Carriage Services Announces Record 2012 Fourth Quarter And Annual Results And Raises Rolling Four Quarter Outlook

Carriage Services Announces Record 2012 Fourth Quarter And Annual Results And
                     Raises Rolling Four Quarter Outlook

PR Newswire

HOUSTON, Feb. 25, 2013

HOUSTON, Feb. 25, 2013 /PRNewswire/ --Carriage Services, Inc. (NYSE: CSV)
today announced record results for the quarter and full year ending December
31, 2012.

Mel Payne, Chief Executive Officer, stated, "Our fourth quarter performance
was outstanding, as we achieved strong revenue growth of 13.1% to a record
$53.3 million, and Adjusted Earnings Per Share growth of 140% to $0.24 per
share. Our full year results were also outstanding as we achieved strong
revenue growth of 8.8% to a record $204.1 million and Adjusted Earnings Per
Share growth of 30.8% to a record $0.85 per share. This record performance
was driven by substantially higher year over year revenue growth and margin
expansion in each of our four major profit segments, the consolidated impact
of which is reflected in the 2012 quarterly and full year comparative
highlights shown below."

Three Months Ending December 31, 2012

  oTotal Revenue up 13.1% to $53.3 million;
  oTotal Field EBITDA up 25.7% to $22.1 million;
  oTotal Field EBITDA Margin up 420 basis points to 41.5%;
  oConsolidated EBITDA up 56.0% to $12.5 million;
  oConsolidated EBITDA Margin up 650 basis points to 23.5%;
  oAdjusted Consolidated EBITDA up 24.8% to $13.6 million;
  oAdjusted Consolidated EBITDA Margin up 240 basis points to 25.5%;
  oAdjusted Earnings Per Share up 140.0% to $0.24 from $0.10 in 2011; and
  oGAAP Diluted EPS from Continuing Operations up 1050% to $0.23 in 2012 from
    $0.02 in 2011.

Twelve Months Ending December 31, 2012

  oTotal Revenue up 8.8% to $204.1 million;
  oTotal Field EBITDA up 16.1% to $80.9 million;
  oTotal Field EBITDA Margin up 250 basis points to 39.6%;
  oConsolidated EBITDA up 24.2% to $50.6 million;
  oConsolidated EBITDA Margin up 310 basis points to 24.8%;
  oAdjusted Consolidated EBITDA up 9.4% to $54.9 million;
  oAdjusted Consolidated EBITDA Margin up 20 basis points to 26.9%;
  oAdjusted Earnings Per Share up 30.8% to $0.85 from $0.65 in 2011; and
  oGAAP Diluted EPS from Continuing Operations up 73.0% to $0.64 from $0.37
    in 2011.

Adjusted Earnings Per Share, Adjusted Net Income, Consolidated EBITDA,
Adjusted Consolidated EBITDA, Field EBITDA, Free Cash Flow are all non-GAAP
financial measures management believes are important financial measurements to
understand the company's operations and financial results. These items are
defined and reconciled to GAAP later in the press release.

"Our record fourth quarter and full year performance was the result of rapid
and transformative change throughout 2012, starting with a major management
reorganization and an updated Funeral Standards Operating Model in the fourth
quarter of 2011. As the year progressed, we positioned Carriage in four other
major fundamental areas to have a strong 2012 fourth quarter finish and to
enter 2013 with a higher capacity of sustainable earnings power."

"First, we completed and rolled out an updated Cemetery Standards Operating
Model effective January 1, 2013, and recruited the organizational leadership
both at the corporate and field level to take our Cemetery Portfolio
performance to a much higher and sustainable level over time. Second, we made
substantial structural changes in how we manage and receive compensation from
our trust funds, which should result in higher sustainable financial revenue
over time. Third, we completed the refinancing of our $130million of 7.875%
senior notes due 2015 with a $235 million syndicated bank financing comprised
of a $130 million five year term loan and a $105 million five year revolving
credit facility, with interest savings of over 400 basis points on the
refinanced term loan. And finally, we increased our acquisition activity by
closing three transactions in December whose full impact will be reflected
beginning in January 2013. Our active acquisition program will continue to
drive acquisition revenue and earnings growth."

"Accordingly, as a result of the effectiveness of the many organizational
leadership changes over the past year and the success of our renewed focus on
all the drivers of sustainable high performance, we are substantially raising
our Rolling Four Quarter Outlook of Adjusted EPS to $1.11 to $1.14 from our
previous guidance of $1.03 to $1.05. This is the first time in our twenty-one
year history that we will have achieved the milestone of earnings in excess of
$1.00 per share during a calendar year."

"As we entered 2012 after concluding our 20^th anniversary year in 2011, we
established extraordinarily challenging goals over the five year period ending
with 2016, consistent with the five year theme of taking Carriage from a Good
company in 2012 to one considered Great by 2016. We more than met the
standard of high performance captured by our yearly theme for 2012, "Carriage
Services 2012 - A NEW BEGINNING!" Our yearly theme for 2013, "Carriage
Services 2013- Raising the Standard – All In!", speaks to the confidence we
have in our corporate and field leaders and employees to execute our models
individually and as teams so as to bring "Being the Best" distinction upon
themselves and our company," concluded Mr. Payne.

FUNERAL FIELD OPERATIONS

For the Three Months Ending December 31, 2012

  oTotal Funeral Operating Revenue increased 10.1% to $37.9 million;
  oSame Store Funeral Revenue increased 2.8% with same store volume
    increasing 4.0%;
  oAcquisition Funeral Revenue increased 57.7% with acquisition volume
    increasing 35.5%;
  oTotal Funeral Field EBITDA increased 17.6% to $14.4 million;
  oTotal Funeral Field EBITDA Margin increased 250 basis points to 38.0%;
  oAverage revenue per contract increased 0.3% to $5,347; and
  oCremation rate increased 130 basis points to 46.5%.

For the Twelve Months Ending December 31, 2012

  oTotal Funeral Operating Revenue increased 8.4% to $146.4 million;
  oSame Store Funeral Revenue decreased 0.2% with same store volume
    decreasing 1.4%;
  oAcquisition Funeral Revenue increased 81.6% with acquisition volume
    increasing 52.6%;
  oTotal Funeral Field EBITDA increased 16.2% to $54.6 million;
  oTotal Funeral Field EBITDA Margin increased 250 basis points to 37.3%;
  oAverage revenue per contract excluding trust earnings increased 1.6% to
    $5,369; and
  oCremation rate increased 100 basis points to 46.0%.

CEMETERY FIELD OPERATIONS

For the Three Months Ending December 31, 2012

  oTotal Cemetery Operating Revenue increased 9.0% to $10.1 million;
  oTotal Cemetery Field EBITDA increased 28.4% to $2.8 million;
  oTotal Cemetery Field EBITDA Margin increased 410 basis points to 27.4%;
  oCemetery pre-need property sale contracts declined 8.9% to 1,433; and
  oAverage Cemetery pre-need property sale per contract increased 7.6% to
    $2,747.

For the Twelve Months Ending December 31, 2012

  oTotal Cemetery Operating Revenue increased 5.0% to $40.1 million;
  oTotal Cemetery Field EBITDA increased 6.0% to $10.1 million;
  oTotal Cemetery Field EBITDA Margin increased 20 basis points to 25.2%;
  oCemetery pre-need property sale contracts increased 1.0% to 6,600; and
  oAverage Cemetery pre-need property sale per contract increased 6.0% to
    $2,765.

FINANCIAL OPERATIONS

For the Three Months Ending December 31, 2012

  oTotal Financial Revenue increased 52.6% to $5.3 million;
  oTotal Financial EBITDA increased 54.5% to $5.0 million;
  oTotal Financial EBITDA Margin increased 120 basis points to 93.4%;
  oFuneral Financial Revenue decreased 2.7% to $1.9 million; and
  oCemetery Financial Revenue increased 124.4% to $3.4 million.

For the Twelve Months Ending December 31, 2012

  oTotal Financial Revenue increased 21.7% to $17.7 million;
  oTotal Financial EBITDA increased 23.3% to $16.2 million;
  oTotal Financial EBITDA Margin increased 130 basis points to 91.8%;
  oFuneral Financial Revenue decreased 6.0% to $7.7 million; and
  oCemetery Financial Revenue increased 57.1% to $10.0 million.

FREE CASH FLOW

Carriage generated Free Cash Flow from continuing operations for the year 2012
of $20.6 million compared to Free Cash Flow from continuing operations of
$24.2 million for the corresponding period in 2011 as summarized below (in
millions):

                                               2011          2012
Cash flow provided by continuing operations    $ 30,959  (1) $ 25,624
Cash used for maintenance capital expenditures (6,776)       (5,066)
Free Cash Flow                                 $ 24,183      $ 20,558

    Cash flow provided by continuing operations and Free Cash Flow for the
(1) year ended December 31, 2011 included $8.5 million cash withdrawal from
    its affiliated preneed cemetery trusts previously disclosed in our press
    release dated July 21, 2011.

ACQUISITIONS

Carriage is focused on acquiring additional funeral homes and cemetery
businesses through a highly disciplined Strategic Acquisition Model as a core
strategy to grow revenues and earnings. Since the implementation of this
updated and revised model late in the fourth quarter of 2011, we have acquired
eight funeral homes and one cemetery that are expected to generate
approximately $18.0 million in annual revenue. However, these acquisitions
contributed only $6.9 million in revenue for the full year 2012 due to the
timing of the purchases. The full revenue and earnings impact of the recent
acquisitions will be realized on a full year basis in 2013. All of these
acquisitions have been accretive to earnings per share and the combined Field
EBITDA Margin on these eight acquisitions was at 38.1% for the full year 2012.
We expect to complete six to eight acquisitions with total annualized revenue
of $15 to $16 million in fiscal 2013. These anticipated acquisitions will be
spread throughout the year and there are no specific acquisitions under a
letter of intent at this point in time.

SENIOR SECURED CREDIT FACILITY

As previously disclosed in the third quarter press release, we completed a
transaction to restructure our debt agreements with a new $235 million secured
bank credit facility (the "Credit Facility") with $105 million available under
a revolving credit facility and $130 million available as a term loan. The new
Credit Facility also contains an accordion provision to borrow up to an
additional $40 million in revolving loans. The Term Loan was used to redeem
and replace our existing 7.875% Senior Notes. The revolver portion of the
Credit Facility refinanced our then existing Revolving Credit, paid other
transaction related expenses and will provide for future corporate needs. The
Credit Facility has a five year maturity and is collateralized by all personal
property and funeral home real property in certain states. Interest under the
new Credit Facility is payable at prime or LIBOR options. As of December 31,
2012, $44.7 million was drawn under the revolving credit facility and $127.5
million is outstanding on the term loan.

In connection with the repayment of the previously outstanding senior debt,
the Company incurred a call premium payment to the former debtholders in the
amount of $1.7 million and recorded a pre-tax charge in the amount of $1.3
million to write off the related unamortized loan costs. GAAP diluted earnings
per share from continuing operations in the current year were affected by the
above mentioned costs that totaled $0.10 per share on an after-tax basis. The
benefits of the new Credit Facility include substantially lower interest costs
and increased capacity for financing acquisition growth.

TRUST FUND PERFORMANCE

During the fourth quarter of 2012, Carriage's discretionary trust funds gained
3.1% compared to a loss of 0.4% for the S&P 500 and a 3.2% gain for the
Barclay's U.S. Corporate High Yield Index. For the year ending December 31,
2012, Carriage's discretionary trust funds gained 20.3% versus a gain of 16.0%
for the S&P 500 and 15.8% for the High Yield Index.

The current yield on Carriage's discretionary fixed income portfolio is 8.46%
and the estimated annual income for the entire discretionary portfolio is
$12.4 million. Over the past four years, Carriage has grown the estimated
annual income by 128% while realizing approximately $84 million in net income
in our discretionary trust accounts.

The high amount of recurring current income combined with the realized net
income in our discretionary trust portfolio will continue to benefit Carriage
through the increased value of preneed funeral and cemetery contracts at
maturity. Carriage will also benefit from the recurring income from our
cemetery perpetual care accounts which is recognized as GAAP revenue and
earnings in the current period.

Shown below are consolidated performance metrics for the combined trust fund
portfolios (preneed funeral, cemetery merchandise and services, and cemetery
perpetual care) at key dates.

Investment Performance
                        Investment           Index Performance
                        Performance^(1)
                                                     Barclay's
                                      Total  S&P 500 U.S.        50/50 index
Timeframe               Discretionary Trust  Stock   Corporate
                                             Index   High        Benchmark^(2)
                                                     Yield Index
3 months ended          3.1%          2.5%   -0.4%   3.2%        1.4%
12/31/12
1 year ended 12/31/12   20.3%         17.1%  16.0%   15.8%       15.9%
2 years ended 12/31/12  16.8%         14.9%  18.4%   21.6%       20.0%
3 years ended 12/31/12  41.0%         35.8%  36.3%   40.0%       38.1%
4 years ended 12/31/12  119.4%        99.8%  72.3%   121.4%      96.9%
5 years ended 12/31/12  57.8%         53.9%  8.6%    63.5%       36.0%

^(1)  Investment performance includes realized income and unrealized
              appreciation (depreciation).
              The 50/50 Benchmark is 50% weighted to the S&P 500 Stock Index
^(2) and 50% weighted to the Barclay's U.S. Corporate High Yield
              Index



Asset Allocation as of December 31, 2012

(in thousands)
                  Discretionary Trust Funds    Total Trust Funds
Asset Class       MV               %         MV           %
Cash              3,568            2%        18,144       8%
Equities          18,929           11%       35,450       15%
Fixed Income      154,985          87%       178,160      77%
Total Portfolios  $   177,482      100%      $ 231,754    100%

ROLLING FOUR QUARTER OUTLOOK RAISED

As a result of the effectiveness of the many organizational leadership changes
over the past year and the success of our renewed focus on all the drivers of
sustainable high performance, we are substantially raising our Rolling Four
Quarter Outlook of Adjusted EPS to $1.11 to $1.14 from our previous guidance
of $1.03 to $1.05. This is the first time in our twenty-one year history that
we will have achieved the milestone of earnings in excess of $1.00 per share
during a calendar year.

The Rolling Four Quarter Outlook "(Outlook)" reflects management's current
opinion on the performance of the portfolio of businesses for the rolling four
quarter period ending December 31,2013, and the performance of the trusts as
well as our view of the financial markets. Factors affecting our analysis
include, among others, acquisitions, funeral contract volumes, average revenue
per funeral service, cemetery interment volumes, preneed cemetery sales,
capital expenditures, execution of our funeral and cemetery Standards
Operating Model, Strategic Acquisition Model and Withdrawable Trust Income.



ROLLING FOUR QUARTER OUTLOOK – Period Ending December 31, 2013
                             Range

                             (in millions, except per share amounts)
Revenues                     $224 – $226
Consolidated EBITDA          $57 – $59
Adjusted Consolidated EBITDA $60 – $62
Net Income                   $17 – $19
Adjusted Net Income          $19 – $21
GAAP Earnings Per Share      $1.02 – $1.04
Adjusted Earnings Per Share  $1.11 – $1.14
Free Cash Flow               $28 – $30



Revenues, Consolidated EBITDA, Adjusted Consolidated EBITDA, Net Income,
Adjusted Net Income, GAAP Earnings Per Share, Adjusted Earnings Per Share and
Free Cash Flow for the four quarter period ending December 31,2013 are
expected to improve relative to the same period ended December 31,2012, for
the following reasons:

  oThe new Credit Facility will allow for increased financial capacity for
    acquisitions and substantially reduced interest costs;
  oIncreases in Acquired Funeral Revenue and Acquired Funeral Field EBITDA;
  oModest increases in Same Store Funeral Revenue and Same Store Funeral
    Field EBITDA;
  oIncreases in Cemetery Revenue and Cemetery Field EBITDA; and
  oIncreases in Financial Revenue and Financial EBITDA from trust funds.



CARRIAGE SERVICES, INC.
NON-GAAP UNAUDITED TREND OPERATING AND FINANCIAL METRICS
FROM CONTINUING OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
                            Three Months Ended        Twelve Months Ended
                            December 31               December 31
                            2011    2012    % Change  2011     2012     %
                                                                        Change
Same Store Contracts
Atneed Contracts            4,424   4,612   4.2%      18,075   18,007   -0.4%
Preneed Contracts           1,215   1,250   2.9%      5,006    4,755    -5.0%
Total Same Store Funeral    5,639   5,862   4.0%      23,081   22,762   -1.4%
Contracts
Acquisition Contracts
Atneed Contracts            945     1,246   31.9%     3,067    4,773    55.6%
Preneed Contracts           168     262     56.0%     599      821      37.1%
Total Acquisition Funeral   1,113   1,508   35.5%     3,666    5,594    52.6%
Contracts
Total Funeral Contracts     6,752   7,370   9.2%      26,747   28,356   6.0%
Funeral Operating Revenue
Same Store Revenue          $29,802 $30,624 2.8%      $120,766 $120,576 -0.2%
Acquisition Revenue         4,619   7,286   57.7%     14,210   25,802   81.6%
Total Funeral Operating     $34,420 $37,910 10.1%     $134,976 $146,378 8.4%
Revenue
Cemetery Operating Revenue
Same Store Revenue          $9,231  $9,958  7.9%      $38,152  $39,902  4.6%
Acquisition Revenue         —       105               —        166
Total Cemetery Operating    $9,231  $10,064 9.0%      $38,152  $40,068  5.0%
Revenue
Financial Revenue
Preneed Funeral Commission  412     348     -15.5%    1,811    1,711    -5.5%
Income
Preneed Funeral Trust       1,563   1,574   0.7%      6,357    5,968    -6.1%
Earnings
Cemetery Trust Earnings     1,187   3,188   168.6%    5,041    8,506    68.7%
Preneed Cemetery Finance    331     218     -34.1%    1,341    1,518    13.2%
Charges
Total Financial Revenue     $3,492  $5,328  52.6%     $14,550  $17,703  21.7%
Total Revenue               $47,143 $53,301 13.1%     $187,678 $204,149 8.8%
Field EBITDA
Same Store Funeral Field    $10,959 $12,185 11.2%     $43,288  $46,231  6.8%
EBITDA
Same Store Funeral Field    36.8%   39.8%   300 bp    35.8%    38.3%    250 bp
EBITDA Margin
Acquisition Funeral Field   1,273   2,203   73.1%     3,681    8,339    126.5%
EBITDA
Acquisition Funeral Field   27.6%   30.2%   260 bp    25.9%    32.3%    640 bp
EBITDA Margin
Total Funeral Field EBITDA  $12,232 $14,388 17.6%     $46,969  $54,570  16.2%
Total Funeral Field EBITDA  35.5%   38.0%   250 bp    34.8%    37.3%    250 bp
Margin
Same Store Cemetery Field   $2,147  $2,767  28.9%     $9,525   $10,176  6.8%
EBITDA
Same Store Cemetery Field   23.3%   27.8%   450 bp    25.0%    25.5%    20 bp
EBITDA Margin
Acquisition Cemetery Field  —       (12)              —        (76)
EBITDA
Acquisition Cemetery Field  —       -11.4%            —        -45.8%
EBITDA Margin
Total Cemetery Field EBITDA $2,147  $2,756  28.4%     $9,525   $10,100  6.0%
Total Cemetery Field EBITDA 23.3%   27.4%   410 bp    25.0%    25.2%    20 bp
Margin
Funeral Financial EBITDA    $1,703  $1,591  -6.6%     $6,793   $6,272   -7.7%
Cemetery Financial EBITDA   1,518   3,385   123.0%    6,382    9,975    56.3%
Total Financial EBITDA      $3,221  $4,976  54.5%     $13,175  $16,247  23.3%
Total Financial EBITDA      92.2%   93.4%   120 bp    90.5%    91.8%    130 bp
Margin
Total Field EBITDA          17,599  22,120  25.7%     69,669   80,917   16.1%
Total Field EBITDA Margin   37.3%   41.5%   420 bp    37.1%    39.6%    250 bp



CARRIAGE SERVICES, INC.
NON-GAAP UNAUDITED TREND OPERATING AND FINANCIAL METRICS
FROM CONTINUING OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
                              Three Months Ended        Twelve Months Ended
                              December 31              December 31
                              2011    2012    % Change  2011    2012    %
                                                                        Change
Overhead
Total Variable Overhead       $4,760  $3,706  -22.1%    $9,422  $9,450  0.3%
Total Regional Fixed Overhead 794     1,257   58.3%     3,766   4,187   11.2%
Total Corporate Fixed         4,012   4,626   15.3%     15,699  16,635  6.0%
Overhead
Total Overhead                $9,566  $9,589  0.2%      $28,887 $30,272 4.8%
                              20.3%   18.0%   -230 bp   15.4%   14.8%   -60 bp
Consolidated EBITDA          $8,034  $12,530 56.0%     $40,781 $50,645 24.2%
Consolidated EBITDA Margin   17.0%   23.5%   650 bp    21.7%   24.8%   310 bp
Special Items Affecting
EBITDA
Withdrawable Trust Income     $(368)  $627              $4,513  $1,916
(loss)
Acquisition Expenses          265     425               1,237   1,340
Severance Costs               1,769   33                1,936   802
Non-Recurring legal           —       —                 —       195
fees/Settlements
Incentive Compensation -      810     —                 810     —
Corporate
Other Incentive Compensation  254     —                 254     —
Professional Fees             141     —                 141     —
Securities Transactions       2       —                 504     —
Expenses
Sum of Special Items          $2,873  $1,085  -62.2%    $9,395  $4,253  -54.7%
Adjusted Consolidated EBITDA  $10,907 $13,615 $24.8%    $50,176 $54,898 9.4%
Adjusted Consolidated EBITDA  23.1%   25.5%   240 bp    26.7%   26.9%   20 bp
Margin
Property Depreciation &       $2,413  $2,505  3.8%      $9,585  $10,054 4.9%
Amortization
Non Cash Stock Compensation   284     553     94.7%     1,870   2,174   16.3%
Interest Expense              4,477   3,421   -23.6%    18,104  17,100  -5.5%
Interest Income and Other,    (16)    (911)             (696)   2,068
Net
Pretax Income before Special  $3,748  $8,048  114.7%    $21,314 $23,502 10.3%
Item Adjustment
Special Items Affecting
Pretax Income
Refinancing Related Costs     —       —                 201     3,031
Gain on Repurchase of TIDES   —       —                 (846)   —
Reduction of Litigation       —       (900)             —       (900)
Reserve
Adjusted Pretax Income        $3,748  $7,148  90.7%     $20,668 $25,633 24.0%
Tax Provision                 $1,928  $2,721  41.1%     $8,781  $10,176 15.9%
Adjusted Net Income           $1,820  $4,427  143.2%    $11,887 $15,457 30.0%
Adjusted Net Profit Margin    3.9%    8.2%    430 bp    6.3%    7.6%    130 bp
Adjusted Earnings Per Share   $0.10   $0.24   140.0%    $0.65   $0.85   30.8%
GAAP Earnings Per Share       $0.02   $0.23   1050.0%   $0.37   $0.64   73.0%
Average Shares Outstanding   18,420  18,264  -0.8%     18,397  18,226  -0.9%

CONFERENCE CALL AND INVESTOR RELATIONS CONTACTS

Carriage Services has scheduled a conference call for tomorrow, February 26,
2013 at 9:30 a.m. CST. To participate in the call, please dial 866-516-3867
(code - 10408333) and ask for the Carriage Services conference call. A
telephonic replay of the conference call will be available through March
8,2013 and may be accessed by dialing 404-537-3406 (code - 10408333). An
audio archive will also be available on the company's website at
www.carriageservices.com after the call. For more information on any investor
relations questions, please contact Bill Heiligbrodt at 713-332-8553.

NON-GAAP FINANCIAL MEASURES

This press release uses Non-GAAP financial measures to present the financial
performance of the Company. Non-GAAP financial measures should be viewed in
addition to, and not as an alternative for, the Company's reported operating
results or cash flow from operations or any other measure of performance as
determined in accordance with GAAP. The Company's GAAP financial statements
accompany this release. Reconciliations of the Non-GAAP financial measures to
GAAP measures are provided at the end of the press release.

The Non-GAAP financial measures include "Free Cash Flow", "Funeral and
Cemetery Field EBITDA", "Total Field EBITDA", "Consolidated EBITDA", "Adjusted
Consolidated EBITDA", "Special Items", "Adjusted Net Income" and "Adjusted
Earnings Per Share" in this press release. These financial measurements are
defined as similar GAAP items adjusted for Special Items itemized and
reconciled to GAAP later in this press release. In addition, the Company's
presentation of these measures may not be comparable to similarly titled
measures in other companies' reports. These financial measures are used by
management to understand and explain the Company's operations and financial
results.

Certain state regulations allow the withdrawal of financial income from
preneed cemetery merchandise and services trust funds when realized in the
trust. Under current generally accepted accounting principles, trust income
is only recognized in the Company's financial statements at a later time when
the related merchandise and services sold on the preneed contract is delivered
at the time of death. Carriage has provided financial income from the trusts,
termed "Withdrawable Trust Income (loss)" and reported on a Non-GAAP proforma
basis within Special Items in the accompanying Non-GAAP Unaudited Income
Statement, to reflect the current cash results. Management believes that the
Withdrawable Trust Income provides useful information to investors because it
presents income and cash flow when earned by the trusts.

FORWARD-LOOKING STATEMENTS

Certain statements made herein or elsewhere by, or on behalf of, the Company
that are not historical facts are intended to be forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These
statements are based on assumptions that the Company believes are reasonable;
however, many important factors, as discussed under "Forward-Looking
Statements" in the Company's Annual Report on Form 10-K for the year ended
December31,2011, could cause the Company's results in the future to differ
materially from the forward-looking statements made herein and in any other
documents or oral presentations made by, or on behalf of, the Company. The
Company assumes no obligation to update or publicly release any revisions to
forward-looking statements made herein or any other forward-looking statements
made by, or on behalf of, the Company. A copy of the Company's Form 10-K, and
other Carriage Services information and news releases, are available at
www.carriageservices.com.



CARRIAGE SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands)


                                                        December31,
                                                        2011       2012
ASSETS
Current assets:
Cash and cash equivalents                               $ 1,137    $ 1,698
Accounts receivable, net                                16,321     17,812
Assets held for sale                                    4,230      1,466
Inventories and other current assets                    13,396     12,163
Total current assets                                    35,084     33,139
Preneed cemetery trust investments                      65,705     70,960
Preneed funeral trust investments                       75,812     82,896
Preneed receivables, net                                22,614     23,222
Receivables from preneed trusts                         22,165     25,871
Property, plant and equipment, net                      135,513    152,433
Cemetery property                                       71,515     75,156
Goodwill                                                192,778    218,442
Deferred charges and other non-current assets           10,106     9,424
Cemetery perpetual care trust investments               41,485     46,542
Total assets                                            $ 672,777  $ 738,085
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of senior long-term debt and capital    $ 628      $ 718
lease obligations
Accounts payable and other liabilities                  13,856     18,310
Accrued liabilities                                     17,809     12,278
Liabilities associated with assets held for sale        2,260      369
Total current liabilities                               34,553     31,675
Long-term debt, net of current portion                  131,900    129,341
Line of credit                                          3,100      44,700
Convertible junior subordinated debenture due in 2029   89,770     89,770
to an affiliate
Obligations under capital leases, net of current        4,155      4,013
portion
Deferred preneed cemetery revenue                       58,809     63,997
Deferred preneed funeral revenue                        40,639     39,795
Deferred preneed cemetery receipts held in trust        65,682     70,960
Deferred preneed funeral receipts held in trust         75,812     82,896
Care trusts' corpus                                     41,379     45,920
Total liabilities                                       545,799    603,067
Commitments and contingencies
Redeemable Preferred Stock                              200        200
Stockholders' equity:
Common Stock, $.01 par value; 80,000,000 shares
authorized; 21,663,000 and 22,078,000 issued as of      217        221
December31, 2011 and 2012, respectively
Additional paid-in capital                              201,284    204,652
Accumulated deficit                                     (63,987)   (54,788)
Treasury stock, at cost; 3,236,000 and 3,922,000 shares (10,736)   (15,267)
at December31, 2011 and 2012, respectively
Total stockholders' equity                              126,778    134,818
Total liabilities and stockholders' equity              $ 672,777  $ 738,085





CARRIAGE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except share and per share data)


                                                  
                      For the three months ended
                                                  For the twelve months ended
                      December 31,
                                                  December 31,
                      2011            2012        2011          2012
Revenues              $   47,143      $  53,301   $  187,678    $  204,149
Field costs and       34,116          36,422      135,606       142,274
expenses
Gross profit          13,027          16,879      52,072        61,875
General and
administrative        7,690           7,407       22,745        23,458
expenses
Operating income      5,337           9,472       29,327        38,417
Interest expense      (4,477)         (3,421)     (18,104)      (17,100)
Interest income and   16              911         51            963
other, net
Gain on repurchase of
junior subordinated   —               —           846           —
debenture
Loss on early
extinguishment of     —               —           (201)         (3,031)
debt and other costs
Income from
continuing operations 876             6,962       11,919        19,249
before income taxes
Provision for income  (582)           (2,673)     (5,066)       (7,642)
taxes
Net income from       294             4,289       6,853         11,607
continuing operations
Net income (loss)
from discontinued     14              (615)       125           (204)
operations, net of
tax
Net income            308             3,674       6,978         11,403
Preferred stock       2               4           14            14
dividend
Net income available
to common             $   306         $  3,670    $  6,964      $  11,389
stockholders
Basic earnings per
common share:
Continuing operations $   0.02        $  0.24     $  0.37       $  0.64
Discontinued          —               (0.03)      0.01          (0.01)
operations
Basic earnings per    $   0.02        $  0.20     $  0.38       $  0.63
common share


Diluted earnings per
common share:
Continuing operations $   0.02        $  0.23     $  0.37       $  0.64
Discontinued          —               (0.03)      0.01          (0.01)
operations
Diluted earnings per  $   0.02        $  0.21     $  0.38       $  0.63
common share
Dividends declared    $   0.025       $  0.025    $  0.075      $  0.100
per common share
Weighted average
number of common and
common equivalent
shares outstanding:
Basic                 18,393          18,114      18,359        18,126
Diluted               18,420          18,264      18,397        18,226



CARRIAGE SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)


                                    For the twelve months ended December 31,
                                         2011                 2012
Cash flows from operating
activities:
Net income                               $       6,978        $    11,403
Adjustments to reconcile net income
to net cash provided by operating
activities:
(Income) loss from discontinued          (125)                204
operations
Depreciation and amortization            9,585                10,054
Amortization of deferred financing       653                  685
costs
Gain on repurchase of convertible        (846)                —
junior subordinated debentures
Provision for losses on accounts         2,756                1,826
receivable
Stock-based compensation expense         1,867                2,174
Deferred income taxes (benefit)          (3,462)              3,930
Loss on early extinguishment of          201                  1,323
debt
Other                                    38                   252
Changes in operating assets and
liabilities that provided
(required) cash:
Accounts and preneed receivables         (1,933)              (3,850)
Inventories and other current            (1,509)              5,334
assets
Deferred charges and other               (38)                 (38)
Preneed funeral and cemetery trust       10,956               6,658
investments
Accounts payable and accrued             7,003                (7,201)
liabilities
Deferred preneed funeral and             10,316               3,720
cemetery revenue
Deferred preneed funeral and             (11,481)             (10,850)
cemetery receipts held in trust
Net cash provided by continuing         30,959               25,624
operating activities
Net cash provided by discontinuing      196                  137
operating activities
Net cash provided by operating           31,155               25,761
activities
Cash flows from investing
activities:
Acquisitions                             (18,574)             (42,709)
Capital expenditures                     (10,625              (12,857)
Net cash used in continuing              (29,199))            (55,566)
investing activities
Net cash provided by (used in)           (19)                 592
discontinuing investing activities
Net cash used in investing               (29,218)             (54,974)
activities
Cash flows from financing
activities:
Borrowings under the bank credit         2,500                43,307
facility
Payments on long-term debt and           (625)                (3,173)
obligations under capital leases
Proceeds from the exercise of stock
options and employee stock purchase      719                  896
plan
Dividends on common stock                (1,376)              (1,804)
Dividends on redeemable preferred        (14)                 (14)
stock
Tax benefit from stock-based             25                   36
compensation
Repurchase of convertible junior         (2,241)              —
subordinated debentures
Payment of debt amendment and loan       (333)                (3,236)
origination costs
Payment of call premium associated       —                    (1,707)
with the senior note redemption
Purchase of treasury stock               (736)                (4,531)
Other financing costs                    2                    —
Net cash provided by (used) in           (2,079)              29,774
financing activities
Net increase (decrease) in cash and      (142)                561
cash equivalents
Cash and cash equivalents at             1,279                1,137
beginning of year
Cash and cash equivalents at end of      $       1,137        $    1,698
year



CARRIAGE SERVICES, INC.

Selected Financial Data
                                                    December 31,  December 31,
                                                    2011          2012
Selected Balance Sheet Data:                        (unaudited)
Cash and short-term investments                     $   1,137     $   1,698
Total Senior Debt (a)                               139,783       178,772
Senior Debt to total capitalization                 39.7%         44.3%
Senior Debt to EBITDA (rolling 12 mos.)             3.4           3.5
Senior Debt to Adjusted Consolidated EBITDA         2.8           3.3
(rolling 12 mos.)

(a) Senior debt does not include the convertible junior subordinated
     debentures.

Reconciliation of Non-GAAP Financial Measures:

This press release includes the use of certain financial measures that are not
GAAP measures. The Non-GAAP financial measures are presented for additional
information and are reconciled to their most comparable GAAP measures below.
We define our Non-GAAP measures as "Adjusted" which is reflected on our
Non-GAAP Unaudited Income Statement presented herein.



Reconciliation of Net Income from continuing operations to Adjusted Net Income
from continuing operations for the three and twelve months ended December 31,
2011 and 2012 (thousands):
                                                  

                 Three months ended                Twelve months ended

                 December 31,                      December 31,
                 2011               2012           2011           2012
Net Income from
continuing       $    294           $   4,289      $  6,853       $  11,607
operations
Special items,   1,526              138            5,034          3,850
net of tax
Adjusted Net
Income from      $    1,820         $   4,427      $  11,887      $  15,457
continuing
operations



Reconciliation of Diluted Earnings Per Share from continuing operations to
Adjusted Earnings per Share from continuing operations for the three and
twelve months ended December 31, 2011 and 2012:
                                                   

                      Three months ended            Twelve months ended

                      December 31,                  December 31,
                      2011             2012         2011            2012
Diluted EPS from      $    0.02        $  0.23      $   0.37        $  0.64
continuing operations
Effect of special     0.08             0.01         0.28            0.21
items
Adjusted EPS from     $    0.10        $  0.24      $   0.65        $  0.85
continuing operations



Summary of Special Itemsfor the three and twelve months ended December 31,
2011 and 2012 on a pre-tax basis (thousands):
                                                   
                        
                                                   
                        Three months ended
                                                   Twelve months ended
                        December 31,
                                                   December 31,
                        2011           2012        2011           2012
Items affecting EBITDA
Withdrawable Trust      $   (368)      $   627     $   4,513      $  1,916
Income (loss)
Acquisition Expenses    265            425         1,237          1,340
Severance Costs         1,769          33          1,936          802
Non-recurring Legal     -              -           -              195
Fees / Settlements
Incentive Compensation  810            -           810            -
- Corporate
Other Incentive         254            -           254            -
Compensation
Professional Fees       141            -           141            -
Securities Transaction  2              -           504            -
Expense
Items Affecting Pre-Tax
Income
Refinancing Related    -              -           201            3,031
Costs
Reduction of Litigation -              (900)       -              (900)
Reserve
Gain or Repurchase of   -              -           (846)          -
Tides
Sum of special items    $   2,873      $   185     $   8,750      $  6,384



Summary of Special Itemsfor the three and twelve months ended December 31,
2011 and 2012 on an after-tax basis (thousands):
                                                    

                         Three months ended          Twelve months ended

                         December 31,                December 31,
                         2011             2012       2011            2012
Items affecting EBITDA
Withdrawable Trust       $   (195)        $  394     $   2,596       $  1,155
Income (loss)
Acquisition Expenses     141              267        712             808
Severance Costs          939              20         1,114           484
Non-recurring Legal Fees -                -          -               118
/ Settlements
Incentive Compensation - 430              -          466             -
Corporate
Other Incentive          135              -          146             -
Compensation
Professional Fees        75               -          81              -
Securities Transaction   1                -          290             -
Expense
Items Affecting Pre-Tax
Income
Refinancing Related     -                -          116             1,828
Costs
Reduction of Litigation  -                (543)      -               (543)
Reserve
Gain or Repurchase of    -                -          (487)           -
Tides
Sum of special items,    $   1,526        $  138     $   5,034       $  3,850
net of tax



Reconciliation of Net Income from continuing operations to Adjusted
Consolidated EBITDA from continuing operations for the three and twelve months
ended December 31, 2011 and 2012 (in thousands):


                                               

                  Three months ended            Twelve months ended

                  December 31,                  December 31,
                  2011          2012         2011          2012
Net income from
continuing        $   294       $  4,289     $  6,853      $  11,607
operations
Provision for     582           2,673        5,066         7,642
income taxes
Pre-tax earnings
from continuing   876           6,962        11,919        19,249
operations
Interest expense, 4,477         3,421        18,104        17,100
net
Interest income   (16)          (11)         (52)          (63)
Non-cash stock    284           553          1,870         2,174
compensation
Depreciation &    2,413         2,505        9,585         10,054
amortization
Special items     2,873         185          8,750         6,384
Adjusted
Consolidated
EBITDA from       $   10,907    $  13,615    $  50,176     $  54,898

continuing
operations
Revenue from
continuing        $   47,143    $  53,301    $  187,678    $  204,149
operations
Adjusted
Consolidated      23.1%         25.5%        26.7$         26.9%
EBITDA Margin



Reconciliation of Net Income from continuing operations to Adjusted
Consolidated EBITDA for the estimated rolling four quarters ended December 31,
2013 (in thousands):
                                Rolling

                                Four Quarter Outlook
                                December 31, 2013E
Net income from continuing              $       19,300
operations
Provision for income taxes              13,200
Pre-tax earnings from                   32,500
continuing operations
Net interest expense, including         13,800
loan cost amortization
Depreciation & amortization,            13,000
including stock compensation
Consolidated EBITDA from                $       59,300
continuing operations



Reconciliation of Consolidated EBITDA to Free Cash Flow for the estimated
rolling four quarters ending December 31, 2013 (in 000's):
                                        Rolling

                                        Four Quarter Outlook
                                        December 31, 2013E
Consolidated EBITDA                            $       59,300
Interest paid                                  (13,200)
Cash Income taxes                              (13,200)
Maintenance capital expenditures               (4,000)
Withdrawable trust income                      1,300
Free Cash Flow                                 $       30,200



Reconciliation of funeral and cemetery income from continuing operations
before income taxes to Field EBITDA from continuing operations for the three
and twelve months ended December 31, 2011 and 2012 (in thousands):


                                            
Funeral
                   Three months ended        Twelve months ended

                   December 31,              December 31,
                   2011         2012         2011          2012
Gross Profit       $  10,882    $  12,083    $  41,975     $  47,482
(GAAP)
Depreciation &     1,440        1,542        5,719         5,974
amortization
Regional           1,613        2,354        6,067         7,386
&unallocated costs
Net financial      (1,703)      (1,591)      (6,793)       (6,272)
income
Funeral Field      $  12,232    $  14,388    $  46,969     $  54,570
EBITDA
Funeral Field      $  34,420    $  37,910    $  134,976    $  146,378
Operating Revenue
Funeral Field      35.5%        38.0%        34.8%         37.3%
EBITDA Margin



                                                    
Cemetery
                                 Three months ended  Twelve months ended

                                 December 31,        December 31,
                                 2011      2012      2011      2012
Gross Profit (GAAP)              $  2,145  $ 4,796   $ 10,097  $ 14,393
Depreciation & amortization      711       718       2,853     3,116
Regional & unallocated costs     808       625       2,957     2,566
Net financial income             (1,518)   (3,385)   (6,382)   (9,975)
Cemetery Field EBITDA            $  2,147  $ 2,756   $ 9,525   $ 10,100
Cemetery Field Operating Revenue $  9,231  $ 10,064  $ 38,152  $ 40,068
Cemetery Field EBITDA Margin     23.3      27.4      25.0      25.2

SOURCE Carriage Services, Inc.

Website: http://www.carriageservices.com
 
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