CARRIAGE SERVICES ANNOUNCES RECORD RESULTS FOR SECOND QUARTER 2014, RAISES ROLLING FOUR QUARTER OUTLOOK

  CARRIAGE SERVICES ANNOUNCES RECORD RESULTS FOR SECOND QUARTER 2014, RAISES
                         ROLLING FOUR QUARTER OUTLOOK

PR Newswire

HOUSTON, Aug. 5, 2014

HOUSTON, Aug. 5, 2014 /PRNewswire/ -- Carriage Services, Inc. (NYSE: CSV)
today announced results for the quarter ended June 30, 2014.

Mel Payne, Chief Executive Officer, stated, "Our second quarter performance
continued our trend of outstanding results as we achieved strong revenue
growth of 5% to a record $56.5 million, Adjusted Diluted Earnings Per Share
growth of 28% to a second quarter record $0.32 per share, and Adjusted Free
Cash Flow growth of 12.8% to a record $13.2 million. This outstanding
performance was driven by higher year over year revenue and Field EBITDA
growth in our acquisition funeral and cemetery segments, substantially lower
overhead, and materially reduced interest costs on our recent refinancings.
Our record second quarter performance more than offset the relative weakness
in the first quarter, resulting in record revenue of $112.2 million and record
Adjusted Diluted Earnings Per Share of $0.63 for the six months ended June 30,
2014. With our earnings performance outlook improving in all major areas, we
are substantially raising our Rolling Four Quarter Outlook of Adjusted Diluted
Earnings Per Share to a range of $1.42 - $1.48.

Three Months Ended June 30, 2014

  oTotal Revenue of $56.5 million, an increase of 5.0%;
  oNon-GAAP Adjusted Consolidated EBITDA of $16.3 million, an increase of
    11.7%;
  oNon-GAAP Adjusted Consolidated EBITDA Margin up 180 basis points to 28.9%;
  oNon-GAAP Diluted Earnings Per Share of $0.32, an increase of 28.0%; and
  oNon-GAAP Adjusted Free Cash Flow of $13.2 million, an increase of
    12.8%.

Six Months Ended June 30, 2014

  oTotal Revenue of $112.2 million, an increase of 1.1%;
  oNon-GAAP Adjusted Consolidated EBITDA of $31.4 million, an increase of
    1.0%;
  oNon-GAAP Adjusted Consolidated EBITDA Margin remained flat at 28.0%;
  oNon-GAAP Diluted Earnings Per Share of $0.63, an increase of 12.5%; and
  oNon-GAAP Adjusted Free Cash Flow of $15.5 million, a decrease of
    21.7%.

"On May 15th, we announced that we closed the acquisition of six businesses in
New Orleans and Alexandria, Virginia from Service Corporation International.
We had a goal of being the first buyer in our industry to close on the large
number of Service Corporation International divestitures resulting from their
acquisition of Stewart Enterprises, and we achieved that goal through a team
effort by a group of high performance 4E Leaders.

This high quality group of operating businesses includes the following:

  oGarden of Memories Funeral Home and Cemetery, Metairie, LA;
  oSchoen Funeral Home, New Orleans, LA;
  oGreenwood Funeral Home, New Orleans, LA;
  oTharp-Sontheimer-Tharp Funeral Home, Metairie, LA;
  oEverly Community Funeral Care, Falls Church, VA; and
  oEverly-Wheatley Funeral Home, Alexandria, VA.

"The four businesses in New Orleans, Louisiana and two in Alexandria / Falls
Church, Virginia (Fairfax County), provide Carriage strong franchises from
which we can build a track record of success and reputation in these two
large, demographically attractive strategic markets.

"With the successful completion of the new convertible subordinated debt and
the amendments to the bank credit facilities, our cost of debt and total cost
of capital has been materially reduced and was immediately accretive in the
second quarter. Our interest expense in the second quarter of 2014 decreased
$1.0 million, or 27.1% compared to the second quarter of 2013. Combined with
our growing Free Cash Flow, we are well positioned to accelerate our earning
power growth over the balance of 2014 and for the full year of 2015, as
reflected by our record second quarter performance and raised Four Quarter
Outlook. Moreover, our selective acquisition strategy will now be financed
with a lower cost of capital at a time when our acquisition pipeline is
growing larger with high quality candidates," concluded Mr. Payne.

TOTAL FIELD OPERATIONS

For the Three Months Ended June 30, 2013 compared to Three Months Ended June
30, 2014

  oTotal Field Revenue increased 5.0% to $56.5 million;
  oTotal Field EBITDA increased 2.1% to $22.4 million; and
  oTotal Field EBITDA Margin decreased 110 basis points to 39.6%.



  oTotal Funeral Operating Revenue increased 5.5% to $39.8 million;
  oSame Store Funeral Revenue decreased 1.5% with same store volume
    decreasing 1.1%;
  oAcquisition Funeral Revenue increased 31.2% with acquisition volume
    increasing 25.0%;
  oTotal Funeral Field EBITDA Margin decreased 130 basis points to 35.2%;



  oTotal Cemetery Operating Revenue increased 7.5% to $11.7 million;
  oCemetery preneed property sale contracts increased 9.3% to 2,212;
  oPreneed property revenue recognized increased 6.7% and At-need revenue
    increased 9.7%;
  oTotal Cemetery Field EBITDA Margin increased 120 basis points to 31.6%;



  oTotal Financial Revenue decreased 4.0% to $5.0 million;
  oFuneral Financial Revenue decreased 12.2% to $2.4 million;
  oCemetery Financial Revenue increased 4.9% to $2.6 million;
  oTotal Financial EBITDA Margin increased 60 basis points to 93.3%.



For the Six Months Ended June 30, 2013 compared to Six Months Ended June 30,
2014

  oTotal Field Revenue increased 1.1% to $112.2 million;
  oTotal Field EBITDA decreased 1.8% to $45.2 million; and
  oTotal Field EBITDA Margin decreased 120 basis points to 40.3%.



  oTotal Funeral Operating Revenue increased 1.2% to $81.3 million;
  oSame Store Funeral Revenue decreased 4.2% with same store volume
    decreasing 3.7%;
  oAcquisition Funeral Revenue increased 20.7% with acquisition volume
    increasing 14.7%;
  oTotal Funeral Field EBITDA Margin decreased 140 basis points to 36.7%;



  oTotal Cemetery Operating Revenue increased 4.0% to $21.5 million;
  oCemetery preneed property sale contracts increased 2.2% to 3,856;
  oPreneed property revenue recognized increased 1.2% and At-need revenue
    increased 9.0%;
  oTotal Cemetery Field EBITDA Margin decreased 10 basis points to 30.4%;



  oTotal Financial Revenue decreased 5.4% to $9.4 million;
  oFuneral Financial Revenue decreased 1.5% to $4.8 million;
  oCemetery Financial Revenue decreased 9.3% to $4.5 million;
  oTotal Financial EBITDA Margin increased 190 basis points to 93.5%.

ADJUSTED FREE CASH FLOW

Carriage produced Adjusted Free Cash Flow from operations in the first half of
2014 of $15.5 million compared to $19.8 million for the corresponding period
in 2013. The sources and uses of cash for the six months ended June 30, 2013
and 2014 consisted of the following (in millions):



                                                        June 30,
                                                        2013      2014
Cash flow provided by operations                        $ 22.8   $   13.3
Adjustment for tax benefit from Good to Great stock     —         4.8
awards
Cash used for maintenance capital expenditures          (3.0)     (2.6)
Adjusted Free Cash Flow                                 $ 19.8   $   15.5
Cash at beginning of period                             1.7       1.4
Acquisitions and land for new construction              (6.0)     (54.9)
Proceeds from sale of businesses and other assets       2.7       0.2
Net (payments) borrowings on our revolving credit       (15.4)    13.0
facility, term loan and long-term debt obligations
Proceeds from issuance of convertible subordinated      —         143.7
notes
Payment of debt issuance costs related to the           —         (4.7)
convertible subordinated notes
Redemption of convertible junior subordinated           —         (89.7)
debentures
Payments for performance-based stock awards             —         (16.2)
Excess tax benefit of equity compensation, net of       1.2       0.3
benefit from Good to Great stock awards
Payment of loan origination costs related to the credit (0.6)     (0.8)
facility
Cash used for growth capital expenditures               (1.5)     (7.1)
Dividends on common stock                               (0.9)     (0.9)
Other investing and financing activities                0.5       0.9
Cash at end of period                                   $  1.5  $    0.7



ROLLING FOUR QUARTER OUTLOOK RAISED

The Rolling Four Quarter Outlook "(Outlook)" reflects management's opinion on
the performance of our existing portfolio of businesses for the rolling four
quarter period ending June 30,2015, the performance of the trusts, and our
view of the activity within the industry acquisition landscape. This Outlook
is not intended to be management estimates or forecasts of our future
performance, as we believe such precise rolling estimates will be precisely
wrong all the time. Rather our intent and goal is to reflect a "roughly right
range" most of the time of future "Rolling Four Quarter Outlook" performance
as we execute our Standards Operating, Strategic Acquisition and 4E Leadership
Models over time.



                                     Range
                                     (in millions, except per share amounts)
Revenues                             $237 - $242
Adjusted Consolidated EBITDA         $65 - $68
Adjusted Net Income                  $26 - $28
Adjusted Diluted Earnings Per Share  $1.42 - $1.48



Factors affecting our analysis include, among others, number, size and timing
of closing of 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, Withdrawable Trust Income and changes in Federal
Reserve monetary policy. Revenues, Adjusted Consolidated EBITDA, Adjusted Net
Income and Adjusted Earnings Per Share for the four quarter period ending June
30,2015 are expected to improve relative to the same period in the previous
period for the following reasons:

  oIncreases in Acquired Funeral Revenue and Acquired Funeral Field EBITDA;
  oIncreases in Acquired Cemetery Revenue and Acquired Cemetery Field EBITDA;
  oModest increases in Same Store Funeral Revenue and Same Store Funeral
    Field EBITDA;
  oIncreases in Same Store Cemetery Revenue and Same Store Cemetery Field
    EBITDA;
  oIncreases in Financial Revenue and Financial EBITDA from trust funds; and
  oReduced interest expense in conjunction with the fourth and fifth
    amendments to our bank credit facilities and the redemption of our $90
    million 7% convertible junior subordinated debentures.

CONFERENCE CALL AND INVESTOR RELATIONS CONTACT

Carriage Services has scheduled a conference call for tomorrow, August 6, 2014
at 9:30 a.m. CDT. To participate in the call, please dial 866-516-3867
(ID-73181607) and ask for the Carriage Services conference call. A replay of
the conference call will be available through August 8,2014 and may be
accessed by dialing 855-859-2056 (ID-73181607). The conference call will also
be available at www.carriageservices.com. For any investor relations
questions, please contact Bill Heiligbrodt at 713-332-8553.

TRUST FUND PERFORMANCE

For the six months ended June 30, 2014, Carriage's discretionary trust funds
gained 10.0%. Over the same period in the discretionary portfolio, the fixed
income return was 7.6%, beating the High Yield index of 5.5% while the equity
return was 16.7%, beating the S&P 500 at 7.1%. The current yield on Carriage's
discretionary fixed income portfolio, which comprises 70% of discretionary
trust assets, is 7.9% and the estimated annual income for the discretionary
portfolio is approximately $11.0 million.

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)
                                Total       S&P 500    High      80/20 index
                 Discretionary  Trust       Stock      Yield     Benchmark^(2)
                                            Index      Index
6 months ended   10.0 %         9.0 %       7.1 %      5.5 %     5.8 %
6/30/14
1 year ended     14.2 %         13.7 %      32.4 %     7.5 %     12.4 %
12/31/13
2 years ended    37.5 %         33.2 %      53.0 %     24.4 %    30.2 %
12/31/13
3 years ended    33.5 %         30.7 %      56.2 %     30.6 %    35.7 %
12/31/13
4 years ended    61.1 %         54.4 %      79.4 %     50.4 %    56.2 %
12/31/13
5 years ended    150.6 %        127.1 %     125.8 %    137.9 %   135.5 %
12/31/13

(1) Investment performance includes realized income and unrealized
    appreciation (depreciation).
(2) The 80/20 Benchmark is 80% weighted to the High Yield Index and 20%
    weighted to the S&P 500 Stock Index. 



Asset Allocation as of June 30, 2014
(in thousands)
                  Discretionary         Total
                  Trust Funds           Trust Funds
Asset Class       MV            %       MV         %
Cash              $    5,909 3 %     $  20,648 8 %
Equities          50,710        26 %    68,478     28 %
Fixed Income      139,016       70 %    154,289    63 %
Other/Insurance   2,656         1 %     2,904      1 %
Total Portfolios  $  198,291   100 %   $ 246,319  100 %



CARRIAGE SERVICES, INC.
OPERATING AND FINANCIAL TREND REPORT
FROM CONTINUING OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
                    Three Months Ended June 30,   Six Months Ended June 30,
                    2013      2014      % Change  2013      2014      % Change
Same Store
Contracts
 Atneed Contracts 4,431     4,428     -0.1 %    9,440     9,223     -2.3 %
 Preneed          1,193     1,136     -4.8 %    2,585     2,353     -9.0 %
Contracts
Total Same Store    5,624     5,564     -1.1 %    12,025    11,576    -3.7 %
Funeral Contracts
Acquisition
Contracts
 Atneed Contracts 1,377     1,712     24.3 %    2,934     3,371     14.9 %
 Preneed          249       321       28.9 %    550       625       13.6 %
Contracts
Total Acquisition   1,626     2,033     25.0 %    3,484     3,996     14.7 %
Funeral Contracts
Total Funeral       7,250     7,597     4.8 %     15,509    15,572    0.4 %
Contracts
Funeral Operating
Revenue
 Same Store       $       $       -1.5 %    $      $      -4.2 %
Revenue             29,612    29,163              63,103    60,469
 Acquisition      8,121     10,657    31.2 %    17,267    20,836    20.7 %
Revenue
Total Funeral       $        $        5.5 %     $       $       1.2 %
Operating Revenue   37,733   39,820             80,370   81,305
Cemetery Operating
Revenue
 Same Store       $       $       5.1 %     $      $      2.8 %
Revenue             10,827    11,382              20,518    21,094
 Acquisition      74        334       351.4 %   143       389       172.0 %
Revenue
Total Cemetery      $        $        7.5 %     $       $       4.0 %
Operating Revenue   10,901   11,716             20,661   21,483
Financial Revenue
 Preneed Funeral  $     $     17.0 %    $     $     14.0 %
Commission Income   481      563                 989    1,127
 Preneed Funeral  2,222     1,809     -18.6 %   3,936     3,725     -5.4 %
Trust Earnings
 Cemetery Trust   2,086     2,276     9.1 %     4,280     3,860     -9.8 %
Earnings
 Preneed Cemetery 388       320       -17.5 %   698       657       -5.9 %
Finance Charges
Total Financial     $       $       -4.0 %    $      $      -5.4 %
Revenue             5,177    4,968              9,903    9,369
Total Revenue       $        $        5.0 %     $        $        1.1 %
                    53,811   56,504             110,934  112,157
Field EBITDA
 Same Store       $       $                 $      $   
Funeral Field       11,344    10,388    -8.4 %    24,999    22,471    -10.1 %
EBITDA
 Same Store                           -270                         -240
Funeral Field       38.3 %    35.6 %    bp       39.6 %    37.2 %    bp
EBITDA Margin
 Acquisition
Funeral Field       2,432     3,632     49.3 %    5,645     7,405     31.2 %
EBITDA
 Acquisition
Funeral Field       29.9 %    34.1 %    420 bp  32.7 %    35.5 %    280 bp
EBITDA Margin
Total Funeral Field $        $        1.8 %     $       $       -2.5 %
EBITDA              13,776   14,020             30,644   29,876
Total Funeral Field 36.5 %    35.2 %    -130     38.1 %    36.7 %    -140
EBITDA Margin                           bp                           bp
 Same Store       $      $                $     $    
Cemetery Field      3,329     3,568     7.2 %     6,349     6,408     0.9 %
EBITDA
 Same Store
Cemetery Field      30.7 %    31.3 %    60 bp   30.9 %    30.4 %    -50 bp
EBITDA Margin
 Acquisition
Cemetery Field      (19)      134       805.3 %   (46)      125       371.7 %
EBITDA
 Acquisition                          6,580                        6,430
Cemetery Field      -25.7 %   40.1 %    bp       -32.2 %   32.1 %    bp
EBITDA Margin
Total Cemetery      $       $       11.8 %    $      $      3.6 %
Field EBITDA        3,310    3,702              6,303    6,533
Total Cemetery      30.4 %    31.6 %    120 bp  30.5 %    30.4 %    -10 bp
Field EBITDA Margin
 Funeral          $      $      -12.4 %   $     $     2.8 %
Financial EBITDA    2,373     2,079               4,188     4,305
 Cemetery         2,428     2,556     5.3 %     4,884     4,454     -8.8 %
Financial EBITDA
Total Financial     $       $       -3.5%     $      $      -3.5%
EBITDA              4,801    4,635              9,072    8,759
Total Financial     92.7 %    93.3 %    60 bp   91.6 %    93.5 %    190 bp
EBITDA Margin
Total Field EBITDA  $        $        2.1 %     $       $       -1.8 %
                    21,887   22,357             46,019   45,168
Total Field EBITDA  40.7 %    39.6 %    -110     41.5 %    40.3 %    -120
Margin                                  bp                           bp



OPERATING AND FINANCIAL TREND REPORT
FROM CONTINUING OPERATIONS (IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
                      Three Months Ended June 30,  Six Months Ended June 30,
                      2013      2014      %        2013      2014      %
                                          Change                       Change
Overhead
 Total Variable     $      $      -40.5 %  $     $     19.8 %
Overhead              2,373     1,411              4,402     5,274
 Total Regional     882       781       -11.5 %  1,848     1,567     -15.2 %
Fixed Overhead
 Total Corporate    5,156     5,085     -1.4 %   10,556    10,659    1.0 %
Fixed Overhead
Total Overhead        $       $       -13.5 %  $       $       4.1 %
                      8,411    7,277             16,806   17,500
Overhead as a percent 15.6 %    12.9 %    -270    15.1 %    15.6 %    50 bp
of sales                                  bp
Consolidated EBITDA   $        $        11.9 %   $       $       -5.3 %
                      13,476   15,080            29,213   27,668
Consolidated EBITDA   25.0 %    26.7 %    170     26.3 %    24.7 %    -160
Margin                                    bp                          bp
Other Expenses and
Interest
 Property           $      $               $     $    
Depreciation &        3,066     3,029     -1.2 %   5,881     5,785     -1.6 %
Amortization
 Non Cash Stock     978       1,263     29.1 %   1,624     1,993     22.7 %
Compensation
 Interest Expense   3,693     2,691     -27.1 %  7,121     5,536     -22.3 %
 Accretion on
Convertible           —         694                —         865
Subordinated Notes
 Loss on Early
Extinguishment of     —         1,042              —         1,042
Debt
 Loss on Redemption
of Convertible Junior —         —                  —         3,779
Subordinated Notes
 Other, Net         (29)      (5)       -82.8 %  (862)     (373)     -56.7 %
Pretax Income         $       $       10.4 %   $       $      -41.5 %
                      5,768    6,366             15,449   9,041
Tax Provision         2,192     2,483              6,469     3,526
GAAP Net Income       $       $       8.6 %    $      $      -38.6 %
                      3,576    3,883             8,980    5,515
Special Items, Net of
Tax
 Withdrawable Trust $     $              $     $    
Income                141      366                469     515
 Acquisition and    102       168                107       659
Divestiture Expenses
 Severance Costs    325       268                451       477
 Consulting Fees    168       6                  168       165
Other Incentive    —         —                  —         660
Compensation
 Accretion on
Convertible           —         458                —         571
Subordinated Notes
 Costs Related to   248       688                248       688
Credit Facility
 Loss on Redemption
of Convertible Junior —         —                  —         2,493
Subordinated Notes
 Gain on Asset      —         —                  —         (746)
Purchase
 Other Special      —         —                  (484)     503
Items
 Tax Adjustment     —         —                  598       —
from Prior Period
Sum of Special Items, $     $       98.6 %   $      $      284.4 %
net of tax            984       1,954             1,557    5,985
Adjusted Net Income   $       $       28.0 %   $       $       9.1 %
                      4,560    5,837             10,537   11,500
Adjusted Net Profit   8.5 %     10.3 %    180     9.5 %     10.3 %    80 bp
Margin                                    bp
Adjusted Basic        $     $     23.1 %   $     $     6.8 %
Earnings Per Share    0.26      0.32                0.59     0.63
Adjusted Diluted      $     $     28.0 %   $     $     12.5 %
Earnings Per Share    0.25      0.32                0.56     0.63
GAAP Basic Earnings   $     $     5.0 %    $     $     -40.0 %
Per Share             0.20      0.21                0.50     0.30
GAAP Diluted Earnings $     $     5.0 %    $     $     -34.8 %
Per Share             0.20      0.21                0.46     0.30
Effective Tax Rate    38.0 %    39.0 %    100     41.9 %    39.0 %    -290
                                          bp                          bp
Reconciliation to
Adjusted Consolidated
EBITDA
Consolidated EBITDA   $        $        11.9 %   $       $       -5.3 %
                      13,476   15,080            29,213   27,668
 Withdrawable Trust 213       554                710       779
Income
 Acquisition and    155       255                163       999
Divestiture Expenses
 Severance Costs    493       406                684       723
 Consulting Fees    255       9                  255       250
 Other Incentive    —         —                  —         1,000
Compensation
 Other Special      —         —                  83        —
Items
Adjusted Consolidated $        $        11.7 %   $       $       1.0 %
EBITDA                14,592   16,304            31,108   31,419
Adjusted Consolidated 27.1 %    28.9 %    180     28.0 %    28.0 %    0 bp
EBITDA Margin                             bp



CARRIAGE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                                                                (unaudited)
                                             December 31, 2013  June 30, 2014
ASSETS
Current assets:
 Cash and cash equivalents                 $           $     731
                                             1,377
 Accounts receivable, net                  17,950             18,252
 Assets held for sale                      3,544              1,354
 Inventories                               5,300              5,345
 Prepaid expenses                          4,421              3,345
 Other current assets                      3,525              3,130
 Total current assets                   36,117             32,157
Preneed cemetery trust investments           68,341             75,646
Preneed funeral trust investments            97,144             100,347
Preneed receivables, net                     24,521             26,439
Receivables from preneed trusts              11,166             11,780
Property, plant and equipment, net           160,690            176,283
Cemetery property                            72,911             75,459
Goodwill                                     221,087            253,573
Deferred charges and other non-current       12,280             18,657
assets
Cemetery perpetual care trust investments    42,342             52,812
 Total assets                           $             $  823,153
                                             746,599
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Current portion of long-term debt and     $            $    9,908
capital lease obligations                    13,424
 Accounts payable                          7,046              6,162
 Other liabilities                         9,939              9,329
 Accrued liabilities                       12,854             13,301
 Liabilities associated with assets held   4,357              360
for sale
 Total current liabilities              47,620             39,060
Long-term debt, net of current portion       105,642            116,699
Revolving credit facility                    36,900             42,400
Convertible junior subordinated debentures   89,770             —
due in 2029 to an affiliate
Convertible subordinated notes due 2021      —                  112,955
Obligations under capital leases, net of     3,786              3,201
current portion
Deferred preneed cemetery revenue            55,479             57,394
Deferred preneed funeral revenue             30,588             30,597
Deferred tax liability                       11,915             21,890
Other long-term liabilities                  1,548              1,220
Deferred preneed cemetery receipts held in   68,341             75,646
trust
Deferred preneed funeral receipts held in    97,144             100,347
trust
Care trusts' corpus                          41,893             52,304
 Total liabilities                      590,626            653,713
Commitments and contingencies:
Stockholders' equity:
 Common stock, $.01 par value; 80,000,000
shares authorized; 22,183,000 and 22,427,000 222                224
shares issued at December31, 2013 and June
30, 2014, respectively
 Additional paid-in capital                204,324            212,325
 Accumulated deficit                       (33,306)           (27,842)
 Treasury stock, at cost; 3,922,000 shares (15,267)           (15,267)
at December31, 2013 and June 30, 2014
 Total stockholders' equity             155,973            169,440
 Total liabilities and stockholders' $             $  823,153
equity                                       746,599



CARRIAGE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except share and per share data)
                           For the Three Months      For the Six Months
                           Ended June 30,            Ended June 30,
                           2013         2014         2013          2014
Revenues                   $  53,811   $  56,504   $  110,934   $  112,157
Field costs and expenses   36,931       38,515       75,149        76,152
Gross profit               $  16,880   $  17,989   $   35,785  $  
                                                                   36,005
General and administrative 7,448        7,201        14,077        16,877
expenses
Operating income           $   9,432  $  10,788   $   21,708  $  
                                                                   19,128
Interest expense, net      (3,664)      (2,686)      (6,259)       (5,531)
Accretion of discount on
convertible subordinated   —            (694)        —             (865)
notes
Loss on early
extinguishment of debt and —            (1,042)      —             (1,042)
other costs
Loss on redemption of
convertible junior         —            —            —             (3,779)
subordinated debentures
Other income               —            —            —             1,130
Income from continuing                                             $   
operations before income   $   5,768  $   6,366  $   15,449  9,041
taxes
Provision for income taxes (2,192)      (2,483)      (6,469)       (3,526)
Net income from continuing $   3,576  $   3,883  $          $   
operations                                           8,980         5,515
Net income (loss) from
discontinued operations,   568          (637)        423           (51)
net of tax
Net income                 $   4,144  $   3,246  $          $   
                                                     9,403         5,464
Preferred stock dividend   —            —            (4)           —
Net income available to    $   4,144  $   3,246  $          $   
common stockholders                                  9,399         5,464
Basic earnings (loss) per
common share:
 Continuing operations   $   0.20  $   0.21  $          $   
                                                     0.50         0.30
 Discontinued operations 0.03         (0.03)       0.02          —
Basic earnings per common  $   0.23  $   0.18  $          $   
share                                                0.52         0.30
Diluted earnings (loss)
per common share:
 Continuing operations   $   0.20  $   0.21  $          $   
                                                     0.46         0.30
 Discontinued operations 0.03         (0.04)       0.02          (0.01)
Diluted earnings per       $   0.23  $   0.17  $          $   
common share                                         0.48         0.29
Dividends declared per     $  0.025   $  0.025   $          $   
common share                                         0.05         0.05
Weighted average number of
common and common
equivalent shares
outstanding:
Basic                      17,830       18,123       17,744        18,054
Diluted                    17,994       18,247       22,316        18,195



 The GAAP Diluted EPS and Adjusted Diluted EPS for the six months ended June
 30, 2013 includes 4.4 million shares thatwould be issued upon conversion of
 our convertible subordinated debentures (TIDES) as a result of the
 if-converted methodprescribed by accounting standards. 



CARRIAGE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
                                                     For the Six Months
                                                     Ended June 30,
                                                     2013         2014
Cash flows from operating activities:
 Net income                                        $   9,403  $   5,464
Adjustments to reconcile net income to net cash
provided by operating activities:
 Gain on sale of businesses and purchase of other  (146)        (2,039)
assets
 Impairment of goodwill                            100          1,180
 Loss on early extinguishment of debt and other    —            1,042
costs
 Depreciation and amortization                     5,953        5,801
 Amortization of deferred financing costs          (36)         456
 Accretion of discount on convertible subordinated —            865
notes
 Provision for losses on accounts receivable       782          1,338
 Stock-based compensation expense                  1,624        2,782
 Deferred income tax expense (benefit)             1,894        (1,884)
 Loss on redemption of convertible junior          —            2,932
subordinated debentures
 Other                                             210          (8)
Changes in operating assets and liabilities that
provided (required) cash:
 Accounts and preneed receivables                  (2,070)      (1,783)
 Inventories and other current assets              1,211        818
 Deferred charges and other                        24           (174)
 Preneed funeral and cemetery trust investments    (1,363)      (10,057)
 Accounts payable                                  (160)        (871)
 Accrued and other liabilities                     1,265        (2,117)
Deferred preneed funeral and cemetery revenue     (9,755)      345
 Deferred preneed funeral and cemetery receipts    13,879       9,229
held in trust
 Net cash provided by operating activities      22,815       13,319
Cash flows from investing activities:
 Acquisitions and land for new construction        (6,051)      (54,850)
 Net proceeds from the sale of businesses and      2,736        200
other assets
 Capital expenditures                              (4,468)      (9,693)
 Net cash used in investing activities          (7,783)      (64,343)
Cash flows from financing activities:
 Net (payments) borrowings on the revolving credit (10,100)     5,500
facility
 Net (payments) borrowings on the term loan        (5,000)      8,000
 Proceeds from the issuance of convertible         —            143,750
subordinated notes
 Payment of debt issuance costs related to the     —            (4,650)
convertible subordinated notes
 Payments on other long-term debt and obligations  (307)        (542)
under capital leases
 Redemption of convertible junior subordinated     —            (89,748)
debentures
 Payments for performance-based stock awards       —            (16,150)
 Proceeds from the exercise of stock options and   492          863
employee stock purchase plan contributions
 Dividends on common stock                         (906)        (917)
 Dividend on redeemable preferred stock            (4)          —
 Payment of loan origination costs related to the  (565)        (797)
credit facility
 Excess tax benefit of equity compensation         1,178        5,069
 Net cash provided by (used in) financing       (15,212)     50,378
activities
Net decrease in cash and cash equivalents            (180)        (646)
Cash and cash equivalents at beginning of period     1,698        1,377
Cash and cash equivalents at end of period           $   1,518  $    731



CARRIAGE SERVICES, INC.
CALCULATION OF EARNINGS PER SHARE
(in thousands, except share and per share data)
                            For the Three Months      For the Six Months
                            Ended June 30,            Ended June 30,
                            2013         2014         2013         2014
Numerator for basic
earnings per share:
Numerator from continuing
operations
 Income from continuing   $         $         $   8,980  $   
operations                  3,576       3,883                    5,515
 Less: Earnings
allocated to unvested       (72)         (76)         (209)        (115)
restricted stock
 Income attributable   $         $         $   8,771  $   
to continuing operations    3,504       3,807                    5,400
Numerator from discontinued
operations
 Income (loss) from       $        $        $    423  $     
discontinued operations     568         (637)                     (51)
 Less: (Earnings) loss
allocated to unvested       (11)         13           (10)         1
restricted stock
 Income (loss)         $        $                     $     
attributable to             557         (624)        $    413  (50)
discontinued operations
Numerator for diluted
earnings per share:
Adjustment for diluted
earnings per share:
 Interest on
convertible junior          $       $       $   1,472  $     
subordinated debentures,    —           —                        —
net of tax
                            $       $       $   1,472  $     
                            —           —                        —
 Income attributable to   $         $         $  10,243   $   
continuing operations       3,504       3,807                    5,400
 Income (loss)            $        $                     $     
attributable to             557         (624)        $    413  (50)
discontinued operations
Denominator
Denominator for basic
earnings per common share - 17,830       18,123       17,744       18,054
weighted average shares
outstanding
Effect of dilutive
securities:
 Stock options         164          124          180          141
 Convertible junior    —            —            4,392        —
subordinated debentures
Denominator for diluted
earnings per common share - 17,994       18,247       22,316       18,195
weighted average shares
outstanding
Basic earnings (loss) per
common share:
 Continuing operations $        $        $   0.50  $    
                            0.20         0.21                      0.30
 Discontinued          0.03         (0.03)       0.02         —
operations
Basic earnings per common   $        $        $   0.52  $    
share                       0.23         0.18                      0.30
Diluted earnings (loss) per
common share:
 Continuing operations $        $        $   0.46  $    
                            0.20         0.21                      0.30
 Discontinued          0.03         (0.04)       0.02         (0.01)
operations
Diluted earnings per common $        $        $   0.48  $    
share                       0.23         0.17                      0.29





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. We believe the Non-GAAP results are
useful to investors because such results help investors compare our results to
previous periods and provide insights into underlying trends in our business.
The Company's GAAP financial statements accompany this release.
Reconciliations of the Non-GAAP financial measures to GAAP measures are
provided in this press release.

The Non-GAAP financial measures include "Adjusted Net Income", "Adjusted Basic
Earnings Per Share", "Adjusted Diluted Earnings Per Share", "Consolidated
EBITDA", "Adjusted Consolidated EBITDA", "Adjusted Free Cash Flow", "Funeral,
Cemetery and Financial EBITDA", "Total Field EBITDA" and "Special Items" in
this press release. These financial measurements are defined as similar GAAP
items adjusted for Special Items and are reconciled to GAAP 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. The
definitions used by the Company for our internal management purposes and in
this press release are as follows:

  oAdjusted Net Income is defined as net income from continuing operations
    plus adjustments for special items and other non-recurring expenses or
    credits.
  oConsolidated EBITDA is defined as net income from continuing operations
    before income taxes, interest expenses, non-cash stock compensation,
    depreciation and amortization, and interest income and other, net.
  oAdjusted Consolidated EBITDA is defined as Consolidated EBITDA plus
    adjustments for special items and non-recurring expenses or credits.
  oAdjusted Free Cash Flow is defined as net cash provided by operations,
    adjusted by special items as deemed necessary, less cash for maintenance
    capital expenditures.
  oFuneral Field EBITDA is defined as Funeral Gross Profit less depreciation
    and amortization, regional and unallocated overhead expenses and net
    financial income.
  oCemetery Field EBITDA is defined as Cemetery Gross Profit less
    depreciation and amortization, regional and unallocated overhead expenses
    and net financial income.
  oFinancial EBITDA is defined as Financial Revenue less Financial Expenses.
  oTotal Field EBITDA is defined as Gross Profit less depreciation and
    amortization, regional and unallocated overhead expenses.
  oSpecial Items is defined as charges or credits that are deemed as Non-GAAP
    items such as withdrawable trust income, acquisition and divestiture
    expenses, litigation settlements, severance costs, loss on early
    retirement of debt and other costs, discrete tax items and other
    non-recurring amounts. Special items are taxed at the federal statutory
    rate of 34 percent for the three and six months ended June 30, 2013 and
    2014.
  oAdjusted Basic Earnings Per Share is defined as GAAP Basic Earnings Per
    Share, adjusted for special items.
  oAdjusted Diluted Earnings Per Share is defined as GAAP Diluted Earnings
    Per Share, adjusted for special items.



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" and reported on a Non-GAAP proforma basis
within Special Items in the accompanying Operating and Financial Trend Report
(a 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.

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.



Reconciliation of Net Income from continuing operations to Adjusted Net Income
for the three and six months ended June 30, 2013 and 2014 (thousands):
                         Three Months Ended          Six Months Ended
                         June 30,                    June 30,
                         2013           2014         2013          2014
Net Income from          $  3,576      $  3,883    $   8,980   $   5,515
continuing operations
Special items, net of
tax
  Withdrawable Trust 141            366          469           515
Income
  Acquisition and    102            168          107           659
Divestiture Expenses
  Severance Costs    325            268          451           477
  Consulting Fees    168            6            168           165
  Other Incentive    —              —            —             660
Compensation
  Accretion of
Discount on Convertible  —              458          —             571
Subordinated Notes
  Costs Related to   248            688          248           688
the Credit Facility
  Loss on Redemption
of Convertible Junior    —              —            —             2,493
Subordinated Debentures
  Gain on Asset      —              —            —             (746)
Purchase
  Other Special      —              —            (484)         503
Items
  Tax Adjustment     —              —            598           —
from Prior Period
  Total Special
items affecting net      $   984      $  1,954    $   1,557   $   5,985
income
Adjusted Net Income      $  4,560      $  5,837    $  10,537    $  11,500





Reconciliation of Net Income from continuing operations to Consolidated EBITDA
and Adjusted Consolidated EBITDA for the three and six months ended June 30,
2013 and 2014 (in thousands):
                        Three Months Ended          Six Months Ended
                        June 30,                    June 30,
                        2013           2014         2013           2014
Net income from         $          $        $          $    
continuing operations   3,576          3,883        8,980          5,515
Provision for income    2,192          2,483        6,469          3,526
taxes
Pre-tax earnings from   $          $        $           $    
continuing operations   5,768          6,366        15,449         9,041
Interest expense        3,693          2,691        7,121          5,536
Accretion of discount
on convertible          —              694          —              865
subordinated notes
Loss on early
extinguishment of debt  —              1,042        —              1,042
and other costs
Loss on redemption of
convertible junior      —              —            —              3,779
subordinated debentures
Non-cash stock          978            1,263        1,624          1,993
compensation
Depreciation &          3,066          3,029        5,881          5,785
amortization
Other, net              (29)           (5)          (862)          (373)
Consolidated EBITDA    $           $         $           $   
                        13,476         15,080       29,213         27,668
Adjusted For:
 Withdrawable Trust   $         $        $         $     
Income                  213            554       710           779
 Acquisition and      155            255          163            999
Divestiture Expenses
 Severance Costs      493            406          684            723
 Consulting Fees      255            9            255            250
 Other Incentive      —              —            —              1,000
Compensation
 Other Special Items  —              —            83             —
Adjusted Consolidated   $           $         $           $   
EBITDA                 14,592         16,304       31,108         31,419
Revenue                 $           $         $            $  
                        53,811         56,504       110,934        112,157
Adjusted Consolidated   27.1%          28.9%        28.0%          28.0%
EBITDA Margin







Reconciliation of funeral and cemetery income before income taxes to Field
EBITDA for the three and six months ended June 30, 2013 and 2014 (in
thousands):
Funeral Field EBITDA     Three Months Ended            Six Months Ended
                         June 30,                      June 30,
                         2013           2014           2013         2014
Gross Profit (GAAP)      $  12,773     $  13,214     $  27,604   $  27,735
Depreciation &           1,612          1,683          3,214        3,297
amortization
Regional & unallocated   1,764          1,202          4,014        3,149
costs
Net financial income     (2,373)        (2,079)        (4,188)      (4,305)
Funeral Field EBITDA     $  13,776     $  14,020     $  30,644   $  29,876
Funeral Field Operating  $  37,733     $  39,820     $  80,370   $  81,305
Revenue
Funeral Field EBITDA     36.5 %         35.2 %         38.1 %       36.7 %
Margin
Cemetery Field EBITDA    Three Months Ended            Six Months Ended
                         June 30,                      June 30,
                         2013           2014           2013         2014
Gross Profit (GAAP)      $   4,107    $   4,775    $   8,181  $  
                                                                    8,270
Depreciation &           1,082          992            1,948        1,793
amortization
Regional & unallocated   549            491            1,058        924
costs
Net financial income     (2,428)        (2,556)        (4,884)      (4,454)
Cemetery Field EBITDA    $   3,310    $   3,702    $   6,303  $  
                                                                    6,533
Cemetery Field Operating $  10,901     $  11,716     $  20,661   $  21,483
Revenue
Cemetery Field EBITDA    30.4 %         31.6 %         30.5 %       30.4 %
Margin
Total Field EBITDA       Three Months Ended            Six Months Ended
                         June 30,                      June 30,
                         2013           2014           2013         2014
Funeral Field EBITDA     $  13,776     $  14,020     $  30,644   $  29,876
Cemetery Field EBITDA    3,310          3,702          6,303        6,533
Funeral Financial EBITDA 2,373          2,079          4,188        4,305
Cemetery Financial       2,428          2,556          4,884        4,454
EBITDA
Total Field EBITDA       $  21,887     $  22,357     $  46,019   $  45,168







Reconciliation of cash provided by operating activities to Adjusted Free Cash
Flow from operations for the three and six months ended June 30, 2013 and 2014
(in thousands):
                       Three Months Ended            Six Months Ended
                       June 30,                      June 30,
                       2013           2014           2013           2014
Cash flow provided by  $            $            $            $  
operations             12,902        14,937        22,815        13,319
Adjustment for tax
benefit from Good to   —              —              —              4,802
Great stock awards
Cash used for
maintenance capital    (1,238)        (1,689)        (3,025)        (2,572)
expenditures
Adjusted Free Cash     $            $            $            $  
Flow                   11,664        13,248        19,790        15,549
Reconciliation of GAAP basic earnings per share to Adjusted basic earnings per
share for the three and six months ended June 30,2013 and 2014:
                       Three Months Ended            Six Months Ended
                       June 30,                      June 30,
                       2013           2014           2013           2014
GAAP basic earnings    $          $          $          $    
per share from         0.20           0.21           0.50           0.30
continuing operations
Special items          0.06           0.11           0.09           0.33
affecting net income
Adjusted basic         $          $          $          $    
earnings per share    0.26           0.32           0.59           0.63
Reconciliation of GAAP diluted earnings per share to Adjusted diluted earnings
per share for the three and six months ended June 30,2013 and 2014: 
                       Three Months Ended            Six Months Ended
                       June 30,                      June 30,
                       2013           2014           2013           2014
GAAP diluted earnings  $          $          $          $    
per share from         0.20          0.21           0.46           0.30
continuing operations
Special items          0.05           0.11           0.07           0.33
affecting net income
Dilution effect of
convertible junior     —              —              0.03           —
subordinated
debentures
Adjusted diluted       $          $           $          $    
earnings per share     0.25           0.32          0.56           0.63



On page 5 of this press release, we present the Rolling Four Quarter Outlook
("Outlook") which reflects management's opinion on the performance of the
portfolio of businesses, plus visible and likely acquisitions, for the rolling
four quarter period ending June 30,2015, and the performance of trusts during
the corresponding period. This Outlook is not intended to be management
estimates or forecasts of our future performance, as we believe such precise
rolling estimates will be precisely wrong all the time. The following three
reconciliations are presented at the midpoint of the range in this Outlook.




Reconciliation of Net Income from continuing operations to Consolidated EBITDA
and Adjusted Consolidated EBITDA for the estimated rolling four quarters
ending June 30, 2015 (in thousands):
                                  Rolling Four Quarter Outlook
                                  June 30, 2015E
Net income from continuing                       $  19,000
operations
Provision for income taxes                       12,300
Pre-tax earnings from continuing                 $  31,300
operations
Net interest expense, including                  14,200
loan cost amortization
Depreciation & amortization,                     16,000
including stock compensation
Consolidated EBITDA                              $  61,500
Adjusted For:
Special items                                    5,000
Adjusted Consolidated EBITDA                     $  66,500
Reconciliation of Net Income from continuing operations to Adjusted Net Income
for the estimated rolling four quarters ending June 30, 2015 (in thousands):
                                  Rolling Four Quarter Outlook
                                  June 30, 2015E
Net income from continuing                       $  19,000
operations
Special items, net of tax                        8,000
Adjusted Net Income                              $  27,000
Reconciliation of GAAP diluted earnings per share to Adjusted diluted earnings
per share for the estimated rolling four quarters ending June 30, 2015:
                                  Rolling Four Quarter Outlook
                                  June 30, 2015E
GAAP diluted earnings per share                  $   1.04
from continuing operations
Special items affecting net                      0.41
income
Adjusted diluted earnings per                    $   1.45
share



CAUTIONARY STATEMENT ON 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. In
addition to historical information, this Press Release contains certain
statements and information that may constitute forward-looking statements
within the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. These statements include statements regarding the consummation of
the SCI acquisition, any projections of earnings, revenues, asset sales, cash
flow, debt levels or other financial items; any statements of the plans,
strategies and objectives of management for future operations; any statements
regarding future economic conditions or performance; any statements of belief;
and any statements of assumptions underlying any of the foregoing and are
based on our current expectations and beliefs concerning future developments
and their potential effect on us. The words "may", "will", "estimate",
"intend", "believe", "expect", "project", "forecast", "foresee", "should",
"would", "could", "plan", "anticipate" and other similar words or expressions
are intended to identify forward-looking statements, which are generally not
historical in nature. While management believes that these forward-looking
statements are reasonable as and when made, there can be no assurance that
future developments affecting us will be those that we anticipate. All
comments concerning our expectations for future revenues and operating results
are based on our forecasts for our existing operations and do not include the
potential impact of any future acquisitions. Our forward-looking statements
involve significant risks and uncertainties (some of which are beyond our
control) and assumptions that could cause actual results to differ materially
from our historical experience and our present expectations or projections.
Important factors that could cause actual results to differ materially from
those in the forward-looking statements include, but are not limited to, those
summarized below:

  othe execution of our Standards Operating Model;
  ochanges in the number of deaths in our markets;
  ochanges in consumer preferences;
  oability to find and retain skilled personnel;
  othe effects of competition;
  othe investment performance of our funeral and cemetery trust funds;
  ofluctuations in interest rates;
  oour ability to obtain debt or equity financing on satisfactory terms to
    fund additional acquisitions, expansion projects, working capital
    requirements and the repayment or refinancing of indebtedness;
  odeath benefits related to preneed funeral contracts funded through life
    insurance contracts;
  oour ability to generate preneed sales;
  othe financial condition of third-party insurance companies that fund our
    preneed funeral contracts;
  oincreased or unanticipated costs, such as insurance or taxes;
  oeffects of the application of applicable laws and regulations, including
    changes in such regulations or the interpretation thereof;
  oconsolidation of the deathcare industry; and
  oother factors and uncertainties inherent in the deathcare industry.

For additional information regarding known material factors that could cause
our actual results to differ from our projected results, please see "Risk
Factors" in our Annual Report on Form 10-K for the year ended December31,
2013. Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date hereof. We undertake no obligation
to publicly update or revise any forward-looking statements after the date
they are made, whether as a result of new information, future events or
otherwise. A copy of the Company's Form 10-K, other Carriage Services
information and news releases are available at
www.carriageservices.com.

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 in the
tables presented above. 

SOURCE Carriage Services, Inc.

Website: http://www.carriageservices.com
Contact: Investor Relations, Bill Heiligbrodt, 713-332-8553
 
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