ (417) (379) Gain on property damage by Hurricane Ida — $ (28) Loss on other property damage — 64 Total $ (417) $ (343) Other, net.
Credit Facility, Lease Obligations and Acquisition Debt The outstanding principal of our Credit Facility, lease obligations and acquisition debt at December 31, 2023 is as follows (in thousands): December 31, 2022 December 31, 2023 Credit Facility $ 190,700 $ 179,100 Operating leases 19,518 18,510 Finance leases 5,157 6,423 Acquisition debt 3,993 5,998 Total $ 219,368 $ 210,031 Credit Facility At December 31, 2023, our senior secured revolving credit facility (the “Credit Facility”) was comprised of: (i) a $250.0 million revolving credit facility, including a $15.0 million subfacility for letters of credit and a $10.0 million swingline, and (ii) an accordion or incremental option allowing for future increases in the facility size by an additional amount of up to $75.0 million in the aggregate in the form of increased revolving commitments or incremental term loans.
Credit Facility, Lease Obligations and Acquisition Debt The outstanding principal of our Credit Facility, lease obligations and acquisition debt at December 31, 2024 is as follows (in thousands): December 31, 2024 December 31, 2023 Credit Facility $ 137,000 $ 179,100 Operating leases 16,845 18,510 Finance leases 6,578 6,423 Acquisition debt 5,466 5,998 Total $ 165,889 $ 210,031 Credit Facility At December 31, 2024, our senior secured revolving credit facility (as amended the “Credit Facility”) was comprised of: (i) a $250.0 million revolving credit facility, including a $15.0 million subfacility for letters of credit and a $10.0 million swingline, and (ii) an accordion or incremental option allowing for future increases in the facility size by an additional amount of up to $75.0 million in the aggregate in the form of increased revolving commitments or incremental term loans.
The components of lease cost are as follows (in thousands): Years Ended December 31, 2021 2022 2023 Operating lease cost $ 3,762 $ 3,375 $ 3,526 Short-term lease cost 193 329 372 Variable lease cost 160 324 234 Finance lease cost: Depreciation of leased assets $ 438 $ 438 $ 541 Interest on lease liabilities 471 442 500 At December 31, 2023, non-cancelable operating and finance lease obligations were $35.9 million with $5.4 million payable within 12 months.
The components of lease cost are as follows (in thousands): Years Ended December 31, 2024 2023 2022 Operating lease cost $ 3,998 $ 3,526 $ 3,375 Short-term lease cost 232 372 329 Variable lease cost 380 234 324 Finance lease cost: Depreciation of leased assets $ 511 $ 541 $ 438 Interest on lease liabilities 506 500 442 At December 31, 2024, non-cancelable operating and finance lease obligations were $35.2 million with $5.5 million payable within 12 months.
We recorded a net discrete tax benefit of $0.2 million for the year ended December 31, 2023, a decrease of $0.3 million compared to the year ended December 31, 2022. The net discrete tax benefit for the year ended December 31, 2023, includes benefit related to equity compensation and other adjustments including return to provision analysis and state legislative changes.
We recorded a net discrete tax expense of $1.0 million for the year ended December 31, 2024, an increase of $1.2 million compared to the year ended December 31, 2023. The net discrete tax expense for the year ended December 31, 2024, includes expense related to equity compensation and other adjustments including return to provision analysis and state legislative changes.
Our effective tax rate was 28.0% and 27.6% for years ended December 31, 2023 and 2022, respectively. 37 At December 31, 2023, our unrecognized tax benefit reserve for uncertain tax positions primarily relates to the uncertainty of receiving audit protection for revenue recognition of cemetery property for the benefit derived from carrying back losses to tax years with a higher effective tax rate than the current 21.0% rate.
At December 31, 2024, our unrecognized tax benefit reserve for uncertain tax positions primarily relates to the uncertainty of receiving audit protection for revenue recognition of cemetery property for the benefit derived from carrying back losses to tax years with a higher effective tax rate than the current 21.0% rate.
During the year ended December 31, 2021, we spent $1.6 million for renovations on four businesses that were affected by Hurricane Ida, all of which was reimbursed by our property insurance. 27 Years Ended December 31, 2021 2022 2023 Maintenance General equipment and furniture $ 7,027 $ 4,834 $ 5,993 Facility repairs and improvements 2,543 3,207 1,041 Vehicles 2,329 2,062 618 Paving roads and parking lots 1,186 1,157 424 Information technology infrastructure improvements 230 524 — Total Maintenance $ 13,315 $ 11,784 $ 8,076 Financing Activities Our financing activities resulted in a net cash outflow of $18.2 million for the year ended December 31, 2023 compared to a net cash outflow of $8.5 million for the year ended December 31, 2022 and a net cash outflow of $71.5 million for the year ended December 31, 2021.
During the year ended December 31, 2022, we spent $2.4 million for renovations on two businesses that were affected by Hurricane Ida, all of which was reimbursed by our property insurance. 28 Years Ended December 31, 2024 2023 2022 Maintenance General equipment and furniture $ 3,994 $ 5,993 $ 4,834 Facility repairs and improvements 2,511 1,041 3,207 Vehicles 230 618 2,062 Paving roads and parking lots 577 424 1,157 Other — — 524 Total Maintenance $ 7,312 $ 8,076 $ 11,784 Financing Activities Our financing activities resulted in a net cash outflow of $48.7 million for the year ended December 31, 2024, compared to a net cash outflow of $18.2 million for the year ended December 31, 2023, and a net cash outflow of $8.5 million for the year ended December 31, 2022.
Further discussion of revenue for our funeral home and cemetery segments is presented under “Results of Operations.” Gross profit in 2023 increased $5.1 million compared to 2022, primarily due to the increase in revenue from our cemetery segment, offset by an increase in operating expenses in our cemetery segment.
Further discussion of revenue for our funeral home and cemetery segments is presented under “Results of Operations.” Gross profit in 2024 increased $19.1 million compared to 2023, primarily due to the increase in revenue from our cemetery segment, as well as lower operating expenses in both of our segments.
Cemetery property amortization. Cemetery property amortization totaled $6.0 million for the year ended December 31, 2023, an increase of $0.2 million compared to the year ended December 31, 2022, primarily due to the increase in property sold across our cemetery portfolio. Field depreciation.
Cemetery property amortization totaled $8.2 million for the year ended December 31, 2024, an increase of $2.1 million compared to the year ended December 31, 2023, primarily driven by the increase in property sold across our cemetery portfolio. Field depreciation.
Revenue in 2022 decreased $5.7 million compared to 2021, primarily as a result of a 3.6% decrease in funeral contract volume, a 4.6% decrease in the number of preneed interment rights (property) sold and a 3.0% decrease in the average price per interment right sold, which were slightly offset by a 2.5% increase in average revenue per funeral contract.
Revenue in 2023 increased $12.3 million compared to 2022, primarily as a result of a 9.4% increase in the average price per interment right sold, an 8.6% increase in the number of preneed interment rights (property) sold and a 0.9% increase in average revenue per funeral contract, offset by a 2.4% decrease in funeral contract volume.
See Part II, Item 8, Financial Statements and Supplementary Data, Note 3 for additional information related to business combinations. 38 RECENT ACCOUNTING PRONOUNCEMENTS, ACCOUNTING CHANGES AND OTHER REGULATIONS For discussion of recent accounting pronouncements and accounting changes, see Part II, Item 8, Financial Statements and Supplementary Data, Note 2.
RECENT ACCOUNTING PRONOUNCEMENTS, ACCOUNTING CHANGES AND OTHER REGULATIONS For discussion of recent accounting pronouncements and accounting changes, see Part II, Item 8, Financial Statements and Supplementary Data, Note 2.
Business Combinations Determining the fair value of identifiable assets, particularly intangibles and liabilities acquired also requires management to make estimates, which are based on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset.
See Part II, Item 8, Financial Statements and Supplementary Data, Note 4 for additional information related to goodwill. 38 Business Combinations Determining the fair value of identifiable assets, particularly intangibles and liabilities acquired also requires management to make estimates, which are based on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset.
Below is a breakdown of operating profit (a non-GAAP financial measure) by Segment (in thousands): Years Ended December 31, 2021 2022 2023 Funeral Home $ 119,007 $ 111,471 $ 104,997 Cemetery 55,634 49,890 56,079 Operating profit $ 174,641 $ 161,361 $ 161,076 Operating profit margin (1) 46.5% 43.6% 42.1% (1) Operating profit margin is defined as operating profit as a percentage of revenue.
Below is a breakdown of adjusted operating profit (a non-GAAP financial measure) by segment (in thousands): Years Ended December 31, 2024 2023 2022 Funeral Home $ 107,990 $ 104,997 $ 111,471 Cemetery 72,661 56,079 49,890 Adjusted operating profit $ 180,651 $ 161,076 $ 161,361 Adjusted operating profit margin (1) 44.7% 42.1% 43.6% (1) Adjusted operating profit margin is defined as adjusted operating profit as a percentage of revenue.
Interest expense related to its respective debt arrangement is as follows (in thousands): Years Ended December 31, 2022 2023 Senior Notes $ 17,614 $ 17,662 Credit Facility 7,517 17,803 Finance leases 442 500 Acquisition debt 311 291 Other 11 10 Total $ 25,895 $ 36,266 Net gain on property damage, net of insurance claims.
Interest expense related to its respective debt arrangement is as follows (in thousands): Years Ended December 31, 2024 2023 Senior Notes $ 17,692 $ 17,662 Credit Facility 13,860 17,803 Finance leases 506 500 Acquisition debt 406 291 Other (389) 10 Total $ 32,075 $ 36,266 37 Net gain on property damage, net of insurance claims.
The fair value of the Senior Notes, which are Level 2 measurements, was $355.4 million at December 31, 2023. 31 The interest expense and amortization of debt discount, debt premium and debt issuance costs related to our Senior Notes are as follows (in thousands): Years Ended December 31, 2021 2022 2023 Senior Notes interest expense $ 21,767 $ 16,980 $ 17,000 Senior Notes amortization of debt discount 504 493 515 Senior Notes amortization of debt premium 85 — — Senior Notes amortization of debt issuance costs 195 140 147 We have future interest payments on our outstanding balance of $93.5 million, with $17.0 million payable within 12 months.
The interest expense and amortization of debt discount and debt issuance costs related to our Senior Notes are as follows (in thousands): Years Ended December 31, 2024 2023 2022 Senior Notes interest expense $ 17,000 $ 17,000 $ 16,980 Senior Notes amortization of debt discount 539 515 493 Senior Notes amortization of debt issuance costs 153 147 140 We have future interest payments on our outstanding balance of $76.5 million, with $17.0 million payable within 12 months.
Income tax expense totaled $13.0 million for the year ended December 31, 2023, a decrease of $3.1 million compared to the year ended December 31, 2022. Our operating tax rate before discrete items was 28.4% for both the years ended December 31, 2023 and 2022.
Income tax expense totaled $17.1 million for the year ended December 31, 2024, an increase of $4.1 million compared to the year ended December 31, 2023. Our operating tax rate before discrete items was 32.1% and 28.4% for the years ended December 31, 2024 and 2023, respectively.
For 2024, our plan is to remain focused on integrating our recently acquired business and prioritizing our capital allocation for debt repayments, the payment of dividends and debt obligations and internal growth capital expenditures, which we expect to fund using cash on hand and borrowings under our Credit Facility, along with general corporate purposes, as allowed under our Credit Facility.
This includes prioritizing our capital allocation for debt repayments, the payment of dividends and debt obligations, internal growth capital expenditures, and general corporate purposes, as allowed under our Credit Facility. We expect to fund these payments using cash on hand and borrowings under our Credit Facility.
The components of Net loss on divestitures, disposals and impairment charges are as follows (in thousands): Years Ended December 31, 2022 2023 Impairment of goodwill, intangibles and PPE $ 2,358 $ 454 Net (gain) loss on divestitures (543) 106 Net loss on disposals of fixed assets 214 631 Total $ 2,029 $ 1,191 During the year ended December 31, 2023, we sold two funeral homes and two cemeteries for a loss of $0.1 million.
The components of Net loss on divestitures, disposals and impairment charges are as follows (in thousands): Years Ended December 31, 2024 2023 Impairment of goodwill, intangibles and PPE $ 637 $ 454 Net loss on divestitures 1,224 106 Net loss on disposals of fixed assets 719 631 Total $ 2,580 $ 1,191 During the year ended December 31, 2024, we sold six funeral homes and one cemetery for an aggregate loss of $1.2 million.
Further discussion of general, administrative and other expenses, net loss on divestitures, disposals and impairment charges, interest expense, income taxes and other components of income and expenses are presented under “Other Financial Statement Items.” REPORTING AND NON-GAAP FINANCIAL MEASURES We also present our financial performance in our “Condensed Operating and Financial Trend Report” (“Trend Report”) as reported in our earnings release for the year ending December 31, 2023, dated February 21, 2024, and discussed in the corresponding earnings conference call.
Net income in 2023 decreased $8.0 million compared to 2022, primarily due to the following: (1) a $10.4 million increase in interest expense; (2) a $4.7 million increase in general, administrative and other expenses; and (3) a $1.0 million increase in divestitures, disposals, impairment charges and insurance reimbursements, offset by (4) the increase in gross profit of $5.1 million and (4) a $2.8 million decrease in tax expense. 33 Further discussion of general, administrative and other expenses, net loss on divestitures, disposals and impairment charges, interest expense, income taxes and other components of income and expenses are presented under “Other Financial Statement Items.” REPORTING AND NON-GAAP FINANCIAL MEASURES We also present our financial performance in our “Condensed Operating and Financial Trend Report” (“Trend Report”) as reported in our earnings release for the year ending December 31, 2024, dated February 26, 2025, and discussed in the corresponding earnings conference call.
At December 31, 2023, we had $68.3 million of availability under the Credit Facility. Outstanding borrowings under our Credit Facility bear interest at a prime rate or a BSBY rate, plus an applicable margin based on our leverage ratio. At December 31, 2023, the prime rate margin was equivalent to 2.375% and the BSBY rate margin was 3.375%.
Outstanding borrowings under our Credit Facility bear interest at a prime rate or the SOFR rate, plus an applicable margin based on our leverage ratio. At December 31, 2024, the prime rate margin was equivalent to 1.50% and the SOFR term margin was 2.50%.
The effective interest rate on the unamortized debt discount and the unamortized debt issuance costs for the Senior Notes for both the years ended December 31, 2022 and 2023 was 4.42% and 4.30%, respectively.
The effective interest rate on the unamortized debt discount and the unamortized debt issuance costs for the Senior Notes for both the years ended December 31, 2024 and 2023 was 4.42% and 4.30%, respectively. The fair value of the Senior Notes, which are Level 2 measurements, was $364.4 million at December 31, 2024.
We also had one letter of credit for $2.3 million under the Credit Facility, which was increased to $2.6 million on July 7, 2023. The letter of credit will expire on November 27, 2024 and is expected to automatically renew annually and secures our obligations under our various self-insured policies.
We also had one letter of credit for $2.2 million under the Credit Facility. The letter of credit will expire on November 25, 2025, and is expected to automatically renew annually and secures our obligations under our various self-insured policies. At December 31, 2024, we had $110.8 million of availability under the Credit Facility.
We do not intend for this information to be considered in isolation or as a substitute for other measures of performance prepared in accordance with United States generally accepted accounting principles (“GAAP”).
We do not intend for this information to be considered in isolation or as a substitute for other measures of performance prepared in accordance with United States generally accepted accounting principles (“GAAP”). The Trend Report is a non-GAAP statement that also provides insight into underlying trends in our business.
Through this thorough internal process, the Company is able to identify viable costs of property based on historical experience, particular markets and demographics, reasonable margins, practical retail prices and park infrastructure and condition.
Through this thorough internal process, the Company is able to identify viable costs of property based on historical experience, particular markets and demographics, reasonable margins, practical retail prices and park infrastructure and condition. See Part II, Item 8, Financial Statements and Supplementary Data, Note 3 for additional information related to business combinations.
Cemetery atneed revenue, which represents 37.0% of our total operating revenue, increased $3.6 million for the year ended December 31, 2023, compared to the same period of the prior year, primarily due to an increase in sales of merchandise and services from our newly acquired cemetery businesses, which were not present in the year ended 2022.
Cemetery atneed revenue, which represents 31% of our total operating revenue, increased $0.7 million for the year ended December 31, 2024, compared to the same period of the prior year, primarily due to an increase in delivered merchandise and services across our cemetery portfolio.
The Trend Report is a non-GAAP statement that also provides insight into underlying trends in our business. 33 Below is a reconciliation of gross profit (a GAAP financial measure) to operating profit (a non-GAAP financial measure) (in thousands): Years Ended December 31, 2021 2022 2023 Gross profit $ 129,516 $ 119,226 $ 124,295 Cemetery property amortization 6,670 5,859 6,039 Field depreciation expense 12,609 13,316 14,166 Regional and unallocated funeral and cemetery costs 25,846 22,960 16,576 Operating profit (1) $ 174,641 $ 161,361 $ 161,076 (1) Operating profit is defined as gross profit plus cemetery property amortization, field depreciation expense and regional and unallocated funeral and cemetery costs.
Below is a reconciliation of gross profit (a GAAP financial measure) to adjusted operating profit (a non-GAAP financial measure) (in thousands): Years Ended December 31, 2024 2023 2022 Gross profit $ 143,390 $ 124,295 $ 119,226 Cemetery property amortization 8,168 6,039 5,859 Field depreciation expense 13,729 14,166 13,316 Regional and unallocated funeral and cemetery costs 15,364 16,576 22,960 Adjusted operating profit (1) $ 180,651 $ 161,076 $ 161,361 (1) Adjusted operating profit is defined as gross profit plus cemetery property amortization, field depreciation expense and regional and unallocated funeral and cemetery costs.
The increase of $14.6 million for the year ended December 31, 2023 compared to the same period in 2022 was primarily due to an $8.6 million withdrawal of realized capital gains and earnings from our preneed funeral and cemetery trust investments and receiving a $6.0 million incentive payment from a vendor related to a strategic partnership agreement to market and sell prearranged funeral services.
The decrease of $23.6 million for the year ended December 31, 2024 compared to the same period in 2023 was primarily due to the following non-recurring events, which occurred during 2023: i) an $8.6 million withdrawal of realized capital gains and earnings from our preneed funeral and cemetery trust investments; and ii) the receipt of a $6.0 million incentive payment from a vendor for entering into a strategic partnership agreement to market and sell prearranged funeral services in the future, as well as non-recurring events, which occurred during 2024: i) executive severance payments of $3.5 million and ii) payments of $3.3 million related to the Company’s review of strategic alternatives.
Further discussion of the components of gross profit for our funeral home and cemetery segments, is presented under “Results of Operations.” Net income in 2023 decreased $8.0 million compared to 2022, primarily due to the following: (1) a $10.4 million increase in interest expense; (2) a $4.7 million increase in general, administrative and other expenses; and (3) a $1.0 million increase in divestitures, disposals, impairment charges and insurance reimbursements, offset by (4) the increase in gross profit of $5.1 million; and (5) a $2.8 million decrease in tax expense.
Further discussion of the components of gross profit for our funeral home and cemetery segments, is presented under “Results of Operations.” Net income in 2024 decreased $0.5 million compared to 2023, primarily due to a $16.9 million increase in general, administrative and other expenses, primarily comprised of one-time costs related to executive severance payments and the Company’s review of strategic alternatives, a $4.1 million increase in income tax expense and a $1.4 million increase in loss on divestitures, disposals and impairment charges.
On February 23, 2022, our Board authorized an increase in our share repurchase program to permit us to purchase up to an additional $75.0 million under our share repurchase program, in addition to amounts previously authorized and outstanding in accordance with Rule 10b-18 of the Exchange Act, which totaled up to $265.0 million in share repurchase authorizations. 28 Share repurchase activity is as follows (dollar value of shares repurchased in thousands): Years Ended December 31, 2021 2022 2023 Number of Shares Repurchased (1) 2,906,983 695,496 — Average Price Paid Per Share $ 49.01 $ 49.22 $ — Dollar Value of Shares Repurchased (1) $ 142,469 $ 34,234 $ — (1) These amounts may differ from the repurchases of common stock amounts in the consolidated statements of cash flows due to unsettled share repurchases at the end of a period.
On February 23, 2022, our Board authorized an increase in our share repurchase program to permit us to purchase up to an additional $75.0 million under our share repurchase program, in addition to amounts previously authorized and outstanding in accordance with Rule 10b-18 of the Exchange Act, which totaled up to $265.0 million in share repurchase authorizations. 29 Share repurchase activity is as follows (dollar value of shares repurchased in thousands): Years Ended December 31, 2024 2023 2022 Number of Shares Repurchased — — 695,496 Average Price Paid Per Share $ — $ — $ 49.22 Dollar Value of Shares Repurchased $ — $ — $ 34,234 Our shares were purchased in the open market at times and in amounts as management determined appropriate based on factors such as market conditions, legal requirements and other business considerations.
We also recognized an impairment of $0.2 million as a result of our 2023 qualitative assessment of tradenames and an impairment of $0.2 million related to property, plant and equipment for assets held for sale.
We also recognized an impairment of $0.6 million as a result of our 2024 qualitative assessment of tradenames and an impairment of $40 thousand related to property, plant and equipment for assets held for sale. During the year ended December 31, 2023, we sold two funeral homes and two cemeteries for a loss of $0.1 million.
The term “divested” when discussed in the Funeral Home segment, refers to two funeral home we sold during the year ended December 31, 2023 and two funeral homes we sold during the year ended December 31, 2022. The term “divested” when discussed in the Cemetery segment, refers to two cemeteries we sold during the year ended December 31, 2023.
The term “divested” when discussed in the cemetery segment, refers to one cemetery we sold during the year ended December 31, 2024 and two cemeteries we sold during the year ended December 31, 2023. 34 The term “ancillary” in the funeral home segment represents our flower shop, monument business, pet cremation business and online cremation businesses.
In accordance with the guidance, if the fair value of the reporting unit is less than its carrying amount an impairment charge is recorded in an amount equal to the difference. See Part II, Item 8, Financial Statements and Supplementary Data, Note 4 for additional information related to goodwill.
In accordance with the guidance, if the fair value of the reporting unit is less than its carrying amount an impairment charge is recorded in an amount equal to the difference.
Other revenue and other operating profit, which consist of preneed cemetery trust revenue and preneed cemetery finance charges, both increased $2.5 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to a $2.1 million increase in perpetual care trust fund income and a $0.2 million increase in finance charges on preneed sales.
Other revenue and other adjusted operating profit, which consist of preneed cemetery trust revenue and preneed cemetery finance charges, increased $0.4 million and $0.5 million, respectively, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
The decrease in operating revenue is primarily driven by a 2.4% decrease in contract volume, which was partially offset by a 1.0% increase in the average revenue per contract excluding preneed interest.
The decline in operating revenue was primarily driven by a 4.9% decrease in contract volume, which was partially offset by a 3.1% increase in the average revenue per contract excluding preneed interest. The decline in funeral contract volume was primarily influenced by the lingering impact of the COVID-19 related pull forward effect.
See Part II, Item 8, Financial Statements and Supplementary Data, Notes 12 and 16 to our Consolidated Financial Statements for further detail of our letter of credit and off-balance sheet agreements, respectively. 32 FINANCIAL HIGHLIGHTS Below are our financial highlights (in thousands except for volumes and averages): Years Ended December 31, 2021 2022 2023 Revenue $ 375,886 $ 370,174 $ 382,520 Funeral contracts 49,249 47,498 46,355 Average revenue per funeral contract $ 5,360 $ 5,493 $ 5,543 Preneed interment rights (property) sold 11,408 10,878 11,813 Average price per preneed interment right sold $ 4,718 $ 4,576 $ 5,007 Gross profit $ 129,516 $ 119,226 $ 124,295 Net income $ 33,159 $ 41,381 $ 33,413 Revenue in 2023 increased $12.3 million compared to 2022, primarily as a result of a 9.4% increase in the average price per preneed interment right sold, an 8.6% increase in the number of preneed interment rights (property) sold and a 0.9% increase in the average revenue per funeral contract, offset by a 2.4% decrease in the funeral contract volume.
FINANCIAL HIGHLIGHTS Below are our financial highlights (in thousands except for volumes and averages): Years Ended December 31, 2024 2023 2022 Revenue $ 404,198 $ 382,520 $ 370,174 Funeral contracts 44,103 46,355 47,498 Average revenue per funeral contract $ 5,714 $ 5,543 $ 5,493 Preneed interment rights (property) sold 14,523 11,813 10,878 Average price per preneed interment right sold $ 5,374 $ 5,007 $ 4,576 Gross profit $ 143,390 $ 124,295 $ 119,226 Net income $ 32,953 $ 33,413 $ 41,381 Revenue in 2024 increased $21.7 million compared to 2023, primarily as a result of a 22.9% increase in preneed interment rights (property) sold and a 7.3% increase in the average price per preneed interment right sold.
We have the ability to draw on our Credit Facility, subject to its customary terms and conditions.
We have the ability to draw on our Credit Facility, as needed, subject to its customary terms and conditions. For 2025, our plan is to remain focused on executing our strategic objectives and growth strategy.
Although we expect these trends to continue throughout the next year, we will continue to assess these impacts and take the appropriate steps, if necessary, to mitigate these cost increases, if possible.
Although such conditions have not materially impacted our business to date and we expect these trends to continue in 2025, we will continue to assess these impacts and take the appropriate steps, if necessary, to mitigate any changes in consumer preferences or additional cost increases, if possible.
Adding back these items will result in gross profit, a GAAP financial measure. 34 Funeral Home Segment The following table sets forth certain information regarding our revenue and operating profit for our funeral home operations (in thousands): Years Ended December 31, 2022 2023 Revenue: Operating $ 251,396 $ 249,180 Divested 1,560 215 Ancillary 4,193 4,588 Other 9,754 10,793 Total $ 266,903 $ 264,776 Operating profit: Operating $ 101,951 $ 94,949 Divested 53 (17) Ancillary 841 455 Other 8,626 9,610 Total $ 111,471 $ 104,997 The following measures reflect the significant metrics over this comparative period: Contract volume 47,498 46,355 Average revenue per contract, excluding preneed funeral trust earnings $ 5,326 $ 5,380 Average revenue per contract, including preneed funeral trust earnings $ 5,493 $ 5,543 Cremation rate 57.7% 59.0% Funeral home operating revenue decreased $2.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Funeral Home Segment The following table sets forth certain information regarding our revenue and adjusted operating profit for our funeral home operations (in thousands): Years Ended December 31, 2024 2023 Revenue: Operating $ 243,709 $ 244,893 Divested 1,023 4,502 Ancillary 4,322 4,588 Other 14,060 10,793 Total $ 263,114 $ 264,776 Adjusted operating profit Operating $ 95,113 $ 93,766 Divested 41 1,166 Ancillary 673 455 Other 12,163 9,610 Total $ 107,990 $ 104,997 The following consolidated operating measures reflect the significant metrics over this comparative period: Contract volume 44,103 46,355 Average revenue per contract, excluding preneed funeral trust earnings $ 5,549 $ 5,380 Average revenue per contract, including preneed funeral trust earnings $ 5,714 $ 5,543 Cremation rate 60.2% 59.0% Funeral home operating revenue decreased $1.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Depreciation expense for our field businesses totaled $14.2 million for the year ended December 31, 2023, an increase of $0.9 million compared to the year ended December 31, 2022, primarily due to the business acquisitions made in the latter half of 2022 and the first quarter of 2023. Regional and unallocated funeral and cemetery costs.
Depreciation expense for our field businesses totaled $13.7 million for the year ended December 31, 2024, a decrease of $0.4 million compared to the year ended December 31, 2023, primarily driven by our business decision in 2023 to lease vehicles rather than purchase them. Regional and unallocated funeral and cemetery costs.
The term “ancillary” in the Funeral Home segment represents our flower shop, monument business, pet cremation business and online cremation businesses. Cemetery property amortization, field depreciation expense and regional and unallocated funeral and cemetery costs, are not included in operating profit, a non-GAAP financial measure.
Cemetery property amortization, field depreciation expense and regional and unallocated funeral and cemetery costs, are not included in adjusted operating profit, a non-GAAP financial measure. Adding back these items will result in gross profit, a GAAP financial measure.
Regional and unallocated funeral and cemetery costs totaled $16.6 million for the year ended December 31, 2023, a decrease of $6.4 million compared to the year ended December 31, 2022, primarily due to the following: (1) a $4.6 million decrease in cash incentives and equity compensation; (2) a $1.2 million decrease in incentive award trips and annual managing partner meetings; 36 (3) a $0.4 million decrease in health and safety expenses related to COVID-19; and (4) a $0.2 million decrease in all other expenses.
Regional and unallocated funeral and cemetery costs totaled $15.4 million for the year ended December 31, 2024, a decrease of $1.2 million compared to the year ended December 31, 2023, primarily driven by the following: i) an $0.7 million decrease in incentive compensation costs, ii) a $0.7 million decrease in leadership and development expenses, offset by iii) a $0.4 million increase in salaries and benefits expenses.
During the year ended December 31, 2021, we sold two funeral homes and one cemetery for $2.5 million, sold real estate for $5.2 million and purchased real estate for $3.3 million.
Acquisition and Divestiture Activity During the year ended December 31, 2024, we sold six funeral homes and one cemetery for an aggregate of $10.9 million. Additionally, we sold real property for $1.1 million.
Other revenue and other operating profit, which consist of preneed funeral insurance commissions and preneed funeral trust earnings, both increased $1.0 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to the recognition of additional general agency commission revenue in 2023 as we entered into an exclusive partnership agreement with a national insurance provider to market and sell prearranged funeral services in the future. 35 Cemetery Segment The following table sets forth certain information regarding our revenue and operating profit for our cemetery operations (in thousands): Years Ended December 31, 2022 2023 Revenue: Operating $ 90,033 $ 102,216 Divested 252 45 Other 12,986 15,483 Total $ 103,271 $ 117,744 Operating profit (loss): Operating $ 37,509 $ 41,096 Divested (47) 12 Other 12,428 14,971 Total $ 49,890 $ 56,079 The following measures reflect the significant metrics over this comparative period: Preneed revenue as a percentage of operating revenue 67% 78% Preneed revenue (in thousands) $ 68,884 $ 79,954 Atneed revenue (in thousands) $ 34,186 $ 37,763 Number of preneed interment rights sold 10,878 11,813 Average price per interment right sold $ 4,576 $ 5,007 Cemetery operating revenue increased $12.2 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily as a result of a 9.4% increase in the average price per preneed interment right sold, as well as an 8.6% increase in preneed interment rights sold.
Cemetery Segment The following table sets forth certain information regarding our revenue and adjusted operating profit for our cemetery operations (in thousands): Years Ended December 31, 2024 2023 Revenue: Operating $ 125,095 $ 101,150 Divested 156 1,111 Other 15,833 15,483 Total $ 141,084 $ 117,744 Adjusted operating profit (loss) Operating $ 57,233 $ 40,899 Divested (30) 209 Other 15,458 14,971 Total $ 72,661 $ 56,079 The following consolidated measures reflect the significant metrics over this comparative period: Preneed revenue as a percentage of operating revenue 69% 63% Preneed revenue (in thousands) $ 86,745 $ 64,498 Atneed revenue (in thousands) $ 38,506 $ 37,763 Number of preneed interment rights sold 14,523 11,813 Average price per interment right sold $ 5,374 $ 5,007 Cemetery operating revenue increased $23.9 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily as a result of a 22.9% increase in the number of preneed interment rights sold and a 7.3% increase in the average price per preneed interment right sold.
General, administrative and other expenses totaled $42.1 million for the year ended December 31, 2023, an increase of $4.7 million compared to the year ended December 31, 2022, primarily due to the following: (1) a $3.7 million increase in salary and benefits expense and cash and equity incentive compensation, as a result of changes to our senior leadership team, including current year executive promotions; and (2) a $2.2 million increase in consulting fees related to the Board’s review of strategic alternatives, offset by (3) a $0.6 million decrease in online marketing costs; and (4) a $0.6 million decrease in all other expenses.
General, administrative and other expenses, which include salaries and benefits and cash and equity incentive compensation for our Houston support office, totaled $59.0 million for the year ended December 31, 2024, an increase of $16.9 million compared to the year ended December 31, 2023, primarily driven by the following: i) a $6.2 million increase in salary and benefits expenses and cash and equity incentive compensation costs, primarily driven by the termination expense of our founder and former Executive Chairman of the Board pursuant to his Transition Agreement and termination expense for our former Chief Financial Officer pursuant to his Separation and Release Agreement; ii) a $4.6 million increase in other professional fees primarily related to the development of our digital transformation project; iii) a $4.0 million increase primarily related to our agreement to pay our financial advisor in connection with the Company's previously concluded review of strategic alternatives; iv) a $0.9 million increase in information technology expenses such as software license and support fees; and v) a $1.2 million increase in various other general and administrative expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAt December 31, 2023, the prime rate margin was equivalent to 2.375% and the BSBY rate margin was 3.375%. Assuming the outstanding balance remains unchanged, a change of 100 basis points in our borrowing rate would result in a change in income before taxes of $1.8 million. We have not entered into interest rate hedging arrangements in the past.
Biggest changeAt December 31, 2024, the prime rate margin was equivalent to 1.5% and the SOFR rate margin was 2.5%. Assuming the outstanding balance remains unchanged, a change of 100 basis points in our borrowing rate would result in a change in income before taxes of $1.4 million. We have not entered into interest rate hedging arrangements in the past.
We are not exposed to any other significant market risks other than those related to the impact of health and safety concerns from epidemics and pandemics and inflation which are described in more detail in Part 1, Item 1A, Risk Factors in this Form 10-K for the year ended December 31, 2023.
We are not exposed to any other significant market risks other than those related to the impact of health and safety concerns from epidemics and pandemics and inflation which are described in more detail in Part 1, Item 1A, Risk Factors in this Form 10-K for the year ended December 31, 2024.
The following quantitative and qualitative information is provided about financial instruments to which we are a party at December 31, 2023 and from which we may incur future gains or losses from changes in market conditions. We do not enter into derivative or other financial instruments for speculative or trading purposes.
The following quantitative and qualitative information is provided about financial instruments to which we are a party at December 31, 2024 and from which we may incur future gains or losses from changes in market conditions. We do not enter into derivative or other financial instruments for speculative or trading purposes.
Any further borrowings or voluntary prepayments against the Credit Facility or any change in the floating rate would cause a change in interest expense. We have the option to pay interest under our Credit Facility at either the prime rate or the BSBY rate, plus an applicable margin based on our leverage ratio.
Any further borrowings or voluntary prepayments against the Credit Facility or any change in the floating rate would cause a change in interest expense. We have the option to pay interest under our Credit Facility at either the prime rate or the Term SOFR rate, plus an applicable margin based on our leverage ratio.
Any increase in market interest rates causes the fair value of those liabilities to decrease, but such changes will not affect our interest costs. 39
Any increase in market interest rates causes the fair value of those liabilities to decrease, but such changes will not affect our interest costs. 40
Cost and market values of such investments at December 31, 2023 are presented in Part II, Item 8, Financial Statements and Supplementary Data, Note 8. The sensitivity of the fixed income securities is such that a 0.25% change in interest rates causes an approximate 1.19% change in the value of the fixed income securities.
Cost and market values of such investments at December 31, 2024 are presented in Part II, Item 8, Financial Statements and Supplementary Data, Note 8. The sensitivity of the fixed income securities is such that a 0.25% change in interest rates causes an approximate 0.37% change in the value of the fixed income securities.
We monitor current and forecasted interest rate risk in the ordinary course of business and seek to maintain optimal financial flexibility, quality and solvency. As of December 31, 2023, we had outstanding borrowings under the Credit Facility of $179.1 million.
We monitor current and forecasted interest rate risk in the ordinary course of business and seek to maintain optimal financial flexibility, quality and solvency. As of December 31, 2024, we had outstanding borrowings under the Credit Facility of $137.0 million.
At December 31, 2023, the carrying value of the Senior Notes on our Consolidated Balance Sheet was $395.9 million and the fair value of the Senior Notes was $355.4 million based on the last traded or broker quoted price as reported by Financial Industry Regulatory Authority.
At December 31, 2024, the carrying value 39 of the Senior Notes on our Consolidated Balance Sheets was $396.6 million and the fair value of the Senior Notes was $364.4 million based on the last traded or broker quoted price as reported by Financial Industry Regulatory Authority.
Removed
At any time before May 15, 2024, we may also redeem all or part of the Senior Notes at the redemption prices described in the Indenture, plus accrued and unpaid interest, if any, to (but excluding) the date of redemption.

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