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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